Supervision of Food and Drugs Distributed Online

The National Agency of Drug and Food Control (Badan Pengawas Obat dan Makanan or “BPOM”) issued its Regulation No. 8 of 2020 dated April 7, 2020 on the Supervision of Drugs and Food Distributed Online (“BPOM Reg. 8/2020”) as an implementing regulation as referred to in Article 35 paragraph (3) of Government Regulation No. 71 of 2019 dated October 10, 2019 on the Organization of Electronic Systems and Transactions.

As mandated under Presidential Regulation No. 80 of 2017 dated August 9, 2017, on the National Agency of Drug and Food Control (BPOM), BPOM is authorized to supervise food and drugs in Indonesia. Through tthe BPOM Reg. 8/2020, BPOM intends to protect consumers from the risk of unsafe food and drugs that may be available in the online market.

Previously, on October 17, 2019, BPOM signed a Memorandum of Understanding (MoU) with the Indonesian E-Commerce Association (idEA) and several online marketplace platforms (Bukalapak, Tokopedia, Gojek, Grab, Klikdokter, and Halodoc) to cooperate in the supervision, delivery, and marketing of food and drugs. BPOM Reg. 8/2020 is the first regulation to provide comprehensive provisions on the supervision of food and drugs that are accessible online.

Pertinent provisions in the BPOM Reg. 8/2020 are as set forth below.

  • Online Distribution of Food and Drugs

BPOM requires that all drugs, traditional medicines, health supplements, cosmetics, processed foods (except (i) ready-to-serve foodstuffs; and (ii) foodstuffs that are to be used as raw materials by business actors which are not sold directly to end consumers) and processed food for special medical purposes (pangan olahan untuk keperluan medis khusus or PKMK) that are distributed online to obtain distribution licenses and to meet the proper manufacturing methods. A more elaborate information regarding the online distribution of these products is stated in the following table.

Allowed Products Sellers Buyers Means of Distribution Obligations
1.     Drugs, including:

a.      Over-the-counter (“OTC”) drugs (obat bebas);

b.      Limited OTC drugs (obat bebas terbatas); and

c.      Prescription drugs (obat keras).

 Pharmacies or pharmacies in collaboration with other legal entities. Patients Electronic systems owned by pharmacies and/or provided by the Pharmacy’s Electronic System Provider (“PSEF”).

It is to be noted that the data retention requirement of all drug transactions online is at least 5 (five) years.

 Business actors carrying out drug distribution activities online must:

1.    Guarantee that the electronic systems utilized meet certain criteria, i.e., provision of electronic data backup system, accessible by BPOM at any time, and information that users must submit original prescriptions prior to drug purchase;

2.    Conduct supervision and evaluation of all drug distribution; and

3.    Submit regular reports which include several information, i.e., list of drugs distributed online, names of PSEF, and transaction data.
2.     PKMK Pharmacies Business actors carrying out PKMK distribution activities online must:

1.      Guarantee that the electronic systems utilized meet certain criteria, i.e., provision of electronic data backup system, accessible by BPOM at any time, and information that users must submit original prescriptions prior to drug purchase; and

2.      Conduct supervision and evaluation of all drug distribution.
3.     Traditional medicines, health supplements and/or cosmetics Business actors or business actors in collaboration with other legal entities. Consumers Electronic systems owned and operated by sellers and/or provided by any Electronic System Provider (an “ESP”).

 

 Business actors carrying out the online distribution of traditional medicines, health supplements and/or cosmetics must:

1.      Guarantee that the electronic systems utilized meet certain criteria, i.e., accessibility of certain information and provision of mechanism for the recordation of distribution;

2.      Guarantee that the condition of the traditional medicines, health supplements and/or cosmetics up to the delivery;

3.      Deliver the traditional medicines, health supplements and/or cosmetics in a closed container;

4.      Guarantee that the traditional medicines, health supplements and/or cosmetics is delivered to the designated address;and

5.      Document the handover of the products.

 
4.     Processed Food Business actors carrying out processed food distribution activities online must:

1.      Provide certain information, i.e., name and address of the seller and other relevant data;

2.      Guarantee that the condition of the processed food up to the delivery;

3.      Deliver the processed food in a closed container; and

4.      Maintain the condition of the delivery in accordance with the characteristics of the product.

 

  • BPOM Supervision and Guidance

BPOM supervises the online distribution of food and drugs by carrying out inspection of the products as well as the online advertisements and examination of related means or means that are suspected to be conducting distribution activities of food and drugs online.

BPOM also provides guidance to business actors that distribute food and drugs online through communication, information, and education, and/or assistance in order to fulfill the standards and requirements of the relevant products distributed. In addition, BPOM provides guidance to consumers through communication, information, and education, and/or the formation of food safety facilitator.

  • Prohibited Products

BPOM prohibits several food, drugs, and cosmetics from being distributed online, as set forth in the table below.

Prohibited Products Classifications
1. Drugs a.      Certain prescription drugs (obat keras tertentu or OKT);

b.      Drugs that contain pharmaceutical precursor;

c.      Drugs for erectile dysfunction;

d.      Injections other than insulin for personal use;

e.      Implants which use requires the assistance of health workers; and

f.       Narcotic drugs and psychotropic substances.
2. Cosmetics a.      Skin care products that contain alpha-hydroxy acids (AHA) greater than 10% (ten percent); and

b.      Teeth whitening products that contain hydrogen peroxide greater than 6% (six percent).
3. Alcohol

Further, BPOM prohibits the promotion and marketing of drugs and the distribution of drugs and PKMK through social media, daily deals, and classified ads.

  • Imposition of Sanction

Business actors that violate BPOM Reg. 8/2020 may be subject to administrative sanctions in the form of warnings, recommendations to close or restrict the relevant electronic systems, recommendations to revoke pharmaceutical service facility licenses, temporary prohibition of distribution, and/or order to recall relevant food and drugs.

 

***

June 5, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

OJK Issues New Regulations on General Meeting of Shareholders using Conventional and Electronic Means

On April 21, 2020, the Indonesia Financial Service Authority (Otoritas Jasa Keuangan or “OJK”) issued 2 (two) new regulations in relation to the General Meeting of Shareholders for Public Companies (“GMS”), as follows:

  1. OJK Regulation No. 15/POJK.04/2020 dated April 21, 2020 on Planning and Implementation of GMS for Public Companies (“OJK Reg. 15/2020”) – replacing the previous OJK Regulation No. 32/POJK.04/2014 of 2014 dated December 8, 2014 as amended by OJK Regulation No. 10/POJK.04/2017 of 2017 dated March 14, 2017.

There are no material changes to the process of GMS under the OJK Reg. 15/2020. However, this new regulation introduces new provisions allowing: (i) BOC to propose convening a GMS and (ii) GMSto be carried out through electronic means.

