General Corporate Sector

No

Regulation

Summary

1.

Government Regulation (“GR”) No. 5 of 2021 on Organization of Risk-Based Business Licensing (“GR 5/2021”)

Enforcement date:

2 February 2021

• GR 5/2021 stipulates that every business actor must fulfill: (i) basic requirements and (ii) risk-based business licensing (Art. 4 of GR 5/2021).
• Risks of business activities are classified into: (i) low risk; (ii) medium risk, which consists of medium-low and medium-high; and (iii) high risk. Each classification will determine the legal documents required by business actors (Art. 10 (1) and (2) of GR 5/2021).

2.

GR No. 44 of 2021 on the Implementation of the Prohibition of Monopolistic and Unfair Business Competition Practices (“GR 44/2021”)

Enforcement date:

2 February 2021

• GR 44/2021 stipulates that the Commission for the Supervision of Business Competition/Komisi Pengawas Persaingan Usaha (“KPPU”) may impose administrative actions to business actors that conduct the following violations: (i) involved in any prohibited agreements, such as oligopolies, price-fixing, market division, boycotts; (ii) conducting prohibited activities, such as monopolies, monopsonies, market control; and (iii) conducting violations related to dominant positions (Art. 4 (2) of GR 44/2021).
• The administrative sanctions would be in the following forms: (i) annulment of agreements; (ii) ordering the relevant business to terminate any vertical integrations; (iii) ordering the relevant businesses to terminate all activities which are proven to have led to monopolistic practices, unfair business competition and/or disservice to the general public; (iv) cancellation of mergers or share acquisitions; (v) imposition of compensation payment; and/or fines at the minimum of IDR 1 billion (Art. 6 (2) of GR 44/2021).

3.

GR No. 6 of 2021 on the Organization of Business Licensing at the Regional Level (“GR 6/2021”)

Enforcement date:

2 February 2021

• The organization of business licensing is implemented to ease the investment and business ecosystem at the regional level, which includes: (i) Risk-based business licensing; (ii) Basic business-licensing requirements; and (iii) Sectoral business-licensing and ease-of-investment requirements (Art. 6 (1) and (2) of GR 6/2021).
• Business licensing at the regional level is implemented by the Investment Unit and the Central One-Stop Integrated Service/Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu (“DPMPTSP”) based on the risk-based business licensing and the utilization of the Online Single Submission (“OSS”) system. (Art. 10 (1) and (2) of GR 6/2021). 

4.

Presidential Regulation (“PR”) No. 10 of 2021 on Investment Business Field (“PR 10/2021”)

Enforcement date:

4 March 2021

• This regulation stipulates that all business sectors are now open to investment, except some certain business sectors that will remain closed to investment or are reserved for the central government (Art. 2 (1) of PR 10/2021).
• Investors of certain priority business sectors may be granted the following incentives: (i) fiscal incentives, including tax and customs incentives; and (ii) non-fiscal incentives, such as ease in doing business, availability of supporting infrastructure, employment incentives, etc. (Art. 4 (5) of PR 10/2020).
• GR 5/2021 provides relief for any foreign investments on technology-based start-ups that are located within special economic zones are permitted to have investment values with a total amount of less than or equal to IDR10Billion, excluding land and building (Art. 8 (2) of PR 10/2020).

  5.

Supreme Court Circular Letter No. 1 of 2021 on the Submission of Objections to Decisions of the Business Competition Supervisory Commission to the Commercial Court (“CL 1/2021”)

Enforcement date:

2 February 2021

• We note that starting from 2 February 2021, any objections to KPPU decisions must be submitted to the Commercial Court within 14 days of its recipient. However, cases that have been submitted to District Court prior to the enforcement date will be examined and adjudicate upon said objection cases.
• Please refer to KPPU Regulation No. 3 of 2019 on Procedures for the Submission of Objections to Decisions of the Business Competition Supervisory Commission for the detailed procedure on submitting KPPU objection.

  6.

