Health Omnibus Law Series – Data Privacy in the Health Sector
This Newsflash is a part of our Health Omnibus Law Newsflash series with respect to the issuance of Law No. 17 of 2023 dated August 8, 2023 on Health (the “Health Law”). The Health Law governs a wide range of topics in the health sector including the personal data protection in the health sector as well as to harmonize the aspects of personal data protection in the health industry to be in line with the applicable data protection laws and regulations, particularly Law No. 27 of 2022 dated October 17, 2022 on Personal Data Protection (the “PDP Law”). Please refer to our previous Newsflash on the PDP Law at the following link: AKSET Newsflash - PDP Law.
As previously noted, the Health Law is issued using the omnibus method. The Health Law revokes several laws and regulations in the health sector, including Law No. 36 of 2009 dated October 13, 2009 on Health (the “Previous Health Law”). Under the Previous Health Law, provisions relating to data privacy and/or personal data protection were inadequate and were still found sporadically in several implementing regulations under the Previous Health Law, including the Minister of Health Regulation No. 24 of 2022 dated August 31, 2022 on Medical Records. Although the Health Law revokes the Previous Health Law, all implementing regulations of the Previous Health Law remain valid for so long they do not contradict the Health Law.
We highlight the key data privacy related provisions under the Health Law, as follows.
♦ Personal Health Data and Information
- Obligation for Medical Personnel, Health Personnel, and Health Service Facilities to Maintain Confidentiality of Patients’ Personal Health Data and Information
Each Medical Personnel or Tenaga Medis (i.e., doctors and dentists) and Health Personnel or Tenaga Kesehatan (e.g., nurses) must maintain confidentiality of patients’ personal health in providing medical services to individuals. Information on patients’ personal health that shall be kept confidential includes history, condition and treatment, medication for one’s physical and psychological health, as well as the patients’ personal data. Such obligation also applies to Health Service Facilities or Fasilitas Pelayanan Kesehatan.
- Acknowledgement of Patients’ Rights to Confidentiality of Personal Health Data and Information and to Obtain Personal Health Data and Information
Patients are entitled to, among others, the right to obtain confidentiality of personal health data dan information. Further, a patient is entitled to request their personal health, including actions and treatments that a patient has received or will receive from Medical Personnel and/or Health Personnel.
However, the confidentiality above is not applicable in certain conditions such as (i) fulfillment of requests by law enforcers for law enforcement, (ii) management of extraordinary events or kejadian luar biasa, outbreaks, or disasters, (iii) limited educational and research interests, (iv) efforts to protect against threats to the safety of others, individually or to the public, (v) health maintenance, treatment, healing, and patient care interests, (vi) the patient’s own request, (vii) administrative, insurance payments, or health financing security interests, and/or (viii) other interests as regulated in the applicable laws and regulations.
♦ Medical Records
- Obligation for Medical Personnel, Health Personnel, and Health Service Facilities to Maintain Confidentiality of Medical Records
In providing medical services to individuals, each Medical Personnel and Health Personnel shall maintain a medical record prepared using an electronic system. A medical record is defined as a document that contains the patients’ identity data, observation, treatment, action, and other services provided to the patients. Such medical records shall be maintained and kept confidential by the Medical Personnel, Health Personnel, and management of Health Service Facilities.
- Acknowledgement of Patients’ Rights to Access Medical Records
Although the medical records are owned by the Health Service Facility, a patient may access information contained in their medical records. The Health Service Facility has the obligation to maintain the security, integrity, confidentiality, and availability of the data contained in the medical records.
- Management of National Health Data
In the context of the management of national health data, the Minister of Health (the “MOH”) is responsible for the management of the medical records. Such management of medical records includes formulation of policies, collection, processing, storage, security, data transfer, and monitoring.
- Operation of Health Information System
To carry out effective and efficient health efforts, the Health Law governs the operation of a Health Information System, which is a system that integrates multiple stages of processing, reporting, and use of information to increase effectiveness and efficiency in health management and directing decision making for health development. The operators of such Health Information System may be the Central Government, a Regional Government, a Health Service Facility, and the public, both individuals and groups (any one of them, an “Operator”).