  1. OJK Regulation No. 16/POJK.04/2020 on the Implementation of GMS Through Electronic Means by Public Companies (“OJK Reg. 16/2020”). Preceded by OJK Circular Letter on March 18, 2020 on the Implementation of GMS (as discussed in our previous newsflash, OJK now specifically regulates the implementation of GMS through electronic means (“E-GMS”).

In brief, this OJK Reg. 16/2020 allows public companies to hold E-GMS, through a system provided by either: (i) an E-GMS Provider (ii.e., the Indonesia Central Securities Depository (“KSEI”)) or other party appointed by OJK; or (ii) the said public company itself.

Please see our previous newsflash on KSEI’s current rules on E-GMS and provision of authorization via electronic means.

Further, this OJK Reg. 16/2020 sets out, among others, the requirements and obligations that must be complied with by the E-GMS Provider or the public companies in preparing and carrying out the E-GMS.

The following are the key points to be noted under the OJK Reg. 15/2020 and OJK Reg. 16/2020.

OJK Reg. 15/2020 – Planning and Implementation of GMS

  • Deadline for Convening Annual GMS

Previously, public companies were required to convene their annual GMS 6 (six) months after the end of their respective financial year at the latest. Under OJK Reg. 15/2020, OJK, under certain circumstances, has the discretion to determine another deadline for public companies to convene their GMS. Such circumstances may include potential of significant fluctuation on market condition – as evident in the recent market condition, amid the COVID-19 outbreak.

  • BOC Request to Convene GMS

OJK Reg. 15/2020 now permits Board of Commissioners (“BOC”) of public companies to request their Board of Directors (“BOD”) to convene GMS. Under the previous regime, only one or more shareholders holding at least 1/10 or more voting shares are entitled to request BOD to convene GMS.

  • Submission of Additional Information Relating to GMS

Prior to convening GMS, public companies need to complete the following actions: (i) submission of the agenda of the GMS to OJK; (ii) announcement of GMS to shareholders (GMS Announcement); and (iii) issuance of GMS invitation to shareholders (GMS Invitation).

In submitting the GMS agenda to OJK, the Public Company must now include: (i) an explanation on whose request the GMS is going to be held (i.e., either the shareholder’s request or court decision) and (ii) details of the party(ies) requesting the GMS (i.e., name and share percentage of the relevant shareholder(s) in such public company and/or the relevant court decision, as applicable).

In addition, OJK Reg. 15/2020 stipulates that in the event a GMS is to be attended only by independent shareholders, the GMS announcement must also include the following information:

  1. The subsequent GMS that will be convened if the first GMS fails to meet the attendance quorum of the independent shareholders; and
  2. The voting quorum required for each meeting.

With respect to the GMS Invitation, OJK Reg. 15/2020 now also requires informing shareholders of possibility of a shareholder to be represented by a proxy by providing a power of attorney through the E-GMS mechanism.

  • Miscellaneous
  1. In the event that the result determined in the resolution of a GMS is not implemented within 12 (twelve) months from the date of such GMS, public companies must provide an explanation on the reasons behind the failure to implementing the next GMS and include such information in the annual report.
  2. Appointment and termination of public accountant in providing audit services relating to the annual financial information must be resolved in GMS, taking into account the proposal from the BOC and the recommendation of the audit committee.

Lastly, it is to be noted that Public Companies also need to amend their Articles of Associations to be in line with the provisions of OJK Reg. 15/2020 within 18 (eighteen) months from April 21, 2020 – i.e., by October 21, 2021.

OJK Reg. 16/2020 – GMS THROUGH ELECTRONIC MEANS

  • E-GMS System

OJK Reg. 16/2020 provides that public companies may hold GMS through electronic means (using teleconferencing media, video conferencing, or other electronic media facilities) – through a system (an electronic GMS system which supports the provision of information, implementation, and reporting of the said GMS) provided by either:

  • E-GMS Providers, which can be:
    1. KSEI – through its “eASY.KSEI” system; or
    2. Other parties designated by the OJK (must be an Indonesian legal entity based in Indonesia).
  • The Public Company itself.

It is to be noted that:

  • If the Public Company convenes GMS using the system hosted by E-GMS Provider, the Public Company must comply with the terms and conditions set by the E-GMS provider; and
  • All systems of E-GMS, whether hosted by OJK’s appointed provider or by the Public Company itself, must be connected with KSEI and the relevant Securities Administration Bureau (Biro Administrasi Efek or “BAE”) as to ensure the said meeting is attended by the rightful shareholders.
  • Requirements for E-GMS Provider

In carrying out its role, E-GMS Provider and Public Companies (which provide their own E-GMS system – except letter (h) below) must comply with the following requirements:

  1. Be registered as an electronic system provider (Penyelenggara Sistem Elektronik or “PSE”) to the Ministry of Communication and Informatics;
  2. Provide access rights to the users (Public Companies, BAE, shareholders, other participants as allowed by the provider);
  3. Determine and follow a set of standard operating procedures for the implementation of the system;
  4. Ensure the implementation of the E-GMS;
  5. Ensure the safety and reliability of the system;
  6. Notify the users in case of changes or development to the system, including the addition of services and features of the E-GMS;
  7. Provide an audit track record of all data processing activities at the system for the purpose of supervision, law enforcement, dispute resolution, verification, and examination;
  8. Provide replacement facilities for data centers and disaster recovery centers which relate to the implementation of E-GMS at a safe location within Indonesia territory and located in a separate area from the main data centers;
  9. Meet various minimum standards which apply to information technology systems, information technology security, system disruptions and failures, and the management of information-transfer technology systems;
  10. Save all data on the implementation of the E-GMS; and
  11. Accept liability for any losses that are incurred as a result of any errors or omissions which occur during the provision and management of E-GMS.

For E-GMS  system that is provided by the Public Company itself, all above-mentioned requirements are also applicable to such company, except for item (h) above.

OJK Reg. 16/2020 also requires KSEI to issue a procedure and guidelines for its system within 6 (six) months after its enactment – which will fall on October 21, 2020. Such procedure and guidelines will contain, among others, requirements and procedures for the registration and/or granting of access rights to E-GMS users, including cancellation of E-GMS user registrations, protection of personal data according to the relevant laws and regulation, etc.

  • Procedures and Requirements for E-GMS

In convening an E-GMS, OJK Reg. 16/2020 requires the following:

  1. Public Companies must include information regarding the implementation plan of E-GMS in the notification of the GMS agenda to OJK, the GMS Notification, and the GMS Invitation;
  2. Public Companies must also hold a Physical GMS (that will be used as the main location to convene the E-GMS) which must be held and attended by at least the following parties:
    • Chairman of the said GMS;
    • 1 (one) director and/or 1 (one) commissioner; and
    • Supporting professionals in capital market – namely the Public Accountant, Appraiser, Legal Consultant, and Public Notary.

