Government Clarifies Risk-Based Business Licensing
Following the issuance of Law No. 11 of 2020 dated November 2, 2020 on Job Creation (the “Job Creation Law”) that introduces risk-based business licensing (the “Risk-Based Business Licensing”), on February 2, 2021, the government issued Government Regulation No. 5 of 2021 on the Administration of Risk-Based Business Licensing (“GR 5/2021”). GR 5/2021 replaces and revokes Government Regulation No. 24 of 2018 dated June 21, 2018 on Electronically Integrated Business Licensing Service (“GR 24/2018”) which governs the licensing system through the Online Singe Submission (the “OSS”). GR 5/2021 entered into force as of February 2, 2021.
Through the Job Creation Law, the government introduces the Risk-Based Business Licensing system in the hope of implementing a simpler and more effective licensing system as well as ensuring a transparent, structured and accountable supervisory system. GR 5/2021 itself stipulates matters on the general provisions of Risk-Based Business Licensing; the norms, standard, procedures and criteria (norma, standar, prosedur, dan kriteria or “NSPK”) of Risk-Based Business Licensing; the OSS system implementation; guidelines on supervision; evaluation and policy reformation; funding; dispute settlement; and sanctions.
In this newsflash, we will focus on key provisions on Risk-Based Business Licensing under GR 5/2021.
- Risk-Based Business Licensing
Under GR 5/2021, for a business actor to conduct its business, one must fulfill basic requirements of business licensing and/or obtain Risk-Based Business Licensing that include the utilization of space, environmental approval, building approval (persetujuan bangungan gedung, previously building permit or IMB), and certificate of worthiness (sertifikat laik fungsi or SLF).
The Central Government carries out the risk analysis to determine the risk level for each business activity in the following sectors:
- marine and fishery;
- agriculture;
- environment and forestry;
- energy and mineral resources;
- nuclear energy;
- industry;
- trade;
- public works and public housing;
- transportation;
- health, medicine, and food;
- education and culture;
- tourism;
- religious affairs;
- post, telecommunications, broadcasting and electronic system and transactions;
- defense and security; and
- employment
Such risk analysis is conducted through the identification of the business activity, assessment of hazard level, assessment on potential hazard, determination of risk levels and scale of business, and the type of Business Licensing. Through this risk analysis, business activities are categorized into:
- low risk business activities;
- medium-low risk business activities;
- medium-high risk business activities; and
- high risk business activity.
The risk category for each business activity is listed under Appendix I of GR 5/2021. GR 5/2021 also stipulates the scope and scale of the activity; whereby different scopes and scales of the same business activity may be categorized into different risks. Business actors shall identify their business activities under Appendix I of GR 5/2021 to determine the risk category of their business activities.
The table below illustrates an example of risk categorization under Appendix I of GR 5/2021.
| KBLI Code | KBLI Title | Business Scale | Land Area | Risk Level |
| 5510
55110 |
Hotel, with less than 61 rooms or less than 41 employees | Micro, small, and medium | Less than 4,000 m2 | Low |
| Hotel, with 61-100 rooms or 41-99 employees | Micro, small, medium, and large | 4,000-6,000 m2 | Medium-low | |
| Hotel, with 101-200 rooms or 100-200 employees | Micro, small, medium, and large | More than 6,000 m2 to less than 10,000 m2 | Medium-high | |
| Hotel, with more than 200 rooms or more than 200 employees | Micro, small, medium, and large | More than 10,000 m2 | High |
Each risk level will require different Risk-Based Business Licensing. We set out below the summary of Business Licensing for each risk.
| Risk | NIB | Certificate of Standards | License |
| Low risk | |||
| Medium-low risk | Self-statement | ||
| Medium-high risk | Verified certificate | ||
| High risk | *) Only if required |
The requirements for the Risk-Based Business Licensing in each sector are stipulated under Appendix II of GR 5/2021.
- Low Risk Business Activities
Low risk business activities will only require the Business Identification Number (Nomor Induk Berusaha or “NIB”) which shall also serve as the Statement Letter on Environmental Management and Monitoring Undertaking (Surat Pernyataan Kesanggupan Pengelolaan dan Pemangauan Lingkungan Hidup or “SPPL”). For low risk business activities carried out by micro and small enterprises, the NIB also serves as the Indonesian National Standard (Standar Nasional Indonesia or “SNI”) and statement of halal guarantee.
The NIB shall be the identity of the business actor as well as the legal basis to carry out the business activities.
- Medium-Low Risk Business Activities
The business licensing for medium-low risk business activities consist of an NIB and a certificate of standards that shall be in the form of a statement by the business actor to fulfill business standards that shall be submitted through the OSS. Although the certificate of standards is in the form of self-statement, the business actor shall fulfill such standards when it conducts the business activities.
