AUGUST 2014 LEGAL ALERT. general. agriculture. banking

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1 LEGAL ALERT AUGUST 2014 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 Minister of Home Affairs Regulation No. 52 of 2014, dated July 11, 2014, regarding Guidelines for the Acknowledgement and Protection of Customary Law Societies. This Regulation aims to protect existing customary societies, or masyarakat hukum adat ( Adat Groups ), throughout Indonesia. It provides a precise definition of Adat Group when a local society must satisfy certain criteria to be classified as such. This Regulation has been in force since its enactment. agriculture Minister of Agriculture Regulation No. 70/Permentan/PD.200/6/2014, dated June 19, 2014, regarding Guidelines for Horticulture Cultivation Business Licenses. This Regulation sets out new provisions on mandatory data collection, registration and licensing procedures for all horticulture cultivation business enterprises. It also sets out guidance for horticulture businesses on how to implement good agriculture practices and mandatory partnerships in certain circumstances. This Regulation has been in force sinceits enactment. banking Bank Indonesia ( BI ) Circular Letter No. 16/11/DKSP, dated July 22, 2014, regarding the Implementation of Electronic Money. This Circular Letter implements BI Regulation No. 16/8/PBI/2014 regarding the Amendment of BI Regulation No. 11/12/ PBI/2009 regarding Electronic Money. It sets out the obligations of electronic money issuers, provisions on limits to the value and facilities related with electronic money, and the implementation of risk management, security, technology and service costs related to the issuance of electronic money. By virtue of this Circular Letter, electronic money is divided into two types, i.e., registered electronic money and unregistered electronic money. This Circular Letter came into force on the date of its enactment. Bank Indonesia ( BI ) Regulation No. 16/12/PBI/2014, dated July 24, 2014, regarding Sharia Monetary Operation ( SMO ). This Regulation was issued to enhance the effectiveness of SMO to encounter and anticipate economic, financial and monetary developments. This Regulation stipulates the form and substance of SMO activity. By virtue of this Regulation, SMO activity can be carried out in the form of a Sharia Public Market Operation and Sharia standing facilities. It also regulates the issuance of Sharia Bank Indonesia Certificates by BI as the commercial paper in relation to an SMO transaction. This Regulation came into force on the date of its enactment. SSEK legal alert 1

2 Bank Indonesia ( BI ) Circular Letter No. 16/13/DPM, dated July 24, 2014, regarding Procedures for Sharia Term Deposit Allocation in Foreign Exchange. This Circular Letter implements BI Regulation No. 16/12/PBI/2014 regarding Sharia Monetary Operation. It regulates Sharia Foreign Exchange Term Deposits conducted by a bidding mechanism. It also sets out the procedure to implement, announce and settle bids. By virtue of this Circular Letter, participants may also conduct early redemption over Sharia Foreign Exchange Term Deposits. This Circular Letter came into force on the date of its enactment. customs and excise Minister of Finance Regulation No. 163/PMK.04/2014, dated August 14, 2014, regarding the Amendment of Minister of Finance Regulation No. 237/PMK.04/2009 regarding Customs Exemption. This Regulation extends the list of goods that are exempt from customs fees. Under the previous regulation, goods that were exempt from customs fees were imported goods and factory goods used as raw materials or supporting materials in the production of finished goods. Under this new Regulation, goods that do not come from the factory but are used as raw materials or supporting materials in the production of finished goods are also exempted from customs fees. It also adds a provision that violations to the rules on customs exemptions shall be subject to sanctions as referred to in the Customs Law. This Regulation comes into force 60 days after its issuance, i.e., November 14, Minister of Finance Regulation No. 175/PMK.04/2014, dated August 28, 2014, regarding the Utilization of Customs Support Documents in the Form of Electronic Data. This Regulation stipulates that import customs notification shall be done electronically through the appointed electronic system by submitting the required supporting documents in the form of electronic data. Hard copies of the documents are not required unless there is a problem with the electronic system. This Regulation came into force on the date of its enactment energy and mineral resources Minister of Energy and Mineral Resources Regulation No. 22 of 2014, dated August 13, 2014, regarding the Amendment of Minister of Energy and Mineral Resources Regulation No. 12 of 2014 regarding the Purchase of Electric Power from Hydroelectric Power Plants by PT Perusahaan Listrik Negara ( PT PLN ). This Regulation amends provisions related to electricity purchased by PT PLN, including the price based on the power network and the location of the power plant. It also stipulates that the power purchase price shall rely on the consent between PT PLN and a legal entity. However, the minister shall grant his or her approval with regard to such purchase price before it becomes applicable for the interested parties. This Regulation has been in force since its enactment. Director General of Minerals and Coal Regulation No. 714.K/30/DJB/2014, dated August 12, 2014, regarding Procedures and Requirements to Grant a Recommendation as a Registered Exporter of Coal. This Regulation implements Minister of Trade Regulation No. 39/M-DAG/PER/7/2014 on Export Provisions for Coal and Coal Products. It stipulates procedures to obtain a recommendation from the Director General of Minerals and Coal, to be further acknowledged by the Director General of Foreign Trade, as a registered exporter of coal and coal products. This Regulation has been in force since its enactment. SSEK legal alert 2

