New Regulation on Post-Closing Notifications Requirements on Mergers, Consolidations, and Acquisitions
Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or “KPPU”) recently issued KPPU Regulation No. 3 of 2023 dated March 30, 2023 on Assessments of Mergers or Consolidations of Business Entities, or Acquisitions of Company’s Shares and/or Assets which may Result in Monopolistic Practices and/or Unfair Business Competition (the “New Regulation”).
The New Regulation revokes KPPU Regulation 3 of 2019 which governed the same subject (“Regulation 3/2019”).
The New Regulation sets out certain new procedural and administrative aspects of the notification requirements on mergers, consolidations, and acquisitions to KPPU. The New Regulation intends to improve and update the previous notification requirements under Regulation 3/2019. The New Regulation became effective as of March 31, 2023.
With regard to the New Regulation, the government also issued Government Regulation No. 20 of 2023 dated April 5, 2023 on Types and Tariffs of Non-Tax State Revenues Applicable to the Business Competition Supervisory Commission (“GR 20/2023”) which introduces a filing fee for merger notification. GR 20/2023 became effective as of May 5, 2023.
We highlight below the key provisions of the New Regulation and GR 20/2023:
♦ Threshold on Asset Localization
Previously in Regulation 3/2019, the threshold of the transaction which required a notification to KPPU on mergers, consolidations, and acquisitions is a combined value of assets exceeds Rp2.5 trillion or a combined value of sales exceeds Rp5 trillion calculated based on global assets, which includes assets outside the territory of Indonesia.
The New Regulation narrows down the calculation of assets with the same threshold. Under the New Regulation, the calculation of the assets only applies to the Indonesian assets, or assets which are located within the Indonesian territory.
♦ Only Indonesia-Related Transactions to be Notified
Previously, Regulation 3/2019 stipulated that mergers, consolidations, acquisitions which met the relevant thresholds had to be notified to KPPU, if one of the parties in the transaction carried out business activities or sales in Indonesia.
Now, under the New Regulation a transaction must be notified to KPPU if the transaction is conducted between parties that have assets and/or sales in Indonesia, both directly and indirectly.
♦ New Electronic Portal for Notification Filings
Under the New Regulation, KPPU introduces a new notification system to submit the notifications to KPPU online at http://notifikasi.kppu.go.id. The New Regulation stipulates that all notifications may now only be submitted through the online notification system. Previously, under Regulation 3/2019 notifications were submitted through the manual methods (in person, via letters, or electronic mails).
For this new notification system, a party needs one account (i.e., one email address) to submit only one notification. Notifications may only be submitted on business days from 09.00 to 14.00 (Western Indonesia Time or Waktu Indonesia Barat).
Importantly, all information and documents shall be submitted in Bahasa Indonesia and the portal is only available in Bahasa Indonesia.
♦ Removal of Clarification and Evaluation Processes
The New Regulation stipulates the notification’s review which consists of 2 (two) phases, namely review on completeness of documents and assessment process. However, the clarification and evaluation process previously existed under Regulation 3/2019 is removed, and replaced with a review on the completeness of the documents submitted by an applicant. Further, the New Regulation adds a step covering determination on whether the transaction meets the relevant threshold. This approach appears to significantly shorten the period for the first phase of the assessment process.
Regarding the time frame of notification process, Regulation 3/2019 previously stipulated that upon receiving the notification, KPPU would carry out the clarification and evaluation for up to 60 (sixty) business days. As this process is eliminated, the process is now shortened only through a review the completeness of the notification which shall be no later than 3 (three) business days upon its submission. If the notification documents are deemed complete, KPPU will issue a notification registration number and statement on whether a notification is required. If a notification is required, KPPU will continue to the assessment phase.
♦ Several Changes in Assessment Process
Similar to Regulation 3/2019, the New Regulation stipulates that the assessment process shall take no longer than 90 (ninety) business days, which include (i) initial and (ii) comprehensive assessment. In the previous Regulation 3/2019, a comprehensive assessment will be conducted if the transaction affects the business competition in the relevant industry and/or market.
Nevertheless, the New Regulation stipulates that a comprehensive assessment will be conducted only if the notified transaction leads to a significant change in market concentration. The New Regulation does not specify any definition on “significant change in market concentration.”
Further, based on Regulation 3/2019, KPPU shall conduct the assessment by using the following analyses: (i) market concentration, (ii) market entry barriers, (iii) potential anti-competitive behaviors, (iv) efficiency, and/or (v) bankruptcy. In addition to the foregoing, the New Regulation takes into account several analyses, namely: (i) policies to increase competitiveness and strengthening national industries, (ii) technological development and innovation, (iii) protection of micro, small and medium enterprises, (iv) impacts on manpower, and (v) implementation of laws and regulations.
♦ Transitional Provisions
Any ongoing fillings, including consultations, and notifications that have been received by KPPU, or ongoing assessments that have been determined by KPPU prior to the enactment date of the New Regulation (i.e., prior to March 31, 2023) shall be processed in accordance with Regulation 3/2019.