GR No. 34 of 2021 on the Utilization of Foreign Workers (“GR 34/2021”)

Enforcement date:

1 April 2021

• GR 34/2021 requires any employers who wish to employ Foreign Workers/Tenaga Kerja Asing (“TKA”) to first secure Plans for the Utilization of Foreign Workers/Rencana Pengunaan Tenaga Kerja Asing (“RPTKA”)(Art. 6 (1) of GR 34/2021)
• TKA’s employers that violate any obligations as stipulated under GR 34/2021 may be subject to administrative sanctions in the form of: (i) fines; (ii) temporary suspension of any RPTKA authorization application submission processes; and (iii) Revocation of RPTKA authorizations (Art. 36 (1) of GR 34/2021).
• GR 34/2021 has revoked and repealed Presidential Regulation No. 20 of 2018 on the Utilization of Foreign Workers (Art. 46 of GR 34/2021).

7.

GR No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours, Rest Periods, and Termination of Employment (“GR 35/2021”)

Enforcement date:

2 February 2021

• GR 35/2021 provides a longer-term of Fixed-Term Employment Agreements/Perjanjian Kerja Waktu Tertentu (“PKWT”) period compared to Law No. 13 of 2013 on Manpower. Today, PKWT can be made for a maximum of 5 (five) years with further extensions of 5 (five) more years (Art. 8 (1) and (2) of GR 35/2021).  
• Employers are required to provide continuous compensation payments to PKWT employees with at least one-month working period whenever a PKWT ends. The amount of compensation is further regulated in this regulation (Art. 16 (1) of GR 35/2021).
• If the PKWT is terminated by employers, then the relevant worker will be eligible to receive a severance payment, a long-service payment, and compensation of rights (Art. 40 (1) of GR 35/2021).

9.

GR No. 37 of 2021 on Management of the Unemployment Insurance Program (“GR 37/2021”)

Enforcement date:

2 February 2020

• GR 37/2021 stipulates that Unemployment Insurance/Jaminan Kehilangan Pekerjaan (“JKP”) to be paid to all workers, either employed based on PKWT or Indefinite Employment Agreements/Perjanjian Kerja Waktu Tidak Tertentu (“PKWTT”) whose employment are ended.
• JKP benefits are consist of the following: (i) Cash payments; (ii) Access to job market information; and (ii) Employment training. (Art. 18 of GR 37/2021).
• Employers who violate any of the provisions set out under this Regulation may be subject to the gradual imposition of administrative sanctions i.e., written reprimands and/or exclusion from certain public services (Art. 46 (1) of GR 37/2021).

Banking and Financial Services Sector

 10.

Minister of Finance (“MoF”) Regulation No. 3/PMK.08/2021 on the Amendment to MoF Regulation No. 149/PMK.08/2018 on the Repurchasing of Government Bonds (“MoF Reg 149/2018 as amended by MoF Reg 3/2021”)

Enforcement date:

19 January 2021

• MoF Reg 3/2021 stipulates that repurchases of government bonds through the debt-switching method may be implemented through the issuance of new series of government bonds and/or through the re-issuance of already existing series of government bonds as switching series (Art. 2 (4) of MoF Reg 149/2018 as amended by MoF Reg 3/2021).
• MoF Reg 3/2021 adds Bank Indonesia as one of the parties that may implement the repurchase of government bonds through the bilateral buyback method (Art. 14 (2) of MoF Reg 149/2018 as amended by MoF Reg 3/2021).

11.

Financial Services Authority/ Otoritas Jasa Keuangan (“OJK”) Regulation No. 3/POJK.04/ 2021 on the Organization of Activities Within the Capital-Market Sector (“POJK 3/2021”)

Enforcement date:

22 February 2021

• Businesses within the capital-market sector, including the stock exchange, mutual funds, securities companies, custodians, etc. must ensure their compliance with updated licensing procedures and requirements in order to be able to conduct their business activities. OJK will issue either an approval or rejection of the application within 45 days of the said application being received by the OJK (Art. 90 of POJK 3/2021).
• Public companies may delist themselves from the stock exchange for any of the following reasons: (i) Voluntary delisting decision; (ii) Delisting order issued by the OJK; or (iii) Delisting order issued by the stock exchange. Dependent on the delisting reason, each company is required to adhere to certain obligations as stipulated under POJK 3/2021.

