MOLHR Regulation Revises Curator/Administrator Fees in Bankruptcy
The Minister of Law and Human Rights (MOLHR) issued Regulation No. 1 of 2013 on Guidelines for Determination of Fees for Curators and Administrators (Regulation) to stipulate new fees for Curators and Administrators under Law No. 37 of 2004 on Bankruptcy and Postponement of Debt Repayment (Bankruptcy Law), revoking the fees listed in MOLHR Decree No. M.09 HT.05.10 of 1998.
Under the Bankruptcy Law, bankruptcy actions may be initiated either by a creditor submitting a bankruptcy petition to the Commercial Court or by a debtor submitting a petition for postponement of debt settlement obligations, also to the Commercial Court.
If a creditor-initiated bankruptcy ends in reconciliation or debt settlement, the debtor’s assets will be liquidated by a Curator appointed by the court. The Curator’s fees are calculated regressively based on the value of the bankruptcy assets. The higher the value, the lower the percentage paid to the Curator.
- Reconciliation/Amicable Settlement
Bankruptcy Assets Value
(excluding debts) Fee Percentage Example:
Assets = IDR 600 billion
Up to IDR 50 billion 5% 2,500,000,000
IDR 50 billion – IDR 250 billion 3% 6,000,000,000
IDR 250 billion – IDR 500 billion 2% 5,000,000,000
Over IDR 500 billion 1% 1,000,000,000 Total fees: IDR 14,500,000,000
- Debt Settlement Mechanism
Bankruptcy Assets Value
(excluding debts) Fee Percentage Example:
Assets = IDR 600 billion
Up to IDR 50 billion 8% 4,000,000,000
IDR 50 billion – IDR 250 billion 6% 12,000,000,000
IDR 250 billion – IDR 500 billion 4% 10,000,000,000
Over IDR 500 billion 2% 2,000,000,000 Total fees: IDR 28,000,000,000
The Curator may also receive fees amounting to 2.5% of the sale of the debtor’s assets that are in the possession of creditors, or third parties, execution of which was deferred while the bankruptcy action was pending.
Fees for temporary Curators depend on the outcome of the proceedings: If the court grants the bankruptcy petition, the fee will be determined in an initial creditors’ meeting; if the court denies the petition, the amount will be determined by the court (0.5% under the former regulation).
If a creditor’s petition for bankruptcy is rejected in cassation or reconsideration by the Supreme Court, the court will determine the amount of fees the Curator should receive based an evaluation of the duties performed by the Curator (2.0% under the former regulation). Under the Regulation, the applicant is obliged to pay the Curator’s fees. However, this provision is inconsistent with Article 17(2)-(3) the Bankruptcy Law, which stipulates that the court may order the applicant and/or the debtor to pay the Curator’s fees.
In debtor-initiated actions, assets are liquidated by an Administrator, who will receive 10% of the value of the debts, if the action is settled by reconciliation, and 15% of the value if settled without reconciliation. Previously, the fee was calculated based on the value of the debtor’s assets.
In both creditor- and debtor-initiated bankruptcy actions, the Curator/Administrator may request fees in addition to those described above, during a meeting of the creditors.
The Regulation does not apply when Balai Harta Peninggalan (BHP) acts as the Curator or Administrator. If BHP acts as the Curator, its fees will be regulated under the prevailing laws and regulations on Non-Tax State Revenue.
April 8, 2013,
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
New Bank Indonesia Regulation on Multiple Licensing Policy
Bank Indonesia (“BI”) has issued Regulation No. 14/26/PBI/2012 of 2012 dated December 27, 2012 on Business Activities and Office Networks Based on Bank Core Capital (“BI Reg. 14/26/2012” or “Regulation”). The Regulation contains several of the six policies announced by BI during a Bankers’ Dinner held in late November 2012.
1 BI Reg. 14/26/2012 regulates permitted business activities, obligations for the amount of credit a bank must grant as productive financing, and establishment/expansion of branch office networks—all based on the amount of Core Capital.
