Jakarta Applies More Stringent PSBB for Two Weeks
The Governor of DKI Jakarta decided to implement stricter large-scale social restrictions (Pembatasan Sosial Berskala Besar – “PSBB”) in Jakarta for the next two weeks, effective as of January 11 to January 25, 2020. This policy is based on 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 (the “Decree”). The Decree stipulates that for any outdoor activities, Jakarta residents must adhere to health protocols as governed under Governor of DKI Jakarta Regulation No. 3 of 2021 dated January 7, 2021 on Implementing Regulation of Regional Regulation No. 2 of 2020 on the Prevention of Corona Virus Disease 2019 (the “Regulation”).
The Governor of DKI Jakarta applies this stringent PSBB due to the significantly increasing number of Corona Virus Disease 2019 (“Covid-19”) cases in Indonesia. On January 10, 2021, Indonesia recorded 9,640 new Covid-19 cases, 2,711 of which cases were recorded in Jakarta alone.
The Decree and the Regulation require Jakarta residents to comply with the following provisions:
- Activities at Workplaces
Private offices and state-owned enterprises are required to limit “work from office” policy to 25% (twenty five percent) from the full capacity of the workplace. If any employee is confirmed Covid-19 positive, the workplace shall be closed for at least 3x24 (three times twenty-four) hours and must be thoroughly disinfected.
- Activities of Essential Sectors
Any activities in the sector of energy, communication and IT, finance, logistics, hotels, industrial, basic necessities, public utilities, and national vital objects are allowed to fully operate while also following the health protocols. Places to fulfill the public needs, such as traditional markets, convenience stores, grocery shops, minimarkets, supermarkets, and hypermarkets are also permitted to fully operate.
- Construction Activities
The Decree allows construction activities to fully operate while also following the health protocols. This includes providing hand sanitizer and checking the workers’ body temperature before they enter the construction place.
- Educational Activities
All educational activities must be conducted online.
- 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 7:00 p.m. (Jakarta time).
- Activities at Shopping Malls
Shopping centers or malls may only operate until 7:00 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.
- Religious Activities at Places of Worship
For any religious activities carried out in places of worship, the maximum attendance shall be 50% (fifty percent) from the full capacity.
- Activities at Health Facilities
Any activities at healthcare providers may be carried out at 100% (hundred percent) capacity while following the health protocols.
- Activities at Public Places and Other Places which may Lead to Crowds
Any activities held at public places and other places which may lead to crowds must have relevant permits and the capacity shall be limited to 50% (fifty percent) of the full capacity.
- People Movement Using Public and/or Private Transportations
For mass public transportations, taxis, and rented vehicles, the maximum capacity would be 50% (fifty percent) of the full capacity of such vehicles. Meanwhile, for motorcycle taxis (ojek), the Decree allows a full capacity.
Although the Decree and the Regulation are only applicable in Jakarta, it is expected that other regions will also apply more stringent PSBB policies. The Minister of Home Affairs (“MOHA”) issued the MOHA Instruction No. 1 of 2021 dated January 6, 2021 on the Entry Into Force of Activities Limitation to Manage the Spread of Covid-19 to order Governors and Mayors/Regents of specific cities/regencies in Jawa and Bali to apply stricter PSBB policies.
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January 11, 2021
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Jakarta Applies More Stringent PSBB for Two Weeks
Government Stipulates Types of COVID-19 Vaccines
As a follow up to our previous Newsflash on the general overview of COVID-19 vaccine procurement, this Newsflash discusses the types of vaccines for COVID-19 as stipulated under the Minister of Health (“MOH”) Decree No. HK.01.07/MENKES/9860/2020 dated December 3, 2020 on Stipulation of the Types of Vaccines for the Implementation of the Corona Virus Disease 2019 (COVID-19) Vaccination (the “MOH Decree”).
We set out below the key provisions of the MOH Decree.
- Types of Vaccines
The MOH Decree stipulates the types of COVID-19 vaccines that may be used for the implementation of vaccination in Indonesia the following vaccines produced by (i) PT Bio Farma (Persero) (as the designated state-owned enterprise to procure the COVID-19 vaccines), (ii) AstraZeneca, (iii) China National Pharmaceutical Group Corporation (Sinopharm), (iv) Moderna, (v) Pfizer Inc. and BioNTech, and (vi) Sinovac Biotech Ltd.