- Obligation of Operators in Processing of Health Data and Information
An Operator shall ensure the reliability of the Health Information System which covers (i) availability, (ii) security, (iii) maintenance, and (iv) integration. Further, an Operator shall carry out the processing of health data and information in accordance with the applicable laws and regulations which includes (i) planning, (ii) collection, (iii) storage, (iv) inspection, (v) transfer, (vi) utilization, and (vii) destruction.
In carrying out the processing of health data and information, an Operator shall ensure the protection of health data and information of each individual. The Health Law also emphasizes that the processing of health data and information that uses individuals’ health data is subject to consent from the data owners and/or fulfill other requirements as the basis of personal data processing in accordance with laws and regulations on personal data protection.
- Rights of Data Owners in Processing of Health Data and Information
In relation to the data processing by an Operator, the data owners are entitled to, as follows: (i) obtain information regarding the purpose of collecting the individual health data, (ii) access and make changes to the data and information through the Operator, (iii) request the Operator to send the data to another Operator, (iv) request the Operator to delete incorrect data based on the data owner’s consent, and (v) obtain other appropriate personal data subject rights in accordance with laws and regulations on personal data protection.
- Location for Processing of Health Data and Information
An Operator shall carry out the processing of health data and information within Indonesia. Such processing of health data and information includes (i) acquisition and collection, (ii) management and analysis, (iii) storage, (iv) repairs and updates, (v) appearance, announcement, transfer, distribution, or disclosure, and/or (vi) deletion or destruction.
Notwithstanding the above, the Health Law provides that data processing may be carried out outside the territory of Indonesia (in the form of transfer and storage) in accordance with laws and regulations regarding electronic information and transactions, electronic system operation, and personal data protection. Specifically for cross-border data transfers, such data transfers shall be for a specific and limited purpose with a permit from the President.
We note that the Health Law expressly stipulates that provisions relating to medical records and processing of health data and information are to be further governed by a Government Regulation. As a reference, the same also applies to the majority of the provisions stipulated under the Health Law, which will be further governed by Presidential Regulations, Government Regulations, and Minister of Health Regulations.
Considering the current objections from medical society with respect to certain provisions under the Health Law, kindly anticipate that there is a possibility for the Health Law to be challenged by the medical society or other parties of interest through the Constitutional Court. We will monitor the development and will issue further updates as relevant.
August 24, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Clara Anastasia So (canastasia@aksetlaw.com), or 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.
Health Omnibus Law Series – Data Privacy in the Health Sector
Health Omnibus Law Series – Occupational Health in Workplace
This Newsflash is part of our Health Omnibus Law Newsflash series with respect to the issuance of Law No. 17 of 2023 dated August 8, 2023 on Health (the “Health Law”). As noted in our previous Newsflash, the Health Law is issued using an omnibus method, revoking several laws and regulations in the health sector, including Law No. 36 of 2009 dated October 13, 2009 on Health (the “Previous Health Law”).
The Health Law governs a wide range of topics in the health sector. This Newsflash focuses on key provisions relating to occupational health in workplace, as follows.
♦ Obligation for All Parties to Participate in Health Security Program
The Health Law stipulates the rights and obligations in relation to the health sector that shall be complied with by all parties (i.e., individuals and corporations). Among others, the Health Law requires that all parties to participate in the health security program in the national security system (i.e., the Health Social Security administered by Badan Penyelenggara Jaminan Sosial Kesehatan) in accordance with the applicable laws and regulations.
We note that the above obligation is in line with the provisions of Law No. 24 of 2011 dated November 25, 2011 on Social Security Administration Agencies as amended by Law No. 6 of 2023 dated March 31, 2023 on Stipulation of Government Regulation No. 2 of 2022 on Job Creation into Law.
