Legal Updates for January 2020

New Regulation on SOE Procurement: Redefining SOE Subsidiary and SOE-Affiliated Company

After the issuance of Presidential Regulation No. 16 of 2018 on Public Procurement of Goods and Services, the public procurement landscape in Indonesia underwent another change when the government issued the Minister of State-owned Enterprise Regulation No. PER-08/MBU/12/2019 on Guideline for Procurement of Goods and Services by State-Owned Enterprise ("SOE") ("New Regulation"). The New Regulation supersedes the entire previous regulation on the same subject.

The key changes introduced in the New Regulation relate to following:

(a)      Qualification as an SOE subsidiary or SOE-affiliated company

(b)      Utilisation of state budget

(c)       Optional adoption of the New Regulation

(d)      Additional requirements for direct appointment

(e)      Priority for domestic products

Indonesia's Legal Landscape in 2020: Prioritised Legislations and Omnibus Law

On 16 January 2020, the Legislation Body of the House of Representatives, the Law Drafting Committee of the Senate and the Minister of Law and Human Rights reached an agreement on Indonesia's National Legislation Program (often referred to as Prolegnas or Program Legislasi Nasional) ("Program").

As in the previous years, this year's Program contains a list of priority bills. At the start of its term of office, the Parliament will establish the Program based on the legislative priority of each of the above institutions. The Program may be evaluated yearly, along with the preparation and determination of the annual priority bills prior to the stipulation of the law on annual state budget (Anggaran Pendapatan dan Belanja Negara or APBN).

Out of 248 bills included in the Program, at least 50 bills have been established as annual priority bills. Four of these are omnibus bills that deal with job creation, state capital, tax and pharmacy.

Constitutional Court Curbed Creditor's Enforcement Power

Towards the end of 2019, the Indonesian Constitutional Court handed down a startling decision declaring certain articles in Law No. 42 of 1999 on Fiduciary Security ("Fiducia Law") on creditor's power to enforce security to be conditionally unconstitutional. The case in the decision involved an application for judicial review by a debtor who claimed that they have suffered losses as a result of the unscrupulous repossession of a security by a multi finance company.

The provisions in question are Articles 15(2) and (3) of the Fiducia Law. Article 15(2) provides that a fiduciary certificate has enforcement powers equivalent to a final and binding court decision. Article 15(3) stipulates that if a debtor is in default, the fiducia grantee (e.g. the creditor or security agent, as the case may be) has the right to sell the fiducia security object on its own powers.

More Details on the New Electronic Systems and Transactions Regulation

Following up on AHP’s previous alert on the relaxation of data localisation requirement under Government Regulation No. 71 of 2019 on Electronic Systems and Transactions ("Regulation"), this Update discusses the other key requirements that electronic system operators must fulfil to comply with the Regulation. 

  1. Mandatory registration – Previously, registration with the Ministry of Communications and Informatics ("Ministry") was mandatory only for electronic system operators providing public services. Under the Regulation, both public and private operators must register themselves with the Ministry.
  2. Removal of prohibited contents – The Regulation requires an operator to ensure that its platform is free from prohibited contents.