Regulation to Accelerate the Digitization of Government Services Issued

On December 18, 2023, President Joko Widodo issued Presidential Regulation No. 82 of 2023 on Acceleration of Digital Transformation and Integration of National Digital Services (“PR 82/2023”). PR 82/2023 was issued to accelerate the digital transformation to realize quality and trusted public services, high-performance bureaucracy and public services, to strengthen the corruption prevention, and to strengthen the cyber and information security.

The key provisions under PR 82/2023 are as follows:

  • Definitions

PR 82/2023 defines certain terms with regard to the acceleration of digital transformation and national digital services, among others, the Electronic-based Government System (in Indonesian, Sistem Pemerintahan Berbasis Elektronik or “SPBE”) which is the administration of the government that utilizes information technology and communications to provide services to SPBE Users (i.e., the central agencies, the regional governments, State civil servants, individuals, communities, business actors and other parties using the SPBE Services).

  • Priority SBPE Application

In order to achieve the integration of national digital services, the Government will accelerate of the digital transformation through implementing the Priority SBPE Application (in Indonesian, Aplikasi SPBE Prioritas) by prioritizing integration and interoperability. PR 82/2023 stipulates that the Priority SBPE Application may be in the form of:

  1. The new SPBE Application that will be operational or will be developed, to be integrated and launched in an integrated manner for the first time at the latest in the third quarter of 2024; or
  2. The SPBE Application that has been operating or will be developed, to be integrated and launched in an integrated manner as an updated version at the latest in the second quarter of 2024,

which has a minimum of 200,000 (two hundred thousand) SPBE Users or target SPBE Users.

  • Functions of Priority SBPE Application

PR 82/2023 sets out the functions of the Priority SBPE Application, which are implemented to support:

  1. Integrated education services;
  2. Integrated health services;
  3. Integrated social assistance services;
  4. Citizenship administration services integrated with digital citizenship identity services;
  5. State financial transaction services as an integrated payment services with all financial services providers;
  6. Government administration services in the field of state apparatus integrated with basic employment services;
  7. Public service portal services, national single sign on services, integrated digital identity services, and integrated SPBE Infrastructure services including national data centers, intra-government networks, government service liaison system, and cloud computing;
  8. Indonesia Single Data (in Indonesian, Satu Data Indonesia) services; and
  9. Integrated police services including issuance of driver license and crowd permits.
  • Parties Responsible for the Priority SPBE Application

Under PR 82/2023, the Government assigns the Mint Company of the Republic of Indonesia (in Indonesian, Perusahaan Umum Percetakan Uang Republik Indonesia or “Perum Peruri”) to administer the Priority SPBE Application. In carrying out such assignment, Perum Peruri shall (i) identify the issues relating to the administration of the Priority SPBE Application, (ii) research the needs of the SPBE Users, and (iii) design effective solutions. PR 82/2023 also allows Perum Peruri to (i) cooperate with state-owned enterprises and its subsidiaries, and other enterprises in accordance with business rules and good corporate governance and (ii) utilize services and/or qualified human resources in the technology sector and human resources from other sectors as support, in accordance with the price reference as determined by the Ministry of Communications and Informatics, in which such price reference shall be regulated by a decree issued by the Minister of Communications and Informatics at the latest 30 (thirty) days as of the date of PR 82/2023.

PR 82/2023 also sets out the relevant Ministers/Head of Institutions which shall be responsible for each function of the Priority SBPE Application as mentioned above. For instance, the Minister of Health shall be responsible for the integrated health services, while the Head of State Police shall be responsible for the integrated police services.

In relation to the above, PR 82/2023 stipulates that the implementation of assignment of Perum Peruri shall be set out in an implementation of assignment agreement between the relevant Ministries/Institutions responsible for the Priority SPBE Application and Perum Peruri. Such agreements shall govern, among others, the forms of support of the relevant Ministries/Institutions, the amounts of funds for the implementation of assignment, and the payment mechanisms for the implementation of assignment.

PR 82/2023 was issued as a foundation to improve the Government’s services and accelerate national development. We also understand that the Government is actively putting in efforts to digitalize the functions of the Government and to establish a “GovTech” ecosystem. We are hopeful that this will be achieved in due course. Nevertheless, the implementation of this digital transformation in Indonesia remains to be seen. We will monitor the development and issue further updates as relevant.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or M. Fatih Satria Kasmaliputra (mkasmaliputra@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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Regulation to Accelerate the Digitization of Government Services Issued

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by Pilanita Silaen

Ministry of Health’s Guidelines on Covid-19 Recurrence

The Ministry of Health through the Director General of Diseases Prevention and Control recently issued guidelines for the provincial and regional governments with regard to recent increase of Covid-19 cases globally.

With regard to the above, the Director General of Disease Prevention and Control (the “Director General”) issued (i) Letter No. IM.02.04/C/4799/2023 of 2023 dated December 8, 2023 regarding Precautions of Increase of Covid-19 Cases for International Travelers (the “Letter”) and (ii) Circular Letter No. HK.02.02/C/4815/2023 dated December 11, 2023 regarding Increased Awareness Against the Surge of Covid-19 Cases (the “Circular Letter”).

We set out below certain key points of the Letter and the Circular Letter.

♦ General Tasks of Healthcare Providers

Under the Circular Letter, the following are certain measures to be taken by: i) Port Health Offices (Kantor Kesehatan Pelabuhan or KKP); ii) Provincial and Regency/City Health Agencies; iii) Public Health Laboratories; and iv) Hospitals, Public Health Centers (Puskesmas) and other Health Service Facilities (collectively referred to as the “Healthcare Providers”):

  1. To monitor the development in Covid-19 situation and information through official channels, namely https://infeksiemerging.kemkes.go.id (for cases updates in Indonesia) and https://covid19.who.int/ (for global cases update);
  2. To completion of both primary and booster vaccination doses;
  3. To ensure the availability of Covid-19 vaccination services, and to ensure the availability of the vaccines;
  4. To monitor and to report new Covid-19 cases to the Director General through the Event Based Surveillance (EBS) within the application of Early Warning and Response System Application (Aplikasi Sistem Kewaspadaan Dini dan Respon or Aplikasi SKDR) and Public Health Emergency Operation Centre (PHEOC), including to record the antigen Rapid Diagnostic Test (RDT-Ag) and Realtime Polimerase Chain Reaction (RT-PCR) to All Record Tc-19 Application of the Ministry of Health; and
  5. To ensure the implementation of case detection and response.