Taxation Sector

12.

MoF Regulation No. 20/PMK. 010/2021 on Sales Tax on Luxury Goods for Handovers of Taxable Luxury Goods in the Form of Certain Motor Vehicles Borne by the Government for the 2021 Budgetary Year (“MoF Regulation 20/2021”)

Enforcement date:

26 February 2021

• MoF Regulation 20/21 provides that Sales Tax Luxury Goods/Pajak Penjualan atas Barang Mewah (“PPnBM”) of certain types of motor vehicles are borne by the government for the year 2021 (Please refer to Art. 2 of MoF Regulation 20/2021).
• The amounts of PPnBM incentives are vary based on the stages as follows: (i) For PPnBM that is payable in March to May 2021 tax period: 100%; (ii) For PPnBM that is payable in June to August 2021 tax period: 50%; (iii) For PPnBM that is payable in September to December 2021 tax period: 25% (Art. 5 of MoF Regulation 20/2021).
• Taxable entrepreneurs that hand over the abovementioned taxable goods are required to issue the tax invoices and report the realization of the incentives (Art. 6 (1) of MoF Regulation 20/2021).

13.

GR No. 10 of 2021 on Regional Taxes and Regional Levies to Support Ease of Doing Business and Regional Services (“GR 10/2021”)

Enforcement date:

2 February 2021

• The scope of GR 10/2021 is: (i) Tariff adjustments for regional taxes and regional levies; (ii) Evaluations of the draft versions and issued versions of regional regulations that address regional taxes and regional levies; (iii) Supervision of the implementation of regional regulations that address regional taxes and regional levies; (iv) Incentives for the ease of doing business; and (v) Administrative sanctions (Art. 2 (2) of GR 10/2021).
• Tariffs comprising regional taxes and regional levies which relate to the implementation of nationally strategic projects may be adjusted and said adjustments should be implemented based on a PR, which should at least specify: (i) Projects which may enjoy the adjusted tariffs; (ii) Types of adjusted regional taxes and regional levies; and (iii) the adjusted tariffs amounts; (iv) Validity and Timeframe of any tariffs adjustment; and (v) Regions which must adjust their regional taxes and regional levy tariffs (Art. 3 (4) of GR 10/2021).

Energy and Natural Resources Sector

14.

GR No. 23 of 2021 on the Organization of the Forestry (“GR 23/2021”)

Enforcement date:

2 February 2021

• Production forest areas and/or protected forest areas may be used for strategic non-forestry areas that now also include the following: locations for the final processing of trash, waste processing facilities or environmental recovery activities (Art. 91 (2) letter m of GR 23/2021).
• Any person or company that utilizes forest areas is now required to pay non-tax state revenue/Penerimaan Negara Bukan Pajak (“PNBP”) in the form of: PNBP compensation; and/or PNBP For Utilization of Forest Area/Penggunaan Kawasan Hutan.
• Business licenses for forest utilization are consist of: (i) business licensing for the utilization of forest area; and (ii) business licensing for the processing of forest products.

 15.

GR No. 25 of 2021 on the Organization of the Energy and Mineral Resources Sectors (“GR 25/2021”).

Enforcement date:

2 February 2021

• Holders of Mining Business License/Izin Usaha Pertambangan (“IUP”) Production Operations, Special Mining Business Licenses/Izin Usaha Pertambangan Khusus (“IUPK”) Production Operations and IUPK as a continuation of contract operations/agreements for coal commodities will be able to enjoy a 0% royalty rate (Art. 3 (1) of GR 25/2021).
• Redefines several administrative sanctions which were previously regulated under GR No. 7 of 2017 on the Indirect Utilization of Geothermal Energy. These sanctions include written reprimands from the Minister of Energy and Mineral Resources and fines.

 16.

