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Print articleRecent Indonesian Regulations
February, 2013 -
Amendments to Mining Business Regulation
The Minister of Energy and Mineral Resources recently issued Regulation No. 24 of 2012 (“Regulation 24”) amending his Regulation No. 28 of 2009 on Organizing Coal and Mineral Mining Businesses. The main concerns of Regulation 24 are (i) the classification of core mining business activities and non-core mining activities; (ii) the amendment to the requirement for IUP and IUPK holders to do their own mining, processing and mineral purifying; and (iii) mining business classifications.
Financial Health of Insurance and Reinsurance Companies Re-regulated
To improve the Indonesian insurance industry and to protect insured persons from financially unhealthy insurers, the Minister of Finance (“MOF”) on 1 January 2013 issued MOF Regulation No. 53/PMK.010/2012 on the Financial Health of Insurance and Reinsurance Companies (“Regulation 53”). The main concerns of Regulation 53 are, among others: (i) the qualifications of financially healthy insurance and reinsurance companies; (ii) the requirement for automatic reinsurance support for every line insurance companies offer, including automatic reinsurance for catastrophic risks; (iii) the requirement to file quarterly reports; and (iv) 20% of an insurance or reinsurance company’s minimum capital must be administered by a custodian bank.
Jamsostek Coverage
The Constitutional Court issued decision No. 70/PUU-IX/2011 which conditionally revokes Article 4 (1) of Law No. 3 of 1992 re Jamsostek and Article 13 (1) of Law No. 40 of 2004 regarding the National Social Security System (SJSN) if these articles are interpreted so that employees cannot enroll themselves in the Jamsostek institution or the Social Security Provider Institution (BPJS) if their employers have failed to so enroll them. However, the employers still have to bear the contribution. There is no provision in which the employee can ask for a reimbursement to the employer for the contribution paid in advance by the employee to the Jamsostek institution.
The Ministry of Manpower and Transmigration issued Regulation No. 20 of 2012 (“Regulation No. 20”) which implements the above Constitutional Court decision, and which states that employers are obliged to participate themselves and their employers in the Jamsostek scheme. In the event that the employer fails to comply, the employee may register him/herself.
Minimum Wage for DKI Jakarta Province and the Delay
A significant increase in the Minimum Wage in DKI Jakarta province become effective as of 1 January 2013. The Minimum Wage increased from Rp.1,529,150 to Rp.2,200,000. A Regulation allows business actors to apply for a delay of minimum wage payment if they cannot meet the payment. The procedure to apply for the delay is still as regulated under Governor Regulation No. 42 of 2007.
Limitation on Franchise Outlets Ownership
Further to the issuance of Regulation No. 53/M-DAG.PER/8/2012 on Organizing a Franchise Business, the Ministry of Trade issued Regulation No. 68/MM-DAG/PER/10/2012 on Retail Shop Business Franchises (“Regulation No. 68”). Under Regulation No. 68, ownership of company-owned outlets is limited to 150 outlets. Exemptions are given for a franchisor and a franchisee that owns 150 outlets but have not yet earned profits as evidenced by audited financial statements and where a franchisor wishing to expand its outlets in local area outside Jakarta, is unable to find a local business entrepreneur which can be a franchisee, based on an evaluation from an Appraisal Team.
New Bank Indonesia Regulation on Foreign Exchange Derived from Export Transactions and Offshore Loan Drawdowns
On 27 December 2012, Bank Indonesia issued Bank Indonesia Regulation No. 14/25/PBI/2012 regarding Foreign Exchange Derived from Export Transactions and Offshore Loan Drawdowns (“PBI 14/25”) which revokes a previous Bank Indonesia Regulation. PBI 14/25 requires foreign exchange derived from export transactions to be received through a licensed foreign exchange bank in Indonesia (“FX Bank”). Foreign exchange derived from offshore loan drawdowns must also be disbursed by the debtor through an FX Bank. The Regulation came into effect on 1 January 2013 and is intended to optimize the use of foreign exchange in export transactions and offshore loan drawdowns.
Ministry of Trade Grants Extension of Time to Apply for New API
On 27 December 2012, the Minister of Trade (MOT) amended for a second time MOT Regulation No. 27/M-DAG/PER/5/2012 on the Provisions on Importer Identification Numbers (“Regulation 27”), previously amended by MOT Regulation No. 59/M-DAG/PER/9/2012). Article 42 of Regulation 27 now stipulates that any Importer Identification Number (API) obtained under the regime in place prior to the issuance of Regulation 27 must now be adjusted to conform with Regulation 27 by 31 March 2013.
