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SSEK Legal Consultants 1
1. Employment
Indonesia Suspends Foreign Manpower Work Permit
Applications During Covid-19 Outbreak - April 24,
2020
Indonesian Employment Law and COVID-19 - March
27, 2020
3. Government Assistance
Indonesian Government to the Rescue: COVID-19 Economic Relief Packages - April 23, 2020
5. Force Majeure
COVID-19 and Indonesia: Force Majeure and Other
Considerations - April 7, 2020
FAQs on Force Majeure in Indonesia - March 26, 2020
7. Tax
Indonesia and COVID-19: New Tax Policies Aim to
Stimulate Economy - April 9, 2020
2. Industry
Indonesia to Accelerate Product Registration for
Covid-19 Drugs - April 21, 2020
Update on License for Companies in Indonesia to
Operate During Pandemic - April 17, 2020
Indonesia Provides Mechanism for Companies to
Operate During Pandemic - April 14, 2020
4. Imports
Indonesian Government Relaxes Licensing Requirements for Medical Devices to Combat COVID-19 - April 16, 2020
6. Social Restrictions
DKI Jakarta Starts Limiting Large-Scale Social
Interactions - April 13, 2020
Indonesia and COVID-19: Government Issues
Regulation on Limiting Social Interactions - April 6,
2020
SSEK Legal Consultants 2
9. Shipping
Navigating Sea Transportation in Indonesia During
COVID-19 - April 8, 2020
8. Capital Market
Indonesian Capital Market Update During the
Coronavirus Pandemic - March 30, 2020
10. Visas
Latest Update on Indonesian Visas in the Time of
COVID-19 - April 15, 2020
Update on Indonesian Visas in the Time of COVID-
19 - April 2, 2020
Indonesian Visas in the Time of COVID-19 - March
30, 2020
SSEK Legal Consultants 3
Indonesia Suspends Foreign Manpower Work Permit Applications
During Covid-19 Outbreak
By Angky Banggaditya
On April 8, 2020, Ida Fauziyah, the Indonesian Minister of Manpower (“MOM”), signed and
issued Circular Letter No. M/4/HK.04/IV/2020 regarding Services for the Utilization of Foreign
Workers in Relation to the Prevention of Covid-19 (“MOM CL 4/2020”).
This new circular letter follows the issuance of Minister of Law and Human Rights Regulation No.
11 of 2020 regarding the Temporary Prohibition on Foreigners Entering Indonesia and the
expiration of an earlier MOM circular letter concerning services for the utilization of foreign
manpower from the People’s Republic of China in order to prevent Covid-19.
Through MOM CL 4/2020, the Ministry of Manpower suspends all services for new applications
related to the utilization and licensing of foreign workers. The circular letter stipulates exceptions
for applications for (a) foreign nationals who will work on national strategic projects and (b) stay
permit holders who are still residing in Indonesia.
MOM CL 4/2020 also allows employers to apply for work permit extensions for their foreign
workers who are still in Indonesia and cannot return to their country of origin due to entry
restrictions. This allows employers to continue employing their expatriate workers during the
Covid-19 outbreak.
As a practical consequence, although the Ministry of Manpower’s online system for foreign
workers is still accessible, companies planning to apply for new work permits for foreign workers
that do not qualify for the exemptions noted above may need to wait for further notice from the
Ministry of Manpower.
MOM CL 4/2020 will remain in effect until the pandemic is declared over by the Indonesian
Government. (April 24, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 4
Indonesian Government to the Rescue: COVID-19 Economic Relief
Packages
By Stephen Igor Warokka and Hanna Yovita Onggano
The ongoing COVID-19 public health crisis has strained not only Indonesia’s healthcare
infrastructure, but also the economy, placing an even heavier burden on the Indonesian people.
In response, President Joko Widodo’s administration announced a 405.1 trillion rupiah (about
US$26 billion at current exchange rates) relief package to support healthcare infrastructure and
facilities, incentivize medical workers, shore up the country’s social safety net, and provide
economic relief for businesses and impacted communities. This amount is divided into 75 trillion
rupiah for healthcare infrastructure, 110 trillion rupiah for the social safety net, 70.1 tri llion rupiah
in industrial support and 150 trillion rupiah for the National Economic Recovery Program. This
relief package was put in place through Government Regulation in Lieu of Law No. 1 of 2020
concerning State Financial Policy and Financial System Stability in Response to Coronavirus
Disease 2019 (“Perpu 1/2020”).
This article discusses the legal measures already implemented or being contemplated by the
Government to allocate the relief package budget.
Import Facilities and Exemptions
President Widodo issued Presidential Decree Number 9 of 2020, whereby the head of the
National Agency for Disaster Mitigation (Badan Nasional Penanggulangan Bencana/ “BNPB”) is
authorized to provide exemptions for licensing procedures in the trade and import sector. The
President subsequently issued Presidential Regulation Number 58 of 2020 dated April 8, 2020,
which serves as an overarching regulation stipulating the relaxation of licensing procedures for
imports of:
essential goods and foodstuffs;
foodstuffs for government food reserves;
raw materials or supporting materials;
goods and raw materials for disaster prevention and mitigation; and/or
other goods as stipulated by the government.
As of April 21, 2020, only goods imported for COVID-19 prevention and relief have been further
regulated in detail through ministerial regulations and/or circular letters, namely:
SSEK Legal Consultants 5
i. Minister of Trade Regulation No. 28 of 2020 regarding the Amendment of Minister of
Trade Regulation No. 87/M-DAG/PER/10/2015, dated March 20, 2020, regarding Imports
of Certain Products, which exempts companies from the application of the provisions of
the regulation itself for medical equipment under 17 Harmonized System (“HS”) Codes.
This exemption is in place until June 30, 2020.
ii. Minister of Trade Regulation No. 31 of 2020 regarding the Amendment of Minister of
Trade Regulation No. 23 of 2020, dated March 24, 2020, regarding the Temporary
Prohibition on the Export of Antiseptic, Mask Raw Materials, Protective Gear and Masks,
which stipulates that goods falling under 14 HS Codes cannot be exported from
Indonesia until June 30, 2020.
iii. Minister of Trade Regulation No. 37 of 2020 regarding the Second Amendment of
Minister of Trade Regulation No. 118 of 2018, dated March 31, 2020, regarding Imports
of Non-New Capital Goods, which exempts companies from the application of the
provisions of the regulation itself, including the requirement for Import Approval and a
Surveyor Report for used capital goods in the form of medical equipment that falls under
two HS Codes, therapeutic respiratory apparatus and other medical respiratory
equipment and gas masks. This exemption is in place until June 30, 2020.
iv. Joint Circular Letter of the BNPB and Directorate General of Customs No. 01/BNPB
/2020 and No. KEP-113/BC/2020 (“BNPB DGC Circular”), which provides the standard
operating procedure for import facilities and exemptions from trade regulations for the
following three categories: (a) central/regional governments and public service agencies;
(b) yayasan/foundations and non-profit organizations; and (c) individuals/private parties
acting in a non-commercial capacity.
Individuals and private parties acting in a commercial capacity are ineligible for the exemptions,
but they may still submit their Import of Goods Notice through the BNPB pursuant to Section C,
Item 7 of the BNPB DGC Circular.
While details on the trade regulations for which eligible parties will receive exemptions have not
been specified, the following areas were discussed in a Ministry of Finance press conference on
April 1, 2020, on the exemptions and facilities:
● Simplification and reduction of prohibitions and restrictions on 749 HS Codes;
● Simplification and reduction of prohibitions and restrictions on certain commodities,
including manufacturing support goods, food, and health and medical equipment;
SSEK Legal Consultants 6
● Acceleration of the export-import process for reputable traders; and
● Acceleration and increase of export-import services through the National Logistics
Ecosystem.
Further details on the proposed measures above shall be subject to Minister of Trade regulation.
At present, no other Minister of Trade or Minister of Industry regulation targeting economic
recovery for businesses has been issued. The implementing regulations currently in place are
focused on providing the medical care necessary to protect public health.
Credit Assistance Relief for Businesses
On the banking side, Financial Services Authority (Otoritas Jasa Keuangan/”OJK”) reports
indicate that there is no liquidity issue for Indonesian banks. However, with respect to
businesses, especially micro, small and medium enterprises, or MSMEs, loan repayment may
become an issue in the near future as indicated by the volume of businesses implementing
redundancy plans, resorting to unpaid leave or simply closing.
i. OJK allows banks to grant credit relaxation
The OJK issued Regulation No. 11/POJK.03/2020 concerning National Economic Stimulus as
Countercyclical Policy to the Coronavirus Disease 2019 Outbreak. This regulation allows banks
to take certain measures to relax the credit requirements or to restructure loans. Based on the
OJK Announcement on Credit Relaxation or Restructuring, dated March 31, 2020, public banks
are free to set their own terms for implementing relaxation measures.
