Legal Updates for October 2019

Government Relaxes Data Localisation Requirement

In early October this year, the Indonesian government enacted Government Regulation No. 71 of 2019 on Electronic Systems and Transactions ("2019 Regulation") exempting the private sector from the data localisation requirement. The long-awaited regulation was enacted to deal with the confusion created by a previous regulation, Government Regulation No. 82 of 2012 on Electronic Systems and Transactions ("2012 Regulation"), on the data localisation requirement. 

New Regulation on Upstream Data Management Could Spark New Investment

Backed with the intention to promote new investments in the oil and gas upstream industry, Indonesia's Minister of Energy and Mineral Resources recently enactedMinister of Energy and Mineral Resources Regulation No. 7 of 2019 on Oil and Gas Data Management and Utilisation(“2019 Regulation”)to replace the 13-year old regulation on upstream oil and gas data management and utilisation, Minister of Energy and Mineral Resources Regulation No. 27 of 2006 on Oil and Gas Data Management and Utilisation (“2006 Regulation”).

One of the key features of the 2019 Regulation is the introduction of access proliferation ofdeclassified upstream petroleum data – the same vision that was set out by the (“2006 Regulation”), but was considered as lacking in implementation. Declassification of data would mean that data and information would be more accessible, which in turn would lead to an increased control over exploration risks and increased possibility and probability of a discovery. However, the 2019 Regulation is an implementing regulation of Indonesia's oil and gas law and upstream business activities regulation and consequently, the key regulatory restrictions (and sanctions) on data remains.

New Merger Control Regulation: Asset Acquisitions are now subject to KPPU Notification

Pending the long-awaited amendment of the Indonesian Competition Law and in response to the urgency from the Indonesian Competition Authority (“KPPU”) to oversee non-share-based transactions that may raise anti-competitive concerns, the KPPU recently published KPPU Regulation No. 3 of 2019 on Assessment of Merger or Consolidation of Business Entities or Share Acquisition of Companies that could Result in Monopolistic and/or Unfair Business Competition Practices ("New Regulation").

New Regulation on Mandatory Use of Bahasa Indonesia Falls Short of Expectation

10 years after the enactment of the Language Law, President Jokowi signed its implementing regulation last week. From the outset, the Language Law have raised alarm not only due to the additional burden imposed on contracting parties, but also on the uncertainties it creates. These uncertainties can be broadly categorised into three topics, namely timing, governing language and consequence on non-compliance.

Over time, the market has adopted a set of approach to address these uncertainties. While many hoped that the Regulation would affirm the market approach, especially in the light of promoting foreign investment in Indonesia, the Regulation seem to do the opposite. Some issues remain unresolved and one might even argue that it fails to promote foreign investment, as well as the use of the Indonesian language.

KPPU Imposes Record-Breaking Fines on Five-Year Old Transactions

On 1 October 2019, the Indonesian Competition Commission, Komisi Pengawas Persaingan Usaha ("KPPU") imposed a record-breaking fine of IDR20.66 billion (approx. US$1.46 million) on PT Citra Prima Sejati ("CPS") for its failure to notify the KPPU of two transactions within the required timeframe. These transactions involved CPS's acquisition of two Indonesian mining companies, PT Buana Minera Harvest and PT Mitra Bisnis Harvest, on 24 December 2013.