Following BP Migas being Disbanded, the Government Establishes SKK Migas
On 13 November 2012, the Constitutional Court (Mahkamah On 13 November 2012, the Constitutional Court (Mahkamah Konstitusi or “MK”) dissolved BP Migas through Decision No. 26/PUU-X/2012 on the judicial review of the oil and Gas Law (Law No. 22 of 2001). In response, the President issued Presidential Regulation No. 95 of 2012 on the Transfer of the Duties and Functions of the Upstream Oil and Gas Activity Agency (BP Migas) (“Regulation 95”). Following the issuance of Regulation 95, the Minister of Energy and Mineral Resources (“ESDM”) issued Decree No. 3135K/08/MEM/2012 regarding the Transfer of the Duties, Functions and Organizational Structure of the Upstream Oil and Gas Activity Agency (“Decree 3135”). Regulation 95 and Decree 3135 govern the employees of BP Migas, BP Migas’ counterparts under Production Sharing Contracts (PSCs) and the PSCs themselves, and BP Migas’ duties are now assigned to the ESDM.
To follow up on the above, the President recently issued Presidential Regulation No. 9 of 2013 regarding The Management of Upstream Oil and Gas Activities (“Regulation 9”). Regulation 9 establishes a government unit called The Special Work Unit for Upstream Oil and Gas Activities (Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi or “SKK Migas”) which assumes BO Migas’ duties until the issuance of the new oil and gas law.
The assets of BP Migas will be utilized by SKK Migas. The same applies to the employees, ie the BP Migas employees now work for SKK Migas.
Although Regulation 9 is silent on BP Migas’ counterparts under Production Sharing Contracts or PSCs, Regulation 95 states that all contracts signed by BP Migas will remain valid until their date of expiry. To control, supervise and evaluate work done by SKK Migas, Regulation 9 establishes a Supervisory Commission (Komisi Pengawas) led by the Minister of ESDM as its Chairman.
Bank Indonesia Regulation on Fund Transfers
Following the issuance of Law No. 3 of 2011 regarding Fund Transfers, on 26 December 2012, Bank Indonesia issued Bank Indonesia Regulation No. 14/23/PBI/2012 on Fund Transfers (“PBI 14/23”) which revokes and replaces Bank Indonesia Regulation No. 8/28/PBI/2006 regarding Money Transfer Business Activities (“PBI 8/28”).
To apply for a permit and qualify as a fund transfer provider, legal entities must be: a) a participant in the Bank Indonesia Real Time Gross Settlement System (RTGS); b) a participant in the Bank Indonesia National Clearing System (SKNBI); and c) an administrator of card-based payment instruments.
Any party which processes fund transfers without a fund transfer license will be liable to up to three years in prison or a fine of up to IDR 3 billion. For cross-border fund transfers, Indonesian fund transfer providers may only cooperate with foreign counterparts which hold a fund transfer license from their corresponding local authority. PBI 14/23 requires Money Transfer Operators (as defined under PBI 8/28) holding a fund transfer permit to apply for a new permit.
Good Corporate Governance for Insurance Companies
The Ministry of Finance has issued new Regulation No. 152/PMK 010/2012 on Good Corporate Governance dated 3 October 2012 (“Regulation No. 152”) as an implementation of Government Regulation No. 7 of 1992 on Insurance Business. The Good Corporate Governance covers the principles of transparency, accountability, responsibility, independency, and fairness. Regulation No. 152 provides provisions among numbers of directors and commissioners that insurance companies may have and their requirements.
First KPPU Fine for Merger Notification Non-Compliance
On 10 December 2012, The Indonesian competition regulator (KPPU) issued its first fine for a failure to comply with Indonesia’s merger notification regime. Although Indonesia’s merger control regime has been active since the promulgation of Government Regulation No. 57 of 2010 on 20 July 2010, the KPPU has just issued its first fine (of IDR 4.6bn, or approximately USD475,000) for a failure to notify. It is not clear yet whether the matter is under appeal. In its decision, No. 09/KPPU-M/2012, the KPPU fined PT Mitra Pinasthika Mustika for its late notification of a share acquisition in PT Austindo Nusantara Jaya Rent. This case is significant in that it is the first involving a violation of Article 29 of the Anti-Monopoly Law (Law No. 5 of 1999). Article 29 of the Anti-Monopoly Law requires the KPPU to be notified of any merger, consolidation, or share acquisition of a certain size within 30 (thirty) days. Although PT Mitra Pinasthika Mustika argued that the failure was not intentional, the KPPU stated the company’s misunderstanding of the thresholds did not relieve it of the consequences of its violation of the Law.
