Legal Updates for February 2024

Indonesia’s Carbon Capture and Storage (CCS) Regulatory Overview: Steps to become Asia-Pacific Hub?

Countries and companies are setting aggressive net-zero emission targets, and Indonesia is in top gear in ensuring that carbon capture, and storage (“CCS”) is available as one of the necessary tools to reach its domestic net-zero target in 2060. In less than one year span, the Indonesian government has enacted three CCS-related regulations, namely:

  1. Minister of Energy and Mineral Resources (“MEMR”) Regulation No. 2 of 2023 on the Implementation of Carbon Capture and Storage and Carbon Capture, Utilisation and Storage for Upstream Oil and Gas Business Activities;
  2. SKK Migas Working Guideline No. PTK-070/SKKIA0000/2024/S9; and
  3. Presidential Regulation No. 14 of 2024 on the Implementation of Carbon Capture and Storage (“Presidential Regulation 14/2024”).

As a foreword, CCS is not a new technology. In fact, it is a half-century old upstream oil and gas technology that is traditionally used to enhance oil and gas recovery or reduce emissions deriving from oil and gas operations. Because it derives from the upstream business, the regulatory process replicates and builds on the existing processes and processes in the upstream business.

The latest regulation, Presidential Regulation 14/2024, is intended to bridge all the regulatory gaps and cover all possible scenarios, areas of concern, and monetisation. This client update will provide an overview of the current regulatory framework:

  1. How and where to do CCS operations in Indonesia;
  2. Tax incentives;
  3. CCS business process;
  4. Monetisation and carbon credit;
  5. Post operations and limitation of liability;
  6. Foreign investment restrictions;
  7. Potential sanctions.
OJK’s New Rule Tightens Share Buyback and Expands Scope of Disclosure

Indonesia’s Financial Services Authority or Otoritas Jasa Keuangan (“OJK”) has enacted several changes on share buyback by public companies. These changes, adopted under OJK Regulation No. 29 of 2023 on Share Buyback by Public Companies (“New Regulation”), subject public companies to more stringent provisions compared to the previous framework under OJK Regulation No. 30/POJK.04/2017, most notably on the execution of buybacks, as well as the contents of the public disclosure.

Furthermore, the New Regulation extends the methods to transfer treasury shares[1] and allows for some flexibility by allowing the payment or settlement of certain transactions such as asset acquisition and debt or bonds repayment as one of the purposes of such transfer.

As we will see below, the New Regulation has far-reaching implications. It not only establishes a more rigorous framework for share buybacks but also instil a heightened sense of accountability and transparency within public companies.

Could 2024 be the Year of Insurance Companies' Consolidation?

To strengthen the insurance sector and align it with the objectives outlined in Law No. 4 of 2023 (often referred to as the Omnibus Financial Law) and Government Regulation No. 14 of 2018 as amended by Government Regulation No. 3 of 2020 (which governs foreign ownership in insurance companies), the Financial Services Authority or OJK enacted OJK Regulation No. 23 of 2023 on Business and Institutional Licensing for Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies (“Regulation 23/2023”) at the end of 2023.

Regulation 23/2023 comprises of 162 articles, distributed across 22 chapters. Effective since 22 December 2023, Regulation 23/2023 replaces OJK Regulation No. 67/POJK.05/2016 and its amendments, and amend certain articles in the following regulations:

  • OJK Regulation No. 71/POJK.05/2016 on the Financial Soundness Levels of Insurance Companies and Reinsurance Companies.
  • OJK Regulation No. 72/POJK.05/2016 on the Financial Soundness Levels of Insurance Companies and Reinsurance Companies operating under Sharia Principles.
  • OJK Regulation No. 73/POJK.05/2016 on Good Corporate Governance of Insurance Companies.