Other than the list above, each Healthcare Provider is subject to the respective tasks and obligations below:

  • Port Health Offices:
      1. To identify the vaccination status of overseas travelers before departure and it is highly recommended to complete the Covid-19 vaccination doses, both primary and booster vaccination; and
      2. To coordinate with the Health Agencies and local referral hospitals in order to enhance awareness of Covid-19 increased cases.
  • Provincial and Regency/City Health Agencies:
      1. To monitor the trend of increasing cases of Influenza Like Illness (ILI), pneumonia, Severe Acute Respiratory Infection (SARI) and suspected Covid-19 through Indicator Based Surveillance (IBS) and Event Based Surveillance (EBS) through the SKDR Application or ILI-Sar sentinel surveillance;
      2. To ensure that the Regional Health Laboratories carry out an independent assessment of the capacity and resources of consumables and reagents for the COVID-19 RDT-Ag examination as well as RT-PCR, specimen collection, and sending reference whole genome sequencing (WGS) specimens;
      3. To follow up on reports of Covid-19 cases discovery from health facilities by continuing to carry out close contact tracing; and
      4. To ensure that all the Public Health Centers and other Healthcare Service Facilities to carry out active and passive case detection, as well as continuing laboratory examinations using RDT-Ag COVID-19 and RT-PCR.
  • Public Health Laboratories
      1. To prepare the provision of resources related to capacity and consumables for reagents related to the required COVID-19 laboratory examination, logistics for collecting and the delivery of WGS COVID-19 reference specimens;
      2. To coordinate with the Provincial Health Services Agencies and Regency/City Health Agencies regarding WGS examinations for every finding of a COVID-19 case that meets the provisions.
  • Hospitals, Public Health Centers and other Health Service Facilities.
      1. To monitor the trend of increasing cases of ILI, pneumonia, SARI and suspected Covid-19 through Indicator Based Surveillance (IBS) and Event Based Surveillance (EBS) through the SKDR Application or ILI-Sar sentinel surveillance;
      2. To carry out active and passive case detection, as well as continuing laboratory examinations using RDT-Ag COVID-19 and RT-PCR, and tracing close contacts;
      3. To inform public to re-implement health protocols including wearing masks in public places and transportation, as well as implementing clean and healthy living behavior.

♦ Precautions of the Increase of Covid-19 for Overseas Travelers

With regard to the increasing number of Covid-19 cases in numbers countries in South-East Asia region, Letter No. IM.02.04/C/4799/2023 set out recommendation for overseas travelers to carry out vaccination (both primer dosage or booster dosage) before entering the territory of the Republic of Indonesia.

Accordingly, the Heads of Agencies of each of the Provinces and Regencies/Cities must ensure:

  1. all Community Health Centers (Puskesmas) and other Health Facilities in its respective working areas continue to provide Covid-19 vaccination services;
  2. vaccines and other logistics are sufficient; and
  3. the public is well informed about Covid-19 vaccination services.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Rae Chalista (rchalista@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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Ministry of Health’s Guidelines on Covid-19 Recurrence

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Further Amendments to EIT Law Approved by DPR

On December 5, 2023, the House of Representatives (Dewan Perwakilan Rakyat or the “DPR”) approved the bill (the “Approved Bill”) on Second Amendments to Law No. 11 of 2008 on Electronic Information and Transactions as amended by Law No. 19 of 2016 (the “EIT Law”). After the approval by the DPR, the President has 30 (thirty) days to enact the Approved Bill into a Law. Thereafter, the Law will be followed by the enactment of the draft and the announcement in the State Gazette and the Supplement to State Gazette.

According to the consideration of the Draft Approved Bill, the intention for the enactment of the Approved Bill is to protect the Indonesian digital space which provides legal certainty, justice, and protects public interest from all kinds of interference as a result of misuse of electronic information, electronic documents, information technology, and/or electronic transactions that disturb public order. Further, the intention for the enactment of the Approved Bill is also to prevent any multiple interpretations and controversy in the implementation of the EIT Law.

The topics covered under this Newsflash relate to several of the amendments of the EIT Law under the Approved Bill. We set out the salient provisions of the Approved Bill below based on the form of the Approved Bill that is available publicly. Please note that during the process of enactment, there may be corrections in the Approved Bill. However, these corrections should not of substantive nature.

♦ Implementation of Electronic Certifications and Electronic Systems

The EIT Law states in Article 13(3) that an electronic certification provider comprises of an Indonesian electronic certification provider and foreign electronic certification provider. The EIT Law only stipulates that a foreign electronic certification provider that operates in Indonesia shall be registered in Indonesia.

Different from the EIT Law, under the Approved Bill Article 13(3) of the EIT Law stipulates that only an Indonesian legal entity domiciled in Indonesia that may operate as an electronic certification provider in Indonesia. However, the Approved Bill does not entirely remove the possibility of a foreign electronic certification provider to operate and provide its services in Indonesia. A foreign electronic certification provider may still operate, if the provision of such a service that uses electronic certificate is not yet available in Indonesia.

Further, the mutual recognition of an electronic certificate between countries will be based on a cooperation agreement.

On a separate but related matter, the Approved Bill adds a new article, i.e., Article 13A, which stipulates the service that may be provided by electronic certification providers. Such services are (i) electronic signatures, (ii) electronic seals, (iii) electronic time stamps, (iv) registered electronic delivery service, (v) website authentication, (vi) electronic signatures and seal preservation, (vii) digital identities, (viii) other services that use electronic certificates.

♦ Children Protection in Electronic Systems

The Approved Bill adds new provisions regarding the obligation of an electronic system provider to provide protection for children who use or access the electronic system in Article 16A of the EIT Law. The Approved Bill further stipulates in Article 16A(2) of the EIT Law that the protection includes the protection of children’s rights in the utilization of the products, services, and features that are developed and implemented by the electronic system provider.

In providing the protection, the Approved Bill introduces Article 16A(4) of the EIT Law that stipulates that the types of protection that shall be provided by an electronic system provider is (i) information regarding the minimum age of children that may use the product or service, (ii) mechanism of children user verification, and (iii) mechanism of product, services and features abuse that may infringe or potentially violates children’s rights.

If the electronic system provider violates the provision of Article 16A of the EIT Law, the electronic system provider may be subject to administrative sanctions in the form of (i) written warnings, (ii) administrative fine, (iii) temporary suspension, and/or (iv) termination of access.

♦ Electronic Transactions

Under the Approved Bill, it is stipulated that a high-risk electronic transaction shall use an electronic signature that is secured with an electronic certificate.

It is also stipulated in the addition of Article 18A of the EIT Law under the Approved Bill that an international electronic contract that uses a standard clause (or in Indonesian, klausula baku) that is made by an electronic system provider shall be governed under Indonesian law in the event:

      1. the user of the electronic system provider services as a party of the electronic transaction is Indonesian and provides his/her approval from or within the Indonesian jurisdiction;
      2. the performance of the contract takes place in Indonesia; and/or
      3. the electronic system provider has a business location or conducts a business activity in the territory of Indonesia.

♦ Addition of Prohibited Action in Electronic Information and Transactions

The Approved Bill adds two new articles in the EIT Law, i.e., Articles 27A and 27B.

Article 27A of the EIT Law stipulates that a person is prohibited from intentionally attacking the honor or reputation of another person by accusing the latter of something with the intention of making the matter publicly known in the form of electronic information and/or electronic documents that are carried out through an electronic system.