Further, if the business activity is required to fulfill the Environment Management Efforts and Environment Monitoring Efforts (Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup or “UKL-UPL”) standards, the business actor shall fill in the UKL-UPL form in the OSS system in order to obtain the NIB and the certificate of standard. Otherwise, the business actor shall fill in the SPPL form in the OSS system.
The NIB and the certificate of standard shall be the legal basis for the business actors to conduct the business activities, both in the preparation and the operation/commercial stages.
- Medium-High Risk Business Activities
Similar to medium-low risk business, businesses categorized as medium-high risk also require an NIB and a certificate of standards. However, the certificate of standards for medium-high risk businesses shall be issued by the Central or Regional Government based on verification of the fulfillment of standards by the business actor. The Central or Regional Government (based on their respective authority) shall verify the fulfillment of standards or assign the verification to certified or accredited institution or expert profession.
Once the unverified certificate of standards has been issued, the business actor may perform actions relating to the preparation stage of the business. The NIB and the verified certificate of standards shall be the legal basis for the business actor to conduct the operation/commercial stage of the business.
- High Risk Business Activities
Under the Risk-Based Business Licensing scheme, only high risk business activities are required to obtain licenses (in addition to the NIB). In the event the high risk business activities require fulfillment of business and/or product standards, the Central or Regional Government will also issue the certificate of standards based on verification of fulfillment of standards.
Prior to the issuance of license, business actors may use the NIB for the preparation stage of the business. Only after obtaining the license, the business actors may commence the operation/commercial stage of the business.
GR 5/2021 provides that the preparation stage consists of (i) land acquisition, (ii) construction of building, (iii) procurement of equipment or facilities, (iv) procurement of human resources, (v) fulfillment of business standards, and/or (vi) other activities including feasibility studies and operational funding during construction stage. As for the operational/commercial stage, it consists of (i) production of goods/services, (ii) logistics and distribution of goods/services, (iii) marketing of goods/services, and/or (iv) other activities in the framework of operational/commercial activities.
- Transitional Provisions
The implementation of the Risk-Based Business Licensing under GR 5/2021 is exempted for business actors that have obtained business licensing that have been approved and effective prior to the enactment of GR 5/2021, except if the terms of GR 5/2021 is more beneficial for the business actor. As for business actors that have obtained business licensing but are not yet effective, the business licensing will be processed in accordance with GR 5/2021.
GR 5/2021 also requires business actors that have obtained access rights to the OSS to update their data at the OSS system. However, the implementation of the Risk-Based Licensing in the OSS system will only be effective 4 (four) months after the promulgation of GR 5/2021 (or by June 2, 2021).
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March 5, 2021
Please contact Inka Kirana (ikirana@aksetlaw.com), Alfa Dewi Setiawati (asetiawati@aksetlaw.com), Nurana Sekar Lestari (nlestari@aksetlaw.com), or Faiz Naufaldo (fnaufaldo@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.
Government Clarifies Risk-Based Business Licensing
Presidential Regulation 10/2021 Revamps Investment Landscape in Indonesia
Law No. 11 of 2020 dated November 2, 2020 on Job Creation (the “Job Creation Law”) was enacted with the aim of attracting both foreign and domestic investors to ultimately create more jobs. Recently, the government issued 49 new implementing regulations to support the Job Creation Law. One notable regulation among the 49 new ones is Presidential Regulation No. 10 of 2021 dated February 2, 2021 on Capital Investment Business Lines (“PR 10/2021”). PR 10/2021 will enter into force 30 (thirty) days as of its promulgation or on March 4, 2021.
PR 10/2021 is the Government’s attempt at revamping Indonesia’s investment landscape. Previously, foreign investment activities in Indonesia, which is regulated under Law 25 of 2007 dated April 26, 2007 on Capital Investment as amended by the Job Creation Law (collectively, the “Investment Law”), were subject to the limitations imposed by Presidential Regulation No. 44 of 2016 dated May 18, 2016 on the List of Businesses Closed and Opened Under Certain Conditions for Investment (“PR 44/2016”), which is now revoked and replaced by PR 10/2021.
PR 44/2016 still lays out a long list of businesses that are either closed off entirely for foreign businesses or those that are open, with certain conditions, for investment, including a cap to the percentage of foreign ownership. This has led foreigners to associate investing in Indonesia with the “Negative List”. PR 10/2021 tries to erase this association by presenting a “positive list” instead.