The Minister of Energy and Mineral Resources recently issued Regulation No. 24 of 2012 (“Regulation 24”) amending his Regulation No. 28 of 2009 on Organizing Coal and Mineral Mining Businesses. The main concerns of Regulation 24 are (i) the classification of core mining business activities and non-core mining activities; (ii) the amendment to the requirement for IUP and IUPK holders to do their own mining, processing and mineral purifying; and (iii) mining business classifications.
***
Financial Health of Insurance and Reinsurance Companies Re-regulated
To improve the Indonesian insurance industry and to protect insured persons from financially unhealthy insurers, the Minister of Finance (“MOF”) on 1 January 2013 issued MOF Regulation No. 53/PMK.010/2012 on the Financial Health of Insurance and Reinsurance Companies (“Regulation 53”). The main concerns of Regulation 53 are, among others: (i) the qualifications of financially healthy insurance and reinsurance companies; (ii) the requirement for automatic reinsurance support for every line insurance companies offer, including automatic reinsurance for catastrophic risks; (iii) the requirement to file quarterly reports; and (iv) 20% of an insurance or reinsurance company’s minimum capital must be administered by a custodian bank.
***
Jamsostek Coverage
The Constitutional Court issued decision No. 70/PUU-IX/2011 which conditionally revokes Article 4 (1) of Law No. 3 of 1992 re Jamsostek and Article 13 (1) of Law No. 40 of 2004 regarding the National Social Security System (SJSN) if these articles are interpreted so that employees cannot enroll themselves in the Jamsostek institution or the Social Security Provider Institution (BPJS) if their employers have failed to so enroll them. However, the employers still have to bear the contribution. There is no provision in which the employee can ask for a reimbursement to the employer for the contribution paid in advance by the employee to the Jamsostek institution.
The Ministry of Manpower and Transmigration issued Regulation No. 20 of 2012 (“Regulation No. 20”) which implements the above Constitutional Court decision, and which states that employers are obliged to participate themselves and their employers in the Jamsostek scheme. In the event that the employer fails to comply, the employee may register him/herself.
***
Minimum Wage for DKI Jakarta Province and the Delay
A significant increase in the Minimum Wage in DKI Jakarta province become effective as of 1 January 2013. The Minimum Wage increased from Rp.1,529,150 to Rp.2,200,000. A Regulation allows business actors to apply for a delay of minimum wage payment if they cannot meet the payment. The procedure to apply for the delay is still as regulated under Governor Regulation No. 42 of 2007.
***
Limitation on Franchise Outlets Ownership
Further to the issuance of Regulation No. 53/M-DAG.PER/8/2012 on Organizing a Franchise Business, the Ministry of Trade issued Regulation No. 68/MM-DAG/PER/10/2012 on Retail Shop Business Franchises (“Regulation No. 68”). Under Regulation No. 68, ownership of company-owned outlets is limited to 150 outlets. Exemptions are given for a franchisor and a franchisee that owns 150 outlets but have not yet earned profits as evidenced by audited financial statements and where a franchisor wishing to expand its outlets in local area outside Jakarta, is unable to find a local business entrepreneur which can be a franchisee, based on an evaluation from an Appraisal Team.
***
New Bank Indonesia Regulation on Foreign Exchange Derived from Export Transactions and Offshore Loan Drawdowns
On 27 December 2012, Bank Indonesia issued Bank Indonesia Regulation No. 14/25/PBI/2012 regarding Foreign Exchange Derived from Export Transactions and Offshore Loan Drawdowns (“PBI 14/25”) which revokes a previous Bank Indonesia Regulation. PBI 14/25 requires foreign exchange derived from export transactions to be received through a licensed foreign exchange bank in Indonesia (“FX Bank”). Foreign exchange derived from offshore loan drawdowns must also be disbursed by the debtor through an FX Bank. The Regulation came into effect on 1 January 2013 and is intended to optimize the use of foreign exchange in export transactions and offshore loan drawdowns.
***
Ministry of Trade Grants Extension of Time to Apply for New API
On 27 December 2012, the Minister of Trade (MOT) amended for a second time MOT Regulation No. 27/M-DAG/PER/5/2012 on the Provisions on Importer Identification Numbers (“Regulation 27”), previously amended by MOT Regulation No. 59/M-DAG/PER/9/2012). Article 42 of Regulation 27 now stipulates that any Importer Identification Number (API) obtained under the regime in place prior to the issuance of Regulation 27 must now be adjusted to conform with Regulation 27 by 31 March 2013.