In certain conditions, the Public Company may not have to carry out the above-mentioned physical GMS or otherwise limit the physical presence of the parties, either partially or wholly, in convening an E-GMS. Such conditions will be determined by the government or proceeded with approval from OJK.

Determination of Total Attendees

The shareholders or their proxies can attend the GMS either physically or electronically when Public Companies decide to hold a GMS through the E-GMS mechanism. The total attending shareholders will be calculated based on the shareholders or their proxies attending the E-GMS physically or electronically.

The number of shareholders/proxies that can attend the GMS physically can be determined by the Public Company on a first come first served basis up to the determined number.

Mandatory Features

OJK Reg. 16/2020 also stipulates that E-GMS must have the following features:

  1. Ability to display the rules, materials of the GMS and the agenda of the GMS needed for shareholders to make decisions for each item listed in the agenda of the GMS;
  2. Ability to allow all participants of the GMS to participate and interact in the GMS;
  3. Ability to provide calculation system to determine the attendance quorum;
  4. Ability to collect and count casted votes, including if there are more than 1 (one) shares classifications;
  5. Ability to record all interactions in the GMS, both in the form of audio, visual, audiovisual, and non-audiovisual electronic recordings; and
  6. Ability of granting power of attorneys electronically.

Voting Mechanism

Under this OJK Reg. 16/2020, voting through electronic means can be submitted from after the GMS Notification is sent until the opening of each agenda on the GMS date. This electronic vote may be changed or canceled up to the point where the GMS Chairman commences the voting process over each of the GMS agenda. Shareholders who have voted electronically before the actual GMS will still be considered validly attending the GMS.

In its implementation, the E-GMS Provider, who has recorded and stored the already-submitted votes, must keep the said votes confidential until the time of the votes’ count.

Minutes of E-GMS

The results of the E-GMS must be made into an E-GMS minutes and made in the form of a notarial deed, without requiring the signatures of the GMS participants.

  • Sanction

OJK may impose administrative sanctions or specific measures for violation of OJK Reg. 16/2020 ranging from written warnings to cancellation of registration. OJK may also publish a public announcement regarding the imposition of administrative sanctions and other specific measures.

  • Transitional Provisions

Public Companies that have delivered the agenda of the GMS to the OJK prior to the enactment of OJK Reg. 16/2020 may follow the provisions stipulated this OJK Reg. 16/2020.

Furthermore, until KSEI’s procedures and guidelines for the system to hold E-GMS is issued by OJK under OJK Reg. 16/2020 (i.e, by October 21, 2020 at the latest), KSEI may act as E-GMS Provider based on an agreement with the users.

 

***

June 3, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

E-Signature in the COVID-19 Crisis: Adapting to the (Not So) New Normal

As the COVID-19 pandemic forces people to adopt homeworking and physical distancing, digital transformation is no longer a mere option. In the past few months, we have witnessed how most businesses have departed from the traditional in-person meetings to virtual meetings, working through online collaborations, and hosting seminars and forums through digital means.

The signing of legal, commercial, and transactional documents is no exception. While gathering all relevant parties in the same room for signing is unfeasible, it is also considered out of fashion and impractical to rely on delayed postal service to circulate hard copy originals to obtain a wet ink signature. Therefore, one of the ways to overcome this issue is for businesses, governmental agencies, and legal practitioners to adapt by transforming or replacing the conventional use of wet ink signature with technology having similar legal robustness to the traditional signing mechanism, while still ensuring that legal documents are executed properly and in a timely manner.

This is where e-signature presents a welcome solution to the challenges of being bound to work from home, which certainly will remain part of our (not so) new normal lives.

Although regulations governing implementation e-signature have been in effect for several years, until the beginning of the pandemic, the use of e-signature is still not commonly adopted in our day-to-day course of business. Now, with a drastic shift to a remote working environment, the use of e-signatures provides a way to enhance efficiency and simplify work. But what is an e-signature and how legitimate is it? Are we to embrace the use of e-signature in every legal document and business transaction?

We have compiled below frequent questions commonly arising on the implementation of e-signature in Indonesia.

  • What is the difference between e-signature and the traditional handwritten (wet ink) signature? Will e-signature be legally binding?

E-signature is generally regulated under Law No. 11 of 2008 as amended by Law No. 19 of 2016 on Electronic Information and Transaction (the “EIT Law”) and Government Regulation No. 71 of 2019 on the Implementation of Electronic System and Transaction (“GR 71/2019”).

E-signature is defined as Electronic Information which is attached, associated, or related to another electronic information utilized as a means of verification and authentication. The current prevailing regulation recognizes various forms of e-signature, from electronically scanned signature, electronic handwriting font in the execution block or using a certified e-signature platform.

Despite its form, e-signature has the same legal standing as regular manual wet ink signature, provided that (i) e-signature data is related only to the signatory party; (ii) e-signature data is under the control of the signatory party during the signature process; (iii) all changes towards the e-signature occurred after the signing can be traced; (iv) all changes towards electronic information related to the e-signature occurred after the signing can be traced; (v) there are means to identify the signatory party; and (vi) there are means to demonstrate that the signatory party has consented to the relevant electronic information.

If all the conditions presented are met, e-signature is legally binding and has the same legal standing as regular manual wet ink signature, with its legal force and legal consequences.

  • What types of e-signature are governed under Indonesian Law?

There are two types of e-signature, namely certified and non-certified e-signatures.

Certified e-signature is an e-signature through a process of unique code generation as generated and certified by an Indonesian electronic certification provider. E-signature certification system can detect any change to the document, assuring both the validity of the signature as well as the integrity of the document.

Meanwhile, non-certified e-signature is rendered without using the services of any Indonesian electronic certification provider. This category includes digitalized version of a wet ink signature (e.g. through scanning process).

Both types of e-signatures are valid and legally binding. However, certified e-signature has stronger legal enforceability in the eye of the Indonesian court, compared to a non-certified e-signature.

  • Is it admissible in legal proceedings?

Yes, e-signature is admissible in legal proceeding. In fact, pursuant to Article 59 (3) GR 71/2019 in conjunction with Article 11 of the EIT Law, a document signed with a certified e-signature has valid legal force and legal consequences– equivalent to an authentic deed – when submitted as an evidence before a court. Meanwhile, submission of documents signed with non-certified e-signature as an evidence will require an authentication process through digital forensic examination. Once examined, the result will be conveyed in a forensic report and a digital forensic expert may also be called before the court to explain the result of the examination. Nonetheless, both types of e-signature are legally recognized by Indonesian courts.

As per July 2018, the Indonesian Supreme Court has also launched an e-Court application as an implementation of the Supreme Court Regulation No. 3 of 2018 on the Case Administrative Guidelines at Electronic Courts enacted in April 2018. The e-Court application accommodates parties to do e-Filing, e-Payment, e-Summons, and e-Litigation electronically. The Supreme Court has also collaborated with the Electronic Certification Agency (Balai Sertifikasi Elektronik – BsrE) of the National Cyber and Crypto Agency (Badan Siber dan Sandi Negara – BSSN) to secure the legality of the  documents used in the proceedings, including in providing e-signature services.