The most notable difference between PR 10/2021 and PR 44/2016 is the fact that PR 10/2021 states that all business activities are fully opened for investment, except for activities that are reserved for the Central Government and six business fields that are now stipulated under Article 12 of the Investment Law, i.e.:
- cultivation and industry of class I narcotics;
- all forms of gambling and/or casino;
- fishing of species of fish listed out in Appendix I Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
- utilization or taking of coral and utilization or taking of coral reefs from nature to be used as building material/lime/calcium, in aquariums, as souvenirs/jewelry, or taking recent death corals from nature;
- chemical weapons manufacturing industry; and
- industrial chemicals industry and ozone-depleting substances industry.
This makes all other business fair game for investors (subject to certain conditions), as opposed to PR 44/2016, which puts its focus on the business fields that are closed or restricted for foreign investment.
PR 10/2021 classifies the types of businesses that are open for investment into 4 categories:
- priority business lines;
- business lines that are allocated for or required for partnerships with cooperatives and Micro, Small and Medium Enterprises (“UMKM”);
- business lines open with certain requirements; and
- other business lines not included in the above, which shall be open for all investors.
- PRIORITY BUSINESS LINES
Previously, regulations on “priority” industries that are eligible for certain incentives were somewhat scattered and can be found in numerous regulations, including Government Regulation, Minister of Finance Regulations, and Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) Regulations.
PR 10/2021 simplifies this matter by listing down priority businesses lines, that are fully open to investors, and are eligible for fiscal (tax allowance, tax holiday, various types of investment allowance, or customs and excise incentives) or non-fiscal incentives (facilitated business licenses, supporting infrastructure, etc.) in its Attachment I. Note that PR 10/2021 sets out conditions for certain priority business lines, such as integration with other related business lines or use of certain technology. Business lines that are not listed in Attachment I of PR 10/2021 are still eligible for incentives if it is stipulated in other laws and regulations.
- BUSINESS LINES ALLOCATED FOR OR REQUIRED FOR PARTNERSHIPS WITH COOPERATIVES AND UMKM
Business lines allocated for cooperatives and UMKM must fulfill the following criteria:
- business lines that do not utilize technology/utilize simple technology;
- business lines with specialized processes, such as those that are labor intensive or specialized, inherited cultural heritage; and
- business lines with a capital not exceeding Rp10,000,000,000 (ten billion rupiah) excluding land and building value.
Large-scale businesses (including foreign investment companies) are not allowed to participate in these business lines allocated for cooperatives and UMKM.
PR 10/2021 also stipulates large-scale businesses that are required to partner with cooperatives or UMKM. The partnership shall be carried out in accordance with Law No. 20 of 2008 dated July 3, 2008 on UMKM as amended by the Job Creation Law and its implementing regulations.
Both business lines that are allocated for cooperatives and UMKM and business lines that are required to partner with cooperatives and UMKM are listed in Attachment II of PR 10/2021.
- BUSINESS LINES OPEN WITH CERTAIN REQUIREMENTS
PR 10/2021 substantially cuts down the number of business fields that are in the “Open with Certain Requirements” under PR 44/2016. Previously, there were 350 business fields listed under this category, all imposed with certain conditions, such as not being opened for foreign investors, or having a cap on its foreign investment. In PR 10/2021 this number is reduced to 46, as listed in its Attachment III, and the requirements can be any of the following:
- closed for foreign investors (only open for Indonesian investors);
- has a cap on its foreign investment; or
- requires special licenses.
The above requirements shall not apply for any foreign investor with special rights under the bilateral investment treaty between Indonesia and its country of origin, except if the requirements under PR 10/2021 is more favorable to the investor.
Some notable business lines that are no longer listed as business lines that are open with certain requirements are:
- wholesale distribution (previously it was open for up to 100% foreign investment if it is affiliated with the manufacturer and only open for up to 67% foreign investment if it is not affiliated with the manufacturer);
- retail sale, except for retail sale of alcoholic beverages (previously it was closed for foreign investment); and
- online marketplace (previously it was open for only up to 49% foreign investment, except if the investment is more than Rp100 billion).
- MINIMUM INVESTMENT REQUIREMENT
Article 7 of PR 10/2021 is another important thing to take note of. This provision requires foreign investors to invest in large-scale businesses with a minimum investment value of Rp10 billion, excluding land and building value. This requirement was previously only regulated in BKPM regulations. The inclusion of this requirement in a Presidential Regulation level provides stronger legal certainty to foreign investors, as well as protection to UMKM.
- INVESTMENT IN SPECIAL ECONOMIC ZONES
Similar to PR 44/2016, under PR 10/2021, all business lines are open for investment (including foreign investment for up to 100%) in Special Economic Zones (Kawasan Ekonomi Khusus or “KEK”). PR 10/2021 takes one step further by allowing foreign investment in tech-based startups located in KEK to have investment value of less than Rp10 billion (excluding land and building).
