SEPTEMBER 2017 LEGAL ALERT. general. agrarian affairs and spatial planning

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1 LEGAL ALERT SEPTEMBER 2017 SSEK Legal Alert is a monthly publication of SSEK, Indonesian Legal Consultants. SSEK s lawyers, advisors and associates provide a wide range of legal services to Indonesian and multinational corporations, banks, joint ventures and other organisations. SSEK Legal Alert is a monthly survey designed to keep our clients up to date with the latest legal developments in Indonesia. To subscribe, visit our website: * * * general Presidential Regulation No. 74 of 2017 dated August 3, 2017, regarding Roadmap for the National Electronic Commerce System. This Regulation provides a roadmap for the development of e-commerce in Indonesia for the period of The roadmap covers funding, taxation, consumer protection, education and human resources, communication infrastructure, logistics, cybersecurity and the formation of a management group to implement the e-commerce roadmap. The roadmap is intended to provide direction and strategic guidance for the acceleration of e-commerce development. This Regulation came into force on the date of its promulgation. Ministry of Law and Human Rights ( MOLHR ) Regulation No. 9 of 2017 dated August 4, 2017, regarding the Implementation of Know Your Customer Principles for Notaries. The stated aim of this Regulation is to prevent and eradicate activities related to money laundering and the funding of terrorism. This Regulation serves as a comprehensive guideline for notaries in implementing Know Your Customer ( KYC ) principles. It addresses, among other issues, the identification, verification and supervision of customers, the recording of transactions, KYC principles for third parties, updating information and/or documents, and administrative sanctions for failure to implement KYC principles. This Regulation came into force on the date of its promulgation. MOLHR Regulation No. 13 of 2017 dated July 14, 2017, regarding Communal Intellectual Property Data. This Regulation defines communal intellectual property as traditional knowledge, traditional cultural expressions, genetic resources and potential geographical indications. The MOLHR, in cooperation with other ministries, institutions and local governments, will inventory communal intellectual property and make this information available to the general public through a data center. This Regulation came into force on the date of its promulgation. Coordinating Minister for Economic Affairs Regulation No. 5 of 2017 dated September 6, 2017, regarding the Amendment of Coordinating Minister for Economic Affairs Regulation No. 12 of 2015 regarding the Acceleration of Priority Infrastructure Development. This Regulation amends an attachment in the previous regulation regarding the list of priority infrastructure, adding several toll road projects to the list. It came into force on the date of its promulgation. agrarian affairs and spatial planning Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency Regulation No. 13 of 2017 dated August 9, 2017, regarding Procedures for Land Freeze and Land Seizure. This Regulation provides guidelines for land freezes and seizures and the handling of land disputes, including the requirements to apply for a land freeze or seizure. It came into force on the date of its promulgation. SSEK legal alert 1