According to the OJK FAQs on Credit Relaxation and Restructuring, accessible on the OJK
website (www.ojk.go.id), credit relaxation or loan restructuring due to COVID-19 may, for
example, be granted to debtors:
● significantly affected by the reduction of import-export volume due to supply chain
dependence and trade with China or other countries impacted by COVID-19;
● affected by the suspension of infrastructure construction projects due to the halt in the
supply of raw materials, manpower and machines from China or other countries impacted
by COVID-19; and/or
● affected by travel warnings or the closure of transportation routes and tourism to and
from China and/or other countries due to COVID-19.
SSEK Legal Consultants 7
These categories include, but are not limited to, MSME debtors with a credit ceiling of 10 billion
rupiah.
ii. Bank Indonesia (“BI”) allows banks to grant credit relaxation
To ensure the liquidity and solvency of financial institutions, Article 16 of Perpu 1/2020 authorizes
the Indonesian central bank, BI, to:
Provide short-term liquidity loans or short-term liquidity financing under shariah principles
to Systemic Banks or banks other than Systemic Banks; and
Provide special liquidity loans to Systemic Banks experiencing liquidity issues that are
unqualified to obtain short-term liquidity loans or short-term liquidity financing.
Article 17 of Perpu 1/2020 provides that the OJK and BI shall jointly conduct a solvency
assessment to determine whether a short-term liquidity loan or short-term sharia liquidity
financing may be granted. Article 16(2) of Perpu 1/2020 states that this matter shall be further
regulated in a Bank Indonesia regulation.
Direct Cash Aid
In addition to providing aid for the supply of raw materials, working capital adequacy for
businesses and liquidity for banks, the government aid package also contemplates providing
direct cash aid for the most vulnerable portion of the population in order to maintain purchasing
power. The regulatory framework for this measure has yet to be confirmed as of this writing, but
the President has reportedly said the amount provided to each family shall be Rp 600,000 per
month for a period of three months.
The Minister of Villages, Development of Disadvantaged Regions and Transmigration issued
Regulation No. 6 year 2020, dated April 13, 2020, to allocate 22.4 trillion rupiah from the Village
Fund (Dana Desa) budget for direct cash aid disbursements to residents of villages. Under this
regulation:
I. Villages receiving 800 million rupiah or less from the Village Fund may allocate a
maximum of 25% of their Village Fund aid for direct cash aid disbursements;
II. Villages receiving between 800 million and 1.2 billion rupiah from the Village Fund may
allocate a maximum of 30% of their Village Fund aid for direct cash aid disbursements;
and
SSEK Legal Consultants 8
III. Villages receiving more than 1.2 billion rupiah from the Village Fund may allocate a
maximum of 35% of their Village Fund aid to direct cash aid disbursements.
Families living in poverty will be identified and determed by mutual discussion, or musyawarah,
at the village level, after which the village head will report to the regional government for
confirmation.
This measure is intended to supplement pre-existing programs under the Ministry of Social
Affairs such as the cash assistance PKH program and non-cash food assistance, as well as
employment training programs for laid-off workers and those employed in the informal sector.
Regarding employment training, the Coordinating Ministry for the Economy issued Press
Release No. HM.4.6/45/SET.M.EKON.2.3/04/2020 concerning the launch of Pre-Employment
Cards. This program provides funding assistance and incentives for workers in the informal
sector, job seekers, and micro and small enterprises. This program has a quota of 164,000
participants per week until the fourth week of November 2020. However, as of April 12, 2020, just
in the first wave of registrations, the Pre-Employment Card program had already received 1.4
million applications.
Each recipient of the Pre-Employment Card is entitled to a benefit package of Rp 3,550,000.- in
total, consisting of:
Training assistance of Rp1 million to purchase various trainings on partner digital
platforms.
Incentives that will be transferred to the participant’s bank account or e-wallet LinkAja,
OVO or GoPay. These incentives consist of two parts:
i. Incentives provided after the completion of the first training of Rp 600,000 per
month for four months (Rp 2,400,000).
ii. Incentives provided after completing evaluation surveys of Rp 50,000 per survey
for three surveys (Rp 150,000).
Participants can choose the training they want on the digital platforms of the official partners of
the Pre-Employment Card program. These digital platforms are Tokopedia, Skill Academy by
Ruangguru, Maubelajarapa, Bukalapak, Pintaria, Sekolahmu, Pijarmahir and Sisnaker. The
assistance expires after 30 days of receipt if the Pre-Employment Card has not been used for
training. (April 23, 2020)
SSEK Legal Consultants 9
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 10
Indonesia to Accelerate Product Registration for Covid-19 Drugs
By Ira A. Eddymurthy and Fadhillah Rizqy
The arrival of Covid-19 has placed health systems in countries around the world under a
significant strain, pushing governments to introduce emergency measures to accelerate the
response to the virus in the hope of the containment or, ideally, elimination of Covid-19. One
measure implemented by a number of countries is fast-tracking the registration of drugs to treat
Covid-19 using what is normally referred to as Emergency Use Authorization (“EUA”).
The Indonesian Food and Drugs Supervisory Agency (Badan Pengawas Obat dan Makanan or
“BPOM”) announced on April 7, 2020, that it would follow other foreign food and drug agencies in
accelerating the drug registration process using the EUA platform for any drugs with the potential
to treat Covid-19.
Under the normal procedure it can take months or even years to complete the drug registration
process due to the multiple layers of inspection and lengthy bureaucratic procedures.
Significantly cutting back the time needed for drug registration may allow viable drug products to
be accessible to Covid-19 patients, which could save lives and eventually help bring the
pandemic to an end.
Accelerated drug registration has been implemented by BPOM in the past, but it has been largely
adopted on a discretionary basis. Given the urgency of the Covid-19 outbreak, BPOM plans to
formalize the procedure using the EUA platform in the coming days. In the meantime, in an
official press release, BPOM provided the following brief guideline that may be useful to
Indonesian pharmaceutical manufacturers in registering products with the potential to treat
Covid-19.
Mechanism for Emergency Use Authorization
In the press release, BPOM emphasized that it would prioritize the registration of any drugs with
a potential claim to treating Covid-19. This includes the registration of any new drugs or existing
drugs being repurposed for Covid-19 treatment.
The pharmaceutical manufacturing company, acting as the registrant for the product, would need
to submit, among others, information and documents on:
a. Pilot scale;
b. Stability data for the past six months;
c. Validation document on pilot scale;
d. Comparative dissolution test.
SSEK Legal Consultants 11
Upon receiving the application, BPOM will conduct an accelerated review of the application and,
if everything is in order, issue a pre-registration approval within six hours. The actual product
registration approval itself will depend on the type of drug being registered and could take up to
20 business days for a new drug and five business days for a generic drug.
Conditionality of Registration
It is important to note that the drug registration approval issued by BPOM using the EUA platform
is conditional and BPOM reserves the right to revisit the drug registration approval based on
further findings on the efficacy, safety and quality of the drug. This means that despite the
significantly faster process using the EUA platform, BPOM will still deploy rigorous supervision of
drug products.
Other Efforts
In addition to the implementation of the EUA platform, BPOM has announced that it will shorten
the importation process for raw materials for drugs to treat Covid-19, from one business day to
only two hours. BPOM also plans to employ a fast-track procedure for the certification of
manufacturing facilities producing drugs to treat Covid-19, cutting the Good Manufacturing
Practice (“GMP”) certification process from 10 to five business days.
Further Guidelines
Our contact at BPOM advised that further regulatory guidelines on the EUA platform and other
fast-track procedures are being finalized and will be made public in the near future. A more
detailed update to this publication will follow. (April 21, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 12
Update on License for Companies in Indonesia to Operate During
Pandemic
By Dewi Savitri Reni and Syarifah Reihana Fakhry
The Indonesian Ministry of Industry announced last week that industrial companies and/or
companies located in industrial parks can continue to operate their factories and offices and
maintain the movement of their workers, materials and finished products during the COVID-19
lockdown if they have the necessary operational license, known in Indonesian as an Izin
Operasional dan Mobilitas Kegiatan Industri.
Companies with an account at the National Industry Information System (Sistem Informasi
Industri Nasional or “SIINas”) can apply for the abovementioned license through the SIINas
website.