♦ Obligation for Employers to Maintain Occupational Health in Workplace
In essence, the responsibility to maintain occupational health falls on the Central Government, Regional Governments, employers, and administrators or managers of workplaces. Such occupational health efforts (or in Indonesian, upaya kesehatan kerja) shall be carried out in conjunction with the occupational health and safety system for the purpose of improving knowledge, awareness, ability of live a health life and prevent sickness caused by work and work accidents, as well as health problems and bad effects caused by work.
Occupational health efforts shall be carried out in workplaces, both the formal and informal sectors, as well as the Health Service Facilities in accordance with occupational health standards. Further, employers and administrators or managers of workplaces shall comply with the occupational health standards and ensure a healthy working environment. Employers and administrators or managers of workplaces shall be responsible for work accidents in workplaces and sickness caused by work.
To ensure the health of employees, employers are required to carry out the promotive, preventive, curative, rehabilitative, and palliative efforts and bear all health care costs of the employees. Employers are also required to bear costs for work-related sickness, health issues, and injuries caused by work suffered by employees in accordance with the applicable laws and regulations. Similarly, the Central Government and Regional Governments shall provide support for the protection of the employees.
On the other hand, employees and all parties in a workplace are required to create and maintain a healthy working environment and comply with occupational health and safety regulations applicable in the workplace.
We note that generally the above provisions are similar to those of the occupational health governed under the Previous Health Law. We also note that the Health Law expressly stipulates that the provisions relating to occupational health are to be further governed by a Government Regulation.
Accordingly, the implementation of the above provisions relating to occupational health remains to be seen. We also anticipate that, considering the objections from the medical society with respect to certain provisions of the Health Law, it is possible the Health Law to be challenged by the medical society or other parties of interest to the Constitutional Court. We will monitor the development and will issue further updates as relevant.
August 24, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or 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.
Health Omnibus Law Series – Occupational Health in Workplace
Health Omnibus Law Series – General Overview
After long discussions within the House of Representatives and objections from the medical society, the Government finally issued Law No. 17 of 2023 dated August 8, 2023 on Health (the “Health Law”). The Health Law is over 200 pages and contains 20 chapters and 458 Articles. The Health Law took effect as of August 8, 2023.
The Health Law is an omnibus law. In other words, the Health Law revokes and combines a significant number of existing laws and regulations in the health sector, among others: (i) Law No. 29 of 2004 dated October 6, 2004, but entered into force on October 6, 2005 on Medical Practice, (ii) Law No. 36 of 2009 dated October 13, 2009 on Health, (iii) Law No. 44 of 2009 dated October 28, 2009 on Hospital, and (iv) Law No. 20 of 2013 dated August 6, 2013 on Medical Education. It is also worth noting that the Health Law expressly stipulates that the implementing regulations of the laws revoked by the Health Law remain valid for so long they do not contradict with the provisions of the Health Law.
We understand that the issuance of the Health Law is related to the Covid-19 pandemic event which brought awareness to the importance of strengthening Indonesia’s national health system and the need to carry out a thorough transformation to Indonesia’s national health system as an effort to improve Indonesia’s public health as well as increasing Indonesia’s competitiveness as a nation.
The Health Law contains provisions that support the implementation of the transformation of Indonesia’s health system, among others, (i) synchronization of health management carried out by the Central Government, Regional Governments, and/or the public, (ii) strengthening the implementation of health efforts in the form of promotive, preventive, curative, rehabilitative, and/or palliative, by prioritizing public rights and government responsibilities, (iii) equal distribution of the Health Service Facilities (in Indonesian, Fasilitas Pelayanan Kesehatan) for easy access for the public through the development of the Health Service Facilities, (iv) availability of Medical Personnel (in Indonesian, Tenaga Medis) and Health Personnel (in Indonesian, Tenaga Kesehatan) through increased implementation of specialist/sub-specialist education, transparency in the registration and licensing process, and improvements in the mechanism of accepting Indonesian overseas graduate Medical Personnel and Health Personnel through transparent competency test, and (v) strengthening of Health Information System (in Indonesian, Sistem Informasi Kesehatan) through the Government’s authority to manage and use health data through integration of multiple Health Information Systems to the National Health Information System.