3 Instruction of the Directorate General of Minerals and Coal No. 2 I/30/DJB/2014, stipulated on May 16, 2014, regarding the Postponement of the Granting of Operation Production Mining Business Licenses Specifically for the Cross-Province and/or Cross- Country Transportation and Sale of Coal in the Framework of Foreign Capital Investment. This Instruction postpones the granting of the license as stipulated above for 12 months from the time the Instruction was issued. This postponement is meant to give authorities time to improve the management and supervision of the cross-province and/or crosscountry transportation and sale of coal. This Instruction came into force on the date of its stipulation. finance Minister of Finance Regulation No. 164/PMK.06/2014, dated August 14, 2014, regarding Procedures to Implement the Utilization of State-Owned Goods for Infrastructure Procurement. This Regulation stipulates that state-owned goods can be utilized as long as such use does not interfere with the tasks and functions of the Government operation. Such utilization can be done either through lease or a cooperation agreement. This Regulation came into force on the date of its enactment. Financial Services Authority ( OJK ) Circular Letter No. 12/SEOJK.07/2014, dated July 24, 2014, regarding Information Conveyance in the Framework of Financial Services Products and/or Marketing. This Circular Letter implements OJK Regulation No. 01/POJK.07/2013 regarding Consumer Protection in the Financial Service Sector. It stipulates reporting procedures and the kind of information that should be delivered by financial service entrepreneurs, specifically regarding the products and services they provide. This Circular Letter regulates the obligation of financial service entrepreneurs to provide information on their products or services and to provide communications that can be accessed by the public, among other obligations. This Circular Letter came into force on August 6, Financial Services Authority ( OJK ) Circular Letter No. 11/SEOJK.04/2014, dated July 24, 2014, regarding the Obligation for Capital Market Practitioners to Submit Report to the OJK and Public Announcements with Deadlines that Fall on Holidays. This Circular Letter regulates the filing of required reports to the OJK when the deadline for filing such reports falls on a holiday. In such instances the report should be filed no later than one business day after the holiday. Under this Circular Letter, such obligation also applies to required public announcements if the deadline for such announcement falls on a holiday. This Circular Letter came into force on the date of its enactment. Financial Services Authority ( OJK ) Regulation No. 8/POJK.03/2014, dated June 11, 2014, regarding the Assessment of the Health Level of Sharia Commercial Banks and Sharia Business Units. This Regulation governs the obligation of Sharia banks to conduct self-assessments and governs the basic procedures to conduct such self-assessments. It provides the general principles for assessing the financial health of concerned banks. This Regulation came into force on June 13, Financial Services Authority ( OJK ) Circular Letter No. 10/SEOJK.03/2014, dated June 11, 2014, regarding the Assessment of the Health Level of Sharia Commercial Banks and Sharia Business Units. This Circular Letter implements OJK Regulation No. 8/POJK.03/2014 regarding the Assessment of the Health Level of Sharia Commercial Banks and Sharia Business Units. This Circular Letter aims to ensure that such assessments are done correctly and includes technical guidelines for the assessments. This Circular Letter came into force on the date of its enactment. SSEK legal alert 3

4 Financial Services Authority ( OJK ) Circular Letter No. 9/SEOJK.04/2014, dated June 11, 2014, regarding the Amendment of Head of Capital Market and Financial Institution Supervisory Agency ( Bapepam-LK ) No. SE-16/BL/2912 regarding the Elucidation of Bapepam-LK No. V.D.3 regarding Internal Control of Securities Companies Acting as Securities Trading Brokers. This amendment addresses the outsourcing of the functions of securities trading brokers to an outside party. It stipulates the obligations of securities trading brokers to ensure that any party to whom its functions are outsourced carry out these functions according to all applicable standards and requirements. This Circular Letter came into force on the date of its enactment. forestry Minister of Forestry Regulation No. P.42/MENHUT-II/2014, dated June 11, 2014, regarding the