Further, Article 27B of the EIT Law stipulates that a person, whether intentionally or unintentionally, is prohibited from unlawfully distributing and/or transmitting electronic information and/or documents, with the intention of benefiting him/herself or another person, forcing people with threats of violence, defaming, or with threats of revealing secrets in order to:

      1. give an item, a part of it or all, belonging to the person or to another person; or
      2. provide debt, make an acknowledgement of indebtedness, or write off receivables.

Other than the addition of the above provisions, the Approved Bill also amends several of the existing articles of the EIT Law in relation to the prohibited action in Articles 28, 29, and 36 of the EIT Law.

Under Article 28 of the EIT Law as amended by the Approved Bill, it is now stipulated that the prohibited action under this Article is to spread fake announcements or misleading information that causes material loss for a consumer in an electronic transaction. The Approved Bill also adds and specify in Article 28(2) of the EIT Law the group under the prohibition to spread hate through electronic information and/or documents, by stipulating that it is prohibited to spread hate against certain people based on races, nationalities, ethnicities, skin colors, religions, beliefs, genders, mental disability, or physical disability. It is also prohibited to intentionally spread electronic information and/or document that is known to have fake news that may cause unrest in society.

Further, Article 29 of the EIT Law under the Approved Bill is slightly amended so that the prohibition under such Article relates to an act of intentionally and unrightfully delivering electronic information and/or documents directly to the victim that contains violent threats and/or scares the victim. Lastly, Article 36 of the EIT Law under the Approved Bill is amended to include material loss as the type of impact that may happen due to a prohibited action.

The Approved Bill also stipulates a criminal sanction for any of the above violations. Such criminal sanction is regulated under Articles 45 and 45A of the EIT Law under the Approved Bill.

♦ Addition of New Government Responsibility

The Approved Bill adds a new Article 40A to the EIT Law which stipulates the responsibility and authority of the Government. To implement its responsibilities, the Government is authorized to order the electronic system provider to carry out adjustments and/or conduct certain actions.

In the event an electronic system provider does not conduct the obligations as ordered by the Government, such an electronic system provider may be subject to an administrative sanction in the form of (i) a written warning, (ii) administrative fines, (iii) temporary suspension, and/or (iv) access termination.

♦ Introduction of New Authority of Civil Servant Investigators

A civil servant investigator under the Approved Bill is now authorized to instruct an electronic system provider to temporarily terminate access to the social media account, bank accounts, electronic money, and/or digital assets.

Under the elucidation of the EIT Law under the Approved Bill, temporary access termination may be conducted as long as required during the law enforcement process.

 AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetaypyengel@aksetlaw.com), and Ammarsyarif G. Goenawan (agoenawan@aksetlaw.com) for further information.

 

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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Further Amendments to EIT Law Approved by DPR

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by Pilanita Silaen

New Regulation On Occupational Health And Safety In Confined Space

On November 28, 2023, the Minister of Manpower (the “MOM”) issued Regulation No. 11 of 2023 on Occupational Health and Safety in Confined Space (“Regulation 11”). Regulation 11 is issued to protect the workers who work in confined place against any potential dangers and to provide safe, secure, comfortable, and healthy workplace as mandated under Law No. 1 of 1970 on Occupational Safety.

We set out below certain key points of Regulation 11.

♦ General Overview of Occupational Safety and Health in Confined Space

Confined space is defined in Regulation 11 as space that is quite spacious and has a configuration of such that a worker may enter and perform work in it, has a limited access to enter or exit, and is not designed for a worker to work in continuously or constantly (the “Confined Space”).

Under Regulation 11, the Management and/or a Company that conducts work or business in the Confined Space is required to implement the Occupational Health and Safety (Keselamatan dan Kesehatan Kerja or “K3”).

Further, Article 3 of Regulation 11 provides that the Confined Space includes as the following:

      • Tanks and/or vessels, boilers, kitchen/furnace, silos, chimneys;
      • Pipelines, tunnels and other similar underground construction;
      • Wells or holes having an opening in the upper part of it, whether natural or artificial, which exceeds a depth of 1.5 (one point five) meters; and/or
      • Other space specified as the Confined Space by the Management and/or the Company.

Please note that a Manpower Supervisor may also conduct an assessment and/or a test to determine the Confined Space other than what is specified in point d above. The Management and/or the Company then shall determine certain space to be the Confined Space following the assessment and/or test of such Manpower Supervisor. Any failure to do so may be subject to applicable sanctions under the laws and regulations. In this case, referring to Law No. 1 of 1970 on Occupational Safety, such sanctions may be a monetary fine of up to Rp100,000 or imprisonment of up to 3 (three) months.

The implementation of K3 by the Management and/or the Company shall include the following:

      • the determination of the classifications of the Confined Space;
      • any restriction of access to enter the Confined Space;
      • any entry permit;
      • the safety work procedures;
      • the equipment and supplies; and
      • the K3 personnel.

♦ Determination of Classifications

The determination of classifications of the Confined Space is conducted by identifying the level of potential danger of the Confined Space. In this regard, the classifications shall include the (i) Confined Space with an Entry Permit, and (ii) Confined Space without an Entry Permit.

The Confined Space with an Entry Permit has the following characteristics of potential danger:

      • Hazardous Atmospheric Gas;
      • Potential of liquid or solid materials that may engulf (engulfment) the workers inside;
      • The shape or the structure of the space in such a way that has the potential to cause workers to be trapped (entrapment); and/or
      • Other potential sources of danger that can result in injury or death.

The Confined Space without an Entry Permit is the Confined Space that has no characteristic of the potential danger as mentioned above.

The restriction to enter into the Confined Space may be in the form of (i) closing, locking, and marking, (ii) installation of barriers, and/or (iii) installation of non-entry sign.

♦ Entry Permits of Confined Space

An Entry Permit is required for any person that wishes to enter the Confined Space with an Entry Permit. It shall be noted that the work may not be conducted without the issuance of the Entry Permit.

An Area Person-in-Charge shall make sure that any person who wishes to enter the Confined Space with an Entry Permit has a permit to enter such Confined Space. This Entry Permit shall be granted by the Area Person-in-Charge to the workers who enter the Confined Space once such Confined Space passed the assessment of the K3 requirements by the K3 Experts.

The assessment of the K3 requirements by the K3 Experts shall be based on certain K3 aspects such as test and monitoring of hazardous atmospheric gas, air test, communication, personal protective equipment, emergency rescue procedures. Kindly note once the assessment of K3 requirements by the K3 Experts has been completed and the Entry Permit has been issued, the K3 Experts still have the right to monitor several aspects of K3 requirements, potential danger of the Confined Space, or potential violation of K3 requirements.

♦ Safety Work Procedures and Equipment

In relation to the K3 requirements that are applicable to the Confined Space, Regulation 11 provides that a Safety Work Procedure shall be made as a basis for the implementation of works to Enter the Confined Space. This Safety Work Procedure shall be made in accordance with the job safety analysis and K3 requirements that are applicable to the Confined Space under Regulation 11, such as, among others, the hazardous atmospheric gas test, cleaning of hazardous materials, air circulation system, provision of communication system, etc.