Provisions on the majority of matters governed under the Health Law are to be further governed under its implementing regulations, i.e., Presidential Regulations, Government Regulations, and Minister of Health Regulations. We also anticipate that, considering the objections from the medical society with respect to certain provisions of the Health Law, it is possible the Health Law to be challenged by the medical society or other parties of interest to the Constitutional Court. We will monitor the development and will issue further updates as relevant.
We will also continue to review the changes and additions regulated under the Health Law and shall circulate follow-up newsflashes in due course.
August 24, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or 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.
Health Omnibus Law Series – General Overview
Update on Obligation to Retain Foreign Exchange Export Proceeds from Natural Resources Within Indonesia
On July 12, 2023, the Government of Indonesia (the “Government”) enacted Government Regulation No. 36 of 2023 on the Foreign Exchange Export Proceeds from the Business, Management, and/or Processing of Natural Resources (“GR 36/2023”). GR 36/2023 sets as an update to, and revokes, Government Regulation No. 1 of 2019 dated June 1, 2019, on the Foreign Exchange Export Proceeds from the Business, Management, and/or Processing of Natural Resources (“GR 1/2019”).
GR 36/2023 will enter into force from August 1, 2023.
Under its consideration, GR 36/2023 states GR 1/2019 must be updated to accommodate the latest developments in the Indonesian financial system. Further, GR 36/2023 states that the foreign exchange export proceeds in relation to natural resources (Devisa Hasil Ekspor Sumber Daya Alam or the “DHE SDA”) must be retained in Indonesia’s financial system to maintain the sustainability of development, improvement, and resilience of the national economy, as well as to increase the optimization of the utilization of natural resources for the maximum prosperity of the people.
While the main provisions of GR 36/2023 are similar to those of GR 1/2019, there are new provisions introduced by GR 36/2023. We set out the salient provisions of GR 36/2023 below.
♦ Retention and Placement of DHE SDA
Same as GR 1/2019, the DHE SDA under GR 36/2023 is derived from the proceeds of exported goods in the following sectors: (i) mining, (ii) plantation, (iii) forestry, and (iv) fishery. Under GR 36/2023 the DHE SDA from the foregoing sectors currently may be placed by the exporter in a Special Account for the DHE SDA (the “Special Account”) with the Indonesian Export Financing Agency (Lembaga Pembiayaan Ekspor Indonesia – “LPEI”) and/or a Foreign Exchange Bank (or Bank Devisa in Bahasa Indonesia, a “Bank”). Previously, GR 1/2019 did not stipulate the placement of the DHE SDA with the LPEI.
GR 36/2023 now regulates that the DHE SDA that is retained and placed by the exporter in the Special Account shall remain in the Indonesian financial system for at least 3 (three) months since the placement for a minimum of 30% (thirty percent). GR 36/2023 also stipulates that the placement of the DHE SDA may be conducted in the following:
- Special Account at the LPEI or the same Bank;
- banking instruments;
- financial instruments issued by the LPEI; and/or
- instruments issued by Bank Indonesia (“BI”).
GR 36/2023 also stipulates that the obligation of to place the DHE SDA above applies to an exporter which has a DHE SDA with an export value in the Export Customs Notification (Pemberitahuan Pabean Ekspor or a “PPE”) of at least USD250,000 or its equivalent. GR 36/2023 allows an exporter with an export value less than US$250,000 to voluntarily place the DHE SDA with the Special Account.
Through the retention and placement of the DHE SDA, the Government incentivizes exporters by way of granting certain tax incentives for any income derived from the placement of the DHE SDA and an exporter who places the DHE SDA with the Special Account may be determined as an exporter with good reputation.