- OTHER NOTABLE PROVISIONS
Similar to PR 44/2016, PR 10/2021 also provides that investment requirements thereunder are not applicable to indirect or portfolio investment which transactions are made through Indonesian capital market.
PR 10/2021 also stipulates that investment in finance and banking sectors shall be subject to specific laws and regulations applicable for those sectors. Although it has long been a public knowledge that finance and banking sectors are subject to different sets of regulations, the Government now clarifies this information by including it in PR 10/2021.
With the enactment of PR 10/2021, it is expected that foreign investors will be eyeing Indonesia to try and capitalize on the changes introduced by the regulation, considering that potential investors can enjoy various new opportunities, facilities, and benefits due to PR 10/2021. It is also expected that this regulation would be able to achieve its aim of attracting investors and boosting the Indonesian economy.
***
March 1, 2021
Please contact Abadi Abi Tisnadisastra (atisnadisastra@aksetlaw.com), Inka Kirana (ikirana@aksetlaw.com), Alfa Dewi Setiawati (asetiawati@aksetlaw.com), N. Sekar Lestari (nlestari@aksetlaw.com), or Caleb Sitorus (csitorus@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.
Presidential Regulation 10/2021 Revamps Investment Landscape in Indonesia
Wage Adjustments Allowed in Certain Labor-Intensive Industries
As a response to the COVID-19 pandemic, the Minister of Manpower issued Minister of Manpower Regulation No. 2 of 2021 dated February 15, 2021 on the Implementation of Remuneration in Certain Labor-Intensive Industries During the Corona Virus Disease 2019 (COVID-19) Pandemic (“Regulation 2”). Regulation 2 aims at protecting both the rights of the workers to their wages and the continuity of certain labor-intensive industries during these volatile times.
Regulation 2 permits companies within certain labor-intensive industries affected by the COVID-19 pandemic to agree with the workers to adjust the amount of the wages paid to workers along with its payment procedures. To this end, a company must enter into on an agreement with the workers (the “Wage Adjustment Agreement”).
Regulation 2 defines companies “affected by the COVID-19 pandemic” as those that have their business activities limited due to government policies which cause a portion or the entirety of their workforce not being able to perform the work.
The key provisions of Regulation 2 are as follows:
- Criteria of Labor-Intensive Industries
Companies within labor-intensive industries fall under the scope of Regulation 2 shall fulfill the following requirements:
- A company has at least 200 (two hundred) workers; and
- The cost of the labor of such company constitutes at least 15% of the total production costs of the company.
In terms of industry coverage, labor-intensive industries encompass the following:
- food, beverage, and tobacco industry;
- textile and garment industry;
- leather and leather goods industry;
- footwear industry;
- children’s toys industry; and
- furniture industry.
- Wage Adjustment Agreement
The Wage Adjustment Agreement must be made through a transparent and good-intentioned deliberation between the company and its workers, and must contain at least the following:
- the amount of adjusted wages;
- the procedures of the wage payment; and
- the term of the agreement (which shall not be beyond December 31, 2021).
However, it must be noted that the amount of the adjusted wages must not be used as the basis for calculating the social security contributions, the termination benefits, and other rights of the workers. For the purpose of such calculations, the amount of the wages prior to the adjustment must be used instead.
In our view, Regulation 2 simply emphasizes the ability of a company (in certain industries) to agree with its employees to reduce the amount of the wages for a certain period of time (not beyond December 31, 2021).
***
February 19, 2021
Please contact Caleb Sitorus (csitorus@aksetlaw.com), N. Sekar Lestari (nlestari@aksetlaw.com), or Johannes C. Sahetapy-Engel (jsahetapyengel@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.
Wage Adjustments Allowed in Certain Labor-Intensive Industries
DKI Jakarta Implements Micro PPKM
On February 8, 2021, the Governor of DKI Jakarta issued Decree No. 107 of 2021 (the “Decree”) on the Entry into Force of Micro-Scale Public Activity Restrictions (Pemberlakuan Pembatasan Kegiatan Masyarakat Berbasis Mikro – the “Micro PPKM”). The Decree is effective as of February 9, 2021 until February 22, 2021.
The Decree sets out similar provisions contained in the previous decree, i.e., the Governor of DKI Jakarta Decree No. 51 of 2021 dated January 22, 2021 on the Extension of Entry into Force, Period and Outdoor Activities Limitation of Large-Scale Social Restrictions. The key changes in the Decree are as follows:
- Activities at Workplaces
Private offices and state-owned enterprises are required to limit their “work from office” policy to 50% (fifty percent) from the full capacity of the workplace. If an employee is confirmed Corona Virus Disease 2019 (“Covid-19”) positive, the workplace shall be closed for at least 3x24 (three times twenty-four) hours and must be thoroughly disinfected.