Based on our recent discussions with our contacts at the Ministry of Industry, a SIINas account is
only available to companies that have obtained their Industrial Business License (Izin Usaha
Industri or “IUI”) from the Online Single Submission (“OSS”) system or uploaded their IUI to the
OSS system if they obtained the license prior to the launch of the system. If companies have not
uploaded their license, their registration for a SIINas account will be rejected.
Also, please expect some delay in processing these licenses. Due to the recently enacted social
distancing restrictions in Jakarta, there are fewer than 10 officials designated to handle licensing
at the moment. If you experience any technical difficulties during the application process, you can
contact the SIINas helpdesk through the SIINas website or by email
at [email protected], or at the following numbers: 0819-500-7755, 0878-010-84059
or 0878-010-84069. (April 17, 2020)
For more information, you can contact Dewi Savitri Reni ([email protected]) or Syarifah
Reihana Fakhry ([email protected]).
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 13
Indonesia Provides Mechanism for Companies to Operate During
Pandemic
By Dewi Savitri Reni and Syarifah Reihana Fakhry
The Indonesian government has enacted several policies to check the spread of COVID-19. One
of these policies is a restriction on large-scale social interactions to limit the activities and mobility
of people.
Since April 10, 2020, residents of Jakarta and surrounding cities have been instructed to remain
at home, while transportation and activities at offices, schools and public facilities have been
limited. This has disrupted the operations of businesses in different sectors around the country.
In the industrial sector, Indonesian manufacturing output has significantly decreased and the
situation could worsen if stricter measures are put in place.
In an attempt to ensure that industrial companies remain productive and are able to provide
essential goods to the public during the pandemic, the Indonesian Ministry of Industry recently
announced that industrial companies and/or companies located in industrial parks will be allowed
to operate their factories and offices, and maintain the movement of their workers, materials and
finished products, as long as they have the necessary operational license, known in Indonesian
as an Izin Operasional dan Mobilitas Kegiatan Industri.
This is pursuant to Ministry of Industry Circular Letter No. 7 Year 2020 regarding Guidelines for
Industrial Companies to Apply for Continued Operations During the COVID-19 Health
Emergency.
How to Apply
Companies can apply for the abovementioned license electronically through the National Industry
Information System (Sistem Informasi Industri Nasional or “SIINas”), using the following steps:
1. Log in to the company’s SIINas account and proceed to the e-services page.
2. Choose the option, “Apply for Izin Operasional dan Mobilitas.”
3. Complete the required information on the page, (e.g., address, license, number of
workers, contact person, production details and capacity).
4. Submit the application.
5. The Ministry of Industry will then evaluate and validate the application.
6. If the application is approved the company will receive the license in the form of a
statement letter (Surat Keterangan) issued electronically by the system.
SSEK Legal Consultants 14
Statement Letter
The issued statement letter permits the company to continue operating and maintain the
movement of its workers, materials and products during the pandemic. It will remain valid
throughout the COVID-19 health emergency period. Therefore, regardless of the social
restrictions put in place during the pandemic, a company can continue to operate if it holds a
valid statement letter.
The authenticity of the letter is shown by the QR Code on the bottom of the page. The QR Code
can be scanned by the relevant authorities and it will direct them to the Ministry of Industry
website page detailing the company’s data and the data of its supplier/distributor.
Industrial companies intending to continue operating during the pandemic should consider
applying for the abovementioned license and obtain a valid statement letter to avoid any
restrictions in the future. We are aware that several companies have already applied for the
license and successfully obtained the statement letter. If you experience any technical difficulties
during the application process, you can contact the SIINas helpdesk through the SIINas website.
(April 14, 2020)
For more information, you can contact Dewi Savitri Reni ([email protected]) or Syarifah
Reihana Fakhry ([email protected]).
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 15
Indonesian Government Relaxes Licensing Requirements for Medical
Devices to Combat COVID-19
By Arvin Raharja
Since the first COVID-19 case was reported in Indonesia on March 2, 2020, the number of cases
has expanded to around 4,839 as of April 14, 2020, with 459 deaths. A number of medical
professionals in the country have contracted COVID-19, in part due to a lack of medical devices
to diagnose, treat or prevent the virus, as well as personal protective equipment (“PPE”) such as
gloves, face shields, goggles, face masks and respirators.
In response, the Government has issued several regulations and policies to relax the licensing
requirements for the importation and production of medical devices, which is hoped will
encourage business actors to support the procurement of the necessary medical equipment to
prevent the spread of COVID-19.
Accelerated Issuance of Licenses for Production, Distribution of Medical Devices
The Indonesian Ministry of Health (“MOH”) has expedited the application process for the licenses
required to produce domestically and distribute certain medical devices and household supplies
(Perbekalan Kesehatan Rumah Tangga or “PKRT”) to deal with COVID-19. It has (i) accelerated
certification services for production and distribution certificates, and (ii) is offering one-day
service for Marketing Authorization (Izin Edar).
The medical devices and PKRT being prioritized by the MOH include:
surgical apparel (face masks, PPE and medical goggles);
liquid chemical sterilant/high-level disinfectants;
surgical gloves;
patient examination gloves;
clinical electronic thermometers;
ventilators;
culture transport medium (VTM/UTM);
microbiological specimen collection and transport device (Dacron swabs); and
antiseptic hand sanitizer.
Under these new policies, manufacturers or distributors that wish to produce or distribute the
above medical devices and/or PKRT can obtain a production certificate or distribution certificate
within one to two days upon fulfilling the (i) statutory payment of Non-Tax State Revenue
SSEK Legal Consultants 16
(Penerimaan Negara Bukan Pajak or “PNBP”) to the Government and (ii) submitting the required
documents and information. The MOH has also simplified the required documents and
information, so manufacturers or distributors are only required to submit their business
identification number (Nomor Induk Berusaha or “NIB”), an application letter, information on the
technical person in charge and a statement letter that they will fulfill the required commitments
within six months.
Manufacturers that have already obtained a production certificate for certain medical devices
and/or household supplies from the MOH can obtain the relevant Marketing Authorization in less
than a week upon fulfilling the requirements as stipulated in the MOH’s Technical Licensing
Guidelines for Medical Devices and Household Supplies. While the MOH has cut the timeline for
obtaining Marketing Authorization, it has not changed the required application documents, in
order to ensure the quality of medical devices and household supplies distributed in Indonesia. In
total, manufacturers should be able to start business operations in approximately one to two
weeks.
To accelerate the issuance of production and distribution certificates the MOH is providing
services every day from 8 am to 4 pm, Monday to Friday, and from 8 am to noon on Saturdays
and Sundays. For the one-day service for Marketing Authorization, the MOH is providing services
24 hours a day, seven days a week until June 30, 2020.
Given the urgency of ensuring the availability of certain medical devices, the Indonesian Capital
Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) has
accelerated the integration of the NIB, industrial business license and MOH operational licenses
in order to expedite the licensing requirements for certain medical devices to deal with COVID-
19. On March 2, the BKPM launched a new system, the Investment Control and Command
Centre (Pusat Komando dan Pemantauan Investasi or “Pusat KOPI”), to monitor all licensing
requests through the Online Single Submission system in order to prevent delays in the BKPM
licensing process.
Licensing Exemption for Importation and Distribution of Certain Medical Devices
Under new rules issued by the ministries of trade and health, the importation of certain medical
devices no longer requires a Surveyor Report from the country of origin of the goods. Also, such
goods are no longer subject to restrictions on the port of entry. These exemptions will apply until
June 30, 2020.
These new rules are provided in Minister of Trade (“MOT”) Regulation Number 28 of 2020 on the
Eighth Amendment to MOT Regulation Number 87 M-DAG/PER/10/2015 on Provisions on the
SSEK Legal Consultants 17
Importation of Specific Products dated March 20, 2020. They are also in MOH Decree No.
HK.01.07/MENKES/218/2020 on Medical Devices, In Vitro Diagnostic Medical Devices and
Household Supplies Exempted from Import Licensing Procedures to Reduce Coronavirus
Disease 2019 (COVID-19) dated March 30, 2020 (“MOH Decree No. 01/2020”).
The MOH has also issued a regulation to allow business actors to bypass the need for a
Marketing Authorization or Special Access Scheme (“SAS”) license to distribute certain medical
devices. This new rule is contained in MOH Regulation No. 7 of 2020 on the Amendment to MOH
Regulation Number 51 of 2014 on the Importation of Medical Devices through the Special
Access Scheme dated March 27, 2020 (“MOH Reg. 7/2020”).