♦ Utilization of DHE SDA
There is no difference between GR 36/2023 and GR 1/2019 regarding what the DHE SDA may be used for (e.g., for the payment of export duty and other levies in the Export sector, loans, and others). If such payment is conducted through an escrow account, the exporter shall open an escrow account with either the LPEI and/or a Bank. If the escrow account is opened prior to GR 36/2023’s entry into force, it shall be transferred to the foregoing two institutions no later than 90 (ninety) days after August 1, 2023.
While GR 36/2023 permits the DHE SDA to be used for payment, it shall be noted that the DHE SDA placed with either the LPEI and/or a Bank shall remain for at least 3 (three) months since the placement for a minimum of 30% (thirty percent).
♦ Supervision of DHE SDA and Sanctions for Violations
The supervision of the DHE SDA will be conducted by the Ministry of Finance (the “MOF”), BI, and the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) through an integrated information system that is provided and/or used jointly by the foregoing institutions. The supervision by the MOF, BI, and OJK will be the basis for the MOF to either impose an administrative sanction; and revoke an administrative sanction.
An administrative sanction in the form of suspension of export services will be imposed by the MOF on an exporter who:
- does not place the DHE SDA in the Special Account;
- does not conduct the DHE SDA placement amounting to at least 30% (thirty percent) for a period of at least 3 (three) months; and/or
- does not create or transfer an existing escrow account to LPEI or a Bank.
July 28, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Radiansyah S. Yamin (ryamin@aksetlaw.com), or Ammarsyarif G. Goenawan (agoenawan@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.
Regulation on National Cyber Security Strategy and Cyber Crisis Management
On July 20, 2023, the President issued a cyber security framework namely President Regulation No. 47 of 2023 on National Cyber Security and Cyber Crisis Management Strategies (“PR 47/2023”). This regulation was issued to safeguard the nation and its interests against the abuse of cyber resources and to address and recover from cyber crises considering the potential of technological advancements in the future.
PR 47/2023 governs the strategy of national cyber security which consists of focus areas and an action plan on cyber security national (the “National Cyber Security Action Plan”) made by the State Cyber and Signal Agency or Badan Siber dan Sandi Negara (“BSSN”). PR 47/2023 is effective as of its issuance.
We set out below the key provisions of PR 47/2023.
♦ National Cyber Security Strategy
The national cyber security strategy is aimed at obtaining cyber security and ensuring a secured national digital economy ecosystem. The focus areas of this strategy consist of:
- governance;
- risk management;
- preparedness and resilience;
- strengthening the protection of vital information infrastructure;
- national cryptography independence;
- capability, capacity, and quality enhancement;
- cyber security policy; and
- international cooperation.
PR 47/2023 stipulates that the National Cyber Security Action Plan shall be made by focusing on the abovementioned areas. The National Cyber Security Action Plan is prepared for 5 (five) years and may be reviewed at any time. The Plan shall cover at least the following elements: (i) activities; (ii) success indicators; (iii) implementation timelines; and (iv) responsible parties.
The National Cyber Security Action Plan must be carried out by a state administration agency or instansi penyelenggara negara.
♦ Cyber Crisis Management
Under Article 17(2) of PR 47/2023, the Cyber Crisis Management is coordinated by BSSN which will involve Electronic Service Providers or Penyelenggara Sistem Elektronik (each, an “ESP”).
In implementing the Cyber Crisis Management, BSSN conducts preparation in the form of preparation of a Cyber Crisis Contingency Plan and Contingency Plan Simulation. The latter is carried out through exercise and role playing.
We set out below the implementation actions to be done for each phase of the cyber crisis management, namely actions before the cyber crisis occurs, when the cyber crisis is occurring, and after the cyber crisis occurred.
Before the Cyber Crisis Occurs
The cyber incident response as a means of cyber crisis management before a cyber crisis occurs shall be carried out gradually by the Cyber Incident Response Team. In relation to the cyber crisis early warning, pursuant to Article 22 of PR 47/2023, not only that it shall be informed to ESPs, such ESPs are required to take action in response to such early warning. Subsequently, a cyber crisis status shall be determined by the President based on a suggestion from the Head of BSSN. Upon such determination, the President shall create a cyber crisis task force.