The above types of vaccines are either in the third-phase clinical trial or have completed the third-phase of the clinical trial.
In the future, the MOH may change the types of COVID-19 vaccines based on the Indonesian Technical Advisory Group on Immunization’s recommendation and taking into account the considerations of the Committee of the COVID-19 Handling and the National Economic Recovery.
- Use of Vaccines
In compliance with the National Agency of Drug and Food Control (Badan Pengawas Obat dan Makanan - "BPOM") Regulation No. 24 of 2017 dated November 24, 2017 on Criteria and Drug Registration Procedures as lastly amended by BPOM Regulation No. 27 of 2020 dated September 29, 2020, the use of vaccines for the implementation of the COVID-19 vaccination is only conducted after receiving the distribution license (izin edar) or emergency use authorization (persetujuan penggunaan darurat) issued by BPOM.
The MOH Decree further provides that the MOH shall conduct the vaccine procurement in accordance with the types of COVID-19 vaccines for the implementation of vaccination program by the MOH. Meanwhile, for the implementation of independent vaccination, the vaccines shall be procured by the Minister of State-Owned Enterprises.
- Price of the COVID-19 Vaccines
Pursuant to President Joko Widodo’s statement on December 16, 2020, the COVID-19 vaccines would be available free of charge or at no cost. This decision was made after considering the contributions of the public and the calculation of the state budget.
In order to dispel public doubts and to gain the community’s confidence about the safety of the COVID-19 vaccines, the President also confirmed that he would be the first person to receive the COVID-19 vaccine.
***
January 8, 2021
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Government Stipulates Types of COVID-19 Vaccines
Foreigners Are Restricted from Entering Indonesia Until January 14, 2021
The Indonesian government officially closed its borders to foreigners starting January 1, 2021 until January 14, 2021. The Minister of Foreign Affairs announced this policy on Monday, December 28, 2020 after having a limited cabinet meeting. She clarified that this step was necessary following the raise concerns over the detection of a new variant of Coronavirus Disease 2019 (“COVID-19”) in several countries.
The Minister of Foreign Affairs further reaffirmed that this policy is in accordance with the Annex of COVID-19 Task Force Circular Letter No. 3 of 2020 dated December 22, 2020 on Travel Health Protocols for Christmas and New Year Holidays During the COVID-19 Pandemic which aims to monitor, control, evaluate, and prevent the increase of COVID-19 transmission, including the new variant firstly identified in the United Kingdom.
According to COVID-19 Task Force Circular Letter No. 4 of 2020 dated December 28, 2020 on Travel Health Protocols During the COVID-19 Pandemic, this restriction is exempted for foreign nationals who enter Indonesia for official visits and their position is at least at ministerial level. In addition, the policy does not apply to foreigners who hold a diplomatic stay visa, a Limited Stay Permit Card (in Indonesian, Kartu Izin Tinggal Terbatas or KITAS) or a Permanent Stay Permit Card (in Indonesian, Kartu Izin Tinggal Tetap or KITAP). The foreign nationals still must adhere to the Indonesian health protocols.
In terms of death numbers due to COVID-19, Indonesia ranks third in Asia. As per January 3, 2021, Indonesia has a total of 765,350 (seven hundred sixty five thousand three hundred fifty) confirmed cases of COVID-19 with total deaths of 22,734 (twenty two thousand seven hundred thirty four).
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January 4, 2021
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Foreigners Are Restricted from Entering Indonesia Until January 14, 2021
New Stamp Duty Law Issued
On October 26, 2020 the government enacted Law No. 10 of 2020 on Stamp Duty (the “2020 Stamp Duty Law”). The purpose of the 2020 Stamp Duty Law is, among others, to increase state revenues and provide legal certainty on stamp duty collection. Stamp duty was previously regulated under Law No. 13 of 1985 dated December 27, 1985 on Stamp Duty (the “1985 Stamp Duty Law”). The 2020 Stamp Duty Law revokes and replaces the 1985 Stamp Duty Law entirely.
The 2020 Stamp Duty Law will enter into force on January 1, 2021.