2 banking and finance Financial Services Authority ( OJK ) Regulation No. 37/POJK.03/2017 dated July 12, 2017, regarding Employment of Foreign Workers and Transfer-of-Knowledge Programs in the Banking Sector. Pursuant to this Regulation, commercial banks are permitted to employ foreign nationals for selected positions, namely as members of the Board of Directors and Board of Commissioners, executive officers, experts or consultants, and heads of representative offices and branch offices, subject to the fulfilment of certain conditions. Employment of foreign nationals is also conditional upon the submission of an employment plan to the OJK, and banks must obtain pre-approval from the OJK and the Ministry of Manpower for the employment of foreign workers. This Regulation also mandates the submission of several reports to the OJK within 10 business days as of the date of the employment of a foreign national, and the submission of an annual employment realization report. This Regulation repeals Bank Indonesia Regulation No. 9/8/PBI/2007 and came into force on the date of its issuance. OJK Regulation No. 46/POJK.03/2017 dated July 12, 2017, regarding the Implementation of Commercial Bank Compliance. The stated aim of this Regulation is to minimize risks associated with the commercial banking business. It addresses the compliance function of commercial banks to ensure that the policies, procedures and activities of banks conform to provisions set out by the OJK and all prevailing laws and regulations. Commercial banks are required to appoint a director and establish a task force specifically to supervise compliance issues, and the compliance director may not concurrently hold other functions related to business operations, treasury, finance, accounting, information technology or internal auditing. The compliance director must submit regular reports to the OJK concerning the bank s compliance working plans, and special reports on policies and/or decisions of the Board of Directors that violate or potentially violate OJK regulations or prevailing laws and regulations. Commercial banks that fail to comply with this Regulation will be subject to administrative sanctions ranging from warnings, reduction of financial soundness level, suspension of activities, termination of member(s) of the Board of Directors and/or Board of Commissioners, and monetary fines. This Regulation repeals Bank Indonesia Regulation No. 13/2/PBI/2011 and came into force on the date of its issuance. OJK Regulation No. 51/POJK.03/2017 dated July 27, 2017, regarding Sustainable Financing by Financial Service Institutions, Issuers and Public Companies. This Regulation mandates the implementation of sustainable financing within the cut-off dates stipulated therein, i.e. from January 1, 2019, to January 1, 2025, depending on the type of financial service institution, issuer and public company. To implement sustainable financing, the relevant institution must produce action plans and sustainability reports that must be submitted to the OJK on an annual basis. Action plans should cover the development of sustainable financial products and services, organizational adjustments and target implementation dates. These action plans must be passed through a General Meeting of Shareholders. It is worth noting that this Regulation sets out certain incentives for the effective implementation of sustainable financing, such as sustainable finance awards. This Regulation came into force on the date of its issuance. OJK Regulation No. 56/POJK.04/2017 dated August 29, 2017, regarding the Second Amendment of OJK Regulation No. 1/POJK.05/2016 regarding Investment in State Securities by Non-Bank Financial Service Institutions. This Regulation amends several provisions in OJK Regulation No. 1/POJK.05/2016 related to the classification of investment instruments and investment caps. It introduces three new types of state securities that non-bank financial service institutions can invest in, i.e. asset-backed securities, mutual funds and other investment instruments used to finance government infrastructure projects. Prior to the issuance of this Regulation, non-bank financial service institutions were only able to invest in bonds or sharia bonds (sukuk). This Regulation also sets a higher investment cap (50% of the minimum investment realization) than its predecessor (40% of the minimum investment realization). It came into force on the date of its issuance. SSEK legal alert 2

3 OJK Circular Letter No. 46/SEOJK.05/2017 dated August 25, 2017, regarding Fraud Control, Anti-Fraud Strategy Implementation and Anti-Fraud Strategy Reporting for Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, Sharia Reinsurance Companies and Sharia Units. This Circular Letter contains provisions on fraud policies for the insurance companies as listed in its title.. Insurance companies must implement fraud control measures, including active managerial oversight, toplevel or managerial review, internal auditing, human resources control and physical and documentary asset control. In implementing fraud control measures, insurance companies must address prevention, detection, investigation, reporting, monitoring and evaluation measures. Pursuant to this Circular Letter, insurance companies must submit periodical reports on the strategic implementation of anti-fraud measures, and ad hoc reports on a per incident basis. The reports must be submitted to the OJK within three business days after the management of the relevant insurance company has executed and approved such reports. This Circular Letter introduces a new online system for the submission of reports. It came into force on the date of its issuance. communication and informatics Minister of Communication and Informatics Regulation No. 14 of 2017 dated September 5, 2017, regarding the Amendment of Minister of Communication and Informatics Regulation No. 12 of 2016 regarding the Registration of Telecommunication Service Customers. This Regulation amends, among other things, registration procedures at telecommunication service outlets. Registration can be done with an identity card number (Nomor Induk Kependudukan), passport or stay permit. If a customer s data is not validated and the customer does not re-register, then the telecommunication service provider must immediately block any services to such customer. A customer using pre-paid services will have additional time to register, failure of which will result in the blockage of services. This Regulation came into effect on the date of its issuance. Minister of Communication and Informatics Regulation No. 20 of 2017 dated September 28, 2017, regarding Selection Procedures for Users of the 2.1 GHz Radio Frequency and the 2.3 GHz Radio Frequency Bands for the Organization of Mobile Cellular Networks in To participate in the selection process, candidates must (i) have a Mobile Cellular Network Provider License; (ii) submit an application; (iii) not be bankrupt or under court supervision for any bankruptcy, and not be under suspension of business activities; and (iv) must not be affiliated with any other selection participant. The selection process may be conducted using one of several methods, such as knockout, bidding, and scoring. The results of the selection will be published on the official website of the Ministry of Communication and Informatics. This Regulation came into effect on the date of its issuance. energy and mineral resources Minister of Energy and Mineral Resources ( MEMR ) Regulation No. 47 of 2017 dated August 3, 2017, regarding the Amendment of MEMR Regulation No. 26 of 2017 regarding Cost-Recovery Mechanisms in Oil and Natural Gas Upstream Business Activities. The original MEMR regulation stipulated that if there are unrecovered investment costs in a Production Sharing Contract ( PSC ) that is expiring and has not been extended, the new PSC Contractor will recover such investment costs. This amendment narrows the limit of the investment costs that can be recovered by the new PSC Contractor to those costs incurred by the existing PSC Contractor within the five years prior to the expiration date of the PSC. Costs recovered by the new PSC Contractor will be calculated as operating costs of the new PSC Contractor. This SSEK legal alert 3

