Legal Updates for April 2024

Potential Challenges under the New KPPU Regulation to Supervise Partnerships

Apart from enforcing competition law, the Indonesia Competition Authority (Komisi Pengawas Persaingan Usaha or “KPPU”) also supervises partnership agreements between large/medium businesses and their micro, small, or medium enterprise (“MSME”) partners. If a large/medium business is found to have ownership or control over its MSME partners, the KPPU can initiate a case against the business and impose administrative sanctions.

For several years, the KPPU has diligently focused on MSME partnerships. The recent issuance of a new regulation in this field underscores their unwavering commitment to this area. This regulation, KPPU Regulation No. 2 of 2024 on the Procedure and Case Handling of Partnership Cases (“New Regulation”) was issued in April 2024, and replaces KPPU Regulation No. 4 of 2019 on the same topic.

The highlights of the New Regulation are as follows:

(a)   Enhanced clarity on the duration of the written warning stage, which gives more room for the reported party to implement the KPPU’s order.

(b)   Partnership cases now adopt stricter requirements for evidence, like competition cases.

(c)   Reported party has a more limited room to rebut the allegations.

(d)   There is a lack of clarity of whether KPPU’s decisions in partnership cases are final.

Time to Reflect on Indonesia’s Local Content Requirement for Renewable Energy

By 2025, the Indonesian government aims to achieve a minimum of 23% renewable energy in the national energy mix and 31% by 2050. Despite the ambitious target, the Electricity Law (Law No. 30 of 2009 as amended by Government Regulation in lieu of Law No. 2 of 2022) requires independent power producers (“IPP”) to prioritise the use of domestic products in developing power generation projects, including renewable energy projects. This means that IPPs must comply with the minimum local content requirements (Tingkat Komponen Dalam Negeri), which apply for goods and services, in the development of electricity infrastructure. Failure to comply with these local content requirements may result in administrative and financial sanctions.

The local content requirements are stipulated under Minister of Industry Regulation No. 54/M-IND/PER/3/2012 on Guidelines for the Use of Domestic Products for the Development of Electrical Infrastructure and its amendment from time to time (“Regulation 54/2012”). Regulation No. 54/2012 has undergone several amendments, with the most recent in 2023, encompassing local content requirement for the module of solar power plants (pembangkit listrik tenaga surya or “PLTS”) and exemptions on local content requirements for PLTS in Ibu Kota Nusantara. It is imperative to note that most of the local content threshold under Regulation 54/2012 dates to 2012, and consequently, the threshold does not reflect the current market condition for renewable energy power plants.

Drawing from past transactions and experience, we will discuss the imperative need to revise the calculation and stipulation of the local content requirements for renewable energy projects.

Ready, Set, Go! Updates to Indonesia’s Gaming Industry

The Indonesian government enacted two regulations for the gaming industry in early 2024. These regulations, which we will discuss in this alert, put the gaming industry under the spotlight and solidify the government’s commitment in revitalising Indonesia’s gaming industry. The first regulation, Presidential Regulation No. 19 of 2024 on the Accelerated Development of the National Gaming Industry ("Presidential Regulation") establishes a national development roadmap for the gaming industry. It is quite common for the government to issue regulations on national development roadmap, and in the past, we have seen similar roadmaps for the e-commerce and digital industry. A common theme of these roadmaps is that they address internal and external issues and/or challenges faced by the relevant industry. Meanwhile, the second regulation, Ministry of Communication and Information Technology Regulation No. 2 of 2024 on Game Classification ("Regulation 2/2024") renews the age classification for games and provides new requirements for game publishers.

The two regulations complement each other and propel Indonesia's gaming industry to new heights by fostering a dynamic ecosystem where foreign investment and local innovation can converge synergistically.

Shift in Responsibility as Digital Service Platforms Become Responsible for Copyright Infringement in User-Generated Content

In February 2024, the Constitutional Court handed down a decision that extended the meaning of “business premises” (tempat perdagangan) in Article 10 of the Copyright Law (Law No. 28 of 2014). Previously, such term commonly referred to physical business premises, and Article 10 itself prohibits operators of business premises from allowing the sale and/or reproduction of goods resulting from copyright and/or related rights infringement in locations under their management. Now, as a result of the decision, the term “business premises” include digital service platforms that facilitate user-generated content (“UGC”).  

In this Update, we take a closer look at the decision.

A Brief Summary of Indonesia’s New Regulations on Imports

In the past several months, the Minister of Trade (“Ministry”) has issued two new regulations on imports. First, in December 2023, the Ministry enacted Ministry of Trade Regulation No. 36 of 2023 on Import Policies and Provisions (“Regulation 36/2023”), which came into effect on 10 March 2024. Regulation 36/2023 replaces Ministry of Trade Regulation No. 20 of 2021 and its amendment, Ministry of Trade Regulation No. 25 of 2022. Then, in March 2024, the Ministry issued Ministry of Trade Regulation No. 3 of 2024 on Amendment of Import Policies and Provisions (“Regulation 3/2024”). Among others, Regulation 3/2024 amended the provisions on import permits and import arrangements of plastic raw materials, chemicals, aircraft spare parts, and horticultural products.

Both Regulations are aimed to enhance the supervision of goods entering Indonesia by restricting the importation of specific goods to maintain the stability of domestic trade. In Regulation 3/2024, the Ministry expands the range of used goods eligible for importation, updates the requirement for obtaining import permit, and adds classification of goods that are subject to import restrictions. Additionally, these regulations also tighten the entry of goods carried by passengers.

We take a closer look at some of the changes introduced by Regulation 36/2023 and Regulation 3/2024.

Navigating the Change in Share Ownership Reporting under OJK Regulation No. 4 of 2024

Starting on 28 August 2024, shareholders of a public company will be subject to a potentially game-changing set of requirements on the reporting of ownership or changes in ownership of a public company’s shares and encumbrances of a public company’s shares. These requirements, which are introduced by the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) in February 2024 under OJK Regulation No. 4 of 2024 (“POJK 4/2024”), will be based on the calculation of valid voting rights over a public company’s shares as opposed to the calculation of the number of shares.

POJK 4/2024 revokes OJK Regulation No. 11/POJK.04/2017 (“POJK 11/2017”). Additionally, POJK 4/2024 serves as the implementing regulation for the provision on the report of changes of ownership in a public company under Law No. 4 of 2023 on the Development and Strengthening of Financial Sector.

Besides introducing a new calculation rule based on valid voting rights, POJK 4/2024 also regulates new matters, such as ownership from inheritance, reporting exemption, reporting of encumbrance, and shortened reporting period.