***
Following BP Migas being Disbanded, the Government Establishes SKK Migas
On 13 November 2012, the Constitutional Court (Mahkamah On 13 November 2012, the Constitutional Court (Mahkamah Konstitusi or “MK”) dissolved BP Migas through Decision No. 26/PUU-X/2012 on the judicial review of the oil and Gas Law (Law No. 22 of 2001). In response, the President issued Presidential Regulation No. 95 of 2012 on the Transfer of the Duties and Functions of the Upstream Oil and Gas Activity Agency (BP Migas) (“Regulation 95”). Following the issuance of Regulation 95, the Minister of Energy and Mineral Resources (“ESDM”) issued Decree No. 3135K/08/MEM/2012 regarding the Transfer of the Duties, Functions and Organizational Structure of the Upstream Oil and Gas Activity Agency (“Decree 3135”). Regulation 95 and Decree 3135 govern the employees of BP Migas, BP Migas’ counterparts under Production Sharing Contracts (PSCs) and the PSCs themselves, and BP Migas’ duties are now assigned to the ESDM.
To follow up on the above, the President recently issued Presidential Regulation No. 9 of 2013 regarding The Management of Upstream Oil and Gas Activities (“Regulation 9”). Regulation 9 establishes a government unit called The Special Work Unit for Upstream Oil and Gas Activities (Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi or “SKK Migas”) which assumes BO Migas’ duties until the issuance of the new oil and gas law.
The assets of BP Migas will be utilized by SKK Migas. The same applies to the employees, ie the BP Migas employees now work for SKK Migas.
Although Regulation 9 is silent on BP Migas’ counterparts under Production Sharing Contracts or PSCs, Regulation 95 states that all contracts signed by BP Migas will remain valid until their date of expiry. To control, supervise and evaluate work done by SKK Migas, Regulation 9 establishes a Supervisory Commission (Komisi Pengawas) led by the Minister of ESDM as its Chairman.
***
Bank Indonesia Regulation on Fund Transfers
Following the issuance of Law No. 3 of 2011 regarding Fund Transfers, on 26 December 2012, Bank Indonesia issued Bank Indonesia Regulation No. 14/23/PBI/2012 on Fund Transfers (“PBI 14/23”) which revokes and replaces Bank Indonesia Regulation No. 8/28/PBI/2006 regarding Money Transfer Business Activities (“PBI 8/28”).
To apply for a permit and qualify as a fund transfer provider, legal entities must be: a) a participant in the Bank Indonesia Real Time Gross Settlement System (RTGS); b) a participant in the Bank Indonesia National Clearing System (SKNBI); and c) an administrator of card-based payment instruments.
Any party which processes fund transfers without a fund transfer license will be liable to up to three years in prison or a fine of up to IDR 3 billion. For cross-border fund transfers, Indonesian fund transfer providers may only cooperate with foreign counterparts which hold a fund transfer license from their corresponding local authority. PBI 14/23 requires Money Transfer Operators (as defined under PBI 8/28) holding a fund transfer permit to apply for a new permit.
***
Good Corporate Governance for Insurance Companies
The Ministry of Finance has issued new Regulation No. 152/PMK 010/2012 on Good Corporate Governance dated 3 October 2012 (“Regulation No. 152”) as an implementation of Government Regulation No. 7 of 1992 on Insurance Business. The Good Corporate Governance covers the principles of transparency, accountability, responsibility, independency, and fairness. Regulation No. 152 provides provisions among numbers of directors and commissioners that insurance companies may have and their requirements.
***
First KPPU Fine for Merger Notification Non-Compliance
On 10 December 2012, The Indonesian competition regulator (KPPU) issued its first fine for a failure to comply with Indonesia’s merger notification regime. Although Indonesia’s merger control regime has been active since the promulgation of Government Regulation No. 57 of 2010 on 20 July 2010, the KPPU has just issued its first fine (of IDR 4.6bn, or approximately USD475,000) for a failure to notify. It is not clear yet whether the matter is under appeal. In its decision, No. 09/KPPU-M/2012, the KPPU fined PT Mitra Pinasthika Mustika for its late notification of a share acquisition in PT Austindo Nusantara Jaya Rent. This case is significant in that it is the first involving a violation of Article 29 of the Anti-Monopoly Law (Law No. 5 of 1999). Article 29 of the Anti-Monopoly Law requires the KPPU to be notified of any merger, consolidation, or share acquisition of a certain size within 30 (thirty) days. Although PT Mitra Pinasthika Mustika argued that the failure was not intentional, the KPPU stated the company’s misunderstanding of the thresholds did not relieve it of the consequences of its violation of the Law.
***