- Restaurants Activities
Restaurants and cafes may open for dine-in for only up to 50% (fifty percent) from the full capacity. Dine-in service is permissible only until 9:00 p.m. (Jakarta time).
- Activities at Shopping Malls
Shopping centers or malls may only operate until 9:00 p.m. (Jakarta time). The standard health protocols must be applied during the operational hours, including providing hand sanitizer and the verification of visitors’ body temperatures before they enter the buildings.
Although the Decree is only applicable in Jakarta, other regions will also apply similar policies on the Micro PPKM. The Minister of Home Affairs Instruction No. 3 of 2021 dated February 5, 2021 on the Entry into Force of Micro PPKM and the Establishment of Posts for Covid-19 Management in Villages and Urban Villages to Manage the Spread of Covid-19 orders Governors and Mayors/Regents of specific cities/regencies in Jawa and Bali to also apply similar Micro PPKM policies.
As of February 9, 2021, Indonesia recorded 8,700 new cases of Covid-19, 3,437 of which were cases in Jakarta.
***
February 10, 2021
Please contact Johannes C. Sahetapy-Engel [jsahetapyengel@aksetlaw.com] or I. Vivi N. Sidabutar [isidabutar@aksetlaw.com] for further information] 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.
DKI Jakarta Implements Micro PPKM
Draft on New IDX Listing Rules
Following the issuance of the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”). Regulation No.41/POJK.04/2020 dated July 2, 2020 on Implementation of Public Offering Activities of Equity-Type Securities, Debt-Type Securities and/or Sukuk Through Electronic Means (e-bookbuilding) (“OJK Reg. 41/2020”), the Indonesian Stock Exchange (“IDX”) is formulating a new listing rule (“Draft Rule”) to replace the Board of Directors of PT Bursa Efek Indonesia Decree No.Kep-00183/BEI/12-2018 dated December 26, 2018 on the Amendment of Rule No. I-A on Shares and Securities Listing Issued by a Listed Company (“IDX Rule I-A”).
The Draft Rule is in line with the spirit of OJK Reg.41/2020 as the intention is to increase public investor participation in the stock exchange. The Draft Rule reflects several changes to include definitions on public shareholders, requirements of issues, as well as other main board and development board requirements.
There are certain key changes and additions under the Draft Rule highlighted as follows:
- Public Shareholders and Free Float Requirement
Currently there is no specific definition under the capital market related regulations (including IDX Rule I-A) of what public shareholders are. However, it is generally understood that public shareholders are those who are not a controlling shareholder, nor a main shareholder. Nonetheless, Controlling Shareholders are defined by the prevailing capital market regulation as parties who directly or indirectly own more than 50% (fifty percent) of the total voting shares or have the ability to determine, whether directly or indirectly, by any form, the management and/or policies of the public company. Meanwhile, main shareholders are defined as those who, directly or indirectly, own at least 20% (twenty percent) of the total voting shares issued by a public company or other lesser amounts.
The Draft Rule IDX covers a definition of public shareholders as shares owned by shareholders owning less than 5% (five percent) and is not a controller of the public company, not of scrip shares and not of treasury shares. Looking at this definition, shareholders who hold more than 5% and less than 20% will then not be considered as a public shareholder, nor a main shareholder.
Although this will be quite beneficial for public shareholders, we are of the view that this will affect the free float requirement of 7.5% (seven point five percent) and at least 50,000,000 (fifty million) shares within the public company’s paid up capital reserved for public shareholders. Public companies will have to conform with this new requirement and must allocate more shares to ‘retail’ or public shareholders as defined in the Draft Rule. Failure to fulfill this requirement may affect the public company’s ability to stay listed in the IDX.
- Listing Requirements
As a measure to increase the number of start-ups and SMEs, the Draft Rule amended several requirements for issuers to become listed in the IDX by broadening the pre-requisites. As one of the pre-requisites of listing on the main board, instead of requiring prospective companies to have net tangible assets of at least Rp100,000,000,000 (one hundred billion Rupiah) (which is one of the main requirements under IDX Rule I-A), the Draft Rule allows prospective issuers to fulfill one of the below requirements:
Having profits before taxes in the last 1 (one) financial year and net tangible assets of at least Rp250,000,000,000 (two hundred fifty billion Rupiah);
Having an aggregate profit before taxes in the last 2 (two) financial years of at least Rp100,000,000,000 (one hundred billion Rupiah) and market capitalization of at least Rp1,000,000,000,000 (one trillion Rupiah) before the listing date;
Having revenue in the last 1 (one) financial year of at least Rp600,000,000,000 (six hundred billion Rupiah) and market capitalization of at least Rp3,000,000,000,000 (three trillion Rupiah) before the listing date;
Having total assets in the last 1 (one) financial year of at least Rp1,000,000,000 (one trillion Rupiah) and market capitalization of at least Rp2,000,000,000,000 (two trillion Rupiah) before the listing date; or
Having cashflow from cumulative operational activities in the last 2 (two) financial years of at least Rp200,000,000,000 (two hundred billion Rupiah) and market capitalization of at least Rp4,000,000,000,000 (four trillion Rupiah).
