Indonesian Law Digest

Draft Government Regulation on Food Labeling and Advertising
A new Draft Government Regulation on Food Labeling and Advertising is currently being cooked up in the government’s legislative kitchen in a bid to improve consumer protection. In essence, the Draft Regulation sets out in greater detail the information that both should and should not be listed on food labels or addressed by advertisements for food products, with public participation taking center stage as the primary key to achieving greater public awareness.
Draft Bill on Water Resources
The House of Representatives is currently in the process of discussing the Draft Bill on Water Resources in response to a landmark Constitutional Court decision, specifically Decision No. 85/PUU-XI/2013, which declared Law No. 7 of 2004 on Water Resources to be null and void. The Draft Bill is aiming to update the umbrella arrangement for the management of water resources and to provide greater legal certainty for the water industry, which currently falls under the obsolete Law No. 11 of 1974 on Water. This edition of ILD will analyze the Draft Bill, which contains a total of 50 articles, and elaborate upon its key provisions, which specifically address rights over water resources, water-resource management measures, financing for water-resource management rights, the obligations and roles of communities, coordination relating to water-resource management and the investigation of water-resource related crimes.
Diverted Profit Tax Schemes: Corporate Conscience and Reluctant Revenues
The taxing of multinational corporations is no easy task in this era of globalized capital, especially when national governments have to deal with corporate behemoths such as Google. However, as complicated as this issue can seem at first glance, the collection of such taxes is by no means an impossible task for Indonesia’s tax authorities. Taking its cue from the United Kingdom’s newly enacted diverted-profits tax scheme, the Indonesian government is optimistic that it can find a new solution to the thorny question of collecting taxes from corporations such as Google in ways that don't involve forcing them to register as permanent establishments within Indonesia. Can such schemes ultimately prove effective however? This edition of ILD will address this tangled question, as Indonesia considers incorporating its own diverted-profits tax scheme into its current tax regime.
Draft Bill on Tobacco
One of the most controversial draft bills in Indonesian legislative history has been incorporated into the 2017 national prioritized legislation program. Indeed, now that the Draft Bill on Tobacco has come to the attention of the general public after being officially initiated by the House of Representatives in mid-2016, the government just this week indicated its intention to suspend the House’s deliberations of the bill. Some believe that the Draft Bill is urgently needed in order to create a regulatory framework aimed at improving and boosting the national tobacco industry. However, others are of the view that the Draft Bill, in its current version at least, fails to address a number of important elements relating to the public interest, specifically health and poverty. This edition of ILD will analyze the Draft Bill and elaborate upon its key provisions.
Reclamation: Land from the Sea
As a way of mitigating the problems associated with land scarcity, the government, working in conjunction with the private sector, is currently engaged in a land reclamation project which is aiming to create new land from the sea. However, land reclamation is an issue that remains steeped in controversy and often leads to disputes between those who are initiating a given reclamation project and the residents who are evicted in order to make way for it. This edition of Indonesian Law Digest will present an in-depth analysis of the various issues affecting land reclamation, particularly as they apply in coastal areas and on small islands.
The Mandatory Use of the Indonesian Language in Contracts
The infamous Nine AM Case has shaken the foundations of contract law within Indonesia’s legal community. Through the handing down of a simple, yet direct and bold decision, the judges presiding over the Nine AM Case, from the District Court level all the way up to the Supreme Court, established that any agreements involving both Indonesian and foreign parties that do not also provide a version in Bahasa Indonesia should be annulled, as they are in violation of Article 31 of the Language Law. However, legal practitioners have argued that the underlying legal analysis as regards the Nine AM Case was not correctly implemented, as the obligation to use Bahasa Indonesia in International Commercial Agreements is considered a non-essential element and should thus not become the basis for any annulments or delegitimizations of contracts and agreements, as stipulated under Article 1320 (4) of the KUHPER. This edition of Indonesian Law Digest (ILD) will attempt to analyze this complex legal issue purely from the standpoint of legal theory, without offering any subjective opinions in relation to this issue.
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.
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