Legal Updates for October 2020

How the Omnibus Law Will Simplify Investment in Indonesia

This is the fourth edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the investment sector.

Many hoped that investing in Indonesia will be simpler for investors after the Omnibus Law becomes effective. One of the ways in which the Omnibus Law seeks to simplify investment in Indonesia is by maximising the potential of the One Stop Service ("OSS") system. Despite being in operation since 2018, the OSS still operates in conjunction with manual licensing application or process. Investors often have to juggle both processes to achieve the desired outcome. 

KPPU Introduces New Guideline on Simplified Assessment

In response to the multiple interpretation of the latest Merger Regulation ("2019 Merger Regulation"), the Indonesia Competition Commission or KPPU finally issued implementing guidelines on merger, consolidation, or acquisition, which came into force on 6 October 2020.

First introduced in July 2020 and despite already being a common practice of the KPPU from an earlier period, the KPPU has now formally acknowledged the simplified merger notification procedure under the new guideline. The simplified procedure is now referred to as "simplified assessment". Once KPPU approves or decides to implement an assessment, eligible businesses will essentially be on the "fast track" for receiving their merger review. The guideline provides that the KPPU must complete this simplified assessment within 14 business days, which is expected to occur and be completed within the 60 business days clarification and research phase. This is a significantly shorter timeframe compared to the maximum 150 business days of the traditional merger notification process.

OMNIBUS LAW 2020: The Omnibus Law Removes Cap on Fines for Competition Law Violations

This is the third edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the competition sector.

With the spotlight on sensitive items such as employment, the Indonesian Government, through the Omnibus Law, has also introduced changes to the Competition Law (Law No. 5 of 1999).

Key changes include the removal of the cap on fines and criminal sanctions for competition law violations, as well as the introduction of a new procedure when lodging an appeal in a competition case.

OMNIBUS LAW 2020: Finding a New Equilibrium in Indonesia's Employment Law?

This is the second edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the employment sector.

In Indonesia, as in many other countries, employment law is often a sensitive issue, and past governments have shied away from resolving issues surrounding employment. With the enactment of the Omnibus Law, various provisions of the current Labour Law (Law No. 13 of 2003) that are deemed to be "too restrictive" or "too difficult" are either removed entirely or updated.

The provisions that are being updated by the Omnibus Law include provisions on termination of employment, compensation for termination of employment, minimum wage, outsourcing, fixed-term employment, work permit for expatriates, and the establishment of a new social security program called the loss of employment security program.

OMNIBUS LAW 2020: Overview Series

On 5 October 2020, the Legislation Body of the House of Representatives of the Republic of Indonesia (“DPR”) and the Indonesian government agreed to pass the Omnibus Bill on Job Creation, commonly known as the Omnibus Law. The bill is a breakthrough effort by the government to comprehensively amend 76 sectoral laws and amend or revoke hundreds of regulations to create job opportunities and improve Indonesia’s investment ecosystem.

The bill will be delivered to the President within seven days after the date of the plenary meeting at DPR on 5 October 2020. The President is expected to sign the bill into law, failing which, it will automatically become law within 30 days after the draft bill is jointly agreed by the President and DPR.

The Omnibus Law is by far the most ambitious and complicated piece of legislation in Indonesia, covering many sensitive areas, such as employment, that previous governments have refused to touch. It consists of 15 chapters and 186 articles, spanning over 900 pages. It mainly covers the following: 

  1. investment growth and licensing leniency;
  2. protection and enforcement of small-medium scale enterprises and cooperative;
  3. employment;
  4. research and innovation;
  5. ease of doing business;
  6. land procurement;
  7. economic area;
  8. central government investment and national strategic projects;
  9. government administration; and
  10. sanctions.