Indonesia's Financial Services Authority has introduced a new concept, known as Primary Parties in Non-Banking Finance Institutions, along with certain requirements that such Primary Parties must fulfill. Primary Parties, according to recent OJK regulations, are those who manage or supervise and have significant influence over Non-Banking Finance Institutions, i.e. insurance companies, pension funds, finance companies, and credit guarantee companies.
Starting this year, companies in Indonesia are required to register employees in the Indonesian Government's health and employment social security programs. This is part of an effort by the Government to expand social security benefits to more of the population, but questions remain about the implementation of the new programs and their effect on business.
Indonesia's House of Representatives recently passed into law the trade bill. There are several points of the new Trade Law in particular that should be highlighted and could affect companies in Indonesia. These points are related to (i) domestic and international trade activities, (ii) labeling, (iii) the standardization of trade goods, (iv) e-commerce transactions, (v) international trade security for exports and imports, (vi) export business facilities, (vii) warehouse registration, and (viii) the requirement for business service providers to have competent technical personnel.
After a long and contentious discussion involving many interested parties, the Government of Indonesia issued a regulation that bans the export of raw minerals/ores. Government Regulation No. 1 of 2014 was issued on January 11th, 2014, one day before the deadline for the domestic processing and refining of raw minerals/ores as mandated by the 2009 Mining Law.
The Indonesian Minister of Manpower and Transmigration ("MOMT") has issued MOMT Regulation No. 12 of 2013 regarding Procedures for Employing Foreign Manpower. This new regulation contemplates several changes to the previous 2008 regulation and introduces a useful new mechanism on the temporary hiring of foreign workers.
In its latest Indonesian Economic Quarterly report, the World Bank projects slowing growth in 2014 and says that risk remains high. To counter slowing growth, according to the report, additional and more focused policy responses are needed.
Bank Indonesia officially transferred its banking microprudential supervisory powers to the Financial Services Authority on December 31, 2013. The OJK now has the authority to monitor individual banks, including the supervision of licensing matters and the day-to-day operations of banks. Bank Indonesia will retain macroprudential supervisory powers and will monitor the banking system as a whole.
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.