Indonesia updates

Arbitration & ADR

Commercial dispute resolution: an overview
  • Indonesia
  • 03 October 2019

In general, the methods used to resolve commercial disputes in Indonesia are litigation, arbitration and alternative dispute resolution (ADR). The resolution of commercial disputes through arbitration or ADR (eg, mediation) is generally governed by the Law Concerning Arbitration and ADR, which recognises the principle of competence under which the district courts have no jurisdiction to try disputes between parties bound by an arbitration agreement.

New Regulation on the Settlement of Disharmony between Laws and Regulations through Mediation
  • Indonesia
  • 04 July 2019

The Ministry of Laws and Human Rights Regulation on the Settlement of Disharmony between Laws and Regulations through Mediation recently took effect. The regulation reinstates the possibility to settle disputes concerning laws and regulations outside the courts through the introduction of mediation, including disputes over ministerial regulations, non-ministerial government institution regulations, non-structural institution regulations and regional laws and regulations.

BANI legal status up in the air
  • Indonesia
  • 11 April 2019

The Indonesia National Board of Arbitration (BANI) was established in 1977. In 2016 the Ministry of Law and Human Rights created BANI Pembaharuan (ie, the Renewed BANI), which claims that it is a revised version of the original BANI. However, the original BANI does not recognise the Renewed BANI and claims that it has been using the BANI name unlawfully. This duality could create uncertainty when commercial parties wish to appoint BANI as their dispute settlement forum.


Banking & Financial Services

OJK relaxes single presence policy in banking sector but tightens minimum capital requirements
  • Indonesia
  • 08 May 2020

The Indonesian Financial Services Authority recently issued a regulation which relaxes bank ownership rules under its single presence policy but simultaneously increases minimum capital requirements. The regulation was conceived prior to the COVID-19 crisis and the issuance of emergency economic legislation. Consequently, the big question is whether the regulation will continue to be relevant, given the perfect storm facing the national economy and the Indonesian financial services industry.

Lending market review 2019
  • Indonesia
  • 24 January 2020

Fintech-based lending in Indonesia grew rapidly in 2019. Various crowdfunding models (in particular, peer-to-peer lending) emerged and gave the regulatory authorities a new focus for their attention. In this regard, the Financial Services Authority issued a number of new regulations concerning equity funding, digital financial innovation in the financial services sector, standing facilities, money markets and open operations.

New Bank Indonesia regulation on prudential rules for offshore debt and FX-denominated liabilities
  • Indonesia
  • 22 March 2019

Bank Indonesia recently issued an umbrella regulation on the application of prudential norms. As with the now revoked Regulation on Offshore Loans in the Banking Sector (as amended), Regulation 21 stresses the importance of compliance with prudential norms for maintaining macroeconomic and financial system stability. However, while the previous regulation's scope was confined to offshore bank loans, Regulation 21 encompasses "offshore bank debt and FX-denominated other bank liabilities".

New framework to establish Securities Finance Agency introduced
  • Indonesia
  • 12 February 2019

The Financial Services Authority recently issued a new regulation which provides a framework to establish the Securities Finance Agency (SFA). The agency aims to boost transaction volumes and liquidity in the Indonesian stock market, particularly by encouraging margin trading and short selling. Upon its establishment, the SFA will provide securities financing to brokerage firms.

OJK issues umbrella regulation for fintech development and establishes regulatory sandbox regime
  • Indonesia
  • 05 October 2018

Until recently, the Financial Services Authority (OJK) had never issued an overarching regulation governing the development of the fintech sector as a whole or replicating the sandbox regime and pre-audit mechanism established by Bank Indonesia for fintech in the payments arena. This gap has now been filled by OJK Regulation 13/POJK.02/2018 on Digital Financial Innovation in the Financial Services Sector.


Competition & Antitrust

KPPU flexes muscles with revamped merger control guidelines
  • Indonesia
  • 23 January 2020

After fining numerous companies for late notification of mergers, consolidations and acquisitions in recent months, the new commissioners of the Indonesian Competition Commission who took office in May 2018 have once again shown their commitment to a more active enforcement of merger control rules by introducing new merger control guidelines.


Corporate & Commercial

Force majeure and impact of COVID-19 on contractual obligations
  • Indonesia
  • 27 April 2020

Given the economic dislocation caused by the spread of COVID-19, many parties facing difficulties in performing contracts will be considering their legal situation. Can they be held liable for damages for a breach of contract or losses suffered by third parties due to circumstances beyond their control or does the law provide a relief mechanism for dire circumstances such as these? Although Indonesian law provides a relief mechanism, it is a difficult one of which to avail.

FAQs on legal impact of COVID-19
  • Indonesia
  • 13 April 2020

With the world facing its biggest challenge of the century so far, and probably its greatest challenge since World War II, businesses are asking how they should best respond to the impact of the COVID-19 crisis. This article answers the FAQs that businesses are asking with regard to contracts, force majeure and shareholders' duties.

Government acts to regulate booming e-commerce sector and foreign providers operating in Indonesian market
  • Indonesia
  • 13 January 2020

Despite being mandated by Article 66 of the Trade Law, which entered into force in 2014, a government regulation specifically focused on e-commerce has only recently been issued after having been under discussion since 2015. This article describes the key aspects of the regulation that directly affect e-commerce operators and consumers.

Long-awaited regulation on Language Law finally introduced – but questions remain
  • Indonesia
  • 28 October 2019

After a 10-year delay, a presidential regulation has finally been issued to give effect to key language provisions of the Law on the National Flag, Language, Coat of Arms and Anthem. Of primary interest to businesses are the provisions on contractual language, as they refer to the controversial requirement that agreements involving an Indonesian party must be written in Indonesian and that agreements involving a foreign party must also be written in the national language of the foreign party or in English.

Will BKPM takeover of OSS help to eliminate glitches?
  • Indonesia
  • 28 January 2019

The online single submission (OSS) system constitutes a significant overhaul of Indonesia's business and investment licensing regime. Although much later than scheduled, responsibility for the OSS has now officially transferred to the Investment Coordinating Board. The government made it clear from the outset that the OSS would take time to perfect. Although the OSS works reasonably well for the most part, a number of problems remain.


Corporate Finance/M&A

Omnibus bill's likely impact on FDI open to interpretation
  • Indonesia
  • 25 March 2020

The government recently submitted the Bill on Job Creation to the National Legislative Assembly. Both foreign direct investment and domestic investment are governed by the Investment Law 2007. While the bill envisages relatively few changes to the Investment Law overall, the proposed changes to its provisions on the Negative Investment List could be significant.

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.