2 The Regulation entered into force on January 2, 2013.
Business Activities Based on Core Capital Classification
The Regulation classifies commercial banks based on Core Capital and stipulates permitted activities for each classification or “BUKU” (Bank Umum berdasarkan Kegiatan Usaha—Commercial Bank Based on Business Activities).
BUKU 1: Core Capital less than Rp 1 Trillion
- Basic Rupiah intermediary functions for deposit and distribution, trade finance, limited agency/cooperation, limited electronic banking and payment systems, temporary capital participation for credit based or other services, and limited foreign exchange
- Branches only within Indonesia
- No capital participation in other financial institutions
- Must distribute 55% of total credit/financing to productive business
BUKU 2: Core Capital of Rp 1 – 5 Trillion
- Same business activities as BUKU 1, but with higher transaction value
- Branches only within Indonesia
- Capital participation in other Indonesian financial institutions, up to 15% of capital
- Must distribute 60% of total credit/financing to productive business
BUKU 3: Core Capital Rp5 – 30 Trillion
- All types of business activities, in Rupiah and foreign currency
- Branches and representative offices in Indonesia and Asia region
- Capital participation in Indonesian and other Asian financial institutions, up to 25% of capital
- Must distribute 65% of total credit/financing to productive business
1 At the Dinner, BI announced 6 new policies: (1) classification of banks and permitted activities based on core capital; (2) branch expansion to correlate with core capital; (3) required loan to value ratio for Sharia banks; (4) provision on trustees; (5) single presence policy; and (6) obligation to provide credit allocation to SME business.
2 Core Capital refers to: paid‐up capital, disclosed reserve, and innovative capital instruments. For Foreign Banks, Core Capital refers to capital calculated based on Capital Equivalency Maintained Assets (CEMA). See BI Reg. 14/18/PBI/2012 regarding Commercial Bank Minimum Provision of Capital. M‐00338
BUKU 4: Core Capital atleast Rp30 Trillion
- All types of business activities, in Rupiah and foreign currency
- Worldwide branches and representative offices
- Worldwide capital participation in other financial institutions, up to 35% of capital
- Must distribute 70% of total credit/financing to productive business
Branch Office Networks and Regional Expansion
To establish branch and representative offices, banks must have a composite rating 3 of 1 – 3 and fulfill Core Capital allocation requirements.
There are two exemptions to the Core Capital requirements:
- Banks that wish to open functional offices to provide credit to Small and Medium Enterprises (SMEs) do not have to meet Core Capital allocation requirements.
- Banks of any size may open branch offices without meeting Core Capital allocation requirements on the condition that they distribute at least 20% of credit/financing to micro‐businesses.
In conjunction with capital allocation requirements, BI will determine: (a) regional zones, numbered 1 – 6 based on density of banks and level of economic development; (b) density coefficients for each zone; and (c) the investment cost of establishing a branch network for each BUKU classification. The zone system will be used to define obligations for banks to open branch or representative offices in lower density areas. The determination of zones will be stipulated in a BI Circular Letter.
Timeline for Compliance
Banks whose business activities are not in accordance with BUKU classifications must either adjust their business activities or increase their Core Capital. Action plans reflecting adjustment measures must be submitted to BI by the end of March 2013. After BI approves the action plan, the banks must revise their business plans (Rencana Bisnis Bank – RBB) before the end of June 2013.
Banks must submit action plans for branch network establishment/expansion, taking into account the Core Capital allocation requirements, and revise their RBB accordingly before the end of June 2013. Previously approved branch establishment/expansion that can be completed before the 2013 RBB is revised will be exempted from Core Capital requirements.
Bank Indonesia Issues Regulation on Fund Transfers
Bank Indonesia Regulation No. 14/23/PBI/2012 dated December 26, 2012 (“PBI”) on Fund Transfers has been issued to implement Law No. 3 of 2011 on Conduct of Fund Transfers (“Law No. 3/2011”). This PBI repeals and replaces PBI No. 8/28/PBI/2006 on Money Transfer Business Activities.
The PBI regulates the requirements of financial institutions and other entities engaged in fund transfer (“Fund Transfer Operators”) with respect to security systems, capital, integrity of management, risk management, and infrastructure readiness, and regulates in detail the rules for execution of fund transfer orders, such as responsibility in times of force majeure, errors in fund transfers, and refund procedures.