♦ Notification Filing Fees
Through GR 20/2023, the notification filing fee is calculated using the following calculation:
0.004% x the value of assets or sales turnover that passes the threshold, whichever is the lower
Pursuant to GR 20/2023, the notification filing fee is a non-tax state revenue. The value of assets or sales calculated is combined of the following: (i) the surviving entity, or the consolidating entity, or the acquiring entity and the acquired entity; and (ii) the entities that are directly or indirectly controlled by the surviving entity resulting from the merger, the consolidating entity, or the acquiring entity and the acquired entity.
Under GR 20/2023 the notification filing fee is subject to a maximum amount of Rp150 million or approximately USD10,000. GR 20/2023 allows a reduction or full waiver of the notification filing fee if the transaction fulfills the following conditions: (i) it supports the development of micro, small, and medium enterprises; (ii) force majeure; or (iii) based on a government’s policy. Further provisions on this matter shall be regulated under a KPPU regulation and subject to the approval from the Ministry of Finance.
May 8, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Clara Anastasia (canastasia@aksetlaw.com), and M. Fatih Satria Kasmaliputra (mkasmaliputra@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Perppu Job Creation Series – Amendments to Manpower Law
The President issued a Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-undang or “Perppu” in short) No. 2 of 2022 dated December 30, 2022 regarding Job Creation (“Perppu Job Creation”). This Newsflash discusses the amendments to the Manpower Law (Law No. 13 of 2003 dated March 25, 2003 regarding Manpower).
Perppu Job Creation is effective as of December 30, 2022. Perppu Job Creation expressly repeals and replaces Law No. 11 of 2020 dated November 2, 2020 regarding Job Creation (the “Job Creation Law”). Like the Job Creation Law, Perppu Job Creation amends certain provisions of the Manpower Law. So, the amendments to the Manpower Law under the Job Creation Law are no longer in effect. But, the implementing regulations issued under the Job Creation Law remain in effect unless they contradict Perppu Job Creation.
The pertinent amendments of the Manpower Law are set out below.
- Outsourcing. Article 64 of the Manpower Law prior to the Job Creation Law allowed outsourcing and subcontracting. The Job Creation Law removed Article 64 entirely. Now Perppu Job Creation amends Article 64 of the Manpower Law to expressly allow outsourcing only. Under Perppu Job Creation, Article 64 of the Manpower Law is silent about subcontracting.
The amended Article 64 of the Manpower Law under Perppu Job Creation is fine because it gives an underlying basis for Government Regulation No. 35 of 2021 dated February 2, 2021 regarding Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Time, and Employment Termination (“GR 35/2021”). GR 35/2021 deals with, among others, outsourcing.
- City/Regency Minimum Wages Determined by Governors. Under Perppu Job Creation, Governors now may only determine the minimum wage of a regency/city within the province if the minimum wage of the regency/city is higher than the minimum wage of the province.
- Additional Basis for Wage Increases Calculation. Under Perppu Job Creation, in addition to the economic growth and the inflation rate, ‘a certain index’ is included as the bases for the calculation of wage increases. Perppu Job Creation does not elaborate what ‘a certain index’ means. We will need to wait for the relevant implementing regulation for the clarity of this matter.
- Government Determines Wage Increases. Under Perppu Job Creation, the Government may determine a different method for the calculation of the wage increases in certain circumstances. These circumstances include pandemics and extraordinary global economics conditions.
January 06, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Thomas P. Wijaya (twijaya@aksetlaw.com) for more information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it beperppuciptakerjaPer relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Copyright © 2023 AKSET. All rights reserved.
Perppu Job Creation Series – Amendments to Manpower Law
Job Creation Law Replaced by Perppu Job Creation
The President issued a Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-undang or “Perppu” in short) No. 2 of 2022 dated December 30, 2022 regarding Job Creation (“Perppu Job Creation”). Perppu Job Creation is effective as of December 30, 2022. After this, Perppu Job Creation must be submitted to the Parliament at its next hearing for the Parliament’s approval. If the Parliament rejects Perppu Job Creation, then Perppu Job Creation is cancelled.
Perppu Job Creation contains over 1,000 pages. We set out below a preliminary brief information about Perppu Job Creation.
- Perppu Job Creation Replaces Job Creation Law
Perppu Job Creation expressly repeals and replaces Law No. 11 of 2020 dated November 2, 2020 regarding Job Creation (the “Job Creation Law”). From our quick read of Perppu Job Creation, it contains similar contents like those of the Job Creation Law. Over the course of the next few weeks, we will circulate updates regarding Perppu Job Creation.
- All Licenses, Permits, and Certificates Issued under Job Creation Law Continue to be Valid
Perppu Job Creation expressly states that all licenses, permits and certificates issued under the Job Creation Law continue to be valid until their respective expiry dates, if any. The official elucidation of Perppu Job Creation provides examples of certificates, including halal certificates and feasibility certificates.
- All Implementing Regulations Issued under Job Creation Law Continue to be Valid
Perppu Job Creation expressly states that all implementing regulations issued under the Job Creation Law continue to be valid unless they contradict Perppu Job Creation. We are now reviewing and determining which implementing regulations under the Job Creation Law that may be affected by this provision.
- All Business Entities Established under Job Creation Law Continue to be Valid
Perppu Job Creation expressly states that all business entities established under the Job Creation Law continue to be valid until their respective expiry dates, if any.
- Pending Licenses and Permits Subject to Perppu Job Creation
Perppu Job Creation expressly states that all pending licenses and permits will be processed under Perppu Job Creation.