  • What documents can be signed electronically?

In general, any document can be signed electronically, and the signature will be deemed valid if it fulfills certain legal requirements. However, the foregoing may not apply in certain cases where certain formal requirements are needed. Pursuant to the provision of Article 5 (4) of the EIT Law, generally there are 2 (two) types of document that cannot be executed electronically, as follows:

  1. documents that, by law, should be made in a written form (hardcopy), for instance, commercial papers, marriage and birth certificates, etc.; and
  2. documents that, by law, shall be made in the form of notarial deed or by deed-granting officials, for instance, company’s acquisition deed or pledge of shares deed – both of which are required to be made in the form of notarial deed.
  • If the other party is from a different jurisdiction, can they sign electronically?

In general, if a document is not subject to any specific regulatory requirements, it is possible for a party from another jurisdiction to sign such document electronically. Please note, even if the e-signature is generated by a foreign certified e-signature provider, it will still be recognized in Indonesia as “uncertified e-signature”.  An e-signature will only be considered as a “certified e-signature” under Indonesian law if it is certified by an Indonesian electronic certification provider by using a certified e-signature producing device. However, the lack of certification thereof does not affect the validity of the e-signature itself.

One important note, e-signature may not be applicable for document that needs to be notarized and consularized in foreign countries.

  • Would a legal document governed under a foreign jurisdiction be valid if it is electronically signed using an Indonesian e-signature provider?

It varies over different jurisdictions. The validity of e-signature on legal document will depend on the laws and regulation respective to e-signature applicable in the relevant jurisdiction.

In Indonesia, for instance, while all e-signatures are legally valid, an e-signature will only be considered as a “certified e-signature” if it is particularly certified by an Indonesian certification company. On the other hand, in the United States, this will depend on the laws of each state. To the best of our knowledge, while some state laws in the United States acknowledge the validity of any type of e-signature, others require some form of security, and some will only acknowledge the validity of e-signature that uses encryption, depending on the types of transactions covered.

  • Is express language by the parties that consents to electronic transacting and acknowledges intent for the electronic signature to be binding necessary for the e-signature to be valid?

There is nothing in the current prevailing Indonesian laws and regulations that requires party to expressly state their intent to be bound by the provisions contained in a document signed electronically. The stipulation of Article 11 of the EIT Law is deemed to have provided sufficient ground for such e-signature to have the same legal force and consequences as wet ink signature and therefore will equally bind the parties in the transaction, regardless the existence of specific language in the document expressing the parties’ consent to be bound by the e-signature.

  • How does e-signature affect the meterai (stamp duty) requirement for certain legal documents?

E-signature can co-exist with meterai requirement. In essence, the obligation to affix meterai is related to a tax obligation, as opposed to the validity of such document. The signature in the document will still be legally enforceable and valid as long as it fulfills the requirement set forth by EIT Law and GR 71/2019. One may affix the meterai at a later stage in case the document is going to be submitted as an evidence in a court proceeding (Nazegeling).

The above, however, only applies when there is no formal procedure which requires affixation of meterai to conclude the document – for instance, submission of statement letter/document for certain license/application purposes.

  • The rise of e-signature certification amidst the COVID-19 pandemic

We have witnessed the pandemic to have served as a wake-up call for government and businesses to embrace digital transformation in carrying out their activities. It has brought a drastic shift to our way of doing business and we are seeing such changes becoming the “new normal”. We have seen various business associations pleading regulatory agencies to adopt e-signature, and in response, more initiatives have been launched by several governmental institutions to embrace the use of e-signature to minimize disruption in the course of business during the pandemic.  The Financial Services Authority (Otoritas Jasa Keuangan – OJK), for instance, now allows e-signature to replace wet ink signature on insurance products. We are hopeful that the current situation will encourage more and more parties, from lawmakers to business players, to adopt the use of e-signatures.

The following is the list of current certified e-signature providers in Indonesia registered with the Ministry of Communication and Informatics:

  1. Digisign – PT Solusi Net Internusa (certified);
  2. PrivyID – PT Privy Identitas Digital (certified);
  3. Perusahaan Umum Percetakan Uang Republik Indonesia (Peruri) (certified);
  4. VIDA – PT Indonesia Digital Identity (certified);
  5. BSrE BSSN (registered);
  6. Badan Pengkajian dan Penerapan Teknologi (BPPT) (registered).

 

***

May 29, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

Lebaran Card 2020

Happy Eid Mubarak 1441H

Lebaran Card 2020

by Edward Aryana

BPN Allows Ease to Extend Land Titles and Land Registration in Response to the COVID-19 Pandemic

The Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency (Kementerian Agraria dan Tata Ruang/Badan Pertanahan Nasional or “BPN”) issued its Decree No. 88.1/SK-HR.01/IV/2020 dated April 16, 2020 on Extension of the Validity of Land Titles and the Registration for Granting, Extension, or Renewal Decrees of Land Titles that Have Expired or Will Expire during the Coronavirus Disease 2019 (COVID-19) Emergency Status Period (“Decree 88/2020”). As a guidance to implement this Decree, BPN also issued its Circular Letter No. 7/SE-100.HR.01/IV/2020 dated April 17, 2020 on Ease of Granting and Registration Services of Land Titles during the COVID-19 Emergency Status Period (“Circular Letter 7/2020”). Both the Decree 88/2020 and the Circular Letter 7/2020 (collectively, “Land Services Policy”) apply retroactively to March 31, 2020.

Through the Land Services Policy, the BPN provides stimulus in the land sector to anticipate the economic fallout and to release the burden of land titles application during the COVID-19 pandemic by extending the duration of land titles validity and registration of granting, extension, or renewal decree of land titles up to December 31, 2020 and by simplifying the documentation requirement for registration of granting and/or transfer of right decree over land titles.

  • Granting Services of Land Titles

In the current exceptional circumstances, the BPN has shown its efforts in taking measures to avoid physical contact between BPN officials and applicants. Under the Land Services Policy, land titles that have expired or will expire as of March 31, 2020 are automatically extended up to December 31, 2020 without the requirement of following any registration procedures as should be carried out by the land titles owners.

The land titles applicable for this relaxation are limited to: (i) right to cultivate (hak guna usaha); (ii) right to build (hak guna bangunan); and (iii) right to use (hak pakai).

However, the Land Services Policy will not be applicable for land titles that expired before March 31, 2020.

In addition, the eligible land titles owners who wish to exercise their rights after December 31, 2020 should apply for an extension of land rights before December 31, 2020. Failure of such application will result in the expiration of the land titles.

  • Registration Services for Granting, Extension, or Renewal Decree of Land Rights

In addition to the above, BPN also extends the registration period for granting, extension, or renewal decrees of land titles that have expired or will expire as of March 31, 2020 up to December 31, 2020.