Fund Transfer Permits
To receive a permit and qualify as a Fund Transfer Operator, applicants must be classified as banks or non-bank legal entities that meet the criteria for, and are participants in, Bank Indonesia’s Real Time Gross Settlement (“BI-RTGS”) system or National Clearing System (“SKNBI”), or Card-Based Payment Organizers that provide fund transfer services.
Permits may not be transferred to third parties. Reports to Bank Indonesia must be made in the event of merger, consolidation, separation, or other corporate action that may result in permit transfer. Bank Indonesia will then decide based on the report, which party, if any, is authorized to acquire the permit.
Fund Transfer Operators that have secured a fund transfer permit based on the previous regulation (PBI 8/28/PBI/2006) must reapply for and obtain a new permit within one year of the effective date of this PBI. Under Law No. 3/2011, parties that process fund transfers without having the proper permit will be subject to up to 3 years imprisonment or IDR 3 billion in criminal fines.
Procedures for Sending and Receiving Overseas Fund Transfers
Overseas fund transfers may only be conducted by parties that have approval from their corresponding local authorities and under written agreement with Indonesian Fund Transfer Operators. The agreement must at minimum contain a commitment to reciprocity between the parties; the rights and obligations of each party; a dispute settlement mechanism; and mechanisms to determine foreign exchange rates, fees, and final settlement. For fund transfer involving overseas non-bank entities, Bank Indonesia may implement a cap on the amount of funds that can be transferred.
Transfer Procedures
A Fund Transfer Operator that has accepted a transfer order from a customer remains responsible for executing the order until the funds are accepted by the final beneficiary Operator. The sending Operator remains responsible in the event of force majeure, failure of electronic or non-electronic M-00332 system infrastructure, failure of clearing system or fund transfer system, or other events to be determined by Bank Indonesia. In such cases, sending Operators are obligated to inform the sender of the conditions; otherwise, they may be required to pay for services, interest, or compensation to the party originating the transfer.
In the event of force majeure, and the sender cancels the transfer order, the Fund Transfer Operator must return the funds by credit to the sender’s account or provide a written notice for cash withdrawal if the sender does not have an account with the sending Operator. The sender is entitled to refund of service fees, interest, or compensation from the Fund Transfer Operator should the Operator fail to provide a refund within 1 working day of receipt of the cancellation request.
In the event of error leading to funds being transferred in the wrong amount, or delivered to the wrong beneficiary, the errant Operator must correct the error within 1 working day after acknowledgement of the error by cancelling or changing the order and/or publishing new orders to the rightful beneficiary without waiting for a refund from the mistaken beneficiary.
Fund Transfer Operators are entitled to charge reasonable transfer fees, but they must inform senders of the fees by, at minimum, posting an announcement in relevant office locations.
Fund Transfers Intended to Be Received in Cash
Fund transfers may be disbursed in cash by sending a notice on the date of the transfer order to the beneficiary that they are entitled to receive funds in cash. Should the transferred funds not be collected after a series of notices, the recipient Operator must transfer the funds back to the originator. If the originator, after a series of notices and after a period of time, fails to collect the funds, the funds will be surrendered to the Probate Court closest to or in the same area of the originating Operator.
Sanctions
Fund Transfer Operators that violate any of the provisions of the PBI may be subject to administrative sanctions in the form of warnings, fines, suspension of transfer activities, and fund transfer permit revocation. Bank Indonesia can also temporarily suspend part of or all fund transfer activities and revoke licenses of non-bank entities.
Ministry of Finance Regulation on Tax Objections
The right of a taxpayer to object to a tax assessment is regulated under Articles 25, 26, 26A, 27 and 27A of the, Law on Taxation, General Provisions and Procedures (Law No. 6 of 1983, as amended). To implement these provisions, the Ministry of Finance issued Regulation No. 9/PMK.03/2013 on Procedure for Submitting and Resolving Objections, which revoked and replaced the previous regulation on the subject (Reg. No. 194/2007), as of March 1, 2013.
