February 22nd, 2012 david
Written by Ade B. Adamy
During 2011, no new regulations were issued that affected franchising in Indonesia and the current regulatory regime is outlined below. However, investors should note that it is anticipated that a new regulation on these matters will be issued in 2012 although the implications of this new regulation remain to be seen.
Indonesia’s franchise regulations are currently contained in Government Regulation No. 42 of 2007 Regarding Franchising (July 23, 2007) (“GR 42”) and Minister of Trade Regulation No. 31/M-DAG/PER/8/2008 Regarding the Organization of Franchise Businesses (August 21, 2008) (“MOT Reg. 31”).
The regulations provide that a franchise is an exclusive right owned by individuals or legal entities to a business system with specific business characteristics for the purpose of marketing goods and/or services that have proven successful and can be used or implemented by other parties on the basis of a franchise agreement.
Minimarket Stores and Restaurants
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February 21st, 2012 david
Written by Tengku Almira Adlinisa
In line with Indonesia’s recent rapid economic growth, Indonesia has also become a more attractive market to insurance companies. A growing middle class with increasing purchasing power has further increased the competition between insurance companies to attract new customers. One of the key marketing methods for insurance products is by collaborating with a bank, known as Bancassurance. While insurance agents remain important in marketing insurance products, Bancassurance also has a significant contribution in insurance product marketing in Indonesia.
Due to the increased use of the Bancassurance model, Bank Indonesia issued BI Circular Letter No. 12/35/DPNP (“BI New Circular Letter”) in December 2010. This BI New Circular Letter revokes the previous BI Circular Letter No.6/43/DPNP of 2004. The new BI Circular Letter stipulates the classification of the Bancassurance business model and the type of insurance products that may be marketed trough Bancassurance, as well as improving the transparency of the customer.
Based on the BI New Circular Letter, Bancassurance is defined as any cooperation in marketing activities between a bank and an insurance company in order to market insurance products through the bank’s sales channels. Pursuant to the BI New Circular Letter, Banccasurance can be conducted through the 4 following methods:
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February 14th, 2012 david
Written by Christina N. Soela
General Overview
While no new regulations have been issued in 2011, we provide below an overview of the main issues facing distributors including changes to importer identification permits.
Distribution of goods and services in Indonesia is generally regulated by the Minister of Trade (“MOT”). In 2006, the MOT issued Regulation No. 11/M-DAG/PER/3/2006 Regarding the Provisions and Procedures on the Issuance of a Certificate of Registration (in Indonesian, a Surat Tanda Pendaftaran or “STP”) for Agents or Distributors of Goods and/or Services (March 29, 2006) (“MOT Reg 11/2006”). This regulation covers both distributors and agents. There have been no amendments to MOT Reg 11/2006 since it was issued.
STP
MOT Reg 11/2006 requires all national trading companies acting as distributors (including sole distributors) that enter into agreements with foreign or Indonesian companies to register at the Ministry of Trade to obtain an STP. An STP is valid for a maximum period of 2 years. An STP is evidence that such a company is registered as a distributor and issued by the Director of Business Development and Company Registration of the Ministry of Trade. The requirement to obtain an STP also applies to sub-distributors appointed by the relevant distributor. The Ministry of Trade may revoke the distributors’ trade business license if they do not comply with this requirement.
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February 9th, 2012 david
You’re invited to a free 90-minute webinar on “Hiring and Firing Workers in the Asia-Pacific region.”
The Indonesia session, contributed by Richard Emmerson, takes place from 11:00am – 12:30pm on Wednesday, February 22nd, 2012.
As multi-national companies open new offices and close others around the world, they need to comply with local labour and employment laws when hiring, managing, and terminating workers. While some hiring practices may be comparable across neighboring jurisdictions, others may include complex legal requirements that are not difficult to meet as long as the employer understands upfront what is required. This webinar will provide practical insight into the most important legal requirements when doing business in Asia and the Pacific.
Register
To register for this webinar, click here and then click the “register now” link under the webinar title on the lower right side of your computer screen.
SSEK is proud to be part of the Employment Law Alliance (ELA) which is the most comprehensive network of labor and employment attorneys in the world. ELA members provide employment, labor, and immigration expertise in all 50 U.S. states and in more than 300 cities in over 120 countries around the globe.
See also: A Guide to Employment Law in Indonesia
February 8th, 2012 david
Written by Syahdan Z. Aziz
In 2011, the two major legal developments affecting the oil and gas industry included ongoing discussions of Government Regulation No. 79 as well as steps toward drafting a new Oil & Gas Law in Parliament.
Government Regulation No. 79
In late 2010, the Government of Indonesia issued Government Regulation No. 79 of 2010 on operating costs that can be recovered and the income tax treatment of the upstream oil and natural gas business sector (“GR 79”). This regulation was enacted in order to implement Article 31D of the Indonesian Income Tax Law.
GR 79 sets forth and clarifies, among others, 24 types of costs that cannot be recovered, the recovery of operating costs, the calculation of income tax on income associated with PSCs, service contracts and other income outside of PSCs, as well as provides additional authority and responsibility to the Minister of Energy and Mineral Resources (“MEMR”).
In addition to the foregoing, GR 79 stipulates a form of contract sanctity for existing PSCs that were signed before GR 79 was enacted. However, it also provides that matters that have not been regulated in Production Sharing Contracts (“PSCs”) must be adjusted to comply with GR 79 within three months (i.e., March 20, 2011).
This regulation was expected to encourage investment in the upstream oil and gas sector in Indonesia, but in practice some provisions of GR 79 created uncertainties for existing PSCs. Implementing regulations for GR 79 were also supposed to be issued, which unfortunately have not yet been issued to implement and compensate for the ambiguity created by GR 79.