Under MOH Reg. 7/2020, importers will only be required to obtain a recommendation from the
National Disaster Management Agency (Badan Nasional Penanggulangan Bencana or “BNPB”),
which they can apply for through the Indonesia National Single Window online system. The list of
HS Codes for medical devices eligible for the licensing exemption is contained in MOH Decree
No. 01/2020.
Temporary Export Ban for Certain Medical Devices
Alongside encouraging the importation and production of medical devices to combat COVID-19,
the Government has also temporarily prohibited the export of certain medical devices, through
the issuance of MOT Regulation No. 23 of 2020 regarding Temporary Export Ban on Antiseptic,
Mask Raw Materials, PPE and Masks dated March 17, 2020 (“MOT Reg. 23/2020”).
Under MOT Reg. 23/2020, business actors cannot export medical devices with HS Codes as
stipulated in the attachment of the regulation. That prohibition is in place until June 30, 2020.
Anyone who violates the import ban under MOT Reg. 23/2020 shall be subject to criminal
sanctions in the form of imprisonment for a maximum of five years and a fine of up to IDR 5
billion, as stipulated in Law Number 7 of 2014 on Trading. (April 16, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 18
Latest Update on Indonesian Visas in the Time of COVID-19
By Stephen Igor Warokka and Manika Jashan Sadarangani
The Government of Indonesia has taken a string of measures to minimize the spread of COVID-
19 in Indonesia. One of those measures has been to enact regulations governing the traffic of
individuals entering and leaving the country. These regulations specifically mandate limitations
and exceptions for the granting of Entry Permits and Re-entry Permits for foreign nationals
wanting to visit or return to Indonesia, and Emergency Stay Permits (Izin Tinggal Dalam
Keadaan Terpaksa) for all foreign nationals currently in Indonesia. The most recent regulation
and currently in force is Minister of Law and Human Rights (“MOLHR”) Regulation Number 11 of
2020 on the Temporary Prohibition of Foreigners Entering Indonesia (“MOLHR Reg No.
11/2020”).
Please visit the website of the Indonesian Directorate General of Immigration, imigrasi.go.id, or
its official Instagram account, @ditjen_imigrasi, to access the abovementioned regulation and
other relevant information, as well as the Indonesian Director General of Immigration circular
letter and the Indonesian Ministry of Foreign Affairs’ announcement regarding this matter, all of
which need to be read collectively to determine the required steps in terms of visas during the
COVID-19 pandemic.
Entry Permits and Re-entry Permits
In response to the COVID-19 pandemic, the Government of Indonesia has temporarily
suspended all foreign nationals from entering or transiting in Indonesia. As provided in Director
General of Immigration Circular Letter No. IMI-GR.01.01-2325 Year 2020 (“DGI Circular
Letter”), this suspension applies to:
i. Permanent Stay Permit (Izin Tinggal Tetap or “ITAP”) holders whose re-entry permit has
expired;
ii. Limited Stay Permit (Izin Tinggal Terbatas or “ITAS”) and ITAP holders whose stay
permit has expired;
iii. individuals visiting on Visa-Free Visits and Visa on Arrival Visits (Visa Kunjungan Saat
Kedatangan or “VKSK”);
iv. Multiple Business Visit Visa (Visa Kunjungan Usaha Beberapa Kali Perjalanan or
“VKUBP”), Visitor Visa 211A (“VK 211A”), Visitor Visa 211B (“VK 211B”), APEC
Business Travel Card (“ABTC”), Transit Visa and Working Holiday Visa holders;
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v. diplomatic passport holders who do not have a diplomatic visa or residence permit in
Indonesia and are visiting on a Diplomatic Visa Exemption for Short Visit (Bebas Visa
Kunjungan Singkat or “BVKS”); and
vi. service passport holders who do not have a service visa or service stay permit in
Indonesia and are visiting on a Service BVKS.
This suspension, however, does not apply to anyone holding a valid ITAS, valid ITAP, Diplomatic
or Service Visa issued by an Indonesian Representative or a Diplomatic Stay Permit or Service
Stay Permit issued by an Indonesian Representative. Also exempted from the suspension are
medical, food and humanitarian aid support workers; crew members for means of transport; and
foreign nationals entering Indonesia with a valid Limited Stay Visa (Visa Tinggal Terbatas or
“VITAS”) issued by an Indonesian Representative for the purpose of working on national
strategic projects, e.g. infrastructure or construction.
Note that these exceptions only apply to foreign nationals if they are travelling from a country that
has not been affected by COVID-19 or have not travelled to or transited in a country affected by
COVID-19 within the last 14 days; and after satisfying the other requirements provided under
MOLHR Reg No.11/2020.
Along with the requirements provided under MOLHR Reg No.11/2020, there may be additional
requirements to obtain new visas/visa extensions in practice.
Emergency Stay Permits
As stipulated in Articles 4 and 5 of MOLHR Reg No. 11/2020, an Emergency Stay Permit is
automatically applicable to any foreign national whose stay permit (any stay permit) has
completely expired and/or can no longer be extended, without having to submit an application to
the immigration office. This overstay will not be subject to a fine and will be completely free of
charge.
The DGI Circular Letter, however, clarifies that an Emergency Stay Permit is not applicable to
foreigners whose residence permit expired at least 60 days before January 1, 2020. Those
individuals whose permit expired at least 60 days before January 1, 2020, but who nevertheless
obtain an Emergency Stay Permit may be prevented from entering Indonesia in the future.
Please note that Article 6 of MOLHR Reg. No 11/2020 stipulates that the minister may issue
other policies related to immigration facilities for foreign nationals as long as such policies
provide general benefits.
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These exceptions and visa requirements are subject to future changes based on the situation
with the COVID-19 pandemic. (April 15, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 21
Update Indonesian Visas in the Time of COVID-19
By Stephen Igor Warokka and Manika Jashan Sadarangani
On 11 March 2020, the World Health Organization (“WHO”) officially announced that COVID-19
had become a global pandemic. Following this announcement, as with many other countries,
Indonesia enacted regulations to govern the traffic of individuals entering and leaving the
country. These regulations specifically mandate limitations and exceptions for the granting of
Entry Permits and Re-entry Permits for foreign nationals wanting to visit or return to Indonesia
and Emergency Stay Permits (Izin Tinggal Dalam Keadaan Terpaksa) for all foreign nationals
currently in Indonesia.
Please visit the website of the Indonesian Directorate General of Immigration, imigrasi.go.id, or
its official Instagram account, @ditjen_imigrasi, to access the abovementioned regulations and
other relevant information, as well as the Indonesian Director General of Immigration circular
letter and the Indonesian Ministry of Foreign Affairs’ announcement regarding this matter, all of
which need to be read collectively to determine the required steps in terms of visas during the
COVID-19 pandemic.
Entry Permits and Re-entry Permits
In response to the COVID-19 pandemic, the Government of Indonesia has temporarily
suspended all foreign visitors from entering or transiting in Indonesia. This suspension, however,
does not apply to anyone holding a Limited Stay Permit (Izin Tinggal Terbatas or “ITAS”);
Permanent Stay Permit (Izin Tinggal Tetap or “ITAP”); Diplomatic or Service Visa; or a
Diplomatic Stay Permit or Service Stay Permit. Also exempted from the suspension are medical,
food and humanitarian aid support workers; crew members for means of transport; and foreign
nationals entering Indonesia to work on national strategic projects, e.g. infrastructure or
construction.
Note that these exceptions only apply to foreign nationals if they are travelling from a country that
has not been affected by COVID-19 or have not travelled to or transited in a country affected by
COVID-19 within the last 14 days; and after satisfying the other requirements provided under
Indonesian Minister of Law and Human Rights (“MOLHR”) Regulation Number 11 of 2020 on the
Temporary Prohibition of Foreigners Entering Indonesia (“MOLHR Reg No. 11/2020”).
Emergency Stay Permits
As stipulated in Articles 4 and 5 of MOLHR Reg No. 11/2020, an Emergency Stay Permit is
automatically applicable to any foreign national whose stay permit (any stay permit) has
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completely expired and can no longer be extended, without having to submit an application to the
immigration office. This overstay will not be subject to a fine and will be completely free of
charge.
Director General of Immigration Circular Letter No. IMI-GR.01.01-2114 Year 2020 provides that
Emergency Stay Permits are applied differently for foreign nationals who arrived in Indonesia
before and after 5 February 2020. However, in practice, Emergency Stay Permits have been
leniently provided to every foreign national in Indonesia whose permit can no longer be
extended, even if they arrived before 5 February 2020.
There may be additional requirements to obtain new visas/visa extensions in practice.
