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).
***
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.
***
January 11, 2021
Copyright © 2021 AKSET. All rights reserved.
Changes to Investment Law under Omnibus Law
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.
***
January 11, 2021
Copyright © 2021 AKSET. All rights reserved.
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).
***
January 4, 2021
Copyright © 2021 AKSET. All rights reserved.
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.
***
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
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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.
***
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).
***
November 25, 2020
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