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February 6th, 2012 david
Every year since 1994, SSEK sends some of our associates to study overseas as part of our professional development program. Today, we talk with Fahrul Salam Yusuf and Kharisma Dwi Perwiro about their recent overseas study trip.
Where did you go and why?
We went to Tokyo. We were given an opportunity by SSEK to participate in the Asia Multilateral Training Season and Asia Competition Forum held by the Japanese law firm Nagashima Ohno & Tsunematsu, November 18 – 19, 2011.
The training involved approximately 60 lawyers practicing anti-monopoly and/or merger & acquisition law from 24 independent law firms. Mostly, the participants were from Asian countries in addition to some participants from Australia, New Zealand, Italy, France, Netherlands and Germany.
We shared recent developments of anti-monopoly law in each jurisdiction particularly in respect to merger control, the issue of a firm’s dominant position in certain markets and cartels. The training was also a big opportunity to network with the lawyers from many jurisdictions.
Give us an overview of the training session and what you learnt
It was a two day training. In the morning session on the first day, we discussed recent trends in competition law in Asia, the US and the EU and recent developments in Merger Control Rules. In the afternoon session we discussed economic analysis in anti-monopoly cases and continued with the training sessions, i.e., a case study for the application of the merger control rules.
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February 1st, 2012 david
Please find attached the latest Legal Alert for December 2011. SSEK’s Legal Alert is a monthly survey designed to keep you up to date with the latest legal developments in Indonesia.
Click here: Legal Alert_December_2011
January 30th, 2012 david
Written by Kharisma D. Perwiro
One of the most important issues over the past year has been the cabotage principle in Indonesia. Significant not only for the shipping industry, cabotage regulations also have important ramifications for the oil & gas industry which received an exemption from certain requirements in April 2011.
What is the cabotage principle?
As one of the principles recognized in international maritime law, the cabotage principle means that domestic sea transportation shall be the full right of coastal nations. In practice, it means that each coastal nation is entitled to prohibit foreign flagged vessels from transporting and/or operating within its territory.
Cabotage in Indonesia 2005 onwards
In Indonesia, the cabotage principle was introduced by Presidential Instruction No. 5 of 2005 regarding the Empowerment of the National Shipping Industry dated March 28, 2005. The Instruction was addressed to the 13 Ministries as well as Governors/Regents/Mayors throughout Indonesia, and requested implementation of the cabotage principle to empower the national shipping industry. From the outset, it is clear that the purpose of Indonesia’s cabotage regulation is to prevent or lessen the dependence of the national economy on foreign shipping companies and foreign flagged vessels.
The road map for implementation was then set out in a 2005 ministerial decree. The decree provides the roadmap for the domestic sea transportation industry based on the transportation of commodities, in which it is expected that all of the goods/cargo transported between domestic ports should be by national shipping companies using Indonesian flagged vessels by January 1, 2011. The interpretation of this provision is that it applies to the transportation of supporting upstream and downstream activities for the oil and gas industry.
2008 Shipping Law
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January 26th, 2012 david
Written by Dewi Savitri Reni
Over the last decade Indonesia has experienced significant economic growth. As much of this growth is the result of natural resource development, Indonesia has also become more aware and willing to tackle accompanying environmental problems with mixed results.
Current Issues
Two years ago, the Indonesian Parliament passed Law No. 32 of 2009 dated October 3, 2009 regarding Environmental Protection and Management (the “Environmental Law”). The Environmental Law, although good in its objectives, raises a number of questions regarding its interpretation and implementation as none of the implementing regulations to the Law have been issued through the end of 2011.
Beyond a lack of legal clarity, President Susilo Bambang Yudhoyono announced a 2-year moratorium on new forest concessions in May 2011. The moratorium is part of a bilateral agreement with Norway to reduce carbon emissions and was originally scheduled to be effective as of January 201. However, forest conservation efforts also received a setback in August 2011 as a carbon trading pilot project in Kalimantan collapsed following inconsistent policy and unclear laws.
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January 19th, 2012 david
Written by Sofia Angeline Manalu
Although some progress has been made by the Government of Indonesia during 2011, the Government still has plenty of work to do to ease investment in the mining sector. The issuance of implementing regulations of the 2009 Mining Law is still on going despite the fact that Indonesia’s new mining law was issued three years ago. As a consequence, no new mining business licenses for coal or minerals have been issued since the enactment of the 2009 Mining Law.
Likewise, the regulation requiring the domestic processing and refining of minerals and coal is still unclear. Overlapping land issues also remain a fundamental issue, as does the issuance of a forestry moratorium by the President of Indonesia.
Issuance of Mining Business Licenses (IUP)
The Mining Law stipulates that new IUPs for exploration may only be issued by way of a tender. The rules of the tender process, as set out by the Mining Law, do not thoroughly cover all aspects of the tender process. As a result, no new IUPs for exploration have been issued. IUPs for production have been issued, but these are merely based on the extension of pre-existing IUPs for exploration. There have been no developments regarding clarification of the tender process or issuing new exploration IUPs in 2011.
Processing and Refinery
The Mining Law also sets forth the requirement to process and refine mineral and coal domestically before export. While the Mining Law and its implementing regulations ban the export of raw material exports as of 2014, the law does not clearly set out the extent or form required for domestically processed minerals and coal. The Directorate General of Mineral and Coal (“DGMC”) advises the standards for processing based on its internal policy, which has been known to change over time. Unlike coal, processing and refining minerals (such as copper, tin, gold, etc) are typically more complex and more costly than those for coal.
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