- Actions by Authorities under Job Creation Law Ratified
Perppu Job Creation expressly states that any and all actions of the Central Government, the Regional Governments, and/or any other governmental bodies taken under the Job Creation Law remain valid and effective provided such actions are consistent with good government governance. In our view, this is consistent primarily with the issuance of all licenses and permits by the relevant authorities.
As noted, we continue to review Perppu Job Creation and how it may affect businesses in general. We will send the follow-up updates in due course.
January 02, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Inka Kirana (ikirana@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Adhitya Ramadhan (aramadhan@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Copyright © 2023 AKSET. All rights reserved.
Job Creation Law Replaced by Perppu Job Creation
Updated Requirements and Procedures on Old-Age Benefit Program
The Minister of Manpower (“MOM”) recently issued a new regulation governing the Old-Age Benefit (Jaminan Hari Tua or “JHT”) Program, i.e., MOM Regulation No. 2 of 2022 dated February 2, 2022 on Procedures and Requirements for the Payment of the Old-Age Benefit Program (“Regulation 2/2022”). Regulation 2/2022 will be effective from May 2, 2022 and revokes MOM Regulation No. 19 of 2015 dated August 19, 2015 (“Regulation 19/2015”) on the same matter.
The JHT Program is one of several social security programs under the Employment Social Security (the “BPJS Ketenagakerjaan”). The JHT Program will be given in a form of cash, when a JHT Participant reaches the retirement age, passes away, or suffers from permanent disability. In this regard, a JHT Participant is every employee, including a foreign worker who has worked for at least 6 (six) months in Indonesia and who already paid the premium.
In regard to the persons entitled to receive the JHT, there is no difference between Regulation 2/2022 and Regulation 19/2015: both regulations state that the JHT shall be paid out to Participants who (i) have reached the retirement age, (ii) are permanently handicapped or (iii) pass away. However, a key difference is that Regulation 2/2022 adds a caveat for Participants who resign or whose employment is terminated—such Participants must reach the age of 56 (fifty-six) before being eligible for the JHT payment. We elaborate on this and other key provisions of Regulation 2/2022 below.
- JHT for Participants Reaching Retirement Age
The JHT will be paid out to Participants when they reach 56 (fifty-six) years of age, and/or have permanently stopped working due to:
- resignation;
- termination; or
- departing Indonesia permanently (applicable only for foreign workers).
As noted above, for Participants that stop working due to resignation or are laid off/terminated, they will only be eligible to receive the JHT benefits after reaching the age of 56 (fifty-six) years old. Previously, such conditions were not governed under Regulation 19/2015. Under Regulation 19/2015, Participants who resigned or whose employment was terminated would receive the JHT payment after a 1 (one) month waiting period.
- Participants Who Suffer Permanent Handicap
Participants who suffer from permanent handicap are also eligible for the JHT benefits before reaching the retirement age. However, they are only entitled to JHT 1 month after the relevant Participant is declared permanently handicapped. To claim for these benefits, the relevant participant must submit their (i) BPJS Ketenagakerjaan Card, (ii) Certificate of the examiner and/or advisory doctor and (iii) KTP or other identity card.
- Participants Who Pass Away
In cases where JHT Participants pass away, the benefits will be given to the heirs (the widow/widower, or children; if any). Otherwise, the benefits will be given to the Participant’s relatives in linear blood relation, siblings, in-laws, or other parties appointed under the participant’s testament.
The new requirement under MOM Reg. 2/2022, particularly the requirement to reach the age of 56 to enjoy JHT benefits for some Participant categories, seems to complicate access to benefits for workers, as they may have to potentially wait for years to receive JHT if they resign or are laid off. The regulation has also been met with considerable backlash from the public, calling for the revocation of MOM Reg. 2/2022. With pressure from the public, we anticipate that there will be some developments surrounding this regulation.
***
February 15, 2022
Please contact Thomas P. Wijaya (twijaya@aksetlaw.com) or Danang W. Dwinanto (ddwinanto@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Updated Requirements and Procedures on Old-Age Benefit Program
New Regulation on Agency/Distributorship Agreements
On April 1, 2021, the Minister of Trade (“MOT”) issued his Regulation No. 24 of 2021 on Agreements for Distribution of Goods by Distributors or Agents (“MOT Reg. 24/2021”), which revokes and replaces the MOT Regulation No. 11/M-DAG/PER/3/2006 dated March 29, 2006 on Provisions and Procedures for the Issuance of Registration Certificate for Agents or Distributors of Goods and/or Services (“MOT Reg. 11/2006”). MOT Reg. 24/2021, which entered into force on May 1, 2021, serves as an implementing regulation of Government Regulation No. 29 of 2021 on Implementation of the Trade Sector (“GR 29/2021”).
MOT Reg. 24/2021 does not set out major changes in the framework of distribution of goods. We set out below the key changes on MOT Reg. 24/2021.
- Restatement of Distributor Business Actors
Article 2 of MOT Reg. 24/2021 restates the types of business actors that classified as carrying out distribution activities provided under GR 29/2021, which consist of (i) distributors; (ii) sole distributors; (iii) agents; and (iv) sole agents. Although GR 29/2021 no longer includes sub-distributors and sub-agents as “distribution business actors”, MOT Reg. 24/2021 provides that distributors and sole distributors may appoint sub-distributors while agents and sole agents may appoint sub-agents.