The eligibility consideration for this land relaxation measures as provided under the Land Services Policy is if it remains valid up to March 30, 2020.

Please note that land titles holders of granting, extension, or renewal decree should also register such decree before December 31, 2020 to avoid the decree being declared null and void. Should the decree become null and void, land titles holders will have to reapply for the granting, extension, or renewal decree to the BPN.

  • Documentation Requirement for Registration of Granting and/or Transfer of Right Decree over Land Titles

Previously, land titles holders were required to submit a validated evidence of Duty on the Acquisition of Rights over Land and Building (Bea Perolehan Hak Atas Tanah dan Bangunan or “BPHTB”) or income tax (pajak penghasilan or “PPh”) payment in order to complete the registration process of granting and/or transfer of right decree over land titles.

Given the urgency to ensure that social distancing is still carried out, BPN relaxes the document submission requirement so that land titles holders are no longer required to obtain validity of tax payment from the relevant tax offices prior to the registration of granting and/or transfer of right decree over land rights.

Pursuant to the Circular Letter 7/2020, BPN acknowledges that the following documents will suffice:

  1. BPHTB and/or PPh proof of payment; and
  2. Stamped statement letter in accordance with the format provided in the Circular Letter 7/2020.

This exemption is valid until December 31, 2020.

 

***

May 20, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

Use of Imported Digital Products and Services Will Be Subject to Value Added Tax

The Minister of Finance (the “Minister”) enacted Minister Regulation No. 48/PMK.03/2020 of 2020 dated May 5, 2020 on the Procedures to Appoint Collectors, Collection as well as Reporting of Value-Added Tax (“VAT”) on Utilization of Taxable Non-Tangible Products and/or Services from Outside the Custom Area through Electronic System Trading within the Custom Area (the “Regulation”). The Regulation is an implementing regulation of Article 6(13) of Government Regulation in Lieu of Law No. 1 of 2020 dated March 31, 2020 (“Perppu 1/2020”) which was promulgated to improve the social, economic, and community welfare implications of the Covid-19 pandemic.

Due to the large-scale social restrictions policy in various places in Indonesia, the utilization of video and music streaming as well as video conference transmissions provided by digital companies from outside Indonesia has increased significantly. Now, based on Perppu 1/2020 and the Regulation, VAT will be imposed towards the utilization of digital products and/or services imported from outside Indonesia effective as of July 1, 2020.

This Newsflash discusses the following salient provisions of the Regulation: (i) the appointment of VAT collectors, (ii) VAT collection, and (iii) VAT payment and reporting.

  • Appointment of VAT Collectors

VAT shall be collected, paid, and reported by an Electronic System Trading (Perdagangan Melalui Sistem Elektronik – the “PMSE”) Business Actor appointed by the Minister (a “PMSE VAT Collector”). The Regulation provides that a PMSE Business Actor includes an offshore trader, an offshore service provider, an offshore PMSE provider, and/or an offshore PMSE provider. In order to be appointed as a PMSE VAT Collector, a PMSE Business Actor must satisfy certain the following criteria:

  1. The transaction value of a PMSE VAT Collector with product purchasers and/or service recipients in Indonesia exceeds a certain amount within 12 (twelve) months; and/or
  2. The volume of the traffic or the number of parties that access the services exceeds a certain volume within 12 (twelve) months.

The foregoing criteria will be further clarified by Director General of Taxation in a regulation.  We understand that the Director General of Taxation is preparing the detailed criteria of PMSE VAT Collectors and the procedures of the appointment. In any event, the regulation should be issued before July 1, 2020 (i.e., the effective date of the Regulation).

  • VAT Collection

Payable VAT over the utilization of digital products and/or service from overseas in Indonesia resulting from  a transaction between a foreign trader or a service provider with a product purchaser and/or a service recipient shall be directly collected, paid, and reported by such foreign trader or service provider. Further, in case the foreign trader or the service provider conducts the transaction with a product purchaser and/or a service recipient through an offshore PMSE provider or an onshore PMSE provider, then the payable VAT may be collected, paid, and reported the foreign trader or the service provider, the offshore PMSE provider or the onshore PMSE provider who is appointed as a PMSE VAT Collector.

The VAT that must be collected by a PMSE VAT Collector is at 10% times the tax basis and must be collected during the payment by a product purchaser and/or a service recipient. A PMSE VAT Collector must further prepare a proof of the VAT collection which states the VAT collection and the payment of the VAT.

  • VAT Payment and Payment Reporting

A PMSE VAT Collector must pay the collected tax for each tax period by no later than the following month after the end of the tax period. The VAT payment shall be conducted electronically through the State Treasury’s account. The VAT may be paid in (i) Rupiah, (ii) US Dollars, or (iii) any other foreign currencies stipulated by the Director General of Taxation.

Further, VAT payment reports must be made quarterly and submitted through an application or system determined by the Director General of Taxation.

  • Possible Sanctions

The Regulation does not stipulate any sanctions for non-compliance.  However, pursuant to Article 7 of Perppu 1/2020, any PMSE VAT Collector that does not satisfy the VAT collection provisions may be subject to administrative sanctions and/or termination of access in Indonesia. At this stage, we are uncertain how the Government will implement the sanctions. We anticipate that this will be dealt with or clarified in the regulation of the Director General of Taxation.

 

***

May 20, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

Personal Data Protection and Privacy: Indonesian Government Turns to Technology to Help Stop the COVID-19 Outbreak

As the number of COVID-19 cases keeps growing, many governments around the world turn to technology to press down the spread of the virus. These technologies serve various purposes, from digital health services to online community management.

The Indonesian government has also been using technology as part of the effort to fight COVID-19. For instance, the Executive Office of the President of Indonesia developed “10 Rumah Aman” Application as a tool to manage the public to stay at home or the modification of “Lancang Kuning Nusantara” Application by the Regional Police of Riau, which previously used to track wildfires and is now altered to track assistance distribution for people affected by COVID-19.

Another use of technology by governments to flatten the COVID-19 curve is the development of a digital contact tracing application. China and Singapore are two of the first countries to launch these contact tracing applications using big data on the movement of people by way of Bluetooth signal to trace if someone has been in close contact within the last 14 (fourteen) days with someone contracted by or suspected to have the COVID-19 virus. Not only the governments, Apple and Google as tech giants are also designing a similar tracking system for their mobile devices.

Learning from other jurisdictions’ experience that has successfully launched digital tracking application, the Indonesian government has recently launched a digital contact tracing application called PeduliLindungi.

  • How Digital Contact Tracing Application Works

In general, digital contact tracing applications will only work between users who have installed the application on their mobile phone. The application generally utilizes proximity data using Bluetooth technology. It often uses a randomly generated ID based on the device information as well as the registered name and active phone number (“Device ID”). If a user has been in close contact with COVID-19 patients or patients suspected to have the virus, the application will notify the user. Some applications will forward the information of the COVID-19 patients to health officials.