Further, Regulation 11 also requires the Management and/or Company to provide the equipment and supplies for any work inside the Confined Space. These equipment and supplies include, among other, equipment to test and monitor the hazardous atmospheric gases, air circulation equipment, communication equipment, personal protective equipment, and lighting equipment. These equipment and supplies need to comply with the technical standards either nationally or internationally, as applicable.

♦ K3 Personnel

Under Regulation 11, there are 3 types of the K3 Personnel with their own tasks and authorities in the implementation of the K3 in the Confined Space, namely (i) a Confined Space K3 Technician. (ii) a Confined Space Gas Detention Technician, and (iii) a Confined Space K3 Rescue Officer.

All of the K3 Personnel are required to have their applicable K3 licenses/competency certifications as required under the laws and regulations.

♦ Supervision

The supervision on the implementation of any provisions under Regulation 11 shall be conducted by the Manpower Supervisor (i.e., the appointed official) in accordance with the applicable laws and regulations.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Rizky Rakhmadita (rrakhmadita@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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New Regulation On Occupational Health And Safety In Confined Space

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Draft Circular Letter on Ethical Guidelines for Use of Artificial Intelligence

Following up on Press Release No. 254/HM/KOMINFO/08/2023 dated August 30, 2023 in which the Minister of Communication and Informatics (the “MOCI”) announced that the MOCI was developing an ethical guideline for the use of Artificial intelligence (“AI”), the MOCI has recently issued the latest draft of the Circular Letter on Ethical Guideline for the Use of AI (the “Draft Circular Letter”).

The Draft Circular Letter is intended for business actors engaging in business activities with the Business Classification (KBLI) 62015 on Artificial Intelligence-Based Programming Activities (Aktivitas Pemrograman Berbasis Kecerdasan Artifisial). The major points stipulated in the Draft Circular Letter are as follows.

  • Purpose and Objective

The purpose of the Draft Circular Letter is (i) to serve as an ethical guideline in preparing and formulating internal policies of companies regarding data and internal ethics of AI, and (ii) to serve as an ethical guideline in the implementation of AI-based consultations, analysis, and programming in accordance with the laws and regulations.

The objective of the Draft Circular Letter is to provide a reference of ethical values ​​for business actors having AI-based programming activities, regarding ethical criteria or considerations in consultation, analysis, and programming utilizing AI Technology.

  • Definitions

The Draft Circular Letter provides the definition of certain terms as follows:

      1.  AI is a form of programming on a computer device in carrying out careful processing of data;
      2.  Implementation of AI is an activity related to research, product development, marketing, and the use of AI; and
      3.  AI Ethics is a basis that regulates the principles and norms of decency in utilizing AI which is based on values of inclusivity, transparency, humanity, and security in the use of available data resources.
  • Scope of Utilization of AI Capability and AI Technology

The Draft Circular Letter stipulates the scope of utilization of AI capabilities which includes activities of consultancy, analysis, and programming. Further, the Draft Circular Letter stipulates that the use of AI technology is included in the subsets of machine learning, natural language processing, expert system, deep learning, robotics, neural networks, and other subsets.

  • Values of AI Ethics

The Draft Circular Letter provides the values of AI Ethics which shall be adhered to in the use of AI technology, namely (i) inclusivity, (ii) humanity, (iii) security, (iv) democracy, (v) transparency, and (vi) credibility and accountability.

  • Implementation and Responsibility

The Draft Circular Letter stipulates several points relating to the implementation of the use of AI, among others, (i)  the use of AI shall be based on the applicable ethics and code of ethics, (ii) supervising the development of AI-based technology programming to prevent crime and misuse of technology, and (iii) maintaining mutual data privacy in the use of AI to ensure that no individual is harmed.

Further, the responsibilities related to the use of AI stipulated in the draft Circular Letter are, among others, (i) providing protection to the public in the use of AI, particularly relating to the use of personal data, (ii) ensuring that AI does not replace human existence, and (iii) preparing strategy of risk management to ensure the security of users and to mitigate accidents in the use of AI.

Based on Press Releases No. 538/HM/KOMINFO/12/2023 dated December 5, 2023 and No. 546/HM/KOMINFO/12/2023 dated December 6, 2023, the Vice of MOCI elaborated that the Draft Circular Letter does not contain any sanctions as the nature of the Draft Circular Letter is to serve as a normative guideline, instead of a statutory provision. The Vice of MOCI also aimed that the Draft Circular Letter to be officially issued within December 2023, while the MOCI is currently in the process of resolving certain issues in the Draft Circular Letter. Inputs from the relevant stakeholders on the Draft Circular Letter are expected. We will monitor the development and will issue further updates as relevant.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or M. Fatih Satria Kasmaliputra (mkasmaliputra@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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Draft Circular Letter on Ethical Guidelines for Use of Artificial Intelligence

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by Pilanita Silaen

New Regulation on Smart Buildings

On November 3, 2023, the Minister of Public Works and Housing (“MOPWH”) issued MOPWH Regulation No. 10 of 2023 on Smart Buildings (“Regulation 10/2023”).

Regulation 10/2023 provides the guidelines and standards for building construction in order to ensure the sustainability of natural resources and reduce the impact of climate change through the concept of implementing smart buildings in accordance with the provisions of Government Regulation No. 16 of 2021 on Implementation of Law No. 28 of 2002 on Buildings and Presidential Regulation No. 63 of 2022 on the Detailed Master Plan of Nusantara Capital City.

Regulation 10/2023 defines a Smart Building as a Green Building that implements smart building management systems that are responsive to regional context, environment, local wisdom, and user needs that meet building technical standards and security systems using integrated high technology and work automatically in accordance with the principles of sustainability, function, and classification in each stage of their implementation.

Further, Green Buildings are buildings that meet building technical standards and have significant measurable performance in saving energy, water, and other resources through the application of Green Buildings principles in accordance with the function and classification at each stage of their implementation.

As provided in the purpose and definition of Smart Buildings above, Regulation 10/2023 is in fact issued to support the implementation of Green Buildings through technology and to support the development and construction of Green (and Smart) Buildings in Indonesia’s new capital (i.e., Nusantara Capital or Ibukota Nusantara).

Further, Regulation 10/2023 regulates the technical standards, implementation, evaluation, certification, funding, development, and incentives and administrative sanctions of Smart Buildings.

We further elaborate on three aspects of Smart Buildings regulated in Regulation 10/2023, namely, technical standards, implementation, and incentives and administrative sanction below.

  • Technical Standards of Smart Buildings

Article 3 of Regulation 10/2023 provides that every Smart Building shall meet the Smart Buildings technical standards according to its function and classification. Further, the technical standards of Smart Buildings under Regulation 10/2023, among others, the principles, elements, and parameters of Smart Buildings.

The principles of Smart Buildings are the principles that are taken into consideration in the realization of Smart Buildings at every stage of Smart Buildings implementation. The elements of Smart Buildings are components of a system or features in the Smart Buildings that utilize high technology integrated with the building management system of Smart Buildings. The parameters of Smart Buildings are the benchmark for assessing the elements of Smart Buildings in implementing the principles of Smart Buildings.