Please note that Article 6 of MOLHR Reg. No 11/2020 stipulates that the minister may issue
other policies related to immigration facilities for foreign nationals as long as such policies
provide general benefits. We have received further information from the Director General of
Immigration that another Circular Letter will be issued regarding MOLHR Reg No. 11/2020.
These exceptions and visa requirements are subject to future changes based on the situation
with the COVID-19 pandemic. (April 2, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 23
Indonesian Visas in the Time of COVID-19
By Stephen Igor Warokka and Manika Jashan Sadarangani
On 11 March 2020, the World Health Organization (“WHO”) officially announced that COVID-19
had become a global pandemic. Following this announcement, as with many other countries,
Indonesia enacted regulations to govern the traffic of individuals entering and leaving the
country. These regulations specifically mandate limitations and exceptions for the granting of
Entry Permits for foreign visitors, Emergency Stay Permits (Izin Tinggal Dalam Keadaan
Terpaksa), Limited Stay Permits (Izin Tinggal Terbatas or “ITAS”), Permanent Stay Permits (Izin
Tinggal Tetap or “ITAP”) and Re-entry Permits for foreign visitors currently in Indonesia and
expatriates currently abroad whose Indonesian permits are to expire soon.
Please visit the website of the Indonesian Directorate General of Immigration, imigrasi.go.id, to
access the abovementioned regulations as well as the Indonesian Director General of
Immigration circular letter and the Indonesian Ministry of Foreign Affairs’ announcement
regarding this matter, all of which need to be read collectively to determine the required steps in
terms of visas during the COVID-19 pandemic.
Entry Permits
In response to the COVID-19 pandemic, the Government of Indonesia has suspended the
granting of Visit Visa Exemptions (Bebas Visa Kunjungan) and Visas on Arrival (Visa Kunjungan
saat Kedatangan) to foreign visitors visiting Indonesia from any country. Foreign visitors may still
visit Indonesia on a different valid visa issued by an Indonesian representative in their country,
after satisfying several requirements provided under Indonesian Minister of Law and Human
Rights (“MOLHR”) Regulation Number 8 of 2020 on the Temporary Termination of Visit Visa
Exemption and Visa on Arrival and the Granting of Emergency Stay Permits (“MOLHR Reg No.
8/2020”). However, this exception does not apply to foreign visitors who have traveled to certain
areas/countries in the last 14 days. These countries include China, South Korea (specifically
Daegu City and Gyeongsangbuk-do Province), Iran, Italy, the Vatican, Spain, France, Germany,
Switzerland and the United Kingdom.
Emergency Stay Permits
As stipulated in Article 4 of MOLHR Regulation Number 7 of 2020 on the Granting of Visas and
Stay Permits in Order to Prevent the Coronavirus Outbreak (“MOLHR Reg No. 7/2020”), an
Emergency Stay Permit is applicable to (a) any foreign citizen currently in Indonesia; (b)
foreigners who hold a stay permit of another country; or (c) the spouse or child of a citizen of a
country other than Indonesia whose visa (any visa) (i) has completely expired and can no longer
SSEK Legal Consultants 24
be extended, and (ii) cannot fly back to their country due to the COVID-19 pandemic. As further
affirmed by the Director General of Immigration in Circular Letter No. IMI-GR.01.01-2114 Year
2020, Emergency Stay Permits are applied differently for foreigners who arrived in Indonesia
before and after 5 February 2020.
Limited Stay Permits, Permanent Stay Permits and Re-entry Permits
MOLHR Reg No. 7/2020 and MOLHR Reg No. 8/2020 stipulate exceptions and procedures for
extending an ITAS/ITAP permit for holders currently in Indonesia and currently abroad. For
individuals currently abroad whose visa is to expire soon, a Re-entry Permit may be granted after
satisfying certain requirements.
These exceptions and visa requirements are subject to future changes based on the situation
with the COVID-19 pandemic. There may be additional requirements to obtain new visas/visa
extensions in practice. (March 30, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 25
DKI Jakarta Starts Limiting Large-Scale Social Interactions
By Stephen Igor Warokka and Sabrina C.M. Tobing
One of the ways to combat the spread of COVID-19 in Indonesia is to implement Limitation of
Large-Scale Social Interactions (Pembatasan Sosial Berskala Besar or “PSBB”). PSBB is a
health quarantine measure under Law No. 6 of 2018 on Health Quarantine (August 7, 2018)
(“HQ Law”) and is further supported by Government Regulation No. 21 of 2020 on the Limitation
of Large-Scale Social Interactions to Expedite Countermeasures Against COVID-19 (March 31,
2020) (“GR 21/2020”), which was issued as an implementing regulation.
The Indonesian Ministry of Health (“MOH”) enacted MOH Regulation No. 9 of 2020 on
Guidelines for PSBB to Expedite Countermeasures Against COVID-19 (April 3, 2020) (“MOH
Reg 9/2020”) to further regulate the mechanism for governors/regents/mayors to apply to the
MOH to implement PSBB in their regions, as introduced by GR 21/2020.
On April 7, 2020, DKI Jakarta Governor Anies Baswedan announced that the MOH had
approved the enactment of PSBB in DKI Jakarta Province, under MOH Decree No.
HK.01.07/MENKES/239/2020 on the Determination of PSBB in DKI Jakarta Province to Expedite
Countermeasures Against COVID-19.
This was followed by the issuance of Governor of DKI Jakarta Province Decree No. 380 of 2020
regarding the Enactment of PSBB to Handle COVID-19 in DKI Jakarta Province (April 9, 2020).
This decree states that DKI Jakarta will implement PSBB for 14 days, from April 10 to April 23,
2020. A day later, Governor Baswedan issued Governor of DKI Jakarta Province Regulation No.
33 of 2020 regarding the Implementation of PSBB to Handle COVID-19 in DKI Jakarta Province
(April 10, 2020) (“Governor Reg 33/2020”).
Implementation of PSBB under MOH Reg 9/2020
PSBB is defined under MOH Reg 9/2020 as the limitation of certain public activities in an area
with suspected COVID-19 cases to prevent its possible spread.
In determining whether a region can put in place PSBB measures, the MOH relies on the criteria
in GR 21/2020:
total number of cases and/or total number of deaths resulting from illness are increasing
and spreading in a significant and swift manner to several regions; and
there exists an epidemiological link with similar cases in other regions or countries.
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A governor/regent/mayor – together or separately – may submit an application to the MOH for
PSBB enactment if they believe their region meets the above criteria. In cases where only the
regent/mayor is applying for PSBB, they must first consult with their governor and copy the
governor in the application letter.
A PSBB enactment application shall included the following information:
the growth in the number of cases over time along with an epidemiological curve;
the spread of cases over time with the relevant mapping of such spread; and
events of local transmission with the result of an epidemiologic investigation that states
second- and third-generation transmission has occurred.
The MOH also requires information regarding the region’s readiness to supply people’s basic
needs, maintain health facilities and infrastructure, finance and operate the social safety net, and
maintain security in the region. The application for PSBB may be submitted electronically to the
MOH’s email address, [email protected].
A determination from the MOH for PSBB will be delivered no later than two days after the
application has been submitted. Although the form of determination was not specified in MOH
Reg 9/2020, we have seen in practice that it will most likely be issued in the form of an MOH
decree. In cases where a region no longer meets the criteria for PSBB, the MOH may revoke its
approval.
The governor/regent/mayor shall record and report the implementation of PSBB measures in
their respective region and report them to the MOH as the basis to assess the success of the
PSBB implementation. PSBB implementation shall also be guided and supervised by the
governor/regent/mayor and the Task Force to Expedite Countermeasures Against COVID-19, as
established by the President, consistent with their respective authorities.
PSBB may be implemented for 14 days. If new evidence of COVID-19 spread is found during the
implementation, the PSBB measures may be extended by 14 days from the date when the most
recent COVID-19 case was found.
PSBB implementation shall consist of the following measures:
temporary closure of schools and workplaces;
limitations on religious activities;
limitations on activities in public places or facilities;
limitations on social and cultural activities
limitations on transportation modes; and
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limitations on other activities related to defense and security.
Although the MOH has provided guidelines for the implementation of the above measures, each
region may structure the measures according to its specific needs and circumstances, as DKI
Jakarta has done in Governor Reg 33/2020.
Implementation of PSBB in DKI Jakarta under Governor Reg 33/2020
1. Temporary closure of schools
School and/or educational institution activities in Jakarta shall be conducted at home/residence
during the PSBB implementation. An exemption is given for educational, training and research
institutions linked to health services. In conducting this measure, the head of the school and
educational institution shall ensure that the learning process continues during the implementation
of the PSBB measures, while preventing the spread of COVID-19.