- Stamp Duty Tarriff
The 2020 Stamp Duty Law introduces a single stamp duty tariff of Rp10,000 (ten thousand Rupiah). Previously, under Government Regulation No. 24 of 2000 dated April 20, 2000 on Amendment of Stamp Duty Tariff and Amount of Nominal Price Imposition Limit Imposed by Stamp Duty, stamp duty tariff was set out at Rp3,000 (three thousand Rupiah) or Rp6,000 (six thousand Rupiah), depending on the nominal value of a document. However, the 2020 Stamp Duty Law recognizes that the stamp duty tariff may be increased or decreased in accordance with the national economy and income rates. Change of stamp duty tariff shall be set out under a Government Regulation.
- Stamp Duty Objects
Stamp duty is imposed on documents that are made that in handwriting, print, or electronic. The definition of “documents” under the 2020 Stamp Duty Law is expanded from the previous definition of documents under the 1985 Stamp Duty Law, which only include “paper documents.”
Stamp duty shall be imposed 1 (one) time for each of the following documents:
- documents made for court evidence; and
- documents made for the purpose of clarifying occurrences of a civil nature, which include:
- agreements, statement letters, or other similar letters and their copies;
- notarial deed and its grosse, copies, and quotations;
- securities in any name and form;
- securities transaction documents, including futures contract transaction documents, in any name and form;
- auction documents in the form of quotation of auction minutes, copy of auction minutes, and grosse of auction minutes;
- documents with monetary value of more than Rp5,000,000 (five million Rupiah) which (i) states the receipt of money, or (ii) consists of statement that the entire or partial of payable amount has been settled or calculated; and
- other documents stipulated under Government Regulation.
Please note that unless required by laws and regulations, stamp duty does not affect the validity of a document. The stamp duty only constitutes the payment of tax over the document.
- Payment of Stamp Duty
Stamp duty shall be paid by:
- the person who receives the document if the document is made unilaterally;
- each party involved in the document if the document is made by 2 (two) or more parties;
- the party who issues the securities; or
- the party who submits the document to a court of law.
- Electronic Stamp Duty
The 2020 Stamp Duty Law acknowledges stamp duty in electronic and other forms, such as by way of digital stamp duty machine or any other technology. By including this provision, the Government clarifies that electronic documents are also subject to stamp duty. Further provisions on electronic stamp duty and stamp duty in other forms shall be regulated under the Minister of Finance’s Regulations.
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December 23, 2020
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New Stamp Duty Law Issued
BKPM Issued Guidelines on Tax Incentive Offline Applications
For the purpose of implementing the Minister of Finance (the “Minister”) Regulation No. 11/PMK.010/2020 dated February 11, 2020 on the Implementation of Government Regulation No. 78 of 2019 on the Income Tax Incentives for Investments in Certain Industries and/or Regions, as amended by the Minister Regulation No. 96/PMK.010/2020 dated July 27, 2020 (collectively, the “Minister Regulation”), the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) enacted Regulation No. 5 of 2020 dated November 10, 2020 on the Guidelines of Entity Income Tax Incentive Offline Submissions for Investments in Certain Industries and/or Regions (the “BKPM Regulation”). For your reference, our Newsflash on the Minister Regulation may be accessed here.
The highlight of the Minister Regulation is the delegation of authorization from the Director General of Tax to the Chairman of BKPM on behalf of the Minister. Due to such delegation, as of August 11, 2020, the income tax incentives under the Minister Regulation (collectively, the “Tax Incentives”) shall be applied through the Online Single Submission (OSS) System and the granting process of the Tax Incentives shall be done by BKPM through the OSS System.
The BKPM Regulation provides an alternative for the Tax Incentive applications other than by way of the OSS System, in case (i) there is any issue with the OSS System and it is not accessible for 5 (five) business days, (ii) there is no internet connection available in certain regions, or (iii) of any force majeure. In such case, the Tax Incentive applications may be submitted in hard copy to the Chairman of BKPM in the form attached in the BKPM Regulation along with the following requirements:
- A copy of the applicant’s Business Identification Number (Nomor Induk Berusaha or NIB);
- A copy of the applicant’s Business License/Principle License/Expansion License;
- A copy of the applicant’s Taxpayer Registration Number (Nomor Pokok Wajib Pajak or NPWP);
- A fiscal statement letter of the shareholders stating that the relevant shareholder (i) has submitted its annual income tax returns for the past two years and its value added tax returns for the past three periods, (ii) does not have any payable tax or has payable tax but it has been granted a permit to postpone the payment of the tax or pay the tax in installment, and (iii) is not in the process of criminal proceeding for tax crime and/or tax-related money laundering;
- The details of the fixed assets of the applicant as stated in the capital investment value plan;
- A statement letter signed by the applicant indicating that the entity has not commenced commercial production;
- A statement letter signed by the applicant indicating the capability to fulfill administrative, technical, and qualitative requirements; and
- A power of attorney in case the application is not submitted by the head of company.