Following are the principles, elements, and parameters of Smart Buildings:

  • Implementation of Smart Buildings

Smart Buildings shall be operated with consideration of the fulfillment of human, environmental, and technological aspects, as stated in the Smart Buildings principles. Further, the implementation of Smart Buildings must comply with the provisions of the Smart Buildings technical standards at each stage of its implementation.

Smart Buildings technical standards apply to new buildings and existing buildings based on the following categories:

  1. mandatory;
  2. recommended; and
  3. voluntary

The implementation of Smart Buildings is carried out in phases, namely, (i) programming; (ii) technical planning; (iii) construction; (iv) utilization; and (v) demolition. For the implementation of Smart Buildings by construction service providers shall involve Smart Buildings experts.

  • Incentives for Smart Buildings

The Central and Regional Governments may grant incentives to owners, users, and/or management of Smart Buildings as an effort to support the development of Smart Buildings.

The incentives may be in the form of:

  1. ease of licensing fees and services;
  2. technical support and/or expertise, including in the form of technical advice and/or assistance from a Smart Building Expert for a pilot project;
  3. awards in the form of certificates, plaques, and/or tokens of appreciation;
  4. publication and/or promotion; and/or
  5. increasing human resource capacity.

In addition to the above, the incentive may also be in the energy conservation sector.

  • Administrative Sanctions for Smart Buildings

In compliance with the fulfillment of technical standards and certification by an owner, user, and/or management of a Smart Building that is categorized as mandatory may result with subject to administrative sanctions as stipulated under Article 44 of Regulation 10/2023.

In general, the administrative sanctions for technical planning, construction, utilization, and demolition are written warnings (up to three times). Additionally, for the technical planning stage, the administrative sanction may be in the form of delaying the issuance of building approvals, and for the utilization stage, the administrative sanctions may also be in the form of delaying the issuance of a certificate of occupancy extension and revocation of a Smart Building’s certification status.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), or  Andi Manggoana Wira Tenri (atenri@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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New Regulation on Smart Buildings

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OJK Issues New Guidelines for Peer-to-Peer Lending Business

On November 8, 2023, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued OJK Circular Letter No. 19/SEOJK.06/2023 on the Implementation of Information Technology Based Collective Financing Services (“Letter 19/2023”). Letter 19/2023 sets out a detailed guideline for the implementation of OJK Regulation No. 10/POJK.05/2022, dated June 29, 2022 on Information Technology Based Collective Financing Services (“OJK Reg. 10/2022”).

In Letter 19/2023, OJK lays out a more comprehensive list of requirements in performing the Peer-to-Peer Lending (the “P2P Lending”) business process to fill in the gaps where OJK Reg. 10/2022 is silent. The topics covered under this Newsflash relate to the operations of business activities, fund distribution, repayment mechanism, outsourced work, interest rates, and payment success rates. We set out the salient provisions of Letter 19/2023 below.

♦ Business Activities of P2P Lending Provider

OJK Reg. 10/2022 states the business activities of a P2P Lending Provider (a “Provider”) consist of (i) provision (penyediaan), (ii) management (pengelolaan), and (iii) operation (pengoperasian) of the P2P Lending. Further definitions of such elements of business activities that shall be performed by a P2P Lending Provider are not set out under OJK Reg. 10/2022.

Now, Letter 19/2023 specifically clarifies the details of each type of business activity, as follows:

  1. Provision Business Activity: providing an electronic system that brings together a borrower and a lender in a funding or lending transaction and providing other facilities such as customer services, virtual accounts, and escrow accounts;
  2. Management Business Activity: conducting activities including user identity verification, users’ private data processing, funding or lending disbursement from lender to borrower, fund repayment from borrower to lender, and debt collection; and
  3. Operation Business Activity: performing operational activities of the Electronic System it owns in full.

♦ Fund Disbursement and Repayment Mechanism

Letter 19/2023 provides a comprehensive procedure for a lender and a borrower in receiving and disbursing funds within a Provider’s platform. Prior to approving certain funds to be provided by a lender, a Provider shall conduct an analysis by way of (i) verification of a document’s authenticity submitted by a lender, (ii) confirmation and clarification to the lender on matters regarding anti-money laundering and counter-terrorist financing, and (iii) an analysis of the prospective lender.

From the borrower’s side, a Provider shall conduct a credit scoring on a prospective borrower before a borrower may borrow through the platform. Following a borrower’s request to borrow funds, a borrower’s credit scoring shall be conducted by way of (i) verification of the document’s authenticity submitted by the borrower, (ii) confirmation and clarification to the borrower on matters regarding anti-money laundering and counter-terrorist financing, (iii) process of data from other relevant third parties for the purpose of scoring (if necessary), and (iv) an analysis of the prospective lender. Based on such analysis, the Provider shall determine whether or not a borrower is eligible for the disbursement of funds in the Provider’s electronic system.

Letter 19/2023 explicitly states that the scoring conducted by a Provider shall take into account the character and repayment capacity of the prospective borrower. It is stipulated under Section IV.3.i of Letter 19/2023 that scoring on the repayment capacity for consumptive funding or lending shall be conducted by way of comparing the total amount of the principal payment amount and economic benefits that are paid by the borrower with the income of the borrower. The repayment capacity of the borrower is set to be at a maximum of:

  1. 50% (fifty percent) on the first year since the issuance of Letter 19/2023;
  2. 40% (forty percent) on the second year since the issuance of Letter 19/2023; and
  3. 30% (thirty percent) on the third year since the issuance of Letter 19/2023.

Once the analysis for both the prospective lender and the borrower is complete, the prospective lender may choose the prospective borrower on a Provider’s electronic system and proceed with the execution of the P2P Lending agreement using an electronic signature. Thereafter, the payment mechanism of the funding or lending shall be disbursed by the lender through a payment gateway or a virtual account to be placed in the Provider’s escrow account which will be further transferred to the borrower.

♦ Prohibition on the Utilization of an Outsourced Worker

OJK Reg. 10/2022 stipulates that a Provider is permitted to have an outsourcing agreement through (i) a job-chartering agreement; and/or (ii) an outsourcing agreement. However, Article 19(2) of OJK Reg. 10/2022 limits that the work function of assessment of funding or lending feasibility and/or information technology may not be outsourced to another third party.

Under Section V.5 of Letter 19/2023, such function is elaborated to cover that the prohibition on the outsourced work on the works that perform the function of assessment of funding or lending feasibility is only regarding the scoring of the funding or lending feasibility. In line with the foregoing, a Provider may still cooperate with a credit information processing agency to increase the data reference in conducting the funding or lending feasibility scoring.

Letter 19/2023 further stipulates that the prohibition of outsourcing in the information technology works which essentially relates to the development and operation of the information technology, which comprise of (i) user access management activities, (ii) database management activities, (iii) backup and restore activities, (iv) troubleshooting, and (v) disaster recovery.