In collecting and processing the data, there are 2 (two) common models of digital contact tracing applications as follows:

  1. Centralized models. This model attempts to collect and centralize data by generating and keeping track of the users’ identifiers to construct the contact graph of a user in case they are infected. The generation of identifiers and generation of contact graphs are done on a server which will be controlled by the responsible institution(s). Thus, in the event that someone is tested positive for COVID-19, the application will upload the contact history log of such user, in which the authorized party would be able to match the identifiers with user records and contact people who had been in close contact with the patient.
  2. Decentralized models. In this model, the data will be kept on the devices as much as possible. It is aimed to strictly control data flows to avoid accumulating and collecting too much data on a centralized server. This means that a server exists but only to enable people to use their own devices to trace contacts. The server is not authorized to collect and store personal data, and it cannot use any identifiers to single out an individual, nor does it provide identifiers for users to broadcast. The key difference here is that the decentralized model will keep as much as data exclusively on the users’ device.

In some cases, a digital contact tracing application can also be equipped with a Past Movement Tracking feature. This feature collects and processes mobile location data generated by a phone’s interaction with cell towers, WiFi, Satelite, or be found in the form of metadata of call log or text log.

  • An Ideal Digital Contact Tracing Application from the Perspective of Indonesian Personal Data Protection Regime

Personal data, in essence, is any data relating to an identified or identifiable natural person – directly or indirectly.

Digital contact tracing application often uses the Device ID, in which it relates to one particular user as it was generated from the submitted name and active phone number. In addition, in the event that the application provides a past movement tracking feature or other feature with similar nature, the application will also collect and process mobile location data – which in itself relates to the users’ registered phone number as well as their location.

As digital contact tracing application uses and processes personal data, its operation shall comply and adhere to the personal data protection regime.

The utilization of a digital contact-tracing application to stop the spread of COVID-19 ideally should still consider and implement the following points:

  1. Use the safest and most appropriate model of digital contact tracing application by considering the prevailing data protection regulatory framework.
  • The centralized model can be more effective by nature, since it collects and analyzes more data centrally. However, in order for this model to safely secure the personal data, it would require a more matured and developed data protection regulatory framework to safeguard the security of the personal data – including its enforceability. This is in particular due to the high risk of unwanted misuse of data or even unlawful external breach when all of the data are pooled in a centralized server.
  • The decentralized model may be the safest approach for the protection of users’ personal data – from a technical standpoint. Using this model, there is no entity that can access a centralized/pooled personal data since the model will keep as much data on the users’ device as possible. This model, in a way, has built-in technical measures within the design of the application to safeguard the users’ data. In addition, it will also help to ensure that any collected data cannot be used for purposes other than to trace and track the spread of COVID-19.
  1. Comply with the rules and principles of the prevailing personal data protection regulatory framework. The following are several key provisions that must be taken into account when it comes to personal data processing activities:
  • Use the appropriate and available lawful grounds, e.g., consent, public interest, legitimate interest, or other grounds as provided by GR 71/2019 (lawfulness principle). Further, when using users’ consent, it must be noted that lawful consent must fulfill the criteria of unambiguous, freely given, specific, and informed.
  • Ensure that the application will only collect and process the personal data that are strictly necessary to achieve the purposes (data minimization principle).
  • Ensure that the personal data are only processed for the purposes which have been initially informed to the users (purpose limitation principle).
  • The responsible institutions must provide clear and sufficient information relating to the processing activities. For instance:
    • identify the responsible party in the operation of the application.
    • inform the purposes of processing and the scope of processing activities in a clear and sufficient manner.
    • provide sufficient detail and assurance on how the data will be adequately protected when it is shared with any third party.
    • provide a sufficient explanation and clarification on how the application actually works, e.g., whether the application strictly processes proximity data utilizing Bluetooth, or also track past movement based on mobile location data.
  • Ensure the accountability of the processing operation carried out by the application, inter alia, by keeping a record of every personal data processing activities (accountability principle).
  • Keep the collected personal data only for the necessary period of time, and store such data using the state of the art encryption technology to maintain its confidentiality. Further, since the application is dealing with sensitive information (i.e., health data), the responsible controller(s) of the data shall store it in a format which does not allow any direct identification during the retention period to prevent any unwanted leakage or misuse.
  1. Lastly, during the processing timeframe, it might also be necessary to periodically evaluate whether or not the proposed measure to use the application shall contribute to mitigate and limit the spread of COVID-19.

 

***

 

A digital contact tracing application may give an edge to the Indonesian Government in managing, preventing, and subsequently, stopping the spread of COVID-19 in Indonesia. However, while processing data plays a major role in formulating the right approach to manage the virus containment, it is paramount for the parties involved in this operation to ensure the adequacy of the protection towards individuals’ Personal Data by complying with relevant Personal Data protection rules and principles.

The assurance on complete compliance with the Personal Data protection regime will certainly help the Government to promote and urge our citizens to utilize a digital contact tracing application. The more users of the application, the more effective this application will be.

 

May 18, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

OJK Amends Regulation on Material Transaction and Change of Business Activities

On April 21, 2020, the Financial Services Authorities (Otoritas Jasa Keuangan or “OJK”) issued OJK Regulation No. 17/POJK.04/2020 on Material Transaction and Change of Business Activities (“OJK Reg. 17/2020”) – replacing the previous Regulation No. IX.E.2 issued by the Capital Market and Financial Institution Supervisory Body (now OJK) concerning the same (“Regulation IX.E.2”).

There are several notable developments in OJK Reg. 17/2020 compared to Regulation IX.E.2 as follows.

A. MATERIAL TRANSACTION

  • Definition and Scope of Material Transaction
    1. Definition

The OJK Reg. 17/2020 defines ‘Material Transaction’ as every transaction conducted by a Public Company having a transaction value of at least 20% (twenty percent) of the said company’s equity, be it in a single or a series of transactions. These transactions include:

      1. Participation in a business entity, project, and/or certain business activity;
      2. Purchase, sale, transfer, use, exchange or assets or operation/business segments;
      3. Acquisition, disposal and/or use of services;
      4. Lease assets;
      5. Lending and borrowing of funds including its transfer;
      6. Securing the assets of the said company and/or a Controlled Company over loans from other parties; and
      7. Providing a corporate guarantee.

OJK Reg. 17/2020 now provides an elaboration on the term “a single or a series of transactions” under the definition of a Material Transaction, as follows:

      1. Having dependency and/or continuity between the contemplated transactions;
      2. Obtaining other company(ies)’s securities in stages with the intention to control or conduct investment;
      3. Disposing a company’s securities in stages with the intention of divestment resulting in in loss of control; and
      4. Obtaining or disposing a unit of asset that is carried out separately (for example, selling a factory by splitting its components and selling it to different parties).