The Chairman of BKPM or the appointed official shall issue the Decree of the Granting of Tax Incentive within 5 (five) business days since the application is verified.
***
December 7, 2020
Copyright © 2020 AKSET. All rights reserved.
BKPM Issued Guidelines on Tax Incentive Offline Applications
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 will cover further discussion on the amendments to the Law No. 25 of 2007 dated April 26, 2007 on Capital Investment (the “Investment Law”) under the Omnibus Law. The amended Investment Law shall now be the main reference for investment, either domestic or foreign, in all lines of business in Indonesia.
We set the following key provisions.
- Closed Lines of Business and Activities Reserved for the Central Government
Under the Omnibus Law, in principle, all lines of business are open for investment, except for business activities that are closed for investment and activities reserved for the Central Government. Under the elucidation of the Omnibus 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 are closed for capital investment. These closed business activities were listed under 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, there used to be 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 casino;
- 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 used to be 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 Omnibus 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 restrictive approach towards production of alcoholic beverages, production of pesticides, and other business activities that are no longer listed as closed for investment under the Omnibus Law.
The Omnibus Law also mandates further provisions on investment to be stipulated under 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 location, infrastructure and energy provision;
- Business activities for the Micro, Small, and Medium Enterprises (usaha mikro, kecil, dan menengah or “UMKM”) and partnership requirement between large enterprises and UMKM excluding 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. However, in order to fully understand the restrictive provision and how it differs with the existing Negative Investment List, we may have to wait for at least three months in order to see the specific provision under the Presidential Regulation governing the Positive Investment List.
- The 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 UMKM, the Omnibus 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 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 program; (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 Government, in accordance with their authorities, (i) must facilitate the partnership between medium enterprise and large enterprise with cooperatives, micro and small enterprise in the supply chain for increasing competitiveness and business level; (ii) provide incentives and ease of doing business according to the 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 the Government Regulation.
- Capital Investment Facilities
Another notable amendment under the Omnibus Law incorporates tourism business development as one of the segments that are eligible to receive investment facilities. The types of investment facilities are no longer listed in this Law and will be subject to laws and regulations on taxation. We note that this change in arrangement is intended to streamline policies relating to tax facilities so that it is governed fully by the Ministry of Finance.
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November 25, 2020
Copyright © 2020 AKSET. All rights reserved.
Changes to Investment Law Under Omnibus Law
DKI Jakarta Extends the Transitional PSBB
The Governor of DKI Jakarta decided to again extend the transitional Large-Scale Social Restrictions Activities (Pembatasan Sosial Berskala Besar or “PSBB”) for 14 (fourteen) days, effective as of November 23, 2020 to December 6, 2020. This extension policy is based on the Governor of DKI Jakarta Decree No. 1100 of 2020 dated November 6, 2020 on the Entry Into Force of the Extension of the Large-Scale Social Restrictions Activities at Transition Period Towards A Healthy, Safe, and Productive Community.
During this transitional PSBB, the Governor of DKI Jakarta reminded Jakarta residents to always comply with the health protocols and report to the relevant agency if they found any violations to the health protocols. He also added that for the last 14 (fourteen) days, Jakarta recorded a substantial increase of the COVID-19 cases, from 8,026 cases on November 7 to 8,444 cases on November 21. Given so, the Governor of DKI Jakarta states that he may implement a stricter PSBB policy if the number of the COVID-19 cases continues to grow significantly.
