Indonesia's insurance industry has seen a number of important recent developments, and more are on the horizon. These include the enactment of Minister of Finance Regulation No. 152/PMK.010/2012 regarding Good Corporate Governance for Insurance Companies and the long-awaited new Insurance Law that is being discussed at the House of Representatives.
In a landmark decision on June 20, 2013, the West Jakarta District Court annulled a Loan Agreement entered into between a local borrower and an offshore lender because it was executed in English only. The decision is not controversial in our view since all agreements entered into by an Indonesian party with a foreign party must be executed in the Indonesian language or in a bilingual format, and the subject Loan Agreement was expressly governed by Indonesian law. Quite rightly, the court ordered the borrower to return the loan funds to the lender.
Microfinance Institutions ("MFIs") play an important role in Indonesia, dispensing financial support to people and small businesses that might not have qualified in the traditional banking system. Until recently MFIs largely operated without a comprehensive regulatory framework to guide their operations, and with little supervision. After a long wait the Government has issued a framework for MFIs, as provided by Law No. 1 of 2012 regarding Microfinance Institutions.
Indonesia's central bank, Bank Indonesia (BI), has issued a regulation designed to improve the competitiveness of the banking system by streamlining bank ownership through consolidation and enhancing supervision, particularly in the area of good corporate governance.
Bank Indonesia has issued a regulation to improve the competitiveness of local banks in providing trust services, basically the management of assets. In particular, the new regulation is addressed to oil and gas companies operating in Indonesia, which keep much of their foreign exchange proceeds outside of the country, utilizing trust services provided by foreign banks.
Foreign and foreign-owned enterprises represent some of the largest employers in Indonesia. Accordingly, some foreign companies expressed consternation when, on February 29, 2012, the country's Ministry of Manpower and Transmigration issued Decree No. 40 of 2012 on Certain Positions that Are Restricted for Foreign Workers, which, among other things, lists 19 positions that cannot be held by non-Indonesian nationals, all related to the field of human resources.
SSEK is delighted to announce the appointment of Fahrul S. Yusuf as a partner of the firm, effective January 2013. Fahrul has been with SSEK since 2002 and he has a wealth of experience in corporate and commercial matters. His appointment strengthens SSEK's ability to serve our clients.
Richard Emmerson, a senior foreign advisor at SSEK and one of Indonesia's leading labor and employment lawyers, spoke at a seminar on February 28, 2013, at the Mandarin Oriental, Jakarta on Indonesian HR & Employment Law.
In an unexpected development with profound implications, the Constitutional Court of the Republic of Indonesia on November 13, 2012, announced a decision disbanding BP MIGAS, the upstream regulator of the petroleum industry in Indonesia.