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.
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.
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.
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.
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 However, it was unclear which of these regulations had been revoked before the announcement and which would be revoked in the future.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.
The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in the energy and mineral resources sector, three of which are of particular importance to independent power producers in the new and renewable power sub-sector. However, a subsequent examination revealed that most if not all of the regulations have yet to be revoked, and the lack of clarity in this regard has called the ministry's commitment to transparency into question.
The new Financial Services Authority Regulation on the Single Presence Policy in Indonesian Banking was issued in July 2017. The policy aims to ensure that a single entity does not simultaneously hold a controlling interest in more than one bank. Therefore, a controlling shareholder of more than one bank is required to merge or consolidate its controlled banks, establish a bank holding company or establish a holding function.
The Ministry of Finance has issued a regulation in order to implement provisions for the establishment of state-owned infrastructure guarantee corporations (BUPI). The regulation sets out more detailed provisions on government guarantees for infrastructure projects, as well as the nature, scope of and procedures governing such guarantees. A guarantee provided by a BUPI may cover infrastructure, political and default risks, among others.
The Financial Services Authority (OJK) has introduced rules for the employment of expatriates and the transfer of knowledge in the banking sector, pursuant to which it has taken over the supervisory role previously performed by Bank Indonesia. Therefore, in order to employ an expatriate, a bank must now obtain OJK approval and submit reports on its expatriate staff. An expatriate's work permit will be processed by the Ministry of Manpower only after having been approved by the OJK.
The Indonesian Investment Coordinating Board recently issued the Regulation concerning Guidelines and Procedures for Investment Licensing and Facilities. As regards the oil and gas sub-sector, the regulation states that a permanent business entity may apply for a permit to establish a foreign representative office in the oil and gas sub-sector through the Electronic Investment Information and Licensing Services. Foreign representative office permits are valid for three years and are extendable.
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.
The Ministry of Manpower recently issued Regulation 18/2017, which introduces an online-only procedure for mandatory manpower reporting. The regulation specifies when companies must submit an online report and requires them to do so via the ministry website. It also regulates the usage and management of data from manpower reports.
The government and the House of Representatives recently agreed to prioritise the Bill on Palm Oil's enactment in 2017. This is despite the fact that the bill has been subject to criticism, particularly from environmental activists, who argue that there is no urgency for its enactment as most of the provisions are already contained in the Plantation Law. Regardless of the controversy surrounding its enactment, the bill contains a number of key provisions.
A recent Financial Services Authority (OJK) regulation sets out new disclosure obligations that apply to issuers and public companies in Indonesia and creates a new penalty regime for non-compliance. The regulation is significant for investors with an interest in the Indonesian Stock Exchange and is consistent with other measures that the OJK has taken to improve transparency and align the reporting obligations of issuers and public companies with international standards.
To promote a more conducive investment climate, the Ministry of Energy and Natural Resources recently simplified and streamlined the procedures for the application of upstream and downstream oil and gas-related licences through the Regulation concerning Licences in the Field of Oil and Gas. The new regulation has introduced some welcome changes – namely, licence applications can now be made online and most licences can now be issued within 10 to 15 calendar days.
The minister of energy and mineral resources recently enacted Regulation 48/2017 on the supervision of business activities in the energy and mineral resources sector, which revoked the short-lived Regulation 42/2017 on the same subject. In a press release, the minister explained that the regulation's aim is to accommodate the interests of investors and prevent any hindrance to investment.
New regulations require the banking and finance industries to comply with heightened supervision by financial authorities and will be welcomed by foreign investors and customers concerned with Indonesia's financial stability. Key developments include intensifying reporting obligations for systemically important banks, introducing tiered supervision and raising safeguard measures.
Despite the primary role that coal and gas continue to play in meeting Indonesia's electricity needs, the government seems to be demonstrating a commitment to promoting renewable energies. New regulations have provided clarity for investors interested in solar, wind, hydro, geothermal and biogas projects by introducing incentives for undertaking such projects, detailing the procedures for renewable power purchase agreements and updating the tariff rates.
A recently promulgated regulation has triggered a major shift in Indonesia's mineral and coal mining industries. Mineral mining companies that depend heavily on mineral exports will be particularly affected by the new policies. Primary changes require all companies operating under a contract of work to transfer to a single licensing regime and introduce stringent mineral export processing standards.
The Supreme Court's enactment of the Regulation regarding the Manner and Procedure for the Handling of Crimes Committed by Corporations is a significant milestone in the development of Indonesia's corporate criminal liability legislation. The regulation aims to provide law enforcers with guidance on handling corporate crimes and strengthens and complements the existing regulations.