Under the Governor of DKI Jakarta Regulation No. 79 of 2020 dated August 19, 2020 on the Implementation of Discipline and Law Enforcement of Health Protocols as an Effort to Prevent and Control Corona Virus Disease 2019 (COVID-19), as amended by the Governor of DKI Jakarta Regulation No. 101 of 2020 dated October 9, 2020 (collectively, “Regulation 79/2020”), any violations of the capacity limitation on workplaces, restaurants, and public transportation would be subject to administrative sanctions. The sanctions are as follows:
- One time violation may be subject to a fine of Rp50,000,000 (fifty million Rupiah);
- Two-time violation may be subject to a fine of Rp100,000,000 (one hundred million Rupiah); and
- Three-time violation may be subject to a fine of Ro150,000,000 (one hundred and fifty million Rupiah).
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November 25, 2020
Copyright © 2020 AKSET. All rights reserved.
DKI Jakarta Extends the Transitional PSBB
A New Regulatory Framework for the Operation of Electronic System within the Territory of Indonesia
On October 10. 2019, the Indonesian Government issued Government Regulation No. 71 of 2019 on the Operation of Electronic Systems and Transactions (“GR 71/2019”). This regulation is intended to be one of the key-implementing regulations of Law No. 11 of 2008, last amended by Law No. 19 of 2016 on the Electronic Information and Transaction (the “EIT Law”), revoking the outdated regime of Government Regulation No. 82 of 2012.
GR 71/2019 provides a breath of fresh air to the Indonesian EIT regulatory framework in facing challenges presented by the rapid growth of information technology. GR 71/2019 introduced myriad of new concepts in relation to the operation of electronic system and data governance, such as the classification of electronic system operator, conditional data localization requirement, a more-modern set of personal data protection rules, so on and so forth.
To further implement certain provisions referred in the GR 71/2019, the Ministry of Communication and Informatics (MOCI) subsequently issued Regulation No. 5 of 2020 on Private Electronic System Operator (“MOCI 5/2020”). This regulation went into effect on November 24, 2020, the date of its promulgation.
Below we highlight some notable provisions under GR 71/2019 and MOCI 5/2020.
- DEFINITION OF KEY-TERMINOLOGIES STIPULATED BY GR 71/2019 AND MOCI 5/2020
First and foremost, it is important to note that both GR 71/2019 and MOCI 5/2020 provide relatively broad definition on several key-terminologies. Consequently, the regulations may be applicable to the operation of almost all type of electronic system and information commonly used in this day and age.
Electronic System Operator (the “ESO”) is defined as anyone that provides, manages, or operates an Electronic System, whether individually or jointly. Further, the term Electronic System itself is defined as series of devices and electronic procedures used to prepare, collect, process, analyze, store, display, announce, deliver, or disseminate electronic information.
- THE CLASSIFICATION OF ESO, AS PROVIDED BY GR 71/2019 AND MOCI 5/2020
As the operator of Electronic System, there are 2 (two) types of ESO, as follows:
- Public ESO
Public ESOs are government institutions and other agencies which are appointed by government institutions to operate electronic systems for them and on their behalf, excluding regulatory and supervisory authorities within the financial sector (e.g., Bank Indonesia and the Financial Services Authority).
- Private ESO
Contrarily, Private ESOs are individuals (whether Indonesian or international residents) and business entities, that operate Electronic Systems, and fall under the following categorization:
- Private ESOs which are subject to the regulation or supervision of a ministry or governmental institution based on the prevailing laws and regulations; and
- Private ESOs which own internet-based portals, sites, or applications within Internet network with the purposes of:
- providing, managing, and/or operating goods and/or services trading and/or offering;
- providing, managing, and/or operating financial transaction services;
- delivery of materials or paid digital content through data networks, by way of downloading via websites, sending of emails or through applications to customers’ devices;
- providing, managing, and/or operating communication services which include but not limited to short text messages, voice calls, video calls, emails, digital chatrooms, networking services and social media;
- search engine and electronic information provider services in the form of text, audiovisual data, animations, music, video, films and games or any combination of the above; and/or
- processing of personal data in accordance with the organization of public services that address electronic transaction activities.
In addition to the above, MOCI 5/2020 also added 2 (two) specific classes of Private ESO, as follows:
- User Generated Content (UGC) Private ESOs, are those who provide Electronic System whereby the provision, display, upload, and/or exchange of electronic information and/or documents are carried out by the user.
- Cloud operator Private ESOs, are those who provide, operate, and/or manage cloud services.
- REGISTRATION REQUIREMENT AND ITS EXTRATERRITORIAL REACH
Both Public and Private ESOs are required to register itself to the MOCI. The registration shall be carried out through the Online Single Submission System (“OSS”) by completing the necessary documentation, such as technical specification, brief elaboration on the operation of the Electronic System, and so on.