- Appointment of PMDN Trading Companies as Agents/Distributors of PMA Companies
MOT Reg. 24/2021 clarifies the requirement of foreign investment PMA trading companies to appoint domestic investment (PMDN) trading companies as distributors, sole distributors, agents, or sole agents. Previously, such requirement may be broadly interpretated since MOT Reg. 11/2006 did not provide any elucidation on what constitutes “national trading companies”.
- Simplification of Procedures for Registration Certificate Obtainment
Previously, MOT Reg. 11/2006 provided the requirements for agency or distributorship agreements to be registered to the Ministry of Trade to obtain a Registration Certificate (Surat Tanda Pendaftaran or “STP”). However, the scope of MOT Reg. 24/2021 only includes provisions regarding the agency or distributorship agreements and does not include procedures for their registration.
Nevertheless, currently STP is still required for agents or distributors, and that companies shall refer to the MOT Regulation No. 8 of 2020 dated February 10, 2020 on Electronically Integrated Business Licensing Services in the Trade Industry as amended by MOT Regulation No. 64 of 2020 dated July 9, 2020 regarding the procedures to obtain an STP.
- Termination of Agreement
MOT Reg. 11/2006 recognized termination of an agency or distributorship agreement due to the transfer of agency/distributorship rights Now, under the MOT Reg. 24/2021, an agency or distributorship agreement may be terminated earlier than the expiration of the agreement in the case of: (i) dissolution of the company; (ii) cessation of business operations; (iii) bankruptcy; and (iv) by mutual agreement of both parties. This means that a principal shall first terminate an agency or distributorship agreement before appointing a new agent or distributor.
If the previous agreement is terminated before the expiration of the STP, the new agent or distributor may only register its agreement and obtain the STP after the clean break of the terminated agreement. If a clean break is not settled within three months as of the termination of agreement, the STP of the previous agent or distributor shall be deemed invalid and the principal may appoint the new agent or distributor.
- Separate Provisions for Health Products and Medicines
Companies distributing health products and medicines are now exempted from the provisions of MOT Reg. 24/2021. Distribution of health products or medicines shall be carried out based on the relevant laws and regulations in the health sector.
***
June 3, 2021
Please contact Inka Kirana (ikirana@aksetlaw.com), N. Sekar Lestari (nlestari@aksetlaw.com), or Clara Anastasia (canastasia@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
New Regulation on Agency/Distributorship Agreements
BKPM Issued New Regulation on Guideline and Procedure of Investment Implementation Management
On November 13, 2020, the Investment Coordination Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued the BKPM Regulation No. 6 of 2020 on the Guidelines and Procedures for Investment Implementation Control (the “BKPM Reg. 6/2020”) which replaces the BKPM Regulation No. 7 of 2018 on the same matter (the “BKPM Reg. 7/2018”).
The issuance of BKPM Reg. 6/2020 and the revocation of BKPM Reg. 7/2018 are done in order to conform investment implementation control with the previously issued BKPM Regulation No. 1 of 2020 dated April 1, 2020 on the Implementation Guidelines for the Implementation of Electronically Integrated Business Licensing.
The key provisions in the BKPM Reg. 6/2020 are as follows.
- LKPM for Businesses with Investment Under Rp500 million
Previously, BKPM Reg. 7/2018 regulated that the Investment Activity Report (Laporan Kegiatan Penanaman Modal or “LKPM”) for businesses with investments of less than Rp500 million must be done in accordance with the regulations of the relevant authorized technical institutions.
BKPM Reg. 6/2020 clarifies this provision by requiring businesses with investments of Rp50 million to Rp 500 million to submit its LKPM every semester, at the latest by July 10 and January 10 each semester. The LKPM shall be submitted through the Online Single Submission (the “OSS”) System. Businesses with investment of less than Rp50 million are not required to submit LKPM.
- LKPM for Businesses with Investment Over Rp500 million
For businesses with investment of more than Rp500 million (including for Foreign Investment (PMA) companies), the LKPM submission requirement under BKPM Reg. 6/2020 remains unchanged from BKPM 7/2018, i.e., the LKPM shall be submitted every quarter (every three months), at the latest by April 10, July 10, October 10, and January 10 each quarter. The LKPM shall be submitted through the OSS System.
- Administrative Fine
BKPM Reg. 6/2020 introduces administrative fine as a type of administrative sanctions that can be imposed to business actors. Administrative fine shall be imposed to the business actors if it is found that there is any deviation in the implementation of the business licenses. The amount of the administrative fine shall be in accordance with the relevant laws and regulations.
Although administrative fine as an administrative sanction is already commonly applied in the relevant sectoral regulations, the provision of administrative fine in this BKPM Reg. 6/2020 enables the relevant government institutions to inform the business actors of the administrative fine through the OSS System.
- New LKPM Forms
Annexes I and II of the BKPM Reg. 6/2020 set out new LKPM forms which shall now include the following:
- LKPM form for business actors with investment of Rp50 million to Rp500 million;
- LKPM form for business actors with investment of more than Rp 500 million that have not started commercial production; and
- LKPM form for business actors with investment of more than Rp 500 million that are already in commercial production/operation stage.