4 amendment also clarifies that this MEMR Regulation applies to pre-existing PSCs that have incurred costs that have been approved by SKK Migas but have not been recovered. This Regulation came into force on the date of its promulgation. MEMR Regulation No. 48 of 2017 dated August 3, 2017, regarding Business Supervision in the Energy and Mineral Resources Sector. This Regulation eases the process for, among other corporate actions, transferring participating interests or shares, or making changes to the Board of Directors or Board of Commissioners by eliminating the requirement to obtain prior approval from the MEMR. Instead, companies are now only required to submit a report to the MEMR on the relevant corporate action. This Regulation revokes three MEMR regulations, including MEMR Regulation No. 42 of It came into force on the date of its promulgation. MEMR Regulation No. 49 of 2017 dated August 8, 2017, regarding the Amendment of MEMR Regulation No. 10 of 2017 regarding the Main Provisions of Power Purchase Agreements. The stated aim of this Regulation is to improve legal certainty in the power sector by amending several provisions in the previous regulation on risk allocation and force majeure in power purchase agreements between PT PLN and business entities. This Regulation came into force on the date of its promulgation. MEMR Regulation No. 52 of 2017 dated August 29, 2017, regarding the Amendment of MEMR Regulation No. 8 of 2017 regarding Gross Split Production Sharing Contracts. Among other changes, this amendment adds natural gas prices to the list of progressive components in determining or adjusting the production split. The amendment also scraps the maximum limit on the additional percentage that PSC Contractors or the Government may obtain in the event the commercialization of the field reaches or fails to reach a certain level, respectively, which was previously capped at 5%. In relation to taxation matters, this amendment revises the language of Article 14 to delete the word may, affirming that the operating costs expended by a PSC Contractor will be considered a deducting factor in computing the PSC Contractor s income tax. This amendment also adds a transitional provision providing that the matters regulated in the MEMR Regulation apply to (i) contracts for working areas for which PT Pertamina (Persero) or its affiliate has been appointed operator, which form of contract has not been determined, and (ii) existing contracts which form have been determined are being used in a tender for working areas and have not been executed. This Regulation came into force on the date of its promulgation. land and real estate Presidential Regulation No. 88 of 2017 dated September 11, 2017, regarding Land Tenure Settlement in Forestry Areas. The stated aim of this Regulation is to provide legal protections for communities that possess land in forestry areas. Under this Regulation, the government can settle land tenure disputes in conservation forests, protected forests and production forests. It provides several methods and procedures for the settlement of disputes, depending on the land type. This Regulation came into force on the date of its promulgation. SSEK legal alert 4

5 public works and public housing Minister of Public Works and Public Housing Regulation No. 15/PRT/M/2017 dated August 30, 2017, regarding Procedures for Calculating the Earnings Value of Surface Water. This Regulation is intended to provide guidance for calculating the earnings value of surface water to be used by the Government as the basis for taxing surface water. This Regulation provides the formula for calculating earnings value and came into force on the date of its promulgation. Minister of Public Works and Public Housing Regulation No. 14/PRT/M/2017 dated August 21, 2017, regarding Building Construction Accessibility Requirements. This Regulation provides guidance to construction companies in fulfilling all building accessibility requirements so that buildings can be safely, conveniently and independently accessed and used by all people. This Regulation contains, inter alia, provisions on building accessibility requirements and implementation. It came into force on the date of its promulgation. trade Minister of Trade Regulation No. 30/M-DAG/PER/5/2017 dated May 19, 2017, regarding Import Provisions for Horticultural Products. This Regulation provides that private companies with an Import Identification Number (Angka Pengenal Impor or API ) and state-owned companies appointed by the relevant minister may import horticultural products, including raw and processed fruits, vegetables, mushrooms and plant-based medicines. There are different types of Horticultural Import Approvals for different types of horticultural products and this Regulation provides details on these different types of Horticultural Import Approvals and how to obtain them. In addition, some HS Codes of horticultural products listed in this Regulation are exempted from the provisions thereunder. This Regulation came into effect on the date of its promulgation and revokes Minister of Trade Regulation No. 71/MDAG/PER/9/2015. transportation Minister of Transportation Regulation No. PM 57 of 2017 dated August 8, 2017, regarding the Second Amendment of Minister of Transportation Regulation No. KM 17 of 2009 regarding Civil Aviation Safety Regulations Part 145 Amendment 3 regarding Approved Maintenance Organizations. Under this Regulation, an approved maintenance organization certificate ( AMO Certificate ) or rating is issued to an AMO located inside or outside of Indonesia. The AMO Certificate will remain in force for a maximum two years unless such certificate is surrendered, suspended or revoked. This Regulation stipulates that the Directorate General of Air Transportation may, with the fulfilment of certain requirements, recognize a foreign AMO Certificate issued by an International Civil Aviation Organization contracting state. This Regulation revokes Minister of Transportation Decree No. KM 27 of 2003 regarding Certification and Operational Requirements for Aeronautic Parts Distributors, and Minister of Transportation Decree No. KM 40 of 2004 regarding Approved Maintenance Organizations, and came into effect on the date of its promulgation. SSEK legal alert 5