This registration requirement, further, is also applicable to foreign Private ESOs which (i) provide its services within the territory of Indonesia; (ii) carry out its business in Indonesia; and/or (iii) its Electronic System is used and/or offered within the territory of Indonesia. In addition to the documentation required for the Private ESO registration, foreign Private ESO must provide the following information for ESO registration (along with its Indonesian translated version by a sworn translator):
- The identity of the foreign Private ESO;
- The identity of the head of organization and/or person-in-charge;
- Domicile certificate and/or certificate of incorporation;
- Numbers of Indonesian users; and
- The amount of transaction generated from Indonesia.
- COMPLIANCE CHECKLIST FOR PRIVATE ESO
In general, both regulations establish a set of rules that must be followed by ESOs (including Private ESO), among others:
- the Electronic System shall fulfill minimum operational requirement, such as able to redisplay information, protect the integrity, has a sustainable mechanism to maintain the accountability, so on and so forth;
- the Electronic System shall not contain, and facilitate the dissemination of, illegal content (i.e., information which violate laws and regulations, disrupt the society and public order, etc.);
- the use of appropriate hardware and software, in accordance with laws and regulations;
- ensure the security of the Electronic System, implement appropriate and accountable governance policy and procedure;
- provide information governance policy as appropriate (e.g., terms and conditions as well as privacy policy).
In addition to the above, there are specific requirements set forth by MOCI 5/2020 for UGC Private ESOs, as follows:
- provide information governance policy, consisting of (i) provisions of rights and obligations of the user and the Private ESO within the use and the operational of the Electronic System, (ii) clear stipulation of responsibility towards the electronic information uploaded by users.
- provide a complaint facility, which must be accessible to the public; and
- Respond, assess, and inform the user in regard to the lodged complaint.
As a safe harbor policy mechanism, Article 11 of MOCI 5/2020 further stipulates that the UGC Private ESO shall be indemnified from the liability of the illegal electronic information, under the condition that (i) it has already in compliance with the rules set forth by GR 71/2019 and MOCI 5/2020, (ii) provide necessary information on the user who disseminate/upload the illegal electronic information, for the purpose of supervisory and/or law enforcement, and (iii) take down the illegal electronic information.
- PERSONAL DATA PROTECTION PROVISIONS WITHIN THE EIT REGULATORY FRAMEWORK
The issuance of GR 71/2019 marks another milestone for Indonesia in its effort to protect individuals’ personal data. Despite the fact that it only consists of a few articles, the regime is jam-packed with new ideas and concepts that correspond to the international standard of personal data protection regulation.
GR 71/2019 introduces several new principles that must be followed at every step of personal data processing activity within the electronic system, such as data minimization and purpose limitation, as well as lawfulness, fairness and transparency principles. It also added several conditions for consent to be considered lawful when compared to the previous regime.
For further elaboration on this, please see our Data Protection & Privacy Recent Regulatory Development and AKSET’s latest GTDT on Data Protection & Privacy.
- TAKE DOWN MECHANISM
In relation to the obligation of ensuring that the Electronic System does not contain illegal electronic information, MOCI 5/2020 specifies a relatively detailed rules on take down mechanism.
Under MOCI 5/2020, the take down request can be submitted by public, ministry/institutions, law enforcement, and/or courts via website and/or application, written letter, and/or e-mail. A lodged take down request shall be considered urgent/emergency if the illegal information are relating to terrorism, child pornography, or content which disrupt the society and public order.
In this case, Private ESOs shall take down the illegal electronic information within 1x24 hours after receiving the take down order from the relevant institution, and within at the latest 4 hours timeframe for an urgent/emergency take down request.
- DATA DISCLOSURE AND ACCESS FOR THE PURPOSE OF REGULATORY SUPERVISION AND LAW ENFORCEMENT
Lastly, MOCI 5/2020 elaborates on the obligation of ESOs in relation to data disclosure and access for the law enforcement as stipulated by Article 22 of GR 71/2019.
The data disclosure and access, in this regard, shall be carried out in response to the written request from the relevant institutions or law enforcement, along with necessary explanation/documentation, such as the scope of the access, purposes, type of access, personal data protection mechanism, period of access, etc. The access is provided in the form of a URL, specific application made by the Private ESO, or other means agreed by the relevant parties.