2. Temporary closure of workplaces
Work activities in Jakarta shall be temporarily conducted from home/residence during PSBB
implementation. During the temporary closure, office managements shall ensure the services
provided and/or business activities continue to operate in a limited manner, protect the
productivity of employees, prevent the spread of COVID-19 and protect the safety of the
workplace, and also provide assistance to employees exposed to COVID-19.
The following are exempted from mandatory closure:
a. all government offices/institutions, central or regional, based on the regulations of the
relevant ministries;
b. foreign representative offices and/or international organizations conducting diplomatic
and consular functions, along with other functions under international law;
c. state/regional-owned enterprises handling COVID-19 and/or fulfilling the public’s primary
needs under the regulations of the relevant ministry and/or the Government of DKI
Jakarta Province;
d. business actors operating in the sectors of health, foodstuffs/food/drinks, energy,
communications and information technology, finance, technology, logistics, hotels,
construction, strategic industries, basic services, public utilities and industries that have
been determined as national vital objects, and/or daily needs;
e. local and international public organizations in the field of disaster relief and/or
socialization.
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For offices that fall under the above exemption, management must implement social distancing
among employees during work activities, social distancing of people with underlying conditions
and/or who are vulnerable to COVID-19, and protocols to prevent COVID-19 in the workplace.
Governor Reg 33/2020 provides specific guidelines for restaurants, food stalls and similar
businesses, hotels, and construction work. These include:
restaurants, food stalls and similar businesses are to limit their service to take-away and
deliver through online and telephone orders;
hotels must provide special services for guests who are self-quarantining, and they must
suspend activities and close facilities that may violate social distancing efforts;
construction projects must provide housing and the daily needs for all workers for as long
as they are in the project area.
3. Limitations on religious activities
Religious activities during PSBB shall be conducted at home. Although not mentioned in
Governor Reg 33/2020, the MOH provides that such religious activities at home may be attended
by limited family members, provided that distance is maintained between each person. Any
exemption for religious activities should be guided by the relevant laws and regulations, and the
views of official religious institutions that are acknowledged by the Government.
4. Limitations on activities in public places or facilities
All public places or facilities shall be temporarily closed for public activities during PSBB
implementation. With regard to crowd control, any activity in a public place or facility may be
attended by no more than five people.
An exemption is provided for activities conducted for (i) fulfilling primary and/or fulfilling daily
needs such as providing, processing, distributing and/or delivering foodstuffs/food/drinks, energy,
communications and information technology, finance, banking, and payment system, and/or
logistics; and (ii) individual sports activities in the area outside of homes.
The term “fulfilling primary and/or daily needs” for providing, processing, distributing and/or
delivering foodstuffs/food/drinks consists of (i) providing retail goods in traditional markets,
supermarkets, or stalls, and (ii) laundry services. For the purpose of maintaining economic
stability, business actors involved in providing basic/daily needs are prohibited from raising the
price of goods.
SSEK Legal Consultants 29
5. Limitations on social and cultural activities
Social and cultural activities consisting of all political, sports, entertainment, academic and
cultural gatherings, meetings and activities that would result in people gathering together are
prohibited during PSBB.
An exemption is provided for circumcisions in health facilities, weddings in the Religious Affairs
Office/Registry Office, and funerals at funeral homes. Such events may be attended by a limited
number of people, with physical distancing of at least one meter between each person. Any
celebration of such activities that would result in a mass gathering is prohibited.
Further, the attachment of MOH Reg 9/2020 provides that no more than 20 people may attend a
funeral and only in cases where the cause of death was not COVID-19.
6. Limitations on transportation modes
During PSBB, all movements of people and goods are temporarily suspended except for
activities to fulfill primary needs and activities that are permitted during PSBB.
There is no limitation on modes of transportation for the transport of goods related to permitted
activities. However, for the transport of passengers, permissible modes of transportation are
limited to private cars and motorcycles, public motor vehicles and public train.
The operation of private cars, private motorcycles and public motor vehicles for transporting
passengers is permitted in Jakarta, with the following limitations:
Private cars can carry no more than 50% of the car’s total passenger capacity;
Application-based motorcycle are only allowed to carry goods and not passengers;
Public motor vehicles can carry no more than 50% of the vehicle’s total passenger
capacity.
8. Social Aid for Citizens and Business Actors Affected by PSBB in DKI Jakarta
The Government of DKI Jakarta Province may provide assistance to residents unable to fulfill
their primary needs during the implementation of PSBB. It may also provide incentives for
business actors affected by the implementation of PSBB. Such incentives may be given in the
form of:
reduction of regional tax and retribution for businesses;
social aid for employees affected by the implementation of PSBB; and/or
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other aid under the applicable laws and regulations.
Enforcement and Potential Sanctions
Every person shall adhere to and participate in the implementation of the health quarantine (e.g.,
PSBB). Article 93 of the HQ Law provides that the failure to adhere to and participate in the
implementation of the health quarantine, and/or the obstruction of the quarantine resulting in a
public health emergency, shall be punishable by imprisonment for a maximum of one year and/or
a maximum fine of one hundred million Rupiah.
With regard to enforcement, the chief of the Indonesian National Police (“Kapolri”) issued
Announcement of Kapolri No. MAK/2/III/2020 of 2020 on Compliance with the Government’s
Policy regarding Countermeasures Against the Spread of COVID-19 (March 19, 2020)
(“MAK/2/III/2020”). MAK 2/III/2020 stipulates the police will enforce measures to ensure (i) there
are no social activities that will result in mass gatherings; (ii) there is no hoarding of primary
needs or other public needs; and (iii) there is no spread of fake news could cause a public panic.
(April 13, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 31
Indonesia and COVID-19: Government Issues Regulation on Limiting
Social Interactions
By Ridzki Putra Ramadhan
As part of the national effort to battle the spread of the coronavirus in the country, the
Government of Indonesia (“GOI”) has issued Government Regulation No. 21 of 2020 on the
Limitation of Large-Scale Social Interactions to Expedite Countermeasures Against COVID-19
(March 31, 2020) (“GR 21/2020”). GR 21/2020 is an implementing regulation for Law No. 6 of
2018 on Health Quarantine (the “HQ Law”).
Under the HQ Law, health quarantine is defined as an effort to prevent or curb the spread of a
disease and/or public health risk factor that has the potential to cause a public health emergency.
The HQ Law defines a public health emergency as an extraordinary public health event as
indicated by the spread across regions or countries of infectious disease and/or events caused
by nuclear radiation, biological pollution, chemical contamination, bioterrorism or food
contamination.
COVID-19 Declared a Public Health Emergency
On the same date it issued GR 21/2020, the GOI designated COVID-19 a public health
emergency by virtue of Presidential Decree No. 11 of 2020 on the Stipulation of Coronavirus
Disease 2019 (COVID-19) as a Public Health Emergency (“Decree 11/2020”). Decree 11/2020
recognizes COVID-19 as a public health emergency as defined by the HQ Law, empowering the
GOI to introduce health quarantine measures as set out in the HQ Law to fight the spread of
COVID-19 in Indonesia. These quarantine measures include home quarantine, regional
quarantine, hospital quarantine, and limits on large-scale social interactions.
While the HQ Law discusses the general provisions for the implementation of health quarantines
in the event of a public health emergency, GR 21/2020 focuses solely on limitations on large-
scale social interactions, particularly as a countermeasure to the spread of COVID-19.
Such limitations are a method of health quarantine by way of temporarily closing certain public
places to prevent the spread of an infectious disease stipulated as a public health emergency by
the GOI. The implementation of such limitations includes at least the following:
a. temporary closure of schools and places of work;
b. limitations on religious activities; and/or
c. limitations on activities in public places or facilities.
SSEK Legal Consultants 32
Pursuant to GR 21/2020, the enforcement of such limitations on large-scale social interactions
can be initiated by the Minister of Health (“Minister”) or by a governor/regent/mayor. In the case
of the latter, the governor/regent/mayor would need to submit a recommendation to the Minister,
who would then consider such recommendation and determine whether to enforce the requested
limitations in a certain region.
The implementation of such large-scale social distancing efforts must be based on various
considerations as set out in Article 2 paragraph (2) of GR 21/2020, including epidemiology, scale
of threat, resources, and political, economic, social, cultural, defense and security considerations.
Further, under Article 3 of GR 21/2020, for limitations on large-scale social interactions to be
implemented, the following conditions must be fulfilled:
a. the number of infections and/or the death toll from the disease have increased and
spread significantly and quickly to several regions;
b. there exists an epidemiologic link with a similar case in another region or country.
