Legal Updates for March 2024

OJK Regulation Mandates Spin-Off of Sharia Insurance Units

In July 2023, the Financial Services Authority (“OJK”) issued OJK Regulation No. 11 of 2023 (“New Regulation”) to regulate the spin-off of sharia units of insurance and reinsurance companies. Along with the recently issued OJK Regulation No. 23 of 2023 on the licensing of conventional and sharia insurance and reinsurance companies, the New Regulation is part of the legislative framework that replaces OJK Regulation No. 67/POJK.05/2016.

Moreover, the New Regulation showcases OJK’s effort to align the insurance sector with the objectives under Law No. 4 of 2023 (the so-called Omnibus Financial Law), which mandates that insurance and reinsurance companies with sharia units must conduct a spin-off of these units upon satisfaction of certain criteria.

Generally, the New Regulation requires an insurance or reinsurance company to spin-off its sharia unit if the unit has fulfilled the criteria set by OJK, there is a spin-off request from the company, or the spin-off is carried out as part of a consolidation of insurance and reinsurance companies. Besides this requirement, the New Regulation also has other key elements that are worth highlighting.

Note on Ministry of Manpower's Statement regarding Holiday Allowances (THR) for Online Ride-Hailing Services

On 15 March 2024, the Ministry of Manpower issued Circular Letter No. M/2/HK.04/III/2024 on the implementation of THR (tunjangan hari raya) or religious holiday allowance for 2024 (“Circular”). In general, the contents of this Circular do not contain anything new or contrary to Minister of Manpower Regulation No. 6 of 2018 on Religious Holiday Allowances for Workers in Companies and other prevailing laws and regulations related to labour.

Nonetheless, shortly thereafter, on Monday 18 March 2024, the Minister of Manpower held a press conference to formally announce the Circular. During the press conference, an officer of the Ministry of Manpower stated that:

“Online ride-hailing drivers are included in those we encourage to be paid. Even though their working relationship is a partnership, they are categorised under the category of fixed-term employment agreement (perjanjian kerja waktu tertentu or “PKWT”) workers. So, they are covered by this Circular.”

The officer's statement immediately garnered widespread public response in the news and raised concerns about legal uncertainty regarding THR for online ride hailing and logistic partners.

Unfortunately, the statement was made by the officer without a detailed reference to the provisions or points in the Circular. Therefore, based on the principle of legality (which states that any kind of government action must have a legal basis) and the Circular, there is no mandate for partnership-based online ride-hailing application companies to provide THR. This is also in line with previous court decisions.

Adjustment to the Rooftop Solar System Regulation: A Step Back for Indonesia?

In January 2024, the Ministry of Energy and Mineral Resources ("MEMR") enacted MEMR Regulation No. 2 of 2024 ("New Regulation") to replace and revise MEMR Regulation No. 26 of 2021. The New Regulation introduces several changes to the regulatory framework on rooftop solar systems, including:

  • Imposing an obligation on PT PLN (Persero) Tbk., as the IUPTLU (Izin Usaha Pemegang Tenaga Listrik untuk Kepentingan Umum) or holder of the power supply business licence for public interest, to prepare a development quota for rooftop solar systems;
  • Removing the kWh metering scheme and eliminating the parallel operation payments;
  • Adding the deemed approval concept for rooftop solar system applications;
  • Introducing penalties for violation of the rooftop solar systems’ requirements; and
  • Continuation of the carbon economic value regulation for rooftop solar systems.

In this Update, we will discuss each of these changes and their respective impacts on the various stakeholders and the broader operational landscape in Indonesia.

A Guide to Renewable Energy in Southeast Asia

The Association of Southeast Asian Nations ("ASEAN") recognises the crucial role of energy in driving the region's growth. This has led to two key priorities: energy security and clean energy development. ASEAN aims for a 23% renewable energy ("RE") share by 2025 in the ASEAN Energy Mix (or TPES: Total Primary Energy Supply), with discussions underway for an even more ambitious target soon. Southeast Asia has abundant RE resources, but several hurdles remain, for instance infrastructure, the need for policy harmonisation, and community engagement. Each ASEAN country faces its own particular set of challenges and constraints in achieving its net zero emissions goal due to a myriad of factors including its stage of economic development, resources (financial and non-financial) and geographical constraints. As such, the policies and focus of each country in the deployment and development of RE may differ. In this Guide, we provide an overview of the RE landscape in the region and certain salient legal and regulatory issues affecting the development and deployment of RE in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.