♦ Interest Rates for P2P Lending

Previously, the interest rate for P2P Lending Activities was only regulated under the Indonesia Fintech Lending Association (Asosiasi Fintech Pendanaan Indonesia or “AFPI”) Code of Conduct which was amended periodically since its first issuance in 2018 and its latest amendment in 2021. Under such AFPI Code of Conduct, the applicable rate is a maximum of flat interest rate of 0.4% per day, calculated based on the principal lending amount.

While OJK Reg. 10/2022 does not stipulate any maximum interest rate, Articles 29(1) and (2) of OJK Reg. 10/2022 require Providers to fulfill provisions on the maximum limitation of funding or lending economic benefits (batas maksimum manfaat ekonomi), which will be determined by OJK.

OJK through its Letter 19/2023 now stipulates the maximum limit of funding or lending economic benefits. To clarify, economic benefits that are imposed by a Provider are the return rate which includes: (i) interest/margin/profit sharing, (ii) administration fees/commission fees/platform fees/ujrah (compensation fees in syariah) equivalent to the relevant fees, and (iii) other costs, other than late fines, stamp duty, and taxes.

The maximum limits of funding or lending economic benefits under Letter 19/2023 are as follows:

  • For productive funding or lending:
    1. 0.1% (zero point one percent) per calendar day of the value of the funding or lending balance, which is valid for 2 (two) years from January 1, 2024; and
    2. 0.067% (zero point zero six seven percent) per calendar day of the value of the funding or lending balance, which is valid from January 1, 2026.
  • For consumptive funding or lending:
    1. 0.3% (zero point three percent) per calendar day of the value of the funding or lending balance, which is valid for 1 (one) year from January 1, 2024;
    2. 0.2% (zero point two percent) per calendar day of the value of the funding or lending balance, which is valid for 1 (one) year from January 1, 2025; and 0.1% (zero point one percent) per calendar day of the value of the funding or lending balance, which is valid from January 1, 2026.

The above rates are also applicable for the maximum limit of late fines according to Sector VI.4 of Letter 19/2023.

Similar to the provision under AFPI Code of Conduct, Letter 19/2023 clarifies that all economic benefits and late fines that may be imposed on the borrowers may not exceed 100% (one hundred percent) of the funding or lending value that is stated in the funding or lending agreement.

♦ Introduction of a New Payment Succes Rate

Before the issuance of Letter 19/2023, there was only one criterion for a Payment Succes Rate (Tingkat Keberhasilan Bayar or “TKB”), as governed under OJK Reg.10/2022, namely TKB90. Letter 19/2023 introduces additional TKBs, which are TKB 0, TKB30, and TKB60. These TKBs are the rate for success payment by the Provider in facilitating the completion of funding or lending obligation within 0 calendar days for TKB0, 30 calendar days for TKB30, 60 calendar days for TKB60, and 90 calendar days for TKB90.

Similar to the previous requirement under OJK Reg.10/2022, the TKB shall be published in the electronic system of the Provider as part of the funding or lending performance of a Provider along with the value of distributed funding or lending, the number of lenders, and the number of borrowers.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetaypyengel@aksetlaw.com), Clara Anastasia So (canastasia@aksetlaw.com), and Ammarsyarif G. Goenawan (agoenawan@aksetlaw.com) for further information.

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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OJK Issues New Guidelines for Peer-to-Peer Lending Business

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New Regulation On Partnerships Within Marine And Fisheries Sector

On October 2, 2023, the Minister of Maritime Affairs and Fisheries (the “MOMF”) issued Regulation No. 31 of 2023 on Partnerships within the Marine and Fisheries Business Sector (“Regulation 31”). Regulation 31 is issued as a follow up to Presidential Regulation (“PR”) No. 10 of 2021 dated February 2, 2021 on Investment Business Fields as amended by PR No. 49 of 2021 dated May 25, 2021 (“PR 10/2021”) which requires several business activities under the marine and fisheries sector to have a partnership with cooperatives and micro, small, and medium enterprises (collectively, the “SMEs”) to be able to conduct its business activities.

Regulation 31 provides detailed provision on the implementation of partnership for businesses with cooperatives and SMEs, such as the types, schemes, procedures, requirements, and evaluation of the partnerships within the marine and fisheries sector.

We set out below certain key points of Regulation 31.

♦ General Overview of Partnership and Types of Partnership

A partnership under Regulation 31 is defined as cooperation in a business relationship either directly or indirectly, on the basis of mutual needs, trust, reinforcement, and benefits, involving SMEs up to large-scale businesses (the “Partnership”).

In line with PR 10/2021, Regulation 31 provides that the Partnership shall be conducted for several business activities under the marine and fisheries sectors, namely the business of fish hatchery, fish rearing, salt production/extraction, fish canning, processing of fisheries products, as well as marketing, distribution, wholesale, and export of fisheries products (all of these business activities are collectively the “Business Activities”).

In this regard, the Partnership shall be conducted by and between:

  1. a large scale business with the micro, small, and/or medium business;
  2. a medium scale business with the micro and/or small scale business;
  3. a large scale business with a cooperative; or
  4. a medium scale business with a cooperative.

For this purpose, the definition of large, medium, small and micro businesses as well as cooperatives shall be the businesses with the criteria as set out under the prevailing laws and regulations on SMEs and cooperatives respectively.

Regulation 31 provides that the Partnership may be conducted within the stage of (i) pre-production, (ii) production, (iii) post-production, (iv) processing, and/or (v) marketing.

Further to the above, Regulation 31 provides that the Partnership is conducted through a transfer of skill within the field of production and processing, marketing, capitalization, human resources, and technology based on the respective Partnership schemes that we will discuss later in this Newsflash.

The transfer of skill as intended in Regulation 31 explained above may be conducted through several means, such as training, skill development, internship, and supervision.

♦ Partnership Schemes

The Partnership schemes under Regulation 31 are as follows:

  1. core-plasma;
  2. subcontract;
  3. franchise;
  4. trade;
  5. distribution;
  6. supply chain; and
  7. other types of partnership.

Other types of partnership as stipulated in letter g above may be in the form of profit sharing, operational cooperation, joint venture, and outsourcing.[5]

Further, certain Partnerships may only be conducted for some of the Business Activities as provided under Regulation 31. For instance, the Partnership through the Subcontract scheme may only be for the Business Activity of salt production/extraction, processing of fisheries products specifically for fish fermentation and other cooked products as well as crushed meat and surimi industries, and fish canning.

♦ Requirements of Partnerships

In order to be able to conduct and partake in the Partnership, the large scale business, SMEs, and cooperatives must fulfill several requirement as set out under Regulation 31, as follows:[6]

  • a large scale business (i.e., domestic and foreign investment companies) and medium scale business:
      1. partnership commitment as evidenced with a letter of commitment;
      2. technology and management with national and/or international standards as evidenced by certifications;
      3. a partnership plan;
      4. business licenses; and
      5. statement letters of not under court supervision and/or under any legal dispute.
  • Cooperatives and/or SMEs:
      1. a partnership commitment as evidenced with a letter of commitment;
      2. business licenses;
      3. financial reports;
      4. a statement letter of having basic equipment for business;
      5. a valid place of business;
      6. a fegal entity for cooperatives; and
      7. a statement letter of not under court supervision and/or under any legal dispute.