GR No. 22 of 2021 on the Implementation of Environmental Protection and Management (“GR 22/2021”)

Enforcement date:

2 February 2021

• Environmental Approvals, which must be secured in relation to any planned businesses/activities, may be secured through the organization of Environmental Impact Assessments/Analisis Mengenai Dampak Lingkungan (“AMDAL”) or Environmental Management and Monitoring Efforts/Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup (“UPL-UKL”) (Art. 3 (4) of GR 22/2021).
• In addition, Statements of Capability for Environmental Management and Monitoring/Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup (“SPPL”) may also be utilized by businesses and/or in relation to any activities which do not have any significant impacts upon the environment and thus which do not encompass any mandatory UKL-UPL criteria (Art. 1 point 9 of GR 22/2021).

Trade Sector

17.

GR No. 29 of 2021 on the Organization of the Trade Sector (“GR 29/2021”)

Enforcement date:

2 February 2021

• GR 29/2021 stipulates that both domestic products and imported products as parties that are required to affix Indonesian-language labeling to goods that are traded domestically, the trading of which now also includes trade that is undertaken through e-commerce platforms and indirect distribution, as well as direct distribution through single-level or multi-level marketing schemes (Art. 20 (1) and (2) of GR 29/2021).
• GR 29/2021 provides relaxation on various requirements for shopping centers and modern stores, including requirements relating to parking areas, establishment locations and distance to existing traditional markets (Art. 86 (1) and (2) of GR 29/2021).

Industrial Sector

18.

GR No. 40 of 2021 on the Organization of Special Economic Zones (“GR 40/2021”)

Enforcement date:

2 February 2021

• Business entities are allowed to propose the establishment of Special Economic Zones/Kawasan Ekonomi Khusus (“KEK”) within single regencies/cities, across regencies/cities or across provinces, provided that any such locations meet the following criteria: (i) Must be in accordance with regional spatial plans and must not have the potential to disturb any conservation areas; (ii) Must have clear borders; and (iii) Must have been occupied at least 50% of the total area of the proposed KEK location (Art. 17 (2), (3), and (4) of GR 40/2021).
• Business entities and/or business actors which engage in KEK business activities may enjoy various facilities and relaxations in relation to the following areas: (i) Taxation, customs and excise; (ii) Goods traffic; (iii) Manpower; (iv) Immigration; (v) Land and spatial planning; (vi) Business licensing; and/or (vii) Other aspects (Art. 2 (2) of GR 40/2021).

Miscellaneous

19.

GR No. 48 of 2021 on the Third Amendment to GR No. 31 of 2013 on the Implementing Regulation to Law No. 6 of 2011 on Immigration (“GR 31/2013 as amended by GR 48/2021”)

Enforcement date:

2 February 2021

• Foreign citizens who travel to Indonesia to engage in any pre-investment activities may now be granted single or multiple-entry visitor visas, provided that they have first submitted visa applications along with the following documents: (i) Passport that has at least 6 (six) months remaining validity; (ii) Guarantee letter from a guarantor or immigration guarantee post of deposit if a foreign citizen does not have a guarantor; (iii) Proof of financial capability during any stay in Indonesia; (iv) Return ticket; and (v) Colored photo (Art. 90 (1) of GR 31/2013 as amended by GR 48/2021).
• The regulation provides maximum validity periods allowed for visas are stipulated under Art. 106 (2), Art. 136, and Art. 137 of GR 31/2013 as amended by GR 48/2021).

20.

GR Government No. 39 of 2021 on the Organization of Halal Product Guarantees (“GR 39/2021”)

Enforcement date:

2 February 2021

• All products that entered, circulated, and traded within the territory of Indonesia must be covered by halal certification, which signifies that the products in question are produced from halal materials and have been subject to halal product processing (Art. 2 (1) of GR 39/2021).
• The halal certificates will remain valid for 4 (four) years (Art. 78 (1) of GR 39/2021).
• After a product has secured halal certification, businesses are required to attach the halal or non-halal label to their products in the following: (i) Product packaging; (ii) Certain parts of products; and/or (iii) Specific places on products (Art. 91 (2) and Art. 92 (2) of GR 39/2021)