Legal Updates for March 2021

OMNIBUS LAW 2020: Shift to Risk-Based Licensing Set to Transform Indonesia's Investment Climate

Following the enactment of the Omnibus Law, the government has introduced the necessary implementing regulations to the law. Of the proposed changes under the Omnibus Law, one, in particular, will affect all businesses, namely the shift from a commitment-based licensing regime to a risk-based licensing regime. The new regime is reflected under Government Regulation No. 5 of 2021 on the Implementation of Risk-Based Business Licenses (“Regulation”). The Regulation is aimed at administering a more streamlined and efficient business licensing process, and in some instances, even removing the licensing requirement for certain businesses.

OMNIBUS LAW 2020: Just in Time, Indonesia's Priority Investment List is Set to Boost Economic Growth

To implement the relevant provisions of the Omnibus Law (Law No. 11 of 2020) with respect to foreign investment, the government has introduced a new investment list to replace the Negative Investment List under Presidential Regulation No. 44 of 2016 and Presidential Regulation No. 76 of 2007. The new investment list, called the Priority Investment List, is issued under Presidential Regulation No. 10 of 2021 on Investment Business Activities.

The Priority Investment List is a crucial piece of the Omnibus Law puzzle that could increase foreign investment and boost economic growth in the country. Under the Priority Investment List the permitted and restricted sectors have been simplified.

OMNIBUS LAW 2020: A New Age in Employment: Part 1

As discussed in AHP’s October 2020 Client Update, the Omnibus Law (Law No. 11 of 2020) gave the employment sector a significant overhaul. But the large-scale change also created gaps. Now, the Indonesian Government seeks to fill in these gaps by enacting the following four regulations: 

(i)        Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreement, Outsourcing, Working Hours and Time-off, and Termination of Employment ("Regulation 35");

(ii)      Government Regulation No. 34 of 2021 on Manpower Utilisation;

(iii)     Government Regulation No. 36 of 2021 on Wages; and

(iv)     Government Regulation No. 37 of 2021 on the Administration of Loss of Employment Security Program. 

This Update focuses on Regulation 35, which addresses areas of the Labour Law (Law No. 13 of 2003) that required further clarification after the Omnibus Law's issuance: fixed-term employment agreement, termination of employment, termination payment, and outsourcing.

A New Year, A New Registration Regime for Private Electronic System Operators

2019 was a pivotal year in Indonesia's digital business landscape as the government issued, among others, Government Regulation No. 71 of 2019 on Electronic Systems and Transactions (“2019 Regulation”).  The 2019 Regulation mandates all electronic system operators to register with the Ministry of Communications and Informatics ("Ministry"). 

The 2019 Regulation only contains the broad principles on the registration obligation, but mandates that this obligation be further regulated in a Ministerial-level regulation. As a follow-up to such mandate, towards the end of 2020, the Ministry issued a new regulation, Minister of Communications and Informatics Regulation No. 5 of 2020 on the Operation of Private Electronic System Operators (“New Regulation”),  to provide more details on the registration obligation, specifically for private electronic system operators.