Overview of Objections
All taxpayers are entitled to file an Objection Letter to the Director General of Taxation (“DGT”) objecting to: (i) Underpaid Tax Assessment; (ii) Additional Underpaid Tax Assessment; (iii) Overpaid Tax Assessment; (iv) Nil Tax Assessment; or (v) withholding or collection of tax by a third party.
Taxpayers may only object to: (i) the contents of a tax assessment, including losses to the taxpayer, (ii) the amount of tax assessed; and/or (iii) the contents and/or amount of withholding or collection by a third party. No other matters will be considered.
The taxpayer is entitled to obtain information from the DGT pertaining to the imposition of tax, calculation of loss, and withholding/collection of tax prior to submitting the Objection Letter.
Submitting on Objection
The Objection Letter must be submitted in the Indonesian language to the Tax Office where the taxpayer or the taxable entrepreneur is registered within three months from the date of assessment, deduction, or collection, unless the taxpayer can prove the delay is due to circumstances beyond their control. The Objection Letter and supporting evidence can be submitted by (i) personal delivery; (ii) registered mail; (iii) courier; or (iv) e-Filing.
The Objection Letter should state the amount of tax payable, the amount of tax withheld or collected, or the amount of alleged loss based on the taxpayer’s calculation, along with the basis for the calculation. A separate Objection Letter is required for each assessment, withholding, or collection to which the taxpayer objects.
Note: for Tax Year 2007 and earlier, filing an Objection will not postpone payment or collection of underpaid taxes stated in the Tax Assessment. For Tax Year 2008 and later, the taxpayer must settle the amount of tax due and payable prior to submitting the Objection Letter, at least in the amount conceded by the taxpayer in an audit or verification result closing conference. Payment of the disputed amount will be postponed until one month after the Decree of Objection.
Resolving the Objection
Within twelve months from the date an Objection Letter is filed, the DGT must render a Decree of Objection,which may approve the Objection in whole or in part, reject the Objection, or increase the amount of tax payable. If the DGT does not render a Decree within twelve months, the Letter of Objection will be deemed granted by operation of law.
In order to resolve the Objection, the DGT is authorized to: (i) obtain taxpayer books, records, data and information; (ii) collect information or evidence from third parties (e.g., bank, public accountant, notary, tax consultant, administration office); (iii) survey the location of the taxpayer, or other places as needed; (iv) summon the taxpayer; and (v) investigate any other data and information relevant to resolving the Objection. If the taxpayer does not fulfill part or all of the DGT’s request for records or information, the Decree of Objection will be rendered in accordance with available data.
Before rendering a Decree of Objection, the DGT will issue a Notice to Appear, along with the results of the examination and a form response letter. If the taxpayer does not attend, the Objection will be resolved in the taxpayer’s absence.
In the event that an Objection is filed simultaneously with a request for Mutual Agreement Procedure (“MAP”) under a Double Taxation Treaty, but Mutual Agreement has not yet been reached, the DGT will render the Decree of Objection based on an examination of the assessment filed with the MAP proceedings. If Mutual Agreement has already been reached when the Decree is issued, the DGT will consider the findings of the MAP in rendering the Decree.
Penalties and Fines
In the event that an Objection is rejected or approved only in part, the taxpayer will be subject to an administrative fine amounting to 50% of the total tax payable based on the Decree of Objection minus any tax that was paid before the Objection was submitted. Similar sanctions will be imposed if the Decree increases the amount of tax payable.
The 50% fine will not be imposed if: (i) the taxpayer revokes the Objection; (ii) the Objection is not considered due to nonfulfillment of filing requirements; or (iii) the taxpayer appeals the Decree to the Tax Court.
Objection Letters submitted before the regulation came into effect but for which a Decree of Objection was not yet issued will be settled based on the new provisions.
April 8, 2013
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
Oil and Gas: Indonesia Ratifies ASEAN Petroleum Security Agreement 2009
In January 2013, Indonesia ratified the 2009 ASEAN Petroleum Security Agreement (“APSA 2009”) through Presidential Regulation No. 7 of 2013. APSA 2009 is the successor agreement to the 1986 ASEAN Petroleumn Security Agreement, which was enacted to provide collective assistance among member states in cases of critical petroleum shortage.