♦ Procedures of Partnerships

The Partnership shall be conducted through 3 (three) procedures, namely (i) identification, (ii) verification, and (iii) facilitation.

Identification

Identification shall be conducted through 2 (two) means, namely (i) mapping, and (ii) application.

Mapping is conducted by the MOMF or relevant Maritime and Fisheries Department Office (the “Department”) through data collection of cooperatives, SMEs, and/or large scale businesses that have the potential to be given the Partnership facilitation. From such mapping of the potential businesses, the MOMF will grant the businesses with the Partnership facility.

Verification

Other than the above, the facilitation of the Partnership may be given through an application by the businesses in the event such businesses are not included within the mapping by the MOMF and the Department as explained above.

The applications submitted by the businesses shall be verified by the MOMF or the Department by examining the completion of requirements as explained in the prior paragraph. If the requirements have been met, the MOMF or the Department may conduct a site visit within 7 (seven) days since the MOMF or the Department deemed the required documents have completed.

Once the documentation and site visit verification have been completed, the MOMF shall grant the businesses with the Partnership facilitation.

Facilitation

Facilitation shall be in the form of business meetings and assistance.

Business meetings shall be conducted by meeting the large scale business with a cooperative and SMEs, or Medium businesses with cooperatives and SMEs. While assistance shall be in the form of at least, financing access, technical assistance for business, business management, institutional enforcement, basic feasibility of processing, enforcement of market access, and/or drafting of a Partnership agreement.

♦ Partnership Agreements

Cooperatives, SMEs, and/or large scale businesses that have been given the Partnership facility shall draft a Partnership Agreement to be able to conduct such Partnership. This Partnership Agreement shall be made in Indonesian or in dual language if the large scale business within the Partnership is a foreign investment company.

The Partnership Agreement shall include at least the following: (i) identities of the parties, (ii) business activities, (iii) right and obligations of the parties, (iv) types of enforcement, (v) period of the Partnership, (vi) the period and mechanism of payment, and (vii) the dispute settlement.

This Partnership Agreement shall be used as the tool by the MOMF and the Department to supervise the implementation of the Partnership.

***

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Rizky Rakhmadita (rrakhmadita@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

 

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New Regulation On Partnerships Within Marine And Fisheries Sector

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New Provisions on Importing Raw and Supporting Materials

To accommodate the developments in the import sector, on September 25, 2023, the Government of Indonesia (the “Government”) enacted Government Regulation No. 46 of 2023 on the Amendment to the Government Regulation No. 28 of 2021 on the Implementation of the Industrial Sector (“GR 46/2023”). The amendments under GR 46/2023 include the alterations and deletions of provisions associated with the import of raw and/or supporting materials (collectively, the “Materials”).

Today, imports of Materials are not always carried out by the holders of Producer Importer Identification Number (Angka Pengenal Importir Produsen or “API-P”), but there are also business models that require the imports of Materials to be performed by holders of General Importer Identification Number (Angka Pengenal Importir Umum or “API-U”). In this regard, the Government views that it is necessary to issue a regulation as the basis to enable the holders of API-U to import the Materials.

♦ Previous Provisions on Import of Materials

As a background, prior to the enactment of GR 46/2023, Article 19(1) of Government Regulation No. 28 of 2021 on the Implementation of the Industrial Sector (“GR 28/2021”) only allowed the import of Materials to be conducted by manufacturers that hold API-P.

GR 28/2021 conditionally allowed the holders of API-U to carry out the imports of Materials, only in the case that the import was utilized for small and mid-scale industries that could not conduct the imports by themselves, and provided that the holder of API-U were able to provide the order contracts from the relevant small and mid-scale industries.

Furthermore, GR 28/2021 stipulated that manufacturers that conduct the import of Materials were not allowed to sell or transfer the Materials imported. However, the prohibition to sell or transfer the imported Materials was excluded if the imported products were in the form of the remains of the Materials that are further regulated in the Minister of Industry Regulation No. 22 of 2021 on Terms of Sale or Transfer of Raw and Supporting Materials.

♦ New Provisions on Import of Materials

Under GR 46/2023, the Government now allows the imports of Materials to be carried out by enterpreneurs that holds API-U, in addition to being carried out by holders of API-P. Nevertheless, the import of Materials conducted by holders of API-U is still limited. API-U holders are not allowed to conduct imports of certain Materials that are regulated and determined of their distribution and supervision in a specific way, such as raw sugar, clinker cement, and/or non-toxic and hazardous waste as a raw material for industries. Therefore, holders of API-U must also observe the provisions on imports for such certain Materials.

In addition, GR 46/2023 maintains the provision regarding the right of API-U holders to carry out the imports of Materials that are utilized for small and mid-scale industries that are not able to carry out the imports by themselves. However, GR 46/2023 removes the obligation of such API-U holders to provide the order contracts from the relevant small and mid-scale industries for conducting the import of Materials.

Furthermore, the provisions on the prohibition of manufacturers from selling or transferring the imported Materials and the exclusion of such prohibitions in the case of import in the form of the remains of the Materials are being clarified under GR 46/2023.

November 13, 2023

AKSET

Please contact Inka Kirana (ikirana@aksetlaw.com) or Ayu Nandini Prameswari (aprameswari@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.

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New Provisions on Importing Raw and Supporting Materials

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Golden Visas For Foreign Investors

On August 22, 2023, the Minister of Law and Human Rights (the “MOLHR”) issued Regulation No. 22 of 2023 on Visas and Stay Permits (“Regulation 22”). Regulation 22 is issued following the enactment of Government Regulation No. 40 of 2023 as the fourth amendment of Government Regulation No. 31 of 2013 on Implementing Regulation of Law No. 6 of 2011 on Immigration.

Regulation 22 is the legal basis for, among others, the implementation of Golden Visas for foreign investors in order to help promote foreign investments and to develop the national economy.

Following the issuance of Regulation 22, several regulations with regard to the Golden Visas are issued, including, (i) Director General of Immigration Decree (“DGID”) No. IMI-0257.GR.01.01 of 2023 on Number of Shares Ownership and Turnover/Sales Value of Foreign Companies for Individual Foreign Investors (“DGID 257”), (ii) DGID No. IMI-0260.GR.01.01 of 2023 on Product Documents and Document Requirements of Stay Permit Services (“DGID 260”), and (iii) DGID No. IMI-0262.GR.01.01 of 2023 on Amount of Living Expenses While Staying Within the Territory of Indonesia as the Requirement for Visitor Visas and Limited Stay Permit Applications (“DGID 262”).

We set out below several key points with regard to the Golden Visas and several adjustments on immigration requirements under Regulation 22.