As for the development board, previously the IDX Rule I-A requires prospective issuers to fulfill one of the following requirements: (i) having net tangible assets of at least Rp5,000,000,000 (five billion Rupiah), (ii) having profits in the last 1 (one) financial year of at least Rp1,000,000,000 (one billion Rupiah) and market capitalization of at least Rp100,000,000,000 (one hundred billion Rupiah) before the listing date, or (iii) having revenue in the last 1 (one) financial year of at least Rp40,000,000,000 (forty billion Rupiah) and market capitalization of at least Rp200,000,000,000 (two hundred billion Rupiah) before the listing date. Through the Draft Rule, the requirements are broadened to only fulfill one of the following criteria:
Having net tangible assets of at least Rp50,000,000,000 (fifty billion Rupiah);
Having an aggregate profit before taxes in the last 2 (two) financial years of at least Rp10,000,000,000 (ten billion Rupiah) and market capitalization of at least Rp100,000,000,000 (one hundred billion Rupiah) before the listing date;
Having revenue in the last 1 (one) financial year of at least Rp40,000,000,000 (forty billion Rupiah) and market capitalization of at least Rp200,000,000,000 (two hundred billion Rupiah) before the listing date;
Having total assets in the last 1 (one) financial year of at least Rp250,000,000,000 (two hundred fifty billion Rupiah) and market capitalization of at least Rp500,000,000,000 (five hundred billion Rupiah) before the listing date; or
Having cashflow from cumulative operational activities in the last 2 (two) financial years of at least Rp20,000,000,000 (twenty billion Rupiah) and market capitalization of at least Rp400,000,000,000 (four hundred billion Rupiah).
Additionally, the Draft Rule also introduces some new requirements for public companies to stay listed in the IDX. Such criteria are as follows:
must fulfill at least one of the following criteria: (i) have not recorded net losses for 2 (two) years consecutively; or (ii) recorded compound annual growth rate) at least 20% (twenty percent) for the last 3 (three) years;
have not recorded negative equity in the last financial statement;
have a minimum number of shareholders of 750 (seven hundred fifty);
If public shares are more than 10%, then the market capitalization must be more than Rp200,000,000,000 (two hundred billion Rupiah); or if less than 10%, then the market capitalization must be more than Rp1,000,000,000,000 (one trillion Rupiah);
Must fulfill at least one of the following criteria: (i) price to earning ratio must not be more than 3x of the price to earning ratio of the market, (ii) price to book value must not be more than 3x of the price to book value ratio of the market or (iii) having a minimum market capitalization of Rp12,000,000,000,000 (twelve trillion Rupiah).
Have not been imposed with a third written warning from the IDX within the last 1 (one) year; and
The audited financial statement has obtained a fair opinion without modification or have obtained a fair opinion without modification with explanation paragraph for the last 2 (two) financial years, o
- Main Board and Development Board Movement
Under the Draft Rule, movement from the development board and the main board and vice versa is allowed. Previously, movement between boards can only be done from the development board to the main board. However, the movement from the main board to the development board will only be done by the IDX in the event the listed company fails to fulfill the requirements of maintaining to be listed in the main board. Movement between boards will only done every 6 (six) months based on audited financial statements of the listed company. Apart from that, the new draft also stipulates new requirements for listed companies from development boards to move to the main board where previously, it is stipulated that one of the requirements is to maintain net tangible assets of at least Rp100,000,000,000 (one hundred billion Rupiah) based on the last audited financial statement, however, under the draft rule, the requirements have been broadened similarly to the pre-requisites of being listed in the main board as explained above.
Kindly note that that the Draft Rule is not in final form and may change and differ with the version enacted. We will provide further updates on the new listing rule once it has been enacted.
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February 10, 2021
Please contact Abi Abadi Tisnadisastra [atisnadisastra@aksetlaw.com] and Alfa Dewi Setiawati [asetiawati@aksetlaw.com], Faiz Naufaldo [fnaufaldo@aksetlaw.com], and Caleb Kharis Nathanael Sitorus [csitorus@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.