We expect these forms to be integrated in the OSS System in accordance with the business actor’s investment and stage.
The forms set out in the Annex I and II of the BKPM Reg. 6/2020 are generally the same with the forms previously provided in the Annex I of BKPM Reg. 7/2018. Specifically for business actors with investment of more than Rp 500 million that have not started commercial production, the LKPM form now includes the following:
- the completion of the project construction;
- the start of commercial operation; and
- the fulfillment of the commitments for the following:
- Location Permit;
- Environmental License;
- Building Construction Permit;
- Certificate of Worthiness (Sertifikat Laik Fungsi); and
- Commercial Operational Licenses.
The following items are now no longer included in the LKPM forms under BKPM Reg. 6/2020:
- realization of funding for the relevant investment;
- the number manpower employed through a third party/sub-contractor; and
the list of newly received licenses and facilities.
***
February 1, 2021
Please contact Alfa Dewi Setiawati at asetiawati@aksetlaw.com, N. Sekar Lestari at nlestari@aksetlaw.com, or Alfan Zakiyanto at azakiyanto@aksetlaw.com for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Copyright © 2021 AKSET. All rights reserved.
New Regulation on Entry Restrictions for Foreigners During ‘New Normal’
In consideration of the continuous Covid-19 outbreak but with the need to recover the national economy, the Minister of Law and Human Rights (the “Minister”) enacted the Minister Regulation No. 26 of 2020 dated October 1, 2020 on Visas and Stay Permits During New Habits Adaptation or as commonly referred to as the “New Normal” (“Regulation 26”). The government viewed that the previous foreigners entry restrictions were no longer relevant nor needed in order to conform with the New Normal conditions.
The restrictions thereof were previously set out under the Minister Regulation No. 11 of 2020 dated March 31, 2020 on Temporary Restriction for Foreigners in Entering the Territory of the Republic of Indonesia (“Regulation 11”). Regulation 26 revokes Regulation 11 effective as of October 1, 2020.
A summary of the salient provisions of Regulation 26 is set out below.
- Comparison of Foreign Entry Restrictions
We set out below the comparison of foreigner entry restrictions under Regulation 26 and Regulation 11.
| Regulation 11 | Regulation 26 |
| Only foreigners who meet the following specific criteria that are allowed to enter Indonesia:
· A holder of a Limited Stay Permit (Izin Tinggal Terbatas) and a Permanent Stay Permit (Izin Tinggal Tetap); · A holder of a Diplomatic Visa and an Official Visa; · A holder of Diplomatic Stay Permit (Izin Tinggal Diplomatik) and an Official Stay Permit (Izin Tinggal Dinas); · A humanitarian aid worker; · A flight, sea, or land transportation crew member; or · An employee in a national strategy project. |
Foreigners who meet the following criteria are allowed to enter Indonesia:
· Official Visa and/or Official Stay Permit holders; · Diplomatic Visa and/or Diplomatic Stay Permit holders; · Travel Visa holders (which includes humanitarian aid workers); · Limited Stay Visa and/or Limited Stay Permit holders; · Permanent Stay Permit holders; · Transportation crew members; · Asia-Pacific Economic Cooperation (APEC) Businessmen Travel Card holders; and · Border crossers. |
In addition the foregoing criteria, Regulation 26 stipulates that an eligible foreigner must enter through certain Immigration Examination Places. The Immigration Examination Places have been determined respectively in certain locations of (i) sea ports, (ii) airports, (iii) international borders posts, and (iv) traditional borders posts under the Minister Decree No. M.HH-01.GR.03.01 TAHUN 2020 dated October 15, 2020 on Certain Immigration Examination Place as the Entering Places During New Habits Adaptation. These entry places include: the Belawan Sea Port, the Soekarno-Hatta Airport, and the Aruk International Border Cross.
- Visa and Permit Applications Procedures
Please see below the application procedures in order to apply for Travel Visas and Limited Stay Visas:
- The application shall be submitted by a Guarantor (i.e., an Indonesian individual or company) of the relevant foreign applicant to Director General of Immigration.
- The application must be submitted along with the following requirements:
- a health certificate consisting of Covid-19 free statement in English, issued by an authorized institution;
- a statement letter in English indicating the willingness to be in a self-funded quarantine or health facility in case the PCR test conducted in Indonesia is positive;
- a statement letter indicating the willingness to be medically supervised during the quarantine; and
- evidence of health insurance or travel insurance possession which covers health payment and/or statement letter indicating the willingness to self-fund any treatment if contracted with Covid-19 while in Indonesia.
- The Guarantor of the relevant Travel Visa applicant must provide evidence of possession of US$10,000 (ten thousand US Dollars) in cash or an equal amount in other currency, issued by a financial institution or bank in Indonesia (excluding foreigners who work as a humanitarian aid and transportation crew member).
- Validity Extension Requirements for Existing Permits
We set out below brief explanation on the validity extension requirements for foreigners who have obtained certain permits:
- A Travel Stay Permit (which refers to (i) visas on arrival, (ii) one trip travel visas, (iii) multiple trips travel visas, and (iv) APEC Businessman Cards) holder who has been granted with an Emergency Stay Permit and who remains in Indonesia may submit an application to the Immigration Office for a validity extension period of maximum 30 (thirty) days. Alternatively, the application may be made for a conversion to Temporary Stay Permit.