APSA 2009 will not enter into force until 30 days after the 10th ratification or acceptance instrument is submitted to ASEAN. All ASEAN members executed the agreement in 2009, but to date, only 7 members have ratified—Laos, Cambodia, and the Philippines have not submitted any instrument to ASEAN. The agreement stipulates a number of short, medium, and long-term measures member states are expected to take to enhance energy security and cooperation within the region. The most significant is a commitment to collectively supply up to 10% of a member’s petroleum needs in times of shortfall—on a voluntary, commercial basis. “Petroleum” as used in the agreement refers to “crude oils, products and natural gas in its natural condition.” Member states are not obligated to divert their petroleum supplies to help other members if doing so would cause hardship. Indonesia is currently a net importer of oil.
- Strategic Mechanisms to Enhance Petroleum Security
Member states are expected to implement short, medium, and long-term strategies to enhance petroleum security, minimize exposure during emergency situations, and mitigate the impacts of critical petroleum shortages.
Short-term Measures for Member States in Distress
An ASEAN member state is “in Distress” when it gives notice to the ASEAN Council on Petroleum (ASCOPE) that it has faced a critical petroleum shortage (defined as a 10% shortfall of the Normal Domestic Requirement) for 30 consecutive days because of natural disaster, explosion of facilities, or war. Member states in Distress are expected to impose immediate limitations on energy consumption, which may include demand restraint, switching to alternative fuels, surge protection, and information sharing with other member states.
If demand limitations fail, the member state in Distress may request assistance under Coordinated Emergency Response Measures (“CERM”), in which the other member states will endeavor to provide, in aggregate, 10% of the Distressed state’s Normal Domestic Requirement on a voluntary, commercial basis. CERM is not a donation. It is a transactional diversion of member states’ petroleum supplies to states in need. Taking unfair advantage of the Distressed state’s vulnerability is prohibited.
Following the activation of CERM, the ASCOPE Secretariat will supervise the situation to determine whether the magnitude of the emergency has changed. Any ASEAN member state that gives assistance under CERM may at any time terminate its assistance if such assistance causes hardship for the state giving assistance.
Medium and Long term Measures
Member states are also expected to implement:
- Cooperation on regional energy policy, trans-ASEAN gas pipeline (TAGP), ASEAN power grid (APG), regional energy policy and planning (REPP), coal, renewable energy, energy efficiency, and conservation
- Exploration for new petroleum resources through voluntary joint ventures with other member states
- Energy diversification (APG, TAGP, fuel switching); joint research, development, and demonstration of renewable energy projects; energy efficiency; and new energy technologies
- Diversification of supply to reduce dependency on single sources
- Deregulation and liberalization of oil and gas markets
- Oil stockpiling
- International Cooperation
To enhance ASEAN’s energy and petroleum security, APSA 2009 stipulates international cooperation with ASEAN dialogue partners and other relevant international organizations.
February 14, 2013
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
Government Stipulates Details for Spatial Planning Maps
Government Regulation No. 8 of 2013 on Details for Spatial Planning Maps dated January 2, 2013 (“GR 8/2013”) was issued to replace Government Regulation No. 10 of 2000, which stipulates procedures for spatial planning, as required by Law No. 26 of 2007 on Spatial Planning.
Spatial planning is one of the processes through which local, provincial, and central governments work together to stipu;late land use policy. Every five years, detailed plans and maps of existing and future land forms (e.g., coastlines, waterways, infrastructure, settlements, and urban areas) and land uses (e.g., forest area boundaries; concession boundaries for logging, mining, and agriculture; and economic development zones) are negotiated among the different levels and departments of government, resulting in spatial plans for a variety of areas and purposes, including, among others:
- Regencies/Cities
- Provinces
- Islands/archipelagos
- National, provincial, and regency/municipal strategic areas (kawasan strategis)
- Urban areas
- Rural areas
Spatial planning maps are an important product of the spatial planning process, as they are used by government agencies in their decisions to approve or deny applications for licenses impacting land use (e.g., location permits, mining licenses, plantation licenses, environmental licenses, etc.). GR 8/2013 stipulates the contents and specifications required for various kinds of maps, including spatial structure maps and spatial pattern maps—both types of which may be issued at the national, provincial, and regency/city level.