Administration of Timber Products from Planted Production Forests. This Regulation generally sets out the guidelines for forestry businesses in harvesting timber from planted production forests, and the transportation, export and import of timber. This Regulation also provides that there are stages of production for timber products and it stipulates the requirements and procedures for each stage. This Regulation has been in force since its issuance. industry Minister of Industry Regulation No. 63/M-IND/PER/7/2014 of 2014, dated July 14, 2014, regarding the Monitoring and Control of Alcoholic Beverages. Under this Regulation, the manufacturers of existing alcoholic beverage products may expand their businesses, which had been prohibited since There are several requirements for alcoholic beverage manufacturers to expand. These requirements are: (i) the manufacturer must have realized 100% of its production plan; (ii) the production must have been audited by an independent auditor; and (iii) the manufacturer must hold a Business Identification Number for Excise ( NPPBKC ). This Regulation also regulates the issuance of new Industrial Business Licenses (Izin Usaha Industri or IUI ) and the amendment of existing IUIs. Such new and amended IUIs will be issued by the Capital Investment Coordinating Board ( BKPM ) after obtaining a recommendation from the Minister of Industry. This Regulation came into force on the date of its enactment. Minister of Industry Regulation No. 64/M-IND/PER/7/2014 of 2014, dated July 10, 2014, regarding the Monitoring and Control of Cigarette Companies. This Regulation primarily aims to provide procedures for obtaining and amending an Industrial Business License (Izin Usaha Industri or IUI ) for cigarette companies. Under this Regulation, an IUI will only be granted to small and medium businesses that are in cooperation with a large cigarette business. The IUI must be amended if there is any change to the address, name or ownership status of the company, or if there is any business expansion, merger, acquisition or amalgamation. The authority to issue the amendment to the IUI is delegated from the Ministry of Industry to the Capital Investment Coordinating Board ( BKPM ) for foreign cigarette companies. This Regulation came into force on the date of its enactment. tax Government Regulation No. 45 of 2014, dated June 3, 2014, regarding the Types and Tariffs of Non-Tax State Revenue Applicable at the Ministry of Law and Human Rights. The types of non-tax state revenue applicable at the Ministry of Law and Human Rights include (i) legal services, (ii) inheritance services, (iii) education and training, (iv) immigration services and (v) intellectual property rights services. The types and tariffs of SSEK legal alert 4

5 non-tax state revenue applicable at the Ministry of Law and Human Rights are stipulated in the attachment to this regulation. This Regulation came into effect 30 days after its enactment, i.e., on July 2, Minister of Finance Regulation No. 135/PMK.011/2014, dated June 18, 2014, regarding the Second Amendment to Minister of Finance Regulation No. 78/ PMK.03/2010 regarding the Guidelines for Calculating the VAT Input Credit for Taxable Entrepreneurs who Deliver Goods and Services Subject to VAT Payable and Non-VAT Payable. This Regulation amends the Attachment of Minister of Finance Regulation No. 78/PMK.03/2010 (as amended). It came into effect on the date of its enactment. Minister of Finance Regulation No. 139/PMK.03/2014, dated July 11, 2014, regarding the Classification and Determination of the Sales Value of the Tax Object to Calculate the Land and Building Tax. The classification of Tax Object Sales Value ( NJOP ) in the plantation, forestry, mining and other industries is provided in the attachment to this Regulation. The Head of the Regional Office of the Directorate General of Tax, on behalf of the Minister of Finance, shall stipulate the amount of the NJOP annually. This Regulation revokes Minister of Finance Regulation No. 150/PMK.03/2010 regarding the Classification and Stipulation of NJOP as the Basis for the Imposition of the Land and Building Tax. This Regulation came into effect on the date of its enactment. telecommunications Minister of Communications and Informatics Regulation No. 19 of 2014, dated July 17, 2014, regarding Internet Websites with Negative Content. This Regulation was issued to protect the public from negative content such as pornography and illegal activities. The Ministry of Communications and Informatics shall provide a list of websites with negative content, called TRUST+Positif, and Internet Service Providers are obligated to block all websites on such list. This Regulation came into force on the date of its enactment. Minister of Communications and Informatics Regulation No. 20 of 2014, dated July 17, 2014, regarding Guidelines for Evaluating the Access and Provision of Telecommunication Services in Telecommunications Universal Service Areas. This Regulation concerns the channeling of Universal Service Obligation ( USO ) funds by the Ministry of Communications and Informatics. An evaluation shall be made at the end of each USO contract and the result of this evaluation will decide whether the services in a USO area shall be terminated or continued and in what form