Indonesia updates

Corporate Finance/M&A

Contributed by Ali Budiardjo, Nugroho, Reksodiputro
New BKPM regulation clarifies guidelines and procedures for licensing and facilities under FDI regime
  • Indonesia
  • 11 September 2019

Indonesia's Investment Coordinating Board (BKPM) recently issued a new regulation that amends BKPM Regulation 6/2018, which sets out guidelines and procedures for licensing and facilities under Indonesia's foreign direct investment (FDI) regime. The most significant changes include the reaffirmation that certain FDI companies must comply with divestment obligations and the confirmation that shareholding foreign directors and commissioners are exempt from the normal expatriate employment rules.

New BKPM regulation on investment licences and facilities
  • Indonesia
  • 31 January 2018

The Indonesian Investment Coordinating Board (BKPM) recently issued the Regulation concerning Guidelines and Procedures for Investment Licensing and Facilities. The regulation enables companies investing in a specific business field to apply for a business licence directly without obtaining an investment registration in certain circumstances. Further, it is relatively more lenient than the previous regulation with regard to the divestment obligation imposed on foreign companies.

Exemption from mandatory tender offer requirement for tax amnesty participants
  • Indonesia
  • 12 October 2016

The Financial Services Authority recently showed its support for the government's tax amnesty programme by issuing a circular letter regarding mandatory tender offers as a result of public company acquisitions. The circular letter exempts any investor that has become the controller of a public company through an acquisition from the obligation to conduct a tender offer and is meant as an incentive for investors that control public companies through nominees to participate in the programme.

New Investment Negative List sets boundaries for investors
  • Indonesia
  • 14 July 2010

The government has finally published the long-awaited new Investment Negative List. The new list sets out the lines of business that are closed to investment, as well as those that are open to investment on certain conditions. The new list replaces the previous list, which was issued in 2007.

New regulation on share buybacks unveiled
  • Indonesia
  • 23 June 2010

The Capital Market and Financial Institutions Supervisory Board has issued a regulation regarding the buyback of shares issued by issuers or public companies. This regulation repealed and replaced previous decisions on the same subject matter. Among the board's considerations for issuing the regulation was the need to implement policies that are in line with provisions on share buybacks of the new Company Law.


Employment & Benefits

Contributed by Makarim & Taira S
Government simplifies outsourcing requirements
  • Indonesia
  • 23 October 2019

The minister of manpower recently amended the Minister of Manpower and Transmigration Regulation on the Requirements for Outsourcing, simplifying manpower outsourcing requirements to reflect current needs. The main highlight of the changes is that the required Manpower Office approval can now be obtained online and transferred using the online single submission system. Further, the time limit for registering a manpower outsourcing agreement with the Manpower Office has been removed.

Partnership agreements in view of Manpower Law
  • Indonesia
  • 10 October 2018

One of the most common ways in which a company can use a person's services is by entering into a partnership agreement and thereby treating them as a partner instead of an employee. However, partnership agreements often give rise to disputes, especially if they are terminated. There have been many cases in which the Manpower Office or the Industrial Relations Court have deemed poorly drafted partnership agreements to be employment agreements.

All in the family: court removes restriction on employment of spouses and blood relatives
  • Indonesia
  • 13 June 2018

Previously, under the Manpower Law, employers in Indonesia could include an article in their employment agreements, company regulations or collective labour agreements which allowed them to terminate employees for having a marital or blood relationship with another employee in the same company. However, the Constitutional Court recently sided with eight individual claimants who contended that the wording of the law contravened their constitutional rights.

Uncertainty of foreign employment status
  • Indonesia
  • 25 April 2018

The number of expatriate employees taking legal action against their employers for terminating their employment contracts, whether for economic reasons or for misconduct, has grown in recent years. Although most jurists maintain that expatriates cannot be permanent employees or receive the same severance entitlements as Indonesian permanent employees, this has not always been the case.