♦ Implementation of Golden Visa Policy

A Golden Visa is a grouping of a Temporary Stay Visa, a Temporary Stay Permit, a Permanent Stay Permit, and a Re-Entry Permit for a certain period of time (collectively, the “Golden Visa”). A Golden Visa is given for a foreigner for the purpose of foreign investment, family unification, repatriation, and a foreigner who has second home in Indonesia. The Golden Visa is valid for up to 5 (five) years or up to 10 (ten) years.

In this Newsflash, we discuss the Golden Visa for foreign investments.

♦ Golden Visas for Foreign Investments

A foreign investment activity is an activity that qualifies for a Golden Visa. In this regard, a Golden Visa for a foreign investment activity may be given for:

      1. individual investors who intend to establish companies in Indonesia;
      2. individual investors with no intention of establishing companies in Indonesia; and
      3. individuals who are the prospective members of boards of directors (each, a “BOD”) or boards of commissioners (each, a “BOC”) of companies that will be established in Indonesia as branch offices or subsidiaries of foreign companies.

Please note that prospective members of a BOD and BOC are limited to a maximum of 10 individuals per company.

Holders of Golden Visas will at least be granted the following types of incentives:

      1. use of priority checking lanes in official immigration check points, as provided by the MOLHR;
      2. priority services at immigration offices; or
      3. priority services from relevant government agencies and/or ministries, in accordance with cooperation agreements.

♦ Immigration Guarantees for Golden Visas for Foreign Investments

As previously regulated, foreigners who reside in Indonesia and want to obtain a Limited Stay Visa are required to have a sponsor/guarantor who guarantees the foreigners during their stay in Indonesia.[3] In this regard, Regulation 22 exempts such requirement in the following events:

      1. foreigner is married to an Indonesian citizen;
      2. foreign business actors who invest their capital as an investment in Indonesia, subject to applicable laws and regulations on investment; and
      3. citizens of a country that reciprocally provides a guarantee waiver.

Under Regulation 22, the requirement to have a sponsor/guarantor is now replaced with the requirement to submit an Immigration Guarantee. An Immigration Guarantee is an instrument for the immigration official to assess the feasibility of the presence of the foreigner in Indonesia and the benefits of his/her stay in Indonesia.

Individual Investors

For an individual investor who wishes to establish a new company in Indonesia, the Immigration Guarantee shall be in the form of as follows:

          1. for an individual investor with the duration of stay of 5 (five) years, a statement of commitment that the individual investor will establish a company in Indonesia with an investment amount of at least US$2,500,000 (two million five hundred thousand US Dollars) within 90 (ninety) days since the issuance of the Limited Stay Visa; and
          2. for an individual investor with the duration of stay of 10 (ten) years, a statement of commitment that the individual investor will establish a company in Indonesia with an investment amount of at least US$5,000,000 (five million US Dollars) within 90 (ninety) days since the issuance of the Limited Stay Visa.

For an individual investor who has no intention to establish a new company in Indonesia, the Immigration Guarantee shall be in the form of as follows:

        1. for the duration of stay of 5 (five) years:
          • a statement of commitment to purchase Indonesian government bonds for an amount of at least US$350,000 (three hundred fifty thousand US Dollars);
          • a statement of commitment to purchase shares of a publicly listed company in Indonesia for an amount of at least US$350,000 (three hundred fifty thousand US Dollars); or
          • a statement of commitment to purchase mutual funds from a publicly listed company in Indonesia for an amount of at least US$350,000 (three hundred fifty thousand US Dollars),

within 90 (ninety) days since the issuance of the Limited Stay Visa.

      1. For the duration of stay of 10 (ten) years:
          • A statement of commitment to purchase Indonesian government bonds for an amount of at least US$700,000 (seven hundred thousand US Dollars);
          • A statement of commitment to purchase shares of a publicly listed company in Indonesia for an amount of at least US$700,000 (seven hundred thousand US Dollars);
          • A statement of commitment to purchase mutual funds from a publicly listed company in Indonesia for an amount of at least US$700,000 (seven hundred thousand US Dollars); or
          • A statement of commitment to purchase multi-story housings or apartments with a minimum value of US$1,000,000 (one million US Dollars),

within 90 (ninety) days since the issuance of the Limited Stay Visa.

Members of BOD and BOC

Regulation 22 regulates the Immigration Guarantees applicable for the prospective members of a BOD or BOC of companies that will be established in Indonesia as branch offices or subsidiaries of the headquarters of foreign companies, which shall be in the form of as follows:

      1. for a prospective member of a BOD or BOC with the duration of stay of 5 (five) years, a statement of commitment from the company to establish a branch or subsidiary in Indonesia with an investment value of at least US$25,000,000 (twenty-five million US Dollars) within 90 (ninety) days since the issuance of the Limited Stay Visa; and
      2. for a prospective member of a BOD or BOC with the duration of stay of 10 (ten) years, a statement of commitment from the company to establish a branch or subsidiary in Indonesia in the form of issued capital (shares) or investment value of at least US$50,000,000 (fifty million US Dollars) within 90 (ninety) days since the issuance of the Limited Stay Visa.

Please note that the templates of these statements of commitment, as well as other documents required for the application of Limited Stay Visas and Limited Stay Permits, are provided in the appendix of DGID 260.

♦Amount of Living Expenses

An application of Limited Stay Visa and Limited Stay Permit requires the applicant (i.e., individual foreigners) to submit a proof of having enough living expenses for him/her and/or his/her family during the stay in Indonesia. Particularly for the foreign individuals who wish to come and reside in Indonesia for the purpose of doing investment in Indonesia as mentioned previously, the amount of living expenses in this regard is regulated under DGID 262.

Under DGID 262, the amount of living expenses required for the application of Limited Stay Visa of foreign individuals with a duration of stay of 5 (five) years or 10 (ten) years shall be a minimum of US$5000 (five thousand US Dollars).

♦ Amount of Turnover/Sales Value

Pursuant to Regulation 22, an application of the Limited Stay Visa and Limited Stay Permit requires the applicant to submit other documents to explain the intention/purpose of the arrival of such foreign individuals to Indonesia.

For the foreign individuals who wish to come and reside in Indonesia for the purpose of doing investment with the intention of establishing new companies in Indonesia for the duration of stay of 5 (five) years and 10 (ten) years shall include:

      1. proof of shares ownership in a company outside Indonesia in a certain amount; and
      2. proof of certain turnover/sales value in a company outside Indonesia,

included in the financial report of the parent company from an international-standard public accounting firm.

This requirement does not apply to foreign investors with no intention of establishing new companies in Indonesia.

As for the application for a Limited Stay Visa and a Limited Stay Permit of a prospective member of a BOD or BOC of companies that will be established in Indonesia as branch offices or subsidiaries of the headquarters of foreign companies with the duration of stay of 5 (five) years and 10 (ten) years, such other documents shall be in the form of proof of certain turnover/sales value in a company abroad included in the financial audit report of the parent company from an international-standard public accounting firm.

Under DGID 257, the amount of shares ownership and turnover/sales value shall be as follows:

November 6, 2023

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Rizky Rakhmadita (rrakhmadita@aksetlaw.com) for further information.

 

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Golden Visas For Foreign Investors

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by Pilanita Silaen