Examples of “A Series of Transactions” falling into the definition of Material Transaction under OJK Reg. 17/2020:

Party X purchases shares issued in Company A, Company B, and Company C – from Party Y.

These transactions will be considered as a series of transactions if: (i) Party Y offers its shares in each of these companies to Party X in a packaged deal with a certain total price and (ii) there is a correlation between the business activities of these companies.

    1. Threshold of Material Transaction

Similar to Regulation IX.E.2, the OJK Reg. 17/2020 maintains the 20% (twenty percent) threshold to determine a transaction as Material Transaction, while also introducing new specific thresholds for the following transaction/condition:

      • Acquisition or disposal of a company or a business segment can also be considered as Material Transaction if:
        1. the transaction value is equal to 20% (twenty percent) or more of the equity of the Public Company;
        2. the total assets of the transaction object divided by the total assets of the Public Company is equal to or more than 20% (twenty percent);
        3. the net profit of the transaction object divided by the net profit of the Public Company is equal to or more than 20% (twenty percent); and
        4. the revenue of the transaction object divided by the revenue of the Public Company is equal to or more than 20% (twenty percent).
      • Public Companies with negative equity will be deemed to be carrying out Material Transaction if the above listed types of transaction represent at least 10% (ten percent) of the said company’s total assets (instead of equity).
      • Non-consolidated subsidiary. Public Companies that due to dilution during a capital increase in the Controlled Companies no longer able to maintain financial statement consolidation, must comply with the provisions under this OJK Reg. 17/2020 if:
        1. total assets of the said Controlled Company represent at least 20% (twenty percent) of the total consolidated assets of the Public Company.
        2. the net profit of the said Controlled Company represents at least 20% (twenty percent) of the consolidated net profits of the Public Company; and
        3. the revenue of the Controlled Company represents at least 20% (twenty percent) of the consolidated revenue of the Public Company.

In order to determine whether a company transaction has reached a certain threshold as determined above, the calculation needs to be based on an audited financial report that is made no more than 12 (twelve) months prior to:

      1. the date that the Public Company is diluted, if the calculation as noted above is no more than 50% (fifty percent); or
      2. the date of the General Meeting of Shareholders (“GMS”) if the calculation as noted above is more than 50% (fifty percent).

3. Method of Determining Value of Material Transaction

Transaction value to determine whether a transaction is considered a Material Transaction shall be calculated based on: (i) an audited annual financial report, (ii) a quarterly financial report – with the review or audit accountant report, or (iii) any audited interim financial report that is made no more than: (i) 12 (twelve) months prior to the transaction date (for any transaction without a GMS approval or (ii) the date of the GMS (for transaction requiring a GMS approval).

  • Procedures and Requirements

OJK Reg. 17/2020 requires Public Companies to comply with the following procedures to carry out Material Transaction:

    1. engage an Appraiser to determine the reasonable value of the Material Transaction object and/or the fairness of such transaction;
    2. publish an information disclosure regarding such transaction to the public;
    3. submit such information disclosure and its supporting documents to OJK;
    4. obtain a GMS approval in the event that:
      1. the value of such transaction is more than 50% (fifty percent) of the equity of the Company;
      2. the value of such transaction is more than 25% (twenty five percent) of the total assets of the Public Company with negative equity; or
      3. the appraisal report shows that such transaction is non-arms-length (transaksi tidak wajar).

In comparison to the Regulation IX.E.2 – point 4a and b are the new conditions introduced in OJK Reg. 17/2020.

Both Regulation IX.E.2 and OJK Reg. 17/2020 require Public Companies to obtain a new GMS approval if they fail to carry out the Material Transaction within 12 (twelve) months after the initial GMS approving such transaction. In addition, Public Companies must also disclose such event in its annual report, providing the reason why it failed to do so within the given period.

    • Provisions on Material Transaction Having Potential to Disrupt Business

OJK Reg. 17/2020 now requires any Public Company intending to carry out a Material Transaction with potential to disrupt business continuity to (i) have the transaction appraised, (ii) conduct disclosure of information to public and OJK, and (iii) obtain approval from independent shareholders in a GMS held in accordance with OJK Regulation No. 15/POJK.04/2020 dated April 21, 2020 on Planning and Implementation of GMS for Public Companies.

    • Exemptions

Similar to the Regulation IX.E.2, OJK Reg. 17/2020 also provides certain conditions of exemptions to the procedures and/or requirements for Material Transaction. Unlike in Regulation IX.E.2, the exemptions introduced in OJK Reg. 17/2020 are limited to exemptions from obligation to engage Appraiser and to obtain GMS approval but does not include exemptions of the disclosure obligation (notwithstanding disclosure requirements under OJK Regulation No. 31/POJK.04/2015 on Disclosure of Material Fact and/or Information by Public Companies). Therefore, for exempted Transaction Materials under OJK Reg. 17/2020, Public Companies still need to comply with the disclosure requirement (to public and the OJK) – unless specifically exempted from such requirement.

The types of transaction exempted under OJK Reg. 17/2020 are similar with exemptions in Regulation IX.E.2, save for the following:

    1. transactions conducted by a publicly listed financial services companies whose Controlled Company engages in sharia-based financial services, for the purpose of developing such sharia-based financial services Company; and
    2. transactions for the purpose of restructuring, conducted by a Public Company either directly or indirectly controlled by the government.

Specifically, OJK Reg. 17/2020 provides that publicly listed financial services companies are exempted under ‘certain condition’, which means such companies are precluded from the requirements (i) to engage an Appraiser,(ii) to conduct public disclosure, (iii) to submit disclosure documents to OJK, as well as (iv) to obtain GMS approval. However, OJK Reg. 17/2020 does not provide further elaboration on this ‘certain condition’, which will be further regulated by OJK.

Exemptions of Main Business Activities

OJK Reg. 17/2020 no longer includes ‘main business activities’ under the list of exempted transactions under OJK Reg. 17/2020. In addition, the previously exempted ‘activities using the company’s assets for or in support of the said company’s production and/or main business activities’ are also excluded in OJK Reg. 17/2020.

In relation to this, OJK Reg. 17/2020 now details that capital expenditures (CAPEX), such as the purchase of production machinery or assets leasing for production, would not fall under the category of transactions relating to business activities and therefore, will not be exempted from the requirements of Material Transaction.

Only those expenditures related to operational expenditures (OPEX) are exempted from all requirements of Material Transaction under OJK Reg. 17/2020 and will only need to be stipulated in the annual report or annual financial report of such company.

B. CHANGE OF BUSINESS ACTIVITIES

OJK Reg. 17/2020 stipulates the following actions shall be considered as a change of business activities:

    1. Addition of a business activity in the articles of association which will be implemented;
    2. The performance of a business activity that has been stated in the articles of association but is yet to be performed;
    3. Reduction of a business activity that has been performed; and
    4. Replacing all business activities that have been performed with new business activity.