6 Minister of Transportation Regulation No. PM 61 of 2017 dated August 8, 2017, regarding the Fourth Amendment of Minister of Transportation Regulation No. PM 28 of 2013 regarding Civil Aviation Safety Regulation Part 121 regarding Certification and Operating Requirements: Domestic, Flag and Supplemental Air Carriers. Under this Regulation, in respect of wet leasing an aircraft, an air carrier must provide the Directorate General of Aircraft Airworthiness and Operation a copy of the lease agreement or a written memorandum outlining the terms of the agreement. For dry leases, an air operations center applicant or an existing operator must provide the Directorate General of Air Transportation several pieces of information, including aircraft type, model and serial number, the name and address of the registered owner of the aircraft, the state of registry, nationality and registration marks, a copy of the lease agreement or a description thereof, duration of lease and areas of operation. This Regulation came into effect on the date of its promulgation. Minister of Transportation Regulation No. 72 of 2017 dated August 16, 2017, regarding Type, Structure, Classification and Stipulation of Tariffs for Port Services. This Regulation stipulates different tariffs for business activities at ports, the structure of tariffs for port services and port-related services, the classification of tariffs and the mechanism for stipulating tariffs for business activities at ports. This Regulation came into effect on the date of its promulgation. Minister of Transportation Regulation No. PM 77 of 2017 dated September 20, 2017, regarding Licensing and Rating of Aircraft Operational Personnel and Aircraft Operational Support Personnel Using Online System. This Regulation requires all aircraft operational and support personnel to have a valid license and rating. The licenses and ratings that can be obtained through the online system include Student Pilot Permit, Private Pilot License, Commercial Pilot License, Flight Attendant Certificate and Flight Operation Officer License. License and ratings applications may be submitted by individuals, the institutions where the applicants work, or education and training institutions. This Regulation came into effect on the date of its promulgation. Minister of Transportation Regulation No. 78 of 2017 dated September 4, 2017, regarding the Imposition of Administrative Sanctions for Violations of Aviation Laws and Regulations. The stated aim of this Regulation is to improve the culture of aviation safety by increasing awareness of and compliance with all aviation safety rules by aircraft operators and aviation personnel. With the issuance of this Regulation, each violation of aviation laws and regulations will result in administrative sanctions. In the event a violation is found, the aviation inspector must complete and file a report with the authorized official. Sanctions for violations consist of warnings, license suspension or revocation, and/or administrative fines. This Regulation came into effect on the date of its promulgation. Minister of Transportation Regulation No. 79 of 2017 dated September 4, 2017, regarding Criteria and Implementation of Pioneer Air Transportation Activities and Air Cargo Transportation Subsidies. This Regulation provides the requirements to engage in the air transportation activities as indicated in the title. This Regulation came into effect on the date of its promulgation. SSEK legal alert 6

AUGUST 2017 LEGAL ALERT. agriculture. communication and informatics

AUGUST 2017 LEGAL ALERT. agriculture. communication and informatics LEGAL ALERT AUGUST 2017 SSEK Legal Alert is a monthly publication of SSEK, Indonesian Legal Consultants. SSEK s lawyers, advisors and associates provide a wide range of legal services to Indonesian and