the services shall be provided. This Regulation came into force on the date of its enactment. Minister of Communications and Informatics Regulation No. 24 of 2014, dated August 7, 2014, regarding the Second Amendment of Minister of Communications and Informatics Regulation No. 21 of 2013 regarding the Operation of Content Services in Cellular Mobile Networks and Wireless Local Fixed Networks with Fixed Mobility. This Regulation stipulates that providers of Broadcast Short Messaging Services that have already secured the relevant principal license no later than August 6, 2014, can continue their operations until November 6, This Regulation came into force on the date of its stipulation. Minister of Communications and Informatics Regulation No. 25 of 2014, dated August 20, 2014, regarding the Table of Indonesian Radio Frequency Spectrum Allocation. This Regulation updates the allocation of the radio frequency spectrum in Indonesia. Any use of the radio frequency spectrum other than as stipulated in this Regulation must be adjusted within five years as of the issuance of this Regulation. This Regulation came into force on the date of its enactment. SSEK legal alert 5

6 Minister of Communications and Informatics Regulation No. 28 of 2014, dated September 9, 2014, regarding the Amendment of Minister of Communications and Informatics Regulation No. 08/PER/M.KOMINFO/01/2009 regarding Decision on Radio Frequency Band for Wireless Broadband Services on Radio Frequency Band of 2.3 GHz. This Regulation opens the possibility for the 2.3 GHz radio frequency band to be used for purposes other than wireless broadband. Such other purpose will be further regulated in by the Minister of Communications and Informatics. This Regulation came into force on the date of its enactment. tourism Minister of Tourism and Creative Economy Regulation No. 6, dated July 8, 2014, regarding the Amendment of Minister of Tourism and Creative Economy Regulation No. PM.53/HM.001/MPEK/2013 concerning Hotel Business Standards. This Regulation amends several provisions to expedite the implementation of hotel business certification for micro, small and medium-scale businesses and cooperatives engaging in hotel business activities. Further changes are made to the validity period for previous licenses issued prior to the issuance of this Regulation. According to this amendment, previous licenses shall be valid until October 3, This Regulation came into effect on the date of its enactment. Minister of Tourism and Creative Economy Regulation No. 8, dated July 8, 2014, regarding the Amendment of Minister of Tourism and Creative Economy Regulation No. 4 of 2014 regarding Tourism Travel Business Standards. This Regulation changes several provisions to expedite the implementation of hotel business certification for micro, small and medium-scale businesses and cooperatives engaging in tourism travel business activities. Further changes are made to the validity period for previous licenses issued prior to the issuance of this Regulation. According to this amendment, previous licenses shall be valid until April 11, This Regulation came into effect on the date of its enactment. Minister of Tourism and Creative Economy Regulation No. 9, dated July 8, 2014, regarding Cottage Business Standards. This Regulation provides the minimum requirements to operate and rent out cottages and guidance for best practices in implementing Cottage Business Certification. Under this Regulation, anyone involved in operating and renting out cottages must obtain Cottage Business Certification. This Regulation came into effect on the date of its enactment. Minister of Tourism and Creative Economy Regulation No. 10, dated July 8, 2014, regarding Cafe Business Standards. This Regulation provides the minimum requirements to operate a cafe business and guidance for best practices in implementing Cafe Business Certification. Under this Regulation, anyone involved in the café business must obtain Cafe Business Certification. This Regulation came into effect on the date of its enactment. SSEK legal alert 6

7 trade Government Regulation No. 49 of 2014, dated July 1, 2014, regarding Organizing Commodity Futures Trading. This Regulation stipulates the requirements and procedures to carry out futures trading based on futures contracts, Sharia derivative contracts and other derivative contracts. This Regulation is relevant to futures exchange(s) and futures clearing house(s), futures brokers, futures traders, futures consultants and their representatives, individuals, business entities and joint venture companies that may also act as consumers or fund managers, and banks that manage consumer funds, compensation funds and the funds of a fund manager. Generally, the Regulation provides the requirements for futures exchanges, in particular capital requirements and the requirements for parties that may own shares in a futures exchange business. This Regulation also specifies the main players involved in futures exchanges, i.e., futures brokers and futures traders, and specifically provides clarification on the requirements for a company to be considered a futures broker or futures trader. This Regulation came into effect on the date of its enactment. Minister of Trade Regulation No. 29/M-DAG/PER/6/2014, dated June 26, 