Three New Ministerial Regulations on Electricity: Towards Equitable and Affordable Power
Recent data has revealed that a large number of Indonesians still do not have access to affordable electricity. In a bid to solve this stubbornly persistent problem, the government has set an electrification target of up to 70,000 MW by 2019 and is also aiming for the equal distribution of electricity at reasonable prices. With these two goals in mind, the Ministry of Energy and Mineral Resources has finally issued three new electricity-related ministerial regulations. These three regulations encompass Ministerial Regulation No. 10/2017 on Main Provisions for Power-Purchase Agreements, Ministerial Regulation No. 11/2017 the Utilization of Natural Gas for Power Plants and Ministerial Regulation No. 12/2017 on the Utilization of New and Renewable Energy. Regulation No. 10/2017 will now be the legal basis for the implementation of power-purchase agreements. Regulation 11/2017 has been issued in order to govern natural gas utilization by power plants, so as to secure gas and energy supplies at reasonable prices. Meanwhile, Regulation 12/2017 will act as a mandate through which PLN can purchase electrical power from any independent power producers that utilize renewable sources, in order to bolster national energy security.
New Legal Framework Governing Guarantee Services
In order to implement Law No. 1 of 2016 on Guarantees, the Financial Services Authority (Otoritas Jasa Keuangan- “OJK”) has finally issued three regulations, namely OJK Regulation No. 1/POJK.05/2017 on Business Licensing and the Organizational Structures of Guarantee Institutions; OJK Regulation No. 2/POJK.05/2017 on the Organization of Guarantee Institutions; and OJK Regulation No. 3/POJK.05/2017 on Good Corporate Governance for Guarantee Institutions. This week’s edition of Indonesian Law Digest (ILD) will analyze and discuss various matters which relate to these new OJK Regulations, such as the general concept underlying guarantee institutions, their licensing, financial ratios and so forth.
Indonesia & the World Trade Organization: Global Trade and Market Maneuvers
As the volume of international trade continues to rise year after year, naturally the number of trade disputes arising is also simultaneously increasing. Indonesia engages in significant amounts of international trade and thus when the country’s businesses import and export various goods to other WTO members, caution is required with respect to international trade principles and the WTO’s various legal instruments . This edition of ILD will offer a concise review of three of the most recent disputes which involved Indonesia’s status as a WTO member. These disputes were related specifically to clove cigarettes and fatty alcohols, as well as various horticultural and animal products.
Financial Soundness and Good Corporate Governance for Insurance Companies
In a bid to promote strong and stable financial environments, the OJK has issued three implementing regulations in order to enhance the management of insurance companies, as well as the various financial requirements that they are required to meet. The first two of these regulations concern the financial soundness of insurance companies and address solvency threshold levels, as well as a requirement to establish guarantee funds. Meanwhile, the last of the recently issued regulations relates to the implementation of good corporate governance within insurance companies and offers guidelines on the prudent operation of insurance businesses.
New Export Policy for Minerals and Coal: Export Ban Relaxed Once Again
Two weeks ago, Indonesia introduced new rules that will allow exports of nickel ore and bauxite, as well as concentrates of other minerals, under certain conditions in a sweeping policy shift from the key global supplier. These new rules are set out in Government Regulation No. 1 of 2017 on the Fourth Amendment to Government Regulation No. 23 of 2010 on the Implementation of Mineral and Coal-Mining Activities, Ministerial Regulation No. 5 of 2017 on the Enhancement of the Added Value of Minerals Through Domestic Mineral Processing and Refinement Activities, Ministerial Regulation No. 6 of 2017 on Procedures and Requirements for the Granting of Recommendations for the Sale of Processed and Purified Minerals Overseas, and Ministerial Regulation No. 7 of 2017 on Procedures for the Designation of Sales Benchmark Prices for Metal Minerals and Coal. With these changes in mind, this week’s edition of ILD will address matters which relate to Indonesia’s latest mining policy, including its new divestment scheme, export procedures for metals and coal, requirements for the securing of export recommendations and benchmark pricing.
New Regulations on Insurance/Reinsurance: Establishment & Organization of Businesses
Two years after the enactment of Law No. 40 0f 2014 on Insurance, the Financial Services Authority (OJK) has finally introduced two regulations relating to the insurance sector, specifically OJK Regulation No. 69/POJK.05/2016 on Business Licenses and the Organizational Structure of Insurance, Sharia-Insurance, Reinsurance and Sharia-Reinsurance Companies; and OJK Regulation No. 67/POJK.05/2016 on the Organization of Insurance, Sharia-Insurance, Reinsurance and Sharia-Reinsurance Companies. Against this background, this week’s edition of ILD trains its precision spotlight upon the establishment and organization of businesses operating within Indonesia’s insurance sector.
Bill on Construction Services: Redefining the Construction Industry
The Bill redefines several basic matters which relate to the construction industry, including the scope of construction businesses, business classifications, the development of construction services, working standards, working health and safety and so forth.
Indonesia’s Legal Labyrinth: Accommodating Foreign Investors Through the ICSID
In order to reflect the current euphoria which is the result of Indonesia having won the investment dispute that it was embroiled in with Churchill Mining and Planet Mining on 6 December 2016, this edition of ILD will examine the basic features of the International Centre for the Settlement of Investment Disputes (ICSID) forum. Furthermore, ILD this week will also be reviewing all of the ICSID cases to date which have involved Indonesia as one of the disputants.
Public-Private Partnerships: An Alternative Financing Scheme for Better Indonesian Infrastructure (Part II)
This edition of Indonesian Law Digest (ILD) follows up on last week’s ILD publication No. 485, which featured a discussion of several issues surrounding the Public-Private Partnership (“PPP”) concept, including matters pertaining to the general exposition of PPP, the implementation of PPP as initiated by government institutions, the appointment of business entities, the whole land-procurement process and the investment-return scheme.
Public-Private Partnerships: An Alternative Financing Scheme for Better Indonesian Infrastructure (Part I)
The government of Indonesia finds itself under a number of financial constraints amid persistent calls that the country invests adequately in its infrastructure. However, the private sector has at the same time also been taking another look at its options, as investing in Indonesian infrastructure has now become a riskier and more expensive proposition. As a result, the government will have to work hard in order to regain investors’ trust in the Indonesian economy. Therefore, as an alternative approach to filling the sizeable gap that still remains as regards budget allocations for infrastructure development, itself a result of the government's limited resources, the government has decided to implement a Public Private Partnership (“PPP”) approach. This week’s edition of ILD is the first of two which will focus upon matters relating to Public-Private Partnership schemes within Indonesia. This week, we offer part one of this two-parter, which sets out a general exposition of PPP and also looks at the implementation of PPP schemes by government institutions. Part one also addresses the appointment of business entities, the whole process of land procurement and returns on investments.