When the Cyber Crisis is Occurring
Cyber Crisis Countermeasures shall be carried out through several activities as set out under PR 47/2023, among others, the identification and analysis of the scope of electronic systems affected by the cyber crisis. Meanwhile, the Cyber Crisis Recovery shall be carried out through data and system restoration for data and system that has been affected or utilization of backup and/or alternative resources, followed by retesting critical and support functions to ensure that recovery objectives are met.
As for the Cyber Crisis Handling Report, it shall be done by the Cyber Crisis task force to the President, which shall consist of the analysis report and objectives of the cyber crisis handling as well as the recommendation on further cyber crisis handling. The determination of the termination of the cyber crisis status shall be done by the President.
After the Cyber Crisis Occurred
The implementation of the activities done in this stage shall be coordinated by the BSSN with the involvement of ESPs. The calculation of the estimated damages, losses, and recovery costs due to a cyber crisis shall derive from the economic value of the temporarily damaged assets arising out of the cyber crisis and costs borne to restore the electronic system to its state prior to the cyber crisis. An evaluation of cyber crisis handling will be a consideration in taking a cyber security policy.
July 26, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Clara Anastasia So (canastasia@aksetlaw.com) for further information.
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.
Measures to Encourage Investments in IKN: Utilization of Foreign Workers and Income Tax Incentives
The Government of Indonesia enacted Government Regulation No. 12 of 2023 on the Granting of Business Licenses, Ease of Business, and Investment Incentives for Business Actors in the Capital City of Nusantara (“GR 12/2023”). GR 12/2023 aims at providing the certainty, opportunity, and more participation for the business actors and accelerates the development of the new capital of Indonesia or known as the Capital City of Nusantara (Ibu Kota Nusantara or in short, the “IKN”).
GR 12/2023 sets out further provisions on the granting of business licenses, ease of doing business, and provide various investment incentives and benefits available to business actors that conduct business activities within IKN and certain regions of Kalimantan as parts of the IKN economic superhub. A couple of measures in GR 12/2023 to attract investments in IKN are the provision on utilization of foreign workers and the granting of income tax incentives for employees working for certain companies within the IKN.
♦ Utilization of Foreign Workers in IKN
According to GR 12/2023, a business actor that conducts its business activities within the IKN may employ a foreign worker to work for a certain position as regulated under the prevailing laws and regulations on the utilization of foreign workers. As generally regulated under the prevailing laws and regulations, the utilization of foreign workers shall be based on an approved Foreign Worker Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or an “RPTKA”).
In this regard, GR 12/2023 provides that an RPTKA for foreign workers who work in the IKN may be approved for 10 (ten) years and may be extended. As a comparison, an RPTKA is generally granted for a maximum of 2 (two) years, or 5 (five) years (for foreign workers who work in a special economic zone) and may be extended.
Further, GR 12/2023 provides an exemption from the obligation to pay the mandatory compensation funds for the utilization of foreign workers (Dana Kompensasi Penggunaan Tenaga Kerja Asing or the “DKP-TKA”) for companies that employ foreign workers within the IKN, including the foreign workers who work for national strategic projects in the IKN. This exemption will be for a certain period of time which will be further determined in a regulation to be issued by the Head of the IKN Authority.
With regard to the Temporary Stay Permit (Izin Tinggal Terbatas or an “ITAS”) for the foreign workers working in the IKN, the foreign workers may be granted an ITAS for a period of up to 10 (ten) years and may be extended for the period based on the period of the employment agreement between the company and the foreign worker. Normally, the prevailing laws and regulations on the immigration may only grant an ITAS for a maximum period of 5 (five) years and may be extended for as long as the total period of the foreign worker’s stay under the ITAS does not exceed 10 (ten) years in total.
