Legal Updates for November 2019

Indonesia Looks Ahead to Abolish the Negative Investment List

As part of the implementation of President Joko Widodo's statement on the need to attract more investment into the country and his promise to make Indonesia more investment-friendly, the government will finally take a step to realise this promise by abandoning the Negative Investment List by January 2020.

Supreme Court Decision a Blow to Restructuring After PKPU

The Supreme Court recently issued a decision cancelling a settlement agreement despite creditors' approval. PT Bank CIMB Niaga Tbk. ("CIMB") had filed an application to the Supreme Court to cancel the settlement agreement of PT Arpeni Pratama Ocean Line Tbk. ("APOL"), despite approval from the majority of APOL's creditors to amend such agreement.

 In the first instance, CIMB's application to cancel the court-approved settlement agreement was rejected by the Commercial Court, which found the amendment to be valid and binding on all parties. The Supreme Court subsequently overturned the Commercial Court's decision based on the following considerations:

 (i)   a court-approved settlement agreement must be treated in the same manner as a final and binding court decision, and therefore it cannot be amended privately by the parties; and

(ii)   amendment to the court-approved settlement agreement contradicts the fairness and equity principle in bankruptcy law as it nullifies the assurance of debtor's performance under the settlement agreement.

Wading through Indonesia's New Water Resources Law

The Indonesian Government has enacted a new law on water resources, Law No. 17 of 2019 on Water Resources("2019 Law"), which replaced the previous Law No. 11 of 1974 on Irrigation. The 2019 Law explicitly states that water resources must be controlled by the state and used for the utmost prosperity of the community. Therefore, individuals, community groups or business entities cannot possess or control water resources, and control remains with the central and regional governments. It further emphasises that society's right to water as guaranteed by the state is not to be interpreted as a title over water resources, but rather a right to receive and use water.

Got a Generator? Here's What You Need to Know

The Minister of Energy and Mineral Resources has issued Minister of Energy and Mineral Resources Regulation No. 12 of 2019 on Capacity of Electricity Generator for Private Interest Based on Operational Permit ("New Regulation") to revise the licensing requirements for the use of generators. Pursuant to the New Regulation, users must only obtain an operational permit if they operate a generator above 500 kVA.

The Indonesian Electricity Law, Law No. 30 of 2009 on Electricity, and its implementing regulation, Government Regulation No. 14 of 2012 on Electricity Supply Business Activities, as amended by Government Regulation No. 23 of 2014, has always required an operational permit(izin operasi) for generators above 200 kVA if such generators are used for private purposes, which include utilisation as a main, reserve, emergency, or temporary power source.