Spatial structure maps depict:
- Municipal layout
- Transportation networks
- Energy grid
- Telecommunications networks
- Water resources/supply networks
- Other infrastructure (required for province and regency/city maps only, may include environmental infrastructure, drinking water systems, waste management systems, evacuation routes, and other infrastructures specific to the area)
Spatial pattern maps depict:
- Protected areas
- Cultivation areas
GR 8/2013 also stipulates the level of accuracy and precision required for spatial planning maps, including mapping units and the minimum scale for each type of map at each level of administration. Generally speaking, the smaller the area depicted, the greater the detail that is required; for example rural and urban area base maps must have at least a scale of 1:10,000, while general provincial maps can be 1:250,000. Coastal and marine areas must include bathymetry data, and border areas are to be depicted based on consultation with neighboring provinces/regencies/cities. The Geospatial Information Agency will provide technical guidance and further regulation on the process and requirements, particularly with respect to geometric accuracy.
February 14, 2013
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
Indonesia Limits the Jurisdiction of the ICSID
On September 22, 2012, the President of Indonesia issued Decree No. 31 of 2012 (“Presidential Decree No. 31/2012”), which determined to exclude disputes arising from state administrative decisions issued by Regencies (Kabupaten) from the types of disputes that may be settled by ICSID. ICSID received the Government’s notification on September 27, 2012.
Indonesia became a member of ICSID in 1968, when it ratified the Convention on the Settlement of Investment Disputes between States and Nationals of others States (“ICSID Convention”) and enacted Law No. 5 of 1968 dated June 29, 1968 regarding the Settlement of Disputes between States and Nationals of other States on Capital Investment (“Law No. 5/1968”). Despite the general ratification of the ICSID Convention, Article 2 of Law No. 5/1968 states that the Indonesian government has the authority to grant consent for a dispute relating to foreign capital investment to be decided under the ICSID Convention and to represent the Republic of Indonesia, with the right of substitution, in such disputes.
In reference to the foregoing, Article 32 paragraph 4 of Law No. 25 of 2007 dated April 26, 2007 regarding Capital Investment (“Law No. 25/2007”) stipulates that a dispute in the field of capital investment between the Government of Indonesia and a foreign investor shall be settled through an agreed international arbitration tribunal. Accordingly, the Indonesian government affirms that it may or may not use ICSID as the forum for alternative dispute settlement in the field of foreign capital investment. Moreover, the ICSID Convention, as modified, allows any Contracting State at the time of ratification, acceptance, or approval of the Convention—or at any time thereafter—to notify ICSID of the class or classes of disputes that it would or would not consider submitting to the jurisdiction of ICSID. This provision formed part of the legal basis for the President issuing Presidential Decree No. 31/2012. However, the exclusion of Regency-level decisions will not apply retroactively. In the case of Churchill Mining versus the Regency of East Kutai, which prompted the Government’s exclusion, that case is still pending before the tribunal,
In light of recent events involving cases in the field of foreign capital investment in Indonesia, the issuance of Presidential Decree No. 31/2012 may stimulate concerns among investors about how the Indonesian government provides legal certainty to their investments, particularly as many government decisions affecting foreign investment are issued at the local level (i.e., provinces and regencies) under the system of Regional Autonomy.
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Ali Suryadharma
(asuryadhama@aksetlaw.com) for further information.
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
December 31, 2012
Constitutional Court Disbanded BP MIGAS
On November 13, 2012, the Constitutional Court issued a judgment partially-granting a judicial review on Law No. 22 of 2001 concerning Oil and Natural Gas (the “Oil & Gas Law”) filed by 30 individuals and 12 community organizations, which judgment disbands BP Migas (the Implementing Body of Upstream Oil and Gas Activities).