♦ Income Tax Incentives
Pursuant to Article 50(1) of GR 12/2023, the income tax Article 21 (or known in Indonesian in short as PPh 21) will be borne by the Government for any income received by certain employees from certain employers in the IKN. The employees must have their tax registration numbers (each in Indonesian in short an “NPWP”) issued by the tax office in the IKN region.
Article 52(1) of GR 12/2023 provides that a ‘certain employer’ means an employer that fulfills the following:
a. the employer is domiciled, resides, or conducts its activities within the IKN;
b. the employer has an NPWP issued by the tax office in the IKN;
c. the employer has submitted a notification letter for the utilization of the “Income Tax Article 21 borne by Government incentive to the Directorate General of Taxes (the “DGT”) for validation; and
d. the employer must submit a realization report for the utilization of the “Income Tax Article 21 borne by Government incentive” to the DGT.
Pursuant to Article 53 of GR 12/2023, this income tax Article 21 incentive is valid until year 2035.
July 17, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Rizky Rakhmadita (rrakhmadita@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.
Tax Court Administration to be Under Supreme Court
On May 20, 2023, the Constitutional Court of the Republic of Indonesia (the “Constitutional Court”) issued the decision No. 26/PUU-XXI/2023 (the “Decision”) in relation to a substantive review petition (the “Petition”) of Article 5 paragraph (2) of Law No. 14 of 2002 dated April 12, 2002 on Tax Court (“Law 14/2002”). We highlight below the key points of the Decision:
♦ The Petition
In the Petition the petitioners had requested that the Constitutional Court declare Article 5(2) of Law 14/2002 to be unconstitutional. Alternatively, the petitioners had requested that the Constitutional Court declare Law 14/2022 entirely to be unconstitutional.
Such requests in the Petition are based on the following facts pertaining to the Tax Court:
- Article 5(2) of Law 14/2002 states that the development of the organization, administration, and finances of the Tax Court are conducted by the Ministry of Finance (the “MOF”). According to the petitioner, such provision creates dualism in the control over the Tax Court since according to Article 5(1) of Law 14/2002, the Supreme Court is the institution that is authorized to conduct the technical development of judiciary of the Tax Court;
- The Tax Court should be considered a part of the judiciary power, instead of the executive power. Therefore, the Tax Court should be entirely controlled by the Supreme Court as per Article 24(2) of the Indonesian Constitution;
- The Tax Court had already been declared as a part of the Administrative Court (therefore, a part of the Supreme Court) under the consideration of the Constitutional Court Decision No. 6/PUU-XIV/2016 dated August 4, 2016; and
- There is already a bill for the amendment of Law 14/2002 which contains the provision that the development of the organization, administration, and finances of the Tax Court will be handed over to the Supreme Court.
♦ The Decision
The Constitutional Court agrees with the Petition and declares that the development of the organization, administration, and finances of the Tax Court shall be handed over to the Supreme Court in stages until not later than December 31, 2026.
June 7, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas Peter Wijaya (twijaya@aksetlaw.com), or Alfan Zakiyanto (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.
Tax Court Administration to be Under Supreme Court
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 Becomes Law based on Law No. 6 of 2023
The House of Representatives (Dewan Perwakilan Rakyat or “DPR”) approved the Government Regulation No. 2 of 2022 in lieu of Law No. 11 of 2020 on Job Creation (“Perppu Job Creation”) into Law based on Law No. 6 of 2023 on the Stipulation of Government Regulation No. 2 of 2022 in lieu of Law No. 11 of 2020 on Job Creation into Law (“Law 6/2023”).
Law 6/2023 does not make any amendment to Perppu Job Creation.
Please look out for our continuation on newsflashes on Law 6/2023 in due course.
April 10, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Adhitya Ramadhan (aramadhan@aksetlaw.com), or M. Raehan A. Fadila (mfadila@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 Becomes Law based on Law No. 6 of 2023
Measured Fishing Regulated
On March 6, 2023, the Government enacted Government Regulation No. 11 of 2023 on Measured Fishing (the “Regulation”).