- A Temporary Stay Permit or Permanent Stay Permit holder who has been granted with an Emergency Stay Permit and who remains in Indonesia may be granted with an extension based on the previous permits and for a Temporary Stay Permit it may be transferred to Permanent Stay Permit.
- Any Temporary Stay Permit, Permanent Stay Permit, or Re-Entry Permit from Expired Permanent Stay Permit which holder remains outside Indonesi, shall be deemed expired and the relevant foreigner must re-submit a visa application in order to enter Indonesia.
***
October 21, 2020
Copyright © 2020 AKSET. All rights reserved.
New Regulation on Entry Restrictions for Foreigners During ‘New Normal’
New Regulation on COVID-19 Vaccines Procurement
On October 5, 2020, President Joko Widodo signed the Presidential Regulation No. 99 of 2020 on the Vaccines Procurement and Implementation of Vaccination for Handling the Corona Virus Disease 2019 (COVID-19) Pandemic (“PR 99/2020”) which entered into force the day after. PR 99/2020 is intended to expedite the vaccines procurement and vaccination.
We set out below the key provisions of PR 99/2020.
- Vaccine Procurement
Under PR 99/2020, the COVID-19 vaccine procurement covers (i) the provision of COVID-19 vaccines and supporting equipment and logistics needed; and (ii) the distribution of the COVID-19 vaccines until the delivery point determined by the Minister of Health (the “Minister”).
The implementation of the COVID-19 vaccines procurement shall be carried out by way of (i) the designation of a state-owned enterprise, (ii) a direct appointment to vaccine providers, and/or (iii) the cooperation with international institutions provided that the cooperation is only limited to the provision of COVID-19 vaccines and the cooperation excludes the supporting equipment for COVID-19 vaccination. Supporting equipment includes personal protection equipment (hazmat suits, face shields, medical gloves, and surgical masks), alcohol-based antiseptics, and safety boxes for bio-waste disposal.
- Designation of a State-Owned Enterprise
The Minister designates PT Bio Farma (Persero) (“Bio Farma”) as the state-owned enterprise to procure the COVID-19 vaccines with the type and number of the COVID-19 vaccines determined by the Minister. In this case, Bio Farma may involve its subsidiaries, i.e., PT Kimia Farma Tbk and PT Indonesia Farma Tbk. Bio Farma may also cooperate with local or foreign business entities and/or institutions for procuring the COVID-19 vaccine.
- Direct Appointment to Vaccine Providers
In line with the designation of Bio Frama, the direct appointment to the other business entities is carried out by the Minister. The vaccine providers may be in the form of national or foreign business entities that meet the requirements determined by the Minister, including: possession of a certificate on manufacturing practice for pharmaceutical products or a certificate on good distribution practice for pharmaceutical products.
- Cooperation with International Institutions
The cooperation is carried out with international institutions which are currently offering or establishing cooperation for research, production, and/or procurement of the COVID-19 vaccine. The Minister determines the type and amount of COVID-19 vaccine procurement by taking into account the consideration from the Committee for COVID-19 Handling and National Economic Recovery.
Based on that, the Ministry of Foreign Affairs (the “MOFA”) establishes the cooperation with the Coalition for Epidemic Preparedness Innovations (CEPI) as an international institution.
In addition, the Minister may cooperate with the Global Alliance for Vaccines and Immunizations (GAVI) as an international institution. However, this cooperation may also be carried out through Bio Farma as the designated state-owned enterprise.
It is worth noting that the Minister determines the purchase price of the COVID-19 vaccines by taking into account the state of emergency and availability of the COVID-19 vaccines. Thus, the purchase price for the same type of vaccines may differ since it depends on a number of factors that may differ from time to time.
- Vaccination Implementation
The Ministry of Health (the “MOH”) will carry out the COVID-19 vaccination based on (i) criteria and priorities for vaccine recipients; (ii) priority areas for vaccine recipients; (iii) schedule and steps for providing vaccines; and (iv) vaccination standard services, by taking into account the consideration from the Committee for COVID-19 Handling and National Economic Recovery. Further provisions on the COVID-19 vaccination shall be governed in a Regulation of the Minister.
- Funding for Vaccine Procurement and Vaccination
The vaccine procurement and vaccination of COVID 19 are covered by State Budget and/or other legal and not binding sources in accordance with the prevailing laws and regulations. Advance payment may be given to the provider for more than 15% (fifteen percent) from the multi-year contract value, as stipulated under the agreement/contract.
In supporting the designation of Bio Farma to procure the COVID-19 vaccines, the Government may provide an additional State Capital Participation (Penyertaan Modal Negara) to Bio Farma. Regional governments may also provide funding in their respective Regional Budgets to support the COVID-19 vaccination in their respective regions.
The Government may provide additional fiscal incentives such as tax, customs, and excise reliefs to import vaccine, raw materials, and equipment needed in the COVID-19 vaccine production and vaccination.