Draft on New IDX Listing Rules
Foreign Public Documents No Longer Need to Be Legalized
On January 5, 2021, Indonesia ratified the Convention Abolishing the Requirement of Legalization for Foreign Public Documents (“Convention”) through Presidential Regulation Number 2 of 2021 (“PR 2/2021”). Ratification of the Convention through PR 2/2021 is intended to improve public services and support ease of doing business. This PR 2/2021 also provides the official translation of the Convention which requires the abolishing of legalization requirement for public documents.
Previously, requirements for legalization of documents executed outside Indonesia is governed under the Minister of Foreign Affairs Regulation Number 13 of 2019 dated August 8, 2019 on the Procedures of Documents Legalization at the Ministry of Foreign Affairs (“MOFA Regulation”). In principle, documents signed and/or executed outside Indonesia that are intended to be used in Indonesia need to be legalized by the nearest Indonesian Embassy.
However, issuance of PR 2/2021 does not immediately revoke the MOFA Regulation. Therefore, MOFA Regulation still prevails and that any provisions under PR 2/2021 that may contradict MOFA Regulation would require further guidance from MOFA. We expect there would be an official statement from MOFA regarding the implementation of this PR 2/2021.
The key provisions in PR 2/2021 and the Convention are as follows.
- Types of Foreign Public Documents Exempted from Legalization
PR 2/2021 applies only to public documents. However, PR 2/2021 does not define “public document”.
In order to determine applicability of this PR 2/2021, we may refer to the determination of public documents as elaborated under the outline of the Convention issued by the Hague Conference on Private International Law. The outline of the Convention provides that the “public” nature of a document is left to be determined by the law of the place where the document originates (i.e., the State of origin).
Article 1 of the Convention provides some guidance as to types of documents that can be considered public document and no longer need to be legalized, as follows:
- Documents produced by any authority or officials connected with courts or tribunals of a state, including documents produced by a public prosecutor, a clerk of court or process-server (“huissier de justice”);
- Administrative documents;
- Notarial acts;
- Official certificates affixed on documents being signed by any persons in their individual capacity, such as official certificates recording the registration of a document or the fact that it was in existence on a certain date and official and notarial authentications of signatures.
- Foreign Public Documents Not Exempted from Legalization
There are also certain public documents not exempted from legalization requirement. PR 2/2021 still requires legalization for the following public documents:
- Documents executed by diplomatic or consular agents;
- Administrative documents dealing directly with commercial or customs activities.
We believe that this may create a wide interpretation regarding the classification of administrative documents related to commercial or customs activities since this provision is not further elaborated under PR 2/2021.
However, the issuance of PR 2/2021 is still very recent. There is also limited precedent on the implementation of this regulation. At this stage, we note that the currently common approach for legalization of foreign documentation may still be implemented, at least until clearer parameter for this issue is clarified by MOFA
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February 10, 2021
Please contact Abadi Abi Tisnadisastra [atisnadisastra@aksetlaw.com], Alfa Dewi Setiawati at [asetiawati@aksetlaw.com], Ajeng Ayuningtyas at [aayuningtyas@aksetlaw.com], or Caleb Kharis Nathanael Sitorus at [csitorus@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.
Foreign Public Documents No Longer Need to Be Legalized
Digital Era for Land Certificates Begins
As part of a digital transformation service within the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency sector, on January 12, 2021, the Minister issued the Minister of Agrarian and Spatial Planning / Head of National Land Agency Regulation No. 1 of 2021 on Electronic Certificate (“Minister Reg 1/2021”). Minister Reg 1/2021 is intended to transform the previous offline services with respect to the provisions of land certificates in Indonesia into electronic based services.
We set out below some notable provisions under Minister Reg 1/2021 as well as expectations that can be achieved in the future with the enactment of Minister Reg 1/2021.
- LAND REGISTRATION TO BE CONDUCTED ELECTRONICALLY
With the issuance of Minister Reg 1/2021, land registration activities in Indonesia will be conducted electronically on a gradual basis. This includes activities relating to:
- new land registration applications; and
- Maintenance of land registration data.
As a result of the above activities, it is expected that all data, information or documentation related to land, such as measuring picture (gambar ukur) land parcel map (peta bidang tanah), spatial map (peta ruang) and electronic land certificates will be stored into and processed through an electronic system data center (“Electronic System”). The implementation of the Electronic System is also introduced in the draft Government Regulation on Right to Manage Title, Land Title, Multi-Story Housing Unit and Land Registration, which is to be issued as the implementing regulation of the Omnibus Law.
- ELECTRONIC LAND CERTIFICATES
With the enactment of Minister Reg. 1/2021, once a plot of land is granted with a land title right, right to manage, right to own over a multi-story housing unit, mortgage, or waqf land, then such plot of land will be registered under the Electronic System and further an electronic land certificate will be issued (“el-Certificate”).
On the other hand, for plots of land that have been granted with physical land certificates (prior to the enactment of Minister Reg. 1/2021) as evidence of a land ownership title, such physical land certificates may be converted into el-Certificate by submitting an application through a land registration data maintenance service (pelayanan pemeliharaan data pendaftaran tanah).
Such application will be granted if the following data have been validated:
- (i) Data with respect to the land ownership title holder;
- (ii) Physical data with respect to the land (e.g., total area of the land, borders of the land);
- (iii) Juridical data with respect to the land (e.g., land title ownership record).
Once granted, the Head of Land Office will revoke the relevant physical land certificates to be compiled with the land book and stored as the record of the Land Office.
In both circumstances above, once an el-Certificate is issued, the relevant land ownership title holder will also be granted with an access to such el-Certificate in the Electronic System.
- LAND REGISTRATION DATA MAINTENANCE
Minister Reg. 1/2021 provides that any change to physical data (e.g., change of total land area) and/or juridical data (e.g., change of land ownership title holder, encumbrance of such plots of land) relating to plots of land that have been processed and granted with el-Certificate will be conducted through the Electronic System.
- E-SIGNATURE ON ELECTRONIC DOCUMENTS
Any electronic document (e.g., e-Certificate) issued through the Electronic System will be ratified by an electronic signature (certified by the Electronic Certification Agency) in accordance with the applicable laws and regulations. While for a physical document that have been converted into an Electronic Document (e.g., from a physical land certificate into an el-Certificate), such documents will be affixed with a digital stamp through the Electronic System.
In addition to the above, any Electronic Document (as well as the printed Electronic Document) related to land as defined under Minister Reg. 1/2021 constitutes a valid legal evidence in accordance with the applicable procedure law (hukum acara) in Indonesia.
- NEW FORM OF LAND CERTIFICATES
Minister Reg. 1/2021 also introduces a new format for each measuring picture (gambar ukur), spatial picture (gambar ruang), floor plan (gambar denah), spatial measuring letter (surat ukur ruang) and certificates (e.g., land certificates including for a land certificate for an above land space or a below land space) as set out under the Attachment of Minister Reg. 1/2021.
In addition to that, the new format of an electronic land certificate will stipulate certain provisions with respect to limitations, obligations that will be attached to the land title holder.
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February 1, 2021
Please contact Inka Kirana [ikirana@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 © 2021 AKSET. All rights reserved.
Digital Era for Land Certificates Begins
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.
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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.
PSBB is Extended for Two Weeks
Following the issuance of the Governor of DKI Jakarta Decree No. 19 of 2021 dated January 7, 2021 on the Entry into Force, Period and Outdoor Activities Limitation of Large-Scale Social Restrictions (“Decree 19/2021”), the Governor of DKI Jakarta issued the Decree No. 51 of 2021 dated January 22, 2021 on the Extension of Entry into Force, Period and Outdoor Activities Limitation of Large-Scale Social Restrictions (“Decree 51/2021”).
Decree 51/2021 provides that outdoor activities limitations and large-scale social restrictions policies (Pembatasan Sosial Berskala Besar – “PSBB”) will be extended for two weeks, effective as of January 26 to February 8, 2021.
Decree 51/2021 set out similar provisions contained in Decree 19/2021. The key changes in Decree 51/2021 are as follows:
- Restaurants Activities
Restaurants and cafes may open for dine-in for only up to 25% (twenty five percent) from the full capacity. Dine-in service is permissible only until 8:00 p.m. (Jakarta time).
- Activities at Shopping Malls
Shopping centers or malls may only operate until 8:00 p.m. (Jakarta time). The standard health protocols must be applied during the operational hours, including providing hand sanitizer and the verification of visitors’ body temperature before they enter the building.
Although the foregoing Decrees are only applicable in Jakarta, other regions will also apply similar stringent PSBB policies. The Minister of Home Affairs (“MOHA”) Instruction No. 2 of 2021 dated January 22, 2021 on the Extension of Entry into Force of Activities Limitation to Manage the Spread of Covid-19 orders Governors and Mayors/Regents of specific cities/regencies in Jawa and Bali to also apply similar stricter PSBB policies.
As of January 26, 2021, Indonesia hit 1,012,350 positive cases of Covid-19, 13,094 of which were new cases. In Jakarta alone, 2,314 of new cases were recorded as of January 26, 2021.
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January 27, 2021
Please contact Johannes C. Sahetapy-Engel [jsahetapyengel@aksetlaw.com] and I. Vivi N. Sidabutar [isidabutar@aksetlaw.com] for further information] 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.