May 10th, 2012 david
Written by Ira Eddymurthy and Tengku Almira
On May 1, 2012, the Minister of Trade (“MOT”) issued MOT Regulation No. 27/M-DAG/PER/5/2012 regarding Importer Identification Numbers (“API”) (“MOT Reg 27”). For a full English translation of MOT Reg 27, click here. For MOT Reg 27 in Bahasa Indonesian, click here.
This regulation revokes the previous MOT Regulations i.e. (i) Minister of Industry and Trade Decree No. 134/MPP/Kep/6/1996 regarding Import Activities and the Domestic Trade of Complementary Goods by Foreign Companies in the Field of Production and (ii) MOT Regulation No. 45/M-DAG/PER/9/2009 regarding API, as lastly amended by MOT regulation No. 20/M-DAG/PER/7/2011 (the “Previous MOT Regulations”).
In general, the rules on API under MOT Reg 27 are similar with the Previous MOT Regulations which are as follows: importation can only be conducted by an importer who has an API, namely (i) a General Importer Identification Number (“API-U”) or (ii) a Producer Importer Identification Number (“API-P”). An importer is only allowed to have one type of API, either API-U or API-P.
API-U and API-P Requirements
While MOT Reg 27 has made other changes to the regulatory regime, the provision on API-U is the most significant change. Similar with the Previous MOT Regulations, MOT Reg 27 also provides that an API-U is granted to companies importing certain products for trading purposes.
However, unlike the Previous MOT Regulations, the MOT Reg 27 limits the imported goods that can be imported by API-U holders. An API-U shall only be used to import one group or type of goods covered in one section of the Goods Classifications System (Sistem Klasifikasi Barang) as attached to the MOT Reg No. 27. There are twenty one sections under the Goods Classification System.
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May 8th, 2012 david
Written by Lasmaroha Simbolon
Foreign companies continue to mull investment in Indonesia by the establishment of joint venture companies with local Indonesian entrepreneurs.
However, foreign and Indonesian parties tend to focus all their time and attention on the creation of hefty joint venture agreements, making sure that nothing is left behind in terms of provisions, representations & warranties and also covenants.
Once the joint venture agreement is signed, the parties usually consider that the struggle is over and that the deal should be able to go forward smoothly.
Articles of Association are as important as Joint Venture Agreements
However, this is not always the case. In order to establish a foreign investment joint venture company under Indonesian law, investors should pay as much attention to the Articles of Association as to the joint venture agreement. After obtaining the approval of the Capital Investment Coordinating Board, the preparation, finalization and execution of the Articles of Association of the company represents the underlying document for the establishment of the body unifying the parties of the joint venture agreement to become shareholders of the Indonesian limited liability company.
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May 2nd, 2012 david
Written by Michael S. Carl
As previously noted, the Indonesian Government has issued Government Regulation No. 24 of 2012 (“GR 24”) as an implementing regulation of Law No. 4 of 2009 Regarding Minerals and Coal Mining. GR 24 now requires foreign shareholders of Indonesian mining companies holding izin usaha pertambangan (IUPs) to divest 51% of their shares starting five years after commencement of production and ending ten year thereafter. This is a significant departure from the previous divestment rule under Government Regulation No. 23 of 2010 (“GR 2010”), which required foreign shareholders to divest only 20% of their shares after the fifth year of production.
There is a draft Ministerial Regulation on mining shares divestment released on the website of the Ministry of Energy and Mineral Resources (available here). The draft Ministerial Regulation was prepared for implementation of Government Regulation No. 23 Year 2010 — i.e., when the divestment requirement was 20%. This is only a draft regulation and is not legally effective. We understand that the regulation is being revised in light of Government Regulation No. 24 Year 2011 — i.e., with the divestment requirement at 51%. We are told informally by the Ministry of Energy and Mineral Resources that the new regulation is expected to be released by the end of the year.
Here are some highlights:
• The divestment process only applies to companies which do not already have a 20% Indonesian shareholder at five years after production (the figure “20%” reflects the requirement under GR 23 before GR 24 came into effect)
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April 27th, 2012 david
Our blog series on the legal issues and regulations concerning the development and investment in Indonesia’s gas sector is now complete. Fitriana Mahiddin and Syahdan Aziz have looked at Law No. 22 of 2001, the changing role of Pertamina, Production Sharing Contracts (PSCs) as well as Government Regulation No. 79 of 2010.
All the articles are listed below:
1. Overview of Gas Regulation (GR 79, Pertamina, CBM, etc)
2. Development & PSCs
3. Transportation
4. LNG
5. Foreign Investment
For more information, please contact SSEK’s partner Fitriana Mahiddin and Senior Associate Syahdan Aziz.