***
October 12, 2020
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Newsflash PR 99 2020 (COVID-19 Vaccine Procurement)
A New Regulatory Framework for Indonesia’s E-Commerce Sector: Licensing Requirement and Threshold of Foreign E-commerce Business
Recognizing the rapid development of e-commerce sector in Indonesia, the Indonesian Government issued the Government Regulation No. 80 of 2019 on Trading through Electronic System (“GR 80/2019”) on November 20, 2019, with the intention to improve the governance of e-commerce sector. GR 80/2019 regulates broad aspects of the e-commerce business in Indonesia -- from general requirement of e-commerce, operational aspect of the e-commerce players, contract processing, to protection of personal data. Please see our brief overview on GR 80/2019 here.
To further implement certain provisions referred in the GR 80/2019, on May 19, 2020, the Ministry of Trade (MoT) subsequently issued Regulation No. 50 of 2020 on Business Licensing, Advertisement, Development, and Supervision of Business Actors in Trading through Electronic System (“MoT 50/2020”). This regulation will become effective 6 (six) months after its promulgation date (i.e., by November 2020).
MoT 50/2020 sets forth further clarification relating to (i) the threshold of foreign e-commerce business to be deemed to have presence in Indonesia, (ii) requirement to have Indonesian representative, and (iii) general licensing requirement for e-commerce business, previously more generally regulated under GR 80/2019.
Below we highlight some notable provisions under GR 80/2019 and MoT 50/2020 (both GR 80/2019 and MoT 50/2020 hereinafter shall be jointly referred as the “E-Commerce Regulation”).
- Broad Scope of “Trading”
Based on the E-Commerce Regulation, the term “trading” is defined broadly so as to cover both the offering of goods and services. Furthermore, Trading through Electronic System (“PMSE”) is also defined broadly as it covers any Trading activity in which the transaction is carried out through electronic system.
- E-Commerce Players, according to Indonesian E-Commerce Regulatory Regime
The E-Commerce Regulation covers all players involved within an e-commerce trading ecosystem offering their goods or services to the Indonesian territory.
- Merchant includes any party who sells product or offers services through electronic system -- unless they offer the goods and/or services temporarily and non-commercially. This term also covers merchant offering its goods/services regularly through social media platforms which provide PMSE facility.
- Platform providers (“PPMSE”) are e-commerce players which provide a platform to facilitate the electronic communication/transaction used in PMSE. PPMSE, in this regard, includes a broad range of platform providers with the following models (non-exhaustive list): (i) merchant’s own e-commerce platform; (ii) online marketplace; (iii) online classified advertisements; (iv) price comparison platform; (v) daily deals.
- Intermediary Service Provider (“PSP”) covers those who facilitate electronic communication (except telecommunication operator). PSP merely serves as an intermediary, which includes the like of search engine, hosting or caching provider.
- “Deemed Presence” and Indonesian Representative Requirement for Foreign E-Commerce Platform Providers
GR 80/2019 introduced a “Deemed Presence” concept to regulate and supervise foreign PPMSE’s activities in Indonesia. Article 7 of GR 80/2019 stipulates that any foreign PPMSE which actively offers and/or carries out PMSE to customers within the Indonesian jurisdiction, which has met certain criteria, shall be deemed to have a physical presence in Indonesia. MoT 50/2020 then complements the foregoing provision by giving a much-needed elaboration on the criteria to determine foreign PPMSE’s “deemed presence”, which are as follows:
- the foreign PPMSE has concluded transactions with more than 1,000 (one thousand) customers within the Indonesian jurisdiction within a period of 1 (one) year; and/or
- the foreign PPMSE has delivered more than 1,000 (one thousand) packages to customers within the Indonesian jurisdiction within a period of 1 (one) year.
Any foreign PPMSE meeting such criteria, consequently, is required to appoint a representative in Indonesia. In this regard, such representative shall be in the form of a Foreign Trade Company Representative Office for PMSE, called “KP3A PMSE”.
- Licensing Requirements
Please see below the summary of licensing requirements for each E-Commerce players as identified by the E-Commerce Regulations:
| Licensing Requirement | Remarks | |
| Domestic Merchant | 1. Trading Business License (SIUP); or
2. Sector-specific business license (if relevant). |
If a Domestic Merchant only carries out business activity of retail through media or internet (online), then, its SIUP shall accommodate KBLI Business code 4791. |
| Foreign Merchant | No licensing requirement. | Obliged to submit its registered business license (issued by its country of origin) to the Domestic PPMSE where such Foreign Merchant offers its goods/services to Indonesian jurisdiction. |
| Domestic PPMSE | PMSE Trading Business License (SIUPMSE). | This license is also applicable to Domestic Merchant which carries out its PMSE through its own platform, under Article 8 paragraph (2) of MoT 50/2020. |
| Foreign PPMSE | Trading Business License of Foreign Trade Representative Office for PMSE (SIUP3A PMSE), if the foreign PPMSE is deemed to have presence within Indonesian jurisdiction. | This license is also applicable to Foreign Merchant which carries out its PMSE through its own platform since it is also considered as PPMSE business model. |
| PSP | SIUPMSE, where a PSP is:
- a beneficiary party to the PMSE transaction; or - directly involved in the contractual relation between parties conducting PMSE. |
Applicable to both domestic and foreign PSP. |
All license applications shall be submitted through Online Single Submission (OSS) System by attaching the required documents, as provided in MoT 50/2020.