MOCI 5/2020 stipulates a relatively stringent safeguard in relation to the data disclosure and access mechanism, such as the limitation of access, confidentiality e of access, and so on.
November 25, 2020
AKSET
Please contact Abadi Abi Tisnadisastra (atisnadisastra@aksetlaw.com) and Noor Prayoga Mokoginta (nmokoginta@aksetlaw.com) for further information.
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Changes to Competition Law under Omnibus Law
As 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 covers further discussion of the notable amendments to Law No. 5 of 1999 dated March 5, 1999 on Prohibitions on Monopolistic Practices and Unfair Business Competition (the “Competition Law”) under the Omnibus Law.
The amendments to the Competition Law may impose several implications and challenges in the antitrust sector.
This newsflash will focus on the following key provisions.
- Change of Appeal Procedure (the “Objection”) to the Commercial Court
Previously, the Objection procedure for a decision rendered by the Indonesian Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or "KPPU") needed to be submitted to the District Court. The Omnibus Law now requires business actors to submit the Objection to the Commercial Court. Accordingly, the authority of the District Court to examine and decide upon Objection to the KPPU decisions regarding business competition and/or antitrust cases as provided under Article 44 of the amended Competition Law is now transferred to the Commercial Court.
In addition to the change in jurisdiction, the Omnibus Law also repeals the maximum 30-day deadline in issuing a decision at the Objection and cassation stage. As a result, both the Commercial Court and Supreme Court are free to issue a decision without any time limit.
With this change of authority taking place, the Commercial Court now has an absolute competence to examine, adjudicate, and decide the following matters: Bankruptcy and Suspension of Debt Payment Obligations (Penundaan Kewajiban Pembayaran Utang or PKPU), Bank Liquidations by the Indonesian Deposit Insurance Company (Lembaga Penjamin Simpanan or LPS), Intellectual Property, and recently, Business Competition.
The Omnibus Law provides that further procedures for the examination on the Commercial Court and the Supreme Court shall refer to the prevailing laws and regulations. In this case, the Objection procedures in the Commercial Court will still refers to the Supreme Court Regulation No. 3 of 2019 dated August 20, 2019 on Procedure for Appeal against Decisions of the KPPU (“SC Reg. 3/2019”). It is worth noting that SC Reg. 3/2019 stipulates Objection procedures in the District Court. Therefore, this may cause some confusion in the future with regard to the procedures to be implemented in the Commercial Court. We expect that the Supreme Court will issue a circular letter on the Objection procedure in the Commercial Court in the near future.
- Removal of Maximum Administrative Fines of Rp25 Billion
The most significant change to the Competition Law lies in the removal of the capped fee on fines of Rp25 billion under Article 47 of the amended Competition Law. Following the adjustment under this article, KPPU may now have a power to impose even higher administrative fines for violation of the Competition Law. This provision is subject to a Government Regulation which will set out further provisions on the criteria, type, amount of fine, and procedures of sanction imposition.
- Limitation of Criminal Sanctions Imposition
The Competition Law previously stipulates criminal sanctions for violating several articles under the Competition Law. In practice, though, criminal sanction has never been exercised in Indonesia towards violation of the Competition Law. The Omnibus Law now stipulates that only a violation of Article 41 of the Competition Law (refusal of providing evidence or hindering the investigation process) may be subject to criminal sanction. The form of criminal sanction for violating this provision is subject to a fine of up to Rp5 billion or substituted with criminal confinement for no longer than 1 (one) year.
Meanwhile, any violation of the other articles previously mentioned in Article 48 of the Competition Law, such as prohibited agreements, prohibited activities, and dominant position are only subject to administrative sanctions provided under the Omnibus Law.
- Removal of Additional Criminal Sanctions
The Omnibus Law also removes the provision on additional criminal sanctions as previously provided under Article 49 of the Competition Law, such as (i) revocation of business licenses; (ii) prohibition of business actors proven to have violated this law from filling the position of director or commissioner for at least 2 (two) years and no longer than 5 (five) years; or (iii) order to cease certain activities or actions causing losses to other parties. The Omnibus Law now does not recognize additional criminal sanctions for any violation of the Competition Law.
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November 24, 2020
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