Energy & Natural Resources

Contributed by Ali Budiardjo, Nugroho, Reksodiputro
New regulation establishes penalties for failure to repatriate proceeds of natural resources exports
  • Indonesia
  • 05 August 2019

The start of 2019 saw a renewed attempt by the government to compel exporters of natural resources-based commodities to repatriate their export earnings and deposit them in the Indonesian financial system with the issuance of new rules in this regard. The minister of finance has now established penalties for non-compliance with these rules.

Repatriation of natural resource export earnings: new regulation signals stricter approach
  • Indonesia
  • 11 February 2019

Government Regulation 1/2019 requires exporters in the natural resources sector to repatriate their forex-denominated export earnings to Indonesia. Thus, forex-denominated export proceeds in the mining, plantation, forestry and fisheries sectors must be deposited in the Indonesian financial system. Overall, the regulation is clearly intended to bolster Indonesia's balance of payments situation, which has worsened considerably over the past year.

MEMR moves quickly to limit application of coal price caps to new contracts
  • Indonesia
  • 02 April 2018

Following the recent issuance of the ​Ministry of Energy and Mineral Resources decree which imposed price caps on coal supplied for power generation in the public interest, the coal industry was expected to undertake significant lobbying in order to reduce or limit the decree's impact. This anticipated lobbying appears to have commenced already, as the decree was amended on March 12 2018 after having been on the statute books for just four days.

Government caps prices of coal for power generation
  • Indonesia
  • 26 March 2018

The government recently imposed caps on the prices payable for coal to be used for power generation in the public interest. The maximum price payable under the new Ministry of Energy and Mineral Resources decree is 30% less than the Indonesian benchmark price for equivalent coal sold for export in February 2018, which means that the country's coal producers will suffer a substantial cut to their profitability by selling coal for domestic power generation.

MEMR delivers on promise to revoke regulations
  • Indonesia
  • 19 March 2018

The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in furtherance of the government's efforts to reduce the regulatory burden on the energy and mineral resources sector. However, it was unclear which of these regulations had been revoked before the announcement and which would be revoked in the future. This situation has now been clarified with the issuance of four new revoking regulations, which form part of what some have called a 'big-bang' reform.


Immigration

Ministry of Manpower issues codified list of businesses which may employ foreign employees
  • Indonesia
  • 27 September 2019

The Ministry of Manpower recently issued Decree 228/2019 on Certain Positions Permissible for Foreign Employees, which came into effect on 27 August 2019 and revoked all prior relevant decrees on this matter. The appendix to Decree 228/2019 provides a list of positions and business fields in which foreign employees can be employed. The list will be evaluated every two years (or as needed).

New regime for hiring foreign employees
Makarim & Taira S
  • Indonesia
  • 21 December 2018

Indonesian entities must comply with certain requirements and follow a specific procedure when hiring foreign employees. The requirements and procedure used to be provided for in Minister of Manpower (MOM) Regulation 16/2015, as amended by MOM Regulation 35/2015. However, in 2018 the MOM issued a new regulation, which introduced a requirement to obtain a notification from the MOM when hiring foreign employees.

Uncertainty surrounding legal status of foreign employees
Makarim & Taira S
  • Indonesia
  • 17 August 2018

The employment of foreign citizens in Indonesia is subject to various restrictions, including with regard to employment terms. Foreign employees can be employed only on a temporary basis and thus cannot be considered permanent employees. However, they also cannot be considered fixed-term employees under Articles 56 and 59 of the Manpower Law. Despite this framework, mediators and the Industrial Relations Court have expressed inconsistent views on the legal status of foreign employees.


Litigation

Supreme Court pushes ahead with expansion of e-litigation services
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 17 September 2019

The Supreme Court has issued a new regulation on e-litigation which significantly expands the scope of earlier regulations and envisages the eventual development of a full-blown electronic court system, which would mean that proceedings could be commenced, court fees paid, documents and pleadings submitted, hearings conducted and judgments pronounced electronically.