2014, regarding Stipulation of the Export Benchmark Price for Processed Mining Products Subject to Export Duty. This Regulation sets out that the Export Benchmark Price is stipulated by referring to the highest price available on international exchanges, the highest average Free on Board price, the highest average price applicable in the domestic market and the highest average price in the importing country of the processed mining product within the latest month prior to the stipulation of the Export Benchmark Price. This Regulation came into effect on July 1, Minister of Trade Regulation No. 30/M-DAG/PER/6/2014, dated June 26, 2014, regarding Stipulation of the Export Benchmark Price for Agriculture and Forestry Products Subject to Export Duty. This Regulation provides that the export duty shall depend on the type of agriculture or forestry product. Palm oil, crude palm oil and its derivatives shall be subject to an export duty based on the average price from the Cost Insurance Freight of Rotterdam and the Malaysian and Indonesian exchanges. Cocoa beans shall be subject to an export duty based on the average price of the CIF Kakao Intercontinental Exchange (ICE), New York. The Regulation came into effect on July 1, Minister of Trade Regulation No. 39/M-DAG/PER/7/2014, dated July 15, 2014, regarding Provisions on Coal Exports and Coal Products. This Regulation provides that only companies that have obtained permission or approval as a coal exporter from the Minister of Trade shall be allowed to export coal products. It stipulates detailed requirements and procedures for such companies to be permitted to export coal products. The regulation further requires that coal products to be exported be verified by a surveyor, with the requirements for such surveyor also covered under this Regulation. This regulation also provides that there are certain conditions under which exporter permission and approval as a surveyor can be revoked. The Regulation came into effect on September 1, Minister of Trade Regulation No. 40/M/DAG/PER/7/2014, dated July 15, 2014, regarding the Amendment of Minister of Trade Regulation No. 03/M-DAG/PER/I/2012 on Import Provisions for Substances that Deplete the Ozone Layer. The purpose of this Regulation is to increase the effectiveness of restrictions on the import of substances that deplete the ozone layer. It implements the 1985 Vienna Convention regarding Protection of the Ozone Layer and the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer. Generally, the Regulation sets out provisions regarding ozonedepleting substances (Bahan Perusak Lapisan Ozon or BPO ). It is also aimed at regulating the import of BPOs that are still utilized by national industries as raw materials or support materials. This Regulation came into effect on the date of its enactment. SSEK legal alert 7

8 transportation Minister of Transportation Regulation No. PM 29 of 2014, dated August 12, 2014, regarding Prevention of Maritime Pollution. This Regulation sets the criteria and obligations for operators of various maritime activities to prevent maritime pollution. It revokes Minister of Transportation Regulation No. KM 4 of 2005 regarding Prevention of Pollution Caused by Vessels and Minister of Transportation Regulation No. 66 of 2005 regarding the Operation of Single-Hull Oil Tankers. This Regulation came into force on the date of its enactment. Minister of Transportation Regulation No. PM 36 of 2014, dated September 12, 2014, regarding Procedures to Establish Tariffs for Airport Services. This Regulation stipulates that airport service tariffs shall be stipulated in Rupiah or United States Dollars. Tariffs shall be reviewed every two years, except if there is more than 7% inflation, improvements in services or infrastructure, or in the event of force majeure. This Regulation revokes Minister of Transportation Decree No. 29 of 1997 regarding the Structure and Classification of Airport Service Tariffs for Public Airports and Minister of Transportation Decree No. 28 of 1999 regarding the Mechanism to Calculate Airport Service Tariffs for Airports Managed by Airport Business Entities. This Regulation came into force on the date of its enactment. Minister of Transportation Regulation No. PM 38 of 2014, dated September 16, 2014, regarding the Second Amendment of Minister of Transportation Regulation No. PM 57 of 2011 regarding Civil Aviation Safety Regulation Part 171 on Aeronautical Telecommunications Service Providers. This Regulation adjusts Civil Aviation Safety Regulation Part 171 in relation to the amendment of the regulations of the International Civil Aviation Organization, Annex 10. The amendments include, among others, the types of aeronautical telecommunications services as well as the performance and technical specifications of aeronautical telecommunications facilities. This Regulation came into force on the date of its enactment. Minister of Transportation Instruction No. IM 3 of 2014, dated July 7, 2014, regarding the Use of Rupiah Currency in Transportation Transactions. This Instruction requires that transportation-related transactions that currently use United States Dollars or any other foreign currency begin to use the Indonesian Rupiah. This Instruction came into force on the date of its issuance. SSEK legal alert 8