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.
***
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
***
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.
***
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.
***
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.
***
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.
PSBB is Extended for Two Weeks
Temporary Restrictions for Foreigners Entering Indonesia
Following the issuance of the COVID-19 Task Force’s Circular Letter No. 2 of 2021 dated January 14, 2021 on International Travel Health Protocols During the COVID-19 Pandemic (the “Task Force Circular”), the Director General of Immigration (the “DGOI”) issued Circular Letter No. IMI-0103.GR.01.01 of 2021 dated January 14, 2021 on Temporary Restrictions for Foreigners to Enter Indonesia During the COVID-19 Pandemic (the “DGOI Circular”). The DGOI Circular intends to provide the guidelines and the optimization of the immigration functions in implementing the temporary restrictions for foreigners who wish to enter Indonesia.
The DGOI Circular mandates attaché, immigration technical staff, or foreign service officials to comply with the following provisions:
- Temporarily rejects visa applications, except for visit visas applications with a 1 (one) way trip for humanity purposes, such as visiting or assisting parents or siblings who are sick, passed away, or in need of medical assistance in Indonesia.
- The foregoing visas may only be issued by immigration officials or foreign service officials in an embassy/consulate only if the relevant visa applications meet the requirements under applicable laws and regulations, and the applications include the reasons for the applications.
- If such visas are granted, the attaché, immigration technical staff, or foreign service officials shall immediately report such granting to the Director General of Immigration.
The DGOI Circular also instructs the Head of Immigration Division to continuously report and conduct assistance, control, and supervision for the implementation of these temporary restrictions.
In addition, Head of Immigration offices are expected to do the following:
- To provide entry stamps for foreigners who:
- hold diplomatic visas or official visas for official visits and their position is at least at the ministerial level,
- hold diplomatic stay permits or official stay permits,
- hold limited stay permits or permanent stay permits,
- hold visit visas and limited stay permit visas issued after the DGOI Circular enters into force based on the consideration and a written special permit from the relevant Ministry(ies)/Agency(ies), and
- are part of the transportation crew who enter Indonesia along with a vehicle.
- To grant the extension of limited stay permits or permanent stay permits and/or re-entry permits for foreigners who currently reside overseas but their stay permits are about to expire during the temporary restrictions,
- To supervise and control anything related to immigration checking, and
- To continuously report and conduct assistance, control, and supervision for the implementation of the temporary restrictions.
According to the Task Force Circular, foreigners are prohibited from entering Indonesia until January 25, 2021 unless they hold a diplomatic visa or an official visa for official visits and their position is at least at the ministerial level, a diplomatic stay permit or an official stay permit, a limited stay permit or a permanent stay permit, or obtain a written special permit from the relevant Ministry(ies)/Agency(ies).
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January 21, 2021
Please contact Johannes C. Sahetapy-Engel [jsahetapyengel@aksetlaw.com] and I. Vivi N. Sidabutar [isidabutar@aksetlaw.com] for further information] for further information.
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Temporary Restrictions for Foreigners Entering Indonesia
Changes to Investment Law under Omnibus Law
This newsflash is a follow up to the previously issued newsflash dated November 5, 2020, on the general overview of the Job Creation Law or what is publicly known as the Omnibus Law (link here).
This newsflash discusses the amendments under the Omnibus Law to Law No. 25 of 2007 dated April 26, 2007 on Capital Investment (the “Investment Law”). The Investment Law (as amended) is the main reference for investment, either domestic or foreign, in all lines of business in Indonesia (save as otherwise stated in other laws). The Investment Law continues to exclude indirect and portfolio investments.
We set out the following key amendments to the Investment Law.
- Closed Lines of Business and Activities Reserved for the Central Government
Under the amended Investment Law, all lines of business are open for investment, except for business activities that are closed for investment and activities reserved for the Central Government. In the elucidation of the amended Investment Law, activities reserved for the Central Government are service activities or other activities under the defense and security sectors, among others, main weaponry systems, public museums, historical and archaeological remains, provision of air navigation, telecommunication/aids to shipping navigation and vessel.