April 25th, 2012 david
Our blog series on the legal issues regarding investment and the purchase of land and real estate in Indonesia is now complete. Dyah Soewito and Denny Rahmansyah have explored some of the broad issues that investors need to know while structuring their investment, as well as recent developments including the new Condominium Law and the new Land Acquisition Law.
All of the articles are listed below:
1. Types of Land Titles
2. Registration of Land Titles
3. Recent Trends in the Industry
4. Foreign Investment in the Industry
5. Commercial Leases
For further information, please feel free to contact SSEK’s partners Dyah Soewito and Denny Rahmansyah.
April 24th, 2012 david
Written by Darrell R. Johnson
Visas on Arrival & Business Visas
We would like to inform our clients that the Director General of Immigration (“DGI”) has adopted a new unwritten policy that Visas on Arrival (“VOAs”) can now only be used for tourism even though the relevant regulation – still in effect – provides that VOAs can be used to hold business discussions and for other activities that are allowed under a Business Visa.
The DGI has said this is a new policy and is currently applicable, notwithstanding that it contradicts existing written regulations.
The DGI has also determined that visitors entering Indonesia under Business Visas, whether single or multiple, are not permitted to provide training but can only receive short term training. Such Business Visa visitors, however, are allowed to attend meetings. This is not a new policy but represents the DGI’s interpretation of current regulations. The DGI has recently detained business visitors who enter Indonesia under Business Visas to provide training and has threatened possible sanctions against their Indonesian sponsors.
This interpretation would also seem to prohibit speakers from attending conferences in Indonesia, if the purpose is to educate, instruct or train.
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April 19th, 2012 david
This is the fifth post in our Legal Guide to Gas Regulation in Indonesia. Fitriana Mahiddin and Syahdan Z. Aziz will address a new topic each week.
Foreign Investment
Upstream oil and gas business can be carried out directly by foreign entities. Foreign companies may not directly engage in downstream activities, although they may establish subsidiaries to engage in these activities, the establishment of which requires the approval of the BKPM and obtaining the requisite downstream business licences.
If the acquisition is made by acquiring an interest in an existing Indonesian company, then it would require the approval of the BKPM. The conditions for obtaining the BKPM’s approval of either the establishment or acquisition of an Indonesian company will depend on the regulations and policies in effect.
BKPM’s current internal guidelines seem to indicate that it will permit maximum foreign ownership of 100 per cent in a company engaged in downstream gas business activities in the natural gas sector. Furthermore, there are no special requirements or limitations imposed on foreign companies.
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April 17th, 2012 david
This is the fifth post in our Legal Guide to Land & Real Estate issues in Indonesia. Dyah Soewito and Denny Rahmansyah will address a new topic each week.
Leases
Indonesian laws and regulations do not stipulate any maximum term for neither a lease of land nor a commercial building lease in Indonesia; the parties are free to decide the number of years that the lease agreement will be effective.
The parties to a lease must, however, take into account the duration of the lessor’s relevant title over the land, except for Hak Milik title which is of unlimited duration. For example, if the right over the land to be leased is HGB, the term of the lease should take into account the term of the HGB.
An original HGB term is 30 years, which may be extended for 20 years and then be renewed again for up to 30 years. The term of the lease must be consistent with the term of the underlying title, such that if the parties agree to a lease term of 50 years for land with HGB title, such lease term must be made subject to an agreed obligation of the lessor to obtain the necessary extension of his underlying title.
As for land with Hak Milik title, since there is no restriction on the duration of Hak Milik title, the land can be leased indefinitely, with no maximum term. There is a possible exception to this rule, however: while there are no restrictions on the length of leaseholds in Indonesia, it is possible that the state could take the position that a leasehold longer than the original term plus a renewal of the underlying title, or so long, in the case of Hak Milik title, that it is equivalent to outright ownership, is against public policy on the grounds that the lease is an attempt to circumvent the restrictions on foreign ownership of property.
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April 12th, 2012 david
This is the fourth post in our Legal Guide to Gas Regulation in Indonesia. Fitriana Mahiddin and Syahdan Z. Aziz will address a new topic each week.
LNG
The broad ownership, organisational and regulatory framework in relation to LNG facilities depends on how the LNG business is carried out.
If, under the applicable contractual arrangements, the natural gas is to be sold as LNG, then the owner of the LNG will be the government until the point of delivery or sale and the facilities would be developed within the framework of the cooperation contract. If the natural gas to be liquefied has been purchased by a private party, then the LNG and related processing and other facilities would be owned by the purchaser.
Currently, Indonesia has three main LNG export facilities: the Arun; Bontang; and Tangguh facilities.
Governmental authorisations
If conducted within the framework of a cooperation contract, the chief approval required will be the approval of the development plan by either the Minister or BP Migas. If conducted outside the framework of a cooperation contract, the processing entity will need one or more downstream business licenses, depending on the scope of its operation.
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BACK TO SSEK.COM
Please find attached the latest Legal Alert for March 2012.