As of the date of this article, we are not aware of any decree or stipulation by the Minister that
enforces any limitations on large-scale social interactions in any region in the country. In practice,
however, several regional governments, including those in DKI Jakarta and West Java, have
begun to implement such limitations in their own regions.
Given that GOI has stipulated COVID-19 a public health emergency and issued an implementing
regulation specifically for the exercise of large-scale social distancing efforts in response to the
COVID-19 pandemic, it would appear that it is possibly preparing itself, by validating its authority
pursuant to the HQ Law, to introduce health quarantines to handle the crisis. (April 6, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 33
COVID-19 and Indonesia: Force Majeure and Other Considerations
By Dewi Savitri Reni and Syarifah Reihana Fakhry
The COVID-19 global pandemic has caused significant disruptions to businesses globally. The
rapid rate of transmission, the unchecked growth in the number of cases and the lack of a
vaccine has forced governments around the world to implement policies that have disrupted
business operations globally.
In Jakarta, Governor Anies Baswedan declared a two-week state of emergency, beginning
March 20, later extended by two weeks, in an attempt to contain the virus. The Jakarta
administration has urged all businesses and organizations to close their offices or at the very
least reduce the number of employees working in the office.
These actions will likely, if they have not already, cause contracts, agreements and transactions
to be delayed or cancelled. Whether due to travel and import restrictions, supply and demand
issues, and/or a lack of human resources, more and more businesses are finding it difficult to
continue to operate and meet their contractual obligations.
This raises a number of questions regarding COVID-19 and its impact on existing contracts. Can
the defaulting party avoid liability? Will the contract be terminated? Will the obligations be
suspended? How can parties to a commercial contract protect themselves during the pandemic?
This article discusses the repercussions of COVID-19 on contracts in Indonesia, the concept and
implementation of force majeure clauses, and the ability of defaulting parties to avoid liability.
What Is Force Majeure?
Force majeure clauses are contractual clauses that alter parties’ obligations and/or liabilities
under a contract in the event that an extraordinary event or circumstance beyond their control
prevents one or more of the parties from fulfilling those obligations.
Under Indonesian law, the concept of force majeure is mentioned in Articles 1244 - 1245 of the
Indonesian Civil Code (ICC). These articles provide that a defaulting party (obligor) is liable for
compensation for costs, losses and profits for non-performance or the late performance of a legal
obligation under a contract, unless they can prove that such non-performance or delay is caused
by something which is unforeseen, for which they cannot be held responsible, even in the
absence of bad faith on their part, and/or fulfilling such obligation would be deemed as
committing a prohibited act.
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In light of the above, one may surmise that in order to constitute force majeure that may exempt
the defaulting party from liability for compensation, the following elements must be met:
1. An unexpected event/circumstance.
2. Circumstances beyond the defaulting party’s control.
3. The defaulting party is not accountable for the event/circumstance.
4. The event/circumstance could not be anticipated/avoided by any of the parties.
5. The situation prevents the defaulting party from performing its obligations.
6. The performance of the obligation would be prohibited.
7. There is no bad faith from the defaulting party.
8. No intention of the defaulting party to default.
If the contract provides a detailed force majeure clause, the terms of that clause will generally
prevail. Indonesian courts will likely enforce the clause written in a contract agreed between both
parties on the twin principles of sanctity and freedom of contract.
Force Majeure Clause in a Contract
The drafting and construction of a force majeure clause is to be negotiated between the parties
to the contract. However, the parties should consider including these components in the clause:
1. A clear description of what matters constitute a force majeure event. In order to
accommodate an event such as COVID-19, wording such as “pandemic” or “outbreak”
should be included. General examples will likely give rise to debate as what may or may
not qualify as a force majeure event.
2. The consequences of the occurrence of a force majeure event. Parties should clarify
the impact on the agreement should a force majeure event occur. For example, will it
delay the object of the agreement, or terminate it, and who will be liable for any costs
incurred as a result of the force majeure.
3. Procedures to be taken upon the occurrence of a force majeure event. For example,
parties may choose to regulate that the party invoking force majeure is obliged to notify
the other party of its intention and include a description of the impediments it is facing.
4. The party invoking the force majeure clause shall prove that it has exhausted the
necessary and reasonable measures to mitigate the damages brought upon the
occurrence of the force majeure. This can be included to protect the other parties to
the contract and ensure that the force majeure directly impedes the performance of the
agreement and is beyond the control of the parties.
However, regardless of whether a contract contains a force majeure clause, force majeure can
still be applied by reason of law. Indonesian civil courts can determine whether force majeure
SSEK Legal Consultants 35
has happened and whether it should preclude the defaulting party from all liability. Non-
performance may still be excused if a company successfully argues in court that COVID-19 is a
force majeure event and is able to prove that there is a direct causal link between the COVID-19
pandemic and its non-performance.
Is COVID-19 a Force Majeure Event?
In order to determine whether COVID-19 constitutes a force majeure event, a detailed analysis of
the specific contractual clause is required. The following questions should be considered:
1. What events are listed as force majeure events in the contract?
2. Are the words “pandemic” or “disease” included in the above list?
3. Has COVID-19 rendered it impossible for the party to fulfill its obligations under the
contract?
4. What is the impact on the party invoking the force majeure clause?
If the force majeure clause does not refer to specific events, the parties may need to rely on
general contractual terms and evaluate whether the effects of the COVID-19 pandemic fulfill the
elements of a force majeure event and have resulted in the defaulting party being unable to meet
its contractual obligations.
One may certainly argue that the pandemic is an unexpected event beyond the control of the
parties that could neither have been anticipated nor avoided. And it can certainly be regarded as
an impediment to business operations worldwide.
Nonetheless, it may be difficult to use COVID-19 to claim force majeure in the absence of
decisions or policies from local, provincial or national authorities that have created such
impediments to business operations. An example would be government-ordered travel
restrictions, quarantines, office closures or a citywide lockdown. If the government orders
companies to halt business operations and workers to stay home to check the spread of the
virus, this may result in various failures to perform contractual obligations.
Once proven that these measures prevented performance, the defaulting party’s argument for
COVID-19 as a force majeure event would in these circumstances be difficult to dispute. But in
the absence of any such government policies, regulations or orders, it is difficult to determine
when exactly COVID-19 may be categorized as a force majeure event.
SSEK Legal Consultants 36
What Must Be Shown to Invoke Force Majeure?
Regardless of whether pandemic is included in the contract as a force majeure event, the party
claiming force majeure will want to show that any failure to perform its contractual obligations
was beyond its control and that it could not have otherwise prevented or mitigated the damage
from such failure.
The party claiming force majeure should ideally show:
1. The inability to perform the obligation was directly caused by the pandemic.
2. Its non-performance was beyond its control.
3. There were no reasonable steps it could have taken to avoid the non-performance and/or
mitigate the damage.
Although it is not specifically mandated by the abovementioned articles of the ICC, the party
seeking to invoke force majeure for non-performance must still take reasonable steps to mitigate
the foreseeable damages brought about by the non-performance, to strengthen its case in legal
proceedings. In this regard, companies should ensure that all the impacts of COVID-19, as well
as the companies’ actions in response to such impacts, are documented. These records may be
crucial to support the claim that the company took steps to mitigate the damages in the event of
non-performance.
We also encourage all businesses looking to invoke force majeure to show that they are still
acting in good faith by complying with all the other requirements of the contract.
As mentioned above, a well-drafted force majeure clause in a contract will also require the party
invoking force majeure to comply with specific procedures upon the occurrence of a force
majeure event. For example, contracts often require parties to provide notifications or updates to
the other party, including at the commencement and conclusion of the force majeure event. In
this regard, the defaulting party should give the other party notice of its situation, describing the
impediments it is facing and expressing its intention to invoke the force majeure clause.
The impact of invoking the force majeure clause depends on the contract. It will generally excuse
the invoking party from performing its obligations under the contract, provide the invoking party
additional time to perform its obligations or give one or both parties the option to terminate the
agreement. The clause may also allocate liability for increased costs arising during the
continuation of the force majeure event.
SSEK Legal Consultants 37
Impact of COVID-19 on Indonesian Courts
The outbreak has delayed and/or suspended operations for not only businesses but also
government institutions and agencies, including court tribunals. The Indonesian Supreme Court
recently issued Circular Letter Number 1 of 2020, dated March 23, 2020, giving court tribunals
the discretion to determine any postponement of hearings or restrictions on visitors attending
hearings. Parties in civil, religious and state administrative proceedings are encouraged to utilize
the e-litigation application system the courts recently introduced (E-Court). Several courts in
Indonesia have announced that they have postponed proceedings for two weeks to
accommodate the Government’s efforts to battle the COVID-19 outbreak.
