Legal Updates for March 2020

Covid-19 Response: Between Lockdown, Quarantine and Massive Social Restriction

For the last couple of weeks, the term 'lockdown' has been frequently mentioned both in official media, as well as social media. Some argue that it will be the most pressing and effective action to prevent viruses spread; others appeal to take a closer look as it may adversely affect state economy and livelihood of workers in the informal economy.

Perhaps unknown by many, the government had issued a law on health quarantine (Law No. 6 of 2018 on Health Quarantine) in 2018. This law regulates various types of actions, including massive social restriction and quarantines that can be taken by the government in preventing the spread of a disease and/or any health risk.

Another Setback for Secured Creditors: A New Supreme Court Decree on Bankruptcy/PKPU

Following the disappointing 2019 decision by the Constitutional Court 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, secured creditors suffer another setback as a result of a decree issued by the Chairman of the Supreme Court. The decree provides a detailed guideline and procedure for bankruptcy and suspension of debt payment (Penundaan Kewajiban Pembayaran Utang or "PKPU") proceedings, starting from the registration of petition, to the process post-issuance of the court decision.

While this decree is neither a law nor a regulation, it still serves as an instruction and guidance for all judges and registrars in Indonesia's commercial courts. Further, as it is not a part of the regulatory hierarchy in Indonesia, it should not introduce any new norms and contains only implementing or technical provisions for existing laws and regulations. But while it refers to, and generally does not deviate from, the procedures stipulated under the Bankruptcy Law (Law No. 37 of 2004), this decree introduces new norms that are not in the Bankruptcy Law, specifically on limitation of secured creditors' right to file a PKPU petition.

Covid-19 Response: Indonesia Temporarily Halts Export of Masks and Medical Protective Equipment

Following the announcement from the World Health Organization that declared Covid-19 as a pandemic, the Indonesian government continues making adjustment and taking steps to deal with the outbreak. As of 23 March 2020, there were 579 confirmed COVID-19 cases, with 49 deaths and 30 recovery. Globally, the pneumonia-like illness has infected more than 330,000 people and taken at least 14,000 lives. 

Amidst this outbreak, the Indonesian Central Statistics Agency noted an increase in the export of protective masks from Indonesia to trading partner countries by an average of 3,000% during February 2020. Given that Indonesia is currently suffering from a shortage of protective masks due to panic buying and an increase of price, the Indonesian government issued the Minister of Trade Regulation No. 23 of 2020 on the Temporary Ban of Export of Antiseptics, Raw Materials for Masks, Personal Protective Equipment and Masks on 17 March 2020 ("Regulation") prohibiting the export of antiseptics, raw materials for masks, personal protective equipment and masks that fall under specified Tariff Post/Harmonized System.

The temporary ban of export started on 18 March 2020 and will end on 30 June 2020. Non-compliance with the Regulation will subject the errant exporters to sanctions provided for by the prevailing laws and regulations.

Indonesian Government Begins Easing Rules in Light of COVID-19

In light of the spread of  the Covid-19 outbreak, on 18 March 2020, the OJK, Indonesia's Financial Services Authority, relaxed the rules on submission of reports and holding of general meeting of shareholders for public companies. Under OJK Letter No. S-92/D.04/2020 ("Letter"), OJK not only extends the deadline for the submission of several reports, including annual reports and financial statements, but also touches upon the holding of a general meeting of shareholders ("GMS") via an e-proxy.

Market Condition Pushes the OJK to Relax Buyback Procedures

Indonesia's financial services authority, Otoritas Jasa Keuangan or “OJK”, recently issued a circular that allows all issuers or public companies to conduct a buyback of shares without convening a general meeting of shareholders. 

In OJK Circular Letter No. 3/SEOJK.04/2020 on Other Conditions as Significantly Fluctuating Market Conditions in the Implementation of Shares Buyback by Issuers or Public Companies ("Circular"), the OJK states that the trading condition in the Indonesia Stock Exchange (IDX) has experienced significant pressure as evidenced by the decline in the Composite Stock Price Index (IHSG) by 18.46% from the beginning of 2020 until the date of the Circular. The economy is also slowing down due to regional and national pressure, including as a result of the COVID-19 outbreak. 

The revision to the buyback procedure is an attempt by the government to provide economic stimulus to the market and at the same time reducing the adverse impact from the current market condition.

Customs Office Seized Goods based on Alleged IP Infringement

The Customs Office recently seized suspected fake pens from entering the territory of the Republic of Indonesia. The pens are counterfeit goods allegedly infringing the Standard AE7 trademark owned by PT Standardpen Industries ("PT SI"), which is recorded at the Customs Office. The Customs Office seized 858,240 pens bearing the Standard AE7 trademark which were imported by PT Putra Alka Mandiri ("PT PAM") from China. 

A judge from the Surabaya Commercial Court examined the suspicious pens jointly with representatives from the Customs Office, Directorate General of Intellectual Property ("DGIP"), PT SI and PT PAM. According to the DGIP's expert statement, there is similarity in principal between the trademark embedded on the imported pens and PT SI's trademark. The inspection of the pens resulted in a decision by the Surabaya Commercial Court to reinforce the seizure. PT SI can take further legal action by filing a criminal and /or civil lawsuit against the other party.