Under the Oil & Gas Law the role of BP Migas was as follows:
a. to provide advice to the Minister of Energy and Mineral Resources (the “MEMR”) with regard to the preparation and offering of work areas and cooperation contracts (Kontrak Kerja Sama);
b. to act as a party to the cooperation contracts;
c. to assess plans of development that are to produce for the first time in a given work area and submit such assessment results to the MEMR in order to obtain the MEMR’s approval;
d. to approve plans of development (other than those mentioned in point c above);
e. to approve work plans and budget;
f. to report to the MEMR on the implementation of the cooperation contracts; and
g. to appoint the seller of the State’s portion of the oil and/or natural gas to the State’s best advantages.
The Constitutional Court held that the role of BP Migas caused limited access for the State to maximize the benefits of natural resources management for people’s welfare as stipulated in Article 33 of the 1945 Constitution. The Court found that BP Migas did not directly manage oil and gas and instead handed it over to state-owned companies or private companies through cooperation contracts. Consequently, the Constitutional Court held that the existence of BP Migas was unconstitutional and did not have legal grounds because it had degraded state control over natural resources.
All articles related to BP Migas in the Oil & Gas Law, including Article 1(23), Article 4(3), Article 41(2), Article 44, Article 45, Article 48(1), Article 59(a), Article 61 and Article 63, were considered to violate the 1945 Constitution so therefore were revoked.
As a consequence of the judgment, BP Migas is disbanded. The Constitutional Court declared that BP Migas’ duties and authorities are implemented by the related Ministry (i.e., the MEMR) until the issuance of the new law. M-00235 2 We note that one Constitutional Court judge dissented the views of the other judges and held that BP Migas was lawful.
In response to the judgment, the Ministry of Economic Affairs, the MEMR and related Ministries, as we understand it, are going to form an Implementing Unit of Upstream Oil and Gas Activities to assume BP Migas role based on a Presidential Decree to be issue in the near future.
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
November 14, 2012
Minimum wage for DKI Jakarta Province increases for 2013
The Governor of DKI Jakarta has determined a new Provincial Minimum Wage (“UMP”) that applies to every company in DKI Jakarta. The UMP for DKI Jakarta is stipulated under Governor of DKI Jakarta Regulation No. 189 of 2012 regarding Provincial Minimum Wage for 2013, dated November 20, 2012 (“Regulation”). Based on the Regulation, the UMP for DKI Jakarta Province will be Rp 2,200,000 (two million two hundred thousand Rupiah) per month, beginning January 1, 2013. This is an increase of almost 44% over the 2012 UMP of Rp1,529,150 (one million five hundred twenty nine thousand one hundred fifty Rupiah) per month, which was stipulated under Governor of DKI Jakarta Regulation No. 117 of 2011 regarding Provincial Minimum Wage for 2012.
The Regulation stipulates that companies that are unable to pay the new UMP may request a suspension from the relevant manpower service office no later than 10 (ten) days before the UMP becomes effective on January 1, 2013.
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
November 27, 2012
BP Migas Role Transferred to Ministry of Energy and Mineral Resources
Following the controversial decision of the Constitutional Court on the disbandment of BP Migas (the Implementing Body of the Upstream Oil and Natural Gas Activities), the President has transferred all authorities and tasks of BP Migas to the Ministry of Energy and Mineral Resources (the “MEMR”).
The President issued Presidential Regulation No. 95 of 2012 dated November 13, 2012 regarding Transfer of Implementation of Tasks and Functions in Upstream Oil and Natural Gas Business Activities (“PR 95/2012”) to effect the transfer above until new regulations are issued. All upstream oil and natural gas management activities by BP Migas shall be assumed by the MEMR in accordance with the relevant laws and regulations. The objective of PR 95/2012 is to avoid any vacuum of power and ensure continuity of the upstream oil and natural gas business.
Equally important, PR 95/2012 affirms that all cooperation contracts signed by BP Migas remain valid until their respective expiry dates.
We understand that an Implementing Unit within the MEMR may be established to assume BP Migas role and function. It seems logical if all employees of BP Migas would be transferred to the Implementing Unit. But it remains to be seen how this will
be determined finally by the MEMR.
If you wish to have further information, please contact Johannes C. Sahetapy-Engel at
jsahetapyengel@aksetlaw.com.
ARFIDEA KADRI SAHETAPY-ENGEL TISNADISTRA