The Supreme Court recently issued Letter No. 379/DJU/PS.00/3/2020 dated March 27, 2020, to
allow trials for criminal cases to be held by teleconference.
Practical Steps for Businesses Affected by COVID-19
There is no doubt the COVID-19 pandemic has presented unprecedented challenges and
impediments to businesses in conducting their normal operations. It is imperative that businesses
enact policies and measures to protect themselves during this time. We suggest several
measures companies can take in this situation.
Review all business contracts and identify what events are regulated as force majeure
and the remedies provided in the event of force majeure, as well as the requirements to
invoke force majeure if business operations are disrupted by the effects of COVID-19.
Companies should identify and assess the consequences of the non-performance of all
their valid contracts.
Identify any notification requirements. Some contracts require parties immediately to
notify the other parties of their intention to invoke force majeure, or at the very least to
inform the other parties of any change in their business operations.
Businesses should ensure they have taken reasonable steps to avoid non-performance
or to mitigate the damages brought about by the non-performance.
Assemble and retain all documentation pertaining to the impact of COVID-19 on business
operations and the measures taken by the company in response to such impact.
Include wording or provisions on infectious disease/pandemic in new contracts and
amend existing contracts if possible.
Continually engage and communicate with workers regarding updates on the pandemic.
Create a policy for the foreseeable future (for example, a work from home policy in the
event of a lockdown) and provide adequate training for workers in an effort to prevent
business operations from being severely impeded.
SSEK Legal Consultants 38
Check insurance arrangements, including whether the business is covered in the event of
non-performance as a result of a pandemic.
Conduct risk assessments.
Ensure proper training and provide information and education on the virus for workers.
(April 7, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 39
Indonesia and COVID-19: FAQs on Force Majeure
By Michael S. Carl and Mahareksha S. Dillon
1. Is force majeure a recognised concept and how is it defined?
Yes, the concept of force majeure is recognized in the Indonesian Civil Code (the “ICC”).
However, the concept as formulated in the ICC is relatively unspecific in comparison to what is
generally found in contemporary international legal practice. As a result, parties will want to
negotiate their own rules of force majeure when drafting their contract.
The principal rules of law relevant to the concept of force majeure are found in Articles 1244 and
1245 of the ICC, which read as follows:
Article 1244:
“An obligor shall be ordered to compensate for costs, losses and profit if he/she cannot prove
that the non-performance of a legal obligation or the late performance of such legal obligation, is
caused by something which is unforeseen, for which he/she cannot be held responsible, even in
the absence of bad faith on his/her part.”
Article 1245:
“There is no compensation for costs, losses or profit, if because of uncontrollable circumstances
or because of happenstance, the obligor is prevented from delivering or performing something
which is obligatory, or commits an act which is prohibited for him/her.”
The Indonesian for the phrase “uncontrollable circumstance,” or “keadaan memaksa,” found in
Article 1245 above, is commonly used as the Indonesian translation for “force majeure” or “act of
God” in English. There is thus no doubt that the concept of force majeure exists in Indonesian
law, although neither Article 1244 nor Article 1245 provide any examples of force majeure or give
much granularity to the concept.
In the absence of a rigid statutory formulation, many Indonesian legal scholars rely on common
law formulations in broadly describing force majeure as an event which: (i) causes the party
claiming the force majeure to be unable to perform an obligation; (ii) results from an occurrence
for which the claiming party cannot be faulted; and (iii) could not have been foreseen by the
claiming party at the time the obligation was formed. However, one should not assume that an
Indonesian court will follow this or any other formulation of the concept.
SSEK Legal Consultants 40
In certain sectors, regulatory pronouncements and legal practices may also be relevant. For
example, government-formulated rules for emergency situations in the petroleum industry make
specific provision for pandemics, among others.
Finally, employment law is also relevant. An employer is not generally permitted to terminate an
employee on force majeure grounds, except in limited situations provided by statute and after
paying compensation in an amount mandated by law. Neither may an employer suspend or
reduce an employee’s salary and other compensation, except with the employee’s permission.
2. Is it only available if it is specified in a contract?
Indonesia is part of the civil law tradition. Articles 1244 and 1245 of the ICC thus apply generally
in circumstances where the parties themselves have not addressed the issue of force majeure in
their legal relations. However, Indonesia also honors the principle of freedom of contract found in
Article 1338 of the ICC. Consequently, parties may supplement or opt out of the ICC provisions
governing force majeure by instead including bespoke force majeure clauses in their written
contracts. This is highly recommended.
3. What are the key requirements, such as notification, to claim force majeure?
The ICC does not stipulate any specific requirements for a party to claim force majeure, including
notice. As with the substantive formulation of force majeure, the parties are also free to agree
procedural requirements in their contract, and both the substantive and procedural requirements
may generally be expected to prevail in legal proceedings.
4. What is the effect of a force majeure certificate issued by a government body?
Indonesian law does not presently provide a mechanism by which the government will issue a
force majeure certificate or its equivalent. However, government agencies can and often do
comment on natural disasters and other instances of force majeure. Nothing in Indonesian law
prevents a court from considering these declarations or pronouncements in determining whether
specified circumstances of unclear origin are to be treated as natural disasters or other acts of
God.
There is also one instance, quite controversial, in which the Government issued a regulation
directing that a particular disaster of questionable origin be treated as an act of God in legal
proceedings, and the courts have honored this regulation.
There are presently no reports that the Government will issue any regulation, guidelines or other
pronouncement with respect to the effect of the COVID-19 pandemic on private contractual
SSEK Legal Consultants 41
relations. Should there be any such pronouncement, one may expect the Indonesian courts to
give it significant weight.
5. What remedies are available if there is a force majeure event?
Where the parties have themselves provided for remedies in the case of a force majeure event,
one may expect that those remedies will generally prevail. In the absence of contractually
specified remedies, Articles 1244 and 1245 of the ICC provide that a party which is successful in
claiming force majeure is relieved of the obligation to pay damages. In effect, the party is
excused from the performance to which the force majeure relates.
In the context of a sale of goods, Article 1264(3) of the ICC provides that if goods, due to no fault
of the seller, depreciate in value while awaiting the satisfaction of conditions precedent for their
delivery, the buyer shall have the option either to cancel the agreement or to require delivery of
the goods in their existing condition without any reduction in the agreed price.
In the context of the employer-employee relationship, Indonesian law does not allow employers
unilaterally to suspend and/or reduce the salary or other compensation of employees except with
the express consent of the employee, irrespective of any force majeure event.
6. What are the risks of claiming force majeure incorrectly?
If a party claims force majeure incorrectly and discontinues performance of a contract
unilaterally, that party may be held in breach of its obligations and the other party may be
successful in seeking damages for non-performance. Although the ICC provides for specific
performance a breached obligation in Article 1267, it is generally understood that courts are
reluctant to award specific performance, and where they do so, the judgment is very difficult to
enforce. Damages are thus generally the preferred remedy.
7. Are there alternatives to force majeure such as frustration of contract or “change in
circumstances”?
Although the ICC does not recognize “frustration of contract” or “change in circumstances” as
express legal doctrines, there may be alternative concepts which may accommodate these
concepts with effective legal advocacy. For example, Article 1254 of the ICC provides:
“All conditions that are intended to do something that cannot be done, something that is contrary
to morality, or something that is prohibited by law are void and render agreements conditioned
upon them not in effect.”
SSEK Legal Consultants 42
The circumstances captured by the phrase “cannot be done” in the above provision are open to
interpretation.
Another example may be found in Article 1381 of the ICC, which provides in relevant part:
“Obligations shall cease … by reason of the destruction of the goods that were owed.”
8. How can you find out if courts or other types of tribunals have been closed or
suspended?
The Supreme Court of the Republic of Indonesia has issued Circular Letter Number 1 of 2020,
dated March 23, 2020, following the earlier promulgation of the same Circular Letter, regarding
the Adjustment of the Working System for Judges and Court Apparatus in Efforts to Prevent the
Spread of COVID-19 at the Supreme Court and Subordinate Courts (the “Circular Letter”).
The Circular Letter gives to court tribunals the discretion to determine any postponement of
hearings or restrictions on visitors attending hearings. The Circular Letter also encourages
parties in civil, religious, and state administrative proceedings to utilize the e-litigation application
system which the courts have recently activated.