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.
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October 12, 2020
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Newsflash PR 99 2020 (COVID-19 Vaccine Procurement)
Minister of State-Owned Enterprises Bolsters Use of Local Products in Procurement of Goods and Services
On December 12, 2019, the Minister of State-Owned Enterprises (Badan Usaha Milik Negara or “BUMN”) issued Regulation No. PER-08/MBU/12/2019 on General Guideline for the Implementation of the Procurement of Goods and Services by State-Owned Enterprises (the “New Regulation”). This New Regulation aims to increase the use of local products and to enhance the role of national business actors.
The New Regulation replaces the Minister of BUMN Regulation No. PER-05/MBU/2008 dated September 3, 2008 which bore the same title and which was amended through the issuance of Minister of BUMN Regulation No. PER-15/MBU/2012 dated September 25, 2012 (collectively, the “Previous Regulation”).
We set out below the key points of the New Regulation.
- Utilization and Monitoring of Local Product
Under the New Regulation, any BUMN that intends to procure goods and/or services (a “User”) is required to prioritize the utilization of domestic goods and services, national designs and engineering, as well as to participate in the expansion of opportunities for small-scale businesses. Furthermore, the board of directors (“BoD”) of a User will be required to establish an internal Local Component Level (Tingkat Komponen Dalam Negeri or “TKDN”) Team in order to monitor and ensure the utilization of local components during the procurement process. These rules were not addressed under the Previous Regulation.
- Price Preferences for Local Component
Previously, the rules on price preferences were not addressed under the Previous Regulation. Under the New Regulation, a User may set price preferences for domestic products with the TKDN value of 25% or above. The price preferences for said products are to be determined as follows:
- up to 25% for local products; and
- up to 7.5% for construction services offered by local companies.
- Qualifications and Options for BUMN Subsidiaries or BUMN-affiliated Companies
The New Regulation allows BUMN subsidiaries or BUMN-affiliated companies to directly appoint any other BUMN, BUMN subsidiaries, or BUMN-affiliated companies in procuring goods and services. However, the New Regulation relaxes the share percentage requirement for a BUMN subsidiary or a BUMN-affiliated company. Previously, the Previous Regulation required a minimum of 90% ownership by one or more BUMN before a company qualified as a BUMN subsidiary or a BUMN-affiliated company. Now, the New Regulation only requires more than 50% ownership by one or more BUMN.
Further, the New Regulation stipulates that the application of the New Regulation is optional for BUMN subsidiaries and BUMN-affiliated companies. As such, these companies can choose whether or not to adopt the requirements under the New Regulation through their general meeting of shareholders.
- Procurement Procedures
The New Regulation uses different terms than those of the Previous Regulation on the procedure for the procurement of goods/services. However, the procedures are still similar with the Previous Regulation, as follows:
- a tender/general selection (previously, an “open tender”), where a User announces its procurement plans publicly through the mass media in order to provide a fair opportunity for all qualified providers of goods/services to participate in the selection process (auction);
- a limited tender/limited selection (previously, a “direct tender”), where a User only informs a limited number of parties of the relevant procurement plans. This process must result in at least two bids;
- a direct appointment, where a User directly appoints a single party to be the provider of goods/services or makes an appointment through “beauty contests” once they have satisfied at least one of the requirements set under Article 13 (2) of the New Regulation; and
- a direct procurement, which refers to purchases of goods that are currently available in the marketplace so that the price follows the market price. This procedure includes e-purchasing.
Further, the New Regulation stipulates that BUMN may set a bid bond as a requirement in a tender, a general selection, a limited tender, or a limited selection process unless the supplier of the goods/service is a BUMN or ex-BUMN parties.
- Long Term Procurement
The New Regulation clarifies the details of the requirements for the long-term procurements, which are as follows:
- work that requires more than 12 months or one fiscal year to complete;
- work that will provide an added value if the contract lasts for a period of one to three fiscal years;
- work that requires a long-term investment; and
- routine work that must be completed at the beginning of a given year.
The BoD of BUMN is allowed to formulate the price adjustment for multi-year contracts based on market conditions and prevailing best practices.
- Deadline to File an Objection
Previously, a User could file an objection within 4 business days as of the date of announcement of the winning bidder or the date of the contract award (whichever is earlier), and the BUMN will have 14 calendar days to respond.
Now, the New Regulation shortens the period in which a bidder can file an objection against a BUMN's determination of the winning bid or contract award. A User may file an objection against the announced tender winners within 2 days as of the date of announcement of the winning bidder or the date of the contract award (whichever is earlier), and the relevant User must then respond to the objections within 7 calendar days of receiving them.
- Procurement Contract
Unlike the Previous Regulation, the New Regulation only requires the procurement contract to provide, at least, clear rules on the rights and obligations between the parties. Such procurement contract must also heed the provisions of the applicable laws and regulations, good corporate governance as well as the precautionary principle on the business judgment rule.
February 11, 2019
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