The Regulation is the legal basis for the measured fishing, which is a means to ensure the sustainability of fishery resources, provide welfare for fishermen, provide expansion and job opportunities, increase added value and competitiveness of fishery products, business certainty, and provide contribution to the business as well as the country.
We highlight below the key provisions of the Regulation.
- Measured Fishing Zones
Measured fishing zones comprise the State Fisheries Management Territory of the Republic of Indonesia (in Indonesian language, Wilayah Pengelolaan Perikanan Negara Republik Indonesia, or the “WPPNRI”) within the marine waters and the high seas. The WPPNRI within the marine waters is reserved for the Fishing Region and Restricted Fishing Region. While the WPPNRI within the high seas is reserved for the Fishing Region taking into account certain conditions as determined by the relevant Regional Fisheries Management Organization.
The Regulation sets out several types of the measured fishing zones, as follows:
- Fishing Quotas within Measured Fishing Zones
The fishing quotas are implemented within each WPPNRI. The quotas are calculated based on the potentially available fish resources and allowed number of captured fish considering the level of utilization of the fish resources. The fishing quotas are determined by the Minister of Marine and Fisheries (the “MOMF”).
The fishing quotas within the measured fishing zones consist of the (i) the industrial quota, (ii) the local fishermen quota, and (iii) the non-commercial activities quota.
Industrial Quotas
The industrial quota is given to any measured fishing zone beyond 12 (twelve) nautical miles. This industrial quota may be given to (i) an individual and (ii) a business entity in the form of a legal entity, based on an application. Individual here means the local and small-scale fishermen. While for the business entity, it may be in the form of limited liability company and cooperative, which having its business activities in the field of fisheries.
Please note that for a limited liability company that utilizes the industrial quota within zone 01, zone 02, zone 03, and zone 04, such company may be a domestic investment company (local company) or a foreign investment company. For the limited liability company that utilizes the industrial quota within zone 05 and zone 06, it must be a domestic investment company.
Local Fishermen Quotas
The local fishermen quota is given to any measured fishing zone of up to 12 (twelve) nautical miles. The local fishermen quota is given to (i) small scale fishermen preferably affiliated with cooperatives and non-small-scale fishermen, and (ii) a business entity in the form of a legal entity, based on an application. For the business entities, they may be limited liability companies or cooperatives which have fisheries as their business. Please note that in this case, a limited liability company may only be a domestic investment company (local company).
Non-Commercial Quotas
The non-commercial quota is given to any measured fishing zone of up to 12 (twelve) nautical miles and above 12 (twelve) nautical miles. This non-commercial quota may be given for any person, the central government or a local government who carry out the activities within the context of education, training, research or other scientific activities, as well as pleasure and tourism.
- Base Ports
Fishing vessels that carry out fishing activities within the measured fishing zones are required to land the captured fishes at the base ports that are specified within the relevant measured fishing zones. The fishing vessels may be granted a maximum of 5 (five) base ports located within the relevant measured fishing zones.
- Fishing Vessel Crew
Any person who carries out fishing activities within the measured fishing zones must assign Indonesian citizens as the following types of fishing vessel crew, (i) the Vessel captain, (ii) the Fishing master, (iii) the Officers, and (iv) the Vessel crew. In this regard, preference will be given to vessel crew who are domiciled in the administrative areas within the measured fishing zones based on their identity cards.
- Transportation of Captured Fish
Any person that carries out fishing activities within the measured fishing zone may conduct load transfer. In this regard, any person who conducts such load transfer must fulfill the following requirements:
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- Fishing vessels must use longline tuna fishing gears and tuna handlines; and
- Fishing vessels and fish transportation vessels must be a part of single business units.
For the loading between ports for inside and/or outside the measured fishing zones shall be conducted by a refrigerated fish cargo vessel with an Indonesian flag. While for the loading from ports to a country of destination, it shall be conducted by a refrigerated fish cargo vessel with an Indonesian or a foreign flag.
April 6, 2023
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) and Rizky Rakhmadita (rrakhmadita@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.