***
June 29, 2020
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BKPM Issued New Regulation on Guidelines on the Provision of Business Licensing Services through OSS System
To improve the implementation of the licensing services provided through Online Single Submission (“OSS System”), on April 1, 2020, the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued the BKPM Regulation No. 1 of 2020 on Guidelines for the Implementation of Integrated Electronic Business Licensing Services (“Regulation 1/2020”).
This Regulation 1/2020 was also issued to implement Article 94 (1) of Government Regulation No. 24 of 2018 dated June 21, 2018 on Electronic Integrated Business Licensing Services (“GR 24/2018”) and Presidential Instruction No. 7 of 2019 dated November 22, 2019 on Acceleration of the Ease of Doing Business as well as to set out the norms, standards, procedures, and criteria of the issuance of the licenses in OSS system 1.1, for the already existing BKPM regulations regarding OSS.
As this Regulation 1/2020 covers broad and technical aspects of the OSS System 1.1, we set out below the key points under Regulation 1/2020.
- Investment Value
Article 6 of Regulation 1/2020 now requires a foreign investment company (Penanaman Modal Asing or “PMA”) to fulfil the amount of total investment value of more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings. The foregoing applies for each business activity (5-digit KBLI), per relevant project. Furthermore, the amount of issued capital must be equivalent to the relevant paid-up capital and should amount to at least Rp2,500,000,000 (two billion five hundred million Rupiah).
In addition to the above, Regulation 1/2020 provides detailed total amount of investment value for certain PMA companies that engage in the following business sectors:
- For wholesale business activities, the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah) excluding land and buildings, for each 2-initial digits of the KBLI;
- For food and beverage services business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, within one regency/municipality; and
- For construction business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, for each construction activity.
Although the Regulation 1/2020 is silent on when the realization of such investment should be made by PMA companies, as prescribed under Article 6(5) of BKPM Regulation No. 6 of 2018 dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility as lastly amended by BKPM Regulation No. 5 of 2019 dated July 29, 2019 on Amendment of BKPM Regulation No. 6 of 2018 dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility, such realization shall be performed within one year as of the issuance of the business license.
- Main and Supporting Project
Article 15 of Regulation 1/2020 now provides that business actors may have a supporting project, provided that (i) such supporting project is outside the business classification stated in its business license, (ii) such project serves as a supporting activities to the main project, and (iii) such project does not generate profit.
The supporting project shall be required to obtain Business Licenses and/or Commercial and Operational License as applicable.
- New Function of Business Identification Number
With the issuance of Regulation 1/2020, the Business Identification Number (Nomor Induk Berusaha or “NIB”) now also functions as evidence of initial submission of Mandatory Manpower Report (Wajib Lapor Ketenagakerjaan or “WLTK”) for the company that has not submitted its WLTK and has not previously obtained NIB.
- Category of Business License and Commercial and Operational License
Regulation 1/2020 has categorized types of Business and Commercial and Operational License into several classification as follow.
| Type | Business Licenses | Description |
| 1 | Business License or Commercial and Operational Licenses without Commitment requirement | Licenses that are effective immediately after the issuance by OSS System |
| 2 | Business License or Commercial and Operational Licenses with technical requirement | Licenses that are issued priorly by the OSS System, but are not effective until the applicable requirements are fulfilled |
| 3 | Business License or Commercial and Operational Licenses with fee requirements | |
| 4 | Business License or Commercial and Operational Licenses with technical and fee requirements |
- Representative Office Registration through OSS System
Under Regulation 1/2020, the OSS System also accommodates the application for the registration of Foreign Trade Company Representative Office (Kantor Perwakilan Perdagangan Asing), Foreign Construction Services Companies (Badan Usaha Jasa Konstruksi Asingi), Franchise Business, Futures Trade, and Administrative Branch Office.
- Merger of Companies
In the event of merger, the surviving company may now request to merge the business licenses of the ceased company into the surviving company. A merger should be implemented in accordance with a deed of merger which has obtained a prior approval from the Minister of Law and Human Rights. Once the relevant deed of merger data has been submitted, the OSS system will then issue a business license for the merger.
Further, the surviving company shall comply and satisfy any commitment set forth in business license and/or commercial and operational License of the merging company, in accordance with the prevailing laws and regulations.
- Submission During OSS Force Majeure Situation
In the event where OSS System is unable to function due to force majeure, the submission and/or administrative services for investment may be done manually, rather than through the system. The force majeure situation shall be determined by the Head of BKPM. Any data and information that are processed during the force majeure situation shall be uploaded into the OSS System by the Business Actor after the end of the force majeure situation.
- Transitional Provision
By the effective date of Regulation 1/2020:
- The provisions set forth within the existing principle license, investment registration, investment licenses, business license commercial or operational license remain valid as long as there is no conflict or not regulated specifically by Regulation 1/2020;
- Investment Value shall not be applicable to PMA Company that obtained a valid investment licenses prior to the enactment of GR 24/2018, as long as there is no change of business activities;
- Business actors shall obtain NIB, regardless of the still-valid TDP, API, and Customs access; and
- Any application relating to NIB, new business license, or commercial or operational license shall be carried out through OSS System.
May 13, 2020
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