Similar with Regulation IX.E.2, OJK Reg. 17/2020 also requires a GMS approval and certain information disclosure for any change of business activities. However, OJK Reg. 17/2020 now additionally requires Public Companies to engage an Appraiser to carry out feasibility study over the change of business activity.

C. SANCTIONS AND EFFECTIVE DATE

Unlike Regulation IX.E.2, OJK Reg. 17/2020 provides certain type of sanctions for non-compliance ranging from written warnings to cancellation of registration.

OJK Reg. 17/2020 will be effective 6 (six) months after its enactment, which will be on October 21, 2020, except for the provision of Article 12 and provisions on sanctions.

Article 12 of OJK Reg. 17/2020 and provisions on sanctions will be enforced starting from April 21, 2020. Article 12 of OJK Reg. 17/2020 discusses the exemption of GMS approval for publicly listed financial services companies in certain condition.

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May 15, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

BKPM Issued New Regulation on Guidelines on the Provision of Business Licensing Services through OSS System

To improve the implementation of the licensing services provided through Online Single Submission (“OSS System”), on April 1, 2020, the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued the BKPM Regulation No. 1 of 2020 on Guidelines for the Implementation of Integrated Electronic Business Licensing Services (“Regulation 1/2020”).

This Regulation 1/2020 was also issued to implement Article 94 (1) of Government Regulation No. 24 of 2018 dated June 21, 2018 on Electronic Integrated Business Licensing Services (“GR 24/2018”) and Presidential Instruction No. 7 of 2019 dated November 22, 2019 on Acceleration of the Ease of Doing Business as well as to set out the norms, standards, procedures, and criteria of the issuance of the licenses in OSS system 1.1, for the already existing BKPM regulations regarding OSS.

As this Regulation 1/2020 covers broad and technical aspects of the OSS System 1.1, we set out below the key points under Regulation 1/2020.

  • Investment Value

Article 6 of Regulation 1/2020 now requires a foreign investment company (Penanaman Modal Asing or “PMA”) to fulfil the amount of total investment value of more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings. The foregoing applies for each business activity (5-digit KBLI), per relevant project. Furthermore, the amount of issued capital must be equivalent to the relevant paid-up capital and should amount to at least Rp2,500,000,000 (two billion five hundred million Rupiah).

In addition to the above, Regulation 1/2020 provides detailed total amount of investment value for certain PMA companies that engage in the following business sectors:

  1. For wholesale business activities, the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah) excluding land and buildings, for each 2-initial digits of the KBLI;
  2. For food and beverage services business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, within one regency/municipality; and
  3. For construction business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, for each construction activity.

Although the Regulation 1/2020 is silent on when the realization of such investment should be made by PMA companies, as prescribed under Article 6(5) of BKPM Regulation No. 6 of 2018  dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility as lastly amended by BKPM Regulation No. 5 of 2019 dated July 29, 2019 on Amendment of BKPM Regulation No. 6 of 2018  dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility, such realization shall be performed within one year as of the issuance of the business license.

  • Main and Supporting Project

Article 15 of Regulation 1/2020 now provides that business actors may have a supporting project, provided that (i) such supporting project is outside the business classification stated in its business license, (ii) such project serves as a supporting activities to the main project, and (iii) such project does not generate profit.

The supporting project shall be required to obtain Business Licenses and/or Commercial and Operational License as applicable.

  • New Function of Business Identification Number

With the issuance of Regulation 1/2020, the Business Identification Number (Nomor Induk Berusaha or “NIB”) now also functions as evidence of initial submission of Mandatory Manpower Report (Wajib Lapor Ketenagakerjaan or “WLTK”) for the company that has not submitted its WLTK and has not previously obtained NIB.

  • Category of Business License and Commercial and Operational License

Regulation 1/2020 has categorized types of Business and Commercial and Operational License into several classification as follow.

Type Business Licenses Description
1 Business License or Commercial and Operational Licenses without Commitment requirement Licenses that are effective immediately after the issuance by OSS System
2 Business License or Commercial and Operational Licenses with technical requirement Licenses that are issued priorly by the OSS System, but are not effective until the applicable requirements are fulfilled
3 Business License or Commercial and Operational Licenses with fee requirements
4 Business License or Commercial and Operational Licenses with technical and fee requirements

 

  • Representative Office Registration through OSS System

Under Regulation 1/2020, the OSS System also accommodates the application for the registration of Foreign Trade Company Representative Office (Kantor Perwakilan Perdagangan Asing), Foreign Construction Services Companies (Badan Usaha Jasa Konstruksi Asingi), Franchise Business, Futures Trade, and Administrative Branch Office.

  • Merger of Companies

In the event of merger, the surviving company may now request to merge the business licenses of the ceased company into the surviving company. A merger should be implemented in accordance with a deed of merger which has obtained a prior approval from the Minister of Law and Human Rights. Once the relevant deed of merger data has been submitted, the OSS system will then issue a business license for the merger.

Further, the surviving company shall comply and satisfy any commitment set forth in business license and/or commercial and operational License of the merging company, in accordance with the prevailing laws and regulations.

  • Submission During OSS Force Majeure Situation

In the event where OSS System is unable to function due to force majeure, the submission and/or administrative services for investment may be done manually, rather than through the system. The force majeure situation shall be determined by the Head of BKPM. Any data and information that are processed during the force majeure situation shall be uploaded into the OSS System by the Business Actor after the end of the force majeure situation.

  • Transitional Provision

By the effective date of Regulation 1/2020:

  1. The provisions set forth within the existing principle license, investment registration, investment licenses, business license commercial or operational license remain valid as long as there is no conflict or not regulated specifically by Regulation 1/2020;
  2. Investment Value shall not be applicable to PMA Company that obtained a valid investment licenses prior to the enactment of GR 24/2018, as long as there is no change of business activities;
  3. Business actors shall obtain NIB, regardless of the still-valid TDP, API, and Customs access; and
  4. Any application relating to NIB, new business license, or commercial or operational license shall be carried out through OSS System.

 

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May 13, 2020

Copyright © 2020 AKSET. All rights reserved.

by Adho Fadillah Putera

Is Covid-19 a Force Majeure Event

AKSET Webinar: Is Covid-19 a Force Majeure Event?

AKSET presents its first webinar with the topic Force Majeure related to Covid-19 outbreak. The webinar will be presented by our partners, Mr. Johannes Sahetapy-Engel and Mr. Suharsanto Raharjo, from our Litigation and Employment practice.

We believe this presentation will be useful for every business actors following the Covid-19 outbreak. The discussion will not only from theoretical but also from practical perspective as well.

Held on:
Tuesday, 12 May 2020
Time: 15.00 - 17.00 WIB (GMT+7)

For registration and information, please contact:
Email: pdpuspitasari@aksetlaw.com
Whatasapp: +62 812-1177-9060 (Priscilla)

Is Covid-19 a Force Majeure Event

by Edward Aryana