Previously, the Investment Law did not include an exhaustive list of business activities that were closed for capital investment. These closed business activities were listed in Appendix I of the Negative Investment List. Now it seems that it will be more difficult to change the list of business activities that are closed for investment, since the revision will require the process of getting such revision be passed by the House of Representatives.
Based on the existing Negative Investment List (which remains in effect until now), there are 20 (twenty) business activities that are closed for capital investment. The Omnibus Law now simplifies the closed business activities into 6 (six) lines of business. The following business activities are closed for capital investment under the Omnibus Law:
- cultivation for and industry of type I narcotics;
- gambling and/or casinos;
- fishing of species in Appendix I of Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
- utilization and retrieval of coral;
- manufacture of chemical weapons; and
- manufacture of industrial chemicals and manufacture of ozone-depleting substances.
It is also still unclear whether the remaining business activities that are closed for investment under the Negative Investment List, such as production of alcoholic beverages, production of active ingredients for pesticides, will now become open for investment. The elucidation of the amended Investment Law stipulates that capital investment shall be based on national interests, including protection of business activities that are harmful for health. Therefore, it remains to be seen whether there will be any change of the restrictive approach on the production of alcoholic beverages, production of pesticides, and other business activities that are no longer listed as closed for investment under the amended Investment Law.
The amended Investment Law mandates further provisions on investment to be stipulated in a Presidential Regulation. The investment requirements for the priority business activities shall be stipulated in the form of investment priority list under the Presidential Regulation which covers the following:
- Priority business activities with fiscal incentives;
- Business activities with non-fiscal incentives, among others, in the form of ease of Business Licensing, investment locations, infrastructure and energy provision;
- Business activities for the Micro, Small, and Medium Enterprises (usaha mikro, kecil, dan menengah or the “UMKM”) and partnership requirements between large enterprises and UMKM excluding the partnership as a shareholder; and
- Business activities that are open with certain requirements.
We expect this Presidential Regulation—which is dubbed as the “Positive Investment List” by the Coordinating Minister for Economic Affairs—to be issued in the near future. A draft Presidential Regulation (in Bahasa Indonesia) is available on the Official Website on the Omnibus Law (www.uu-ciptakerja.go.id).
- Protection of Cooperatives and Micro, Small, and Medium Enterprises
The Omnibus Law also amends Article 13 of the Investment Law. Under this provision, the Central Government or the Regional Governments, in accordance with their authorities, shall provide the convenience, empowerment, and protection to cooperatives and UMKM for their investment in accordance with the standards determined by the Central Government.
In order to protect and empower cooperatives and the UMKM, the amended Investment Law provides that foreign capital investment is only allowed for large-scale enterprises and shall establish a partnership with the cooperatives and UMKM. Certain business activities will also be either allocated for cooperatives and the UMKM or open for large-scale enterprises with requirement to establish a partnership with cooperatives and UMKM. These protection and empowerment may be in the form of (a) partnership programs; (b) human resources training; (c) competitiveness enhancement; (d) innovation and market growth endorsement; (e) accessibility to financing; and (f) widespread dissemination of information.
Further, to support the intention of supporting entrepreneurship in Indonesia the Omnibus Law introduces a specific support provision for partnership arrangement in Indonesia. In this new provision, the Central Government and the Regional Governments, in accordance with their authorities, (i) must facilitate the partnership between a medium enterprise and a large enterprise with cooperatives, micro and small enterprises in the supply chain for increasing competitiveness and business level; (ii) provide incentives and ease of doing business according to prevailing laws and regulations; and (iii) supervise and evaluate the implementation of partnership between cooperatives, UMKM, and large enterprises. Further provisions will be governed under a Government Regulation. This Government Regulation is not issued yet to date.
- Capital Investment Incentives
Another notable amendment under the Omnibus Law is the inclusion of the tourism business development as one of the segments that are eligible to receive investment incentives. The types of investment incentives are no longer listed in the amended Investment Law and will be subject to laws and regulations on taxation. We note that this change in arrangement is intended to streamline the policies relating to tax incentives so that it is governed fully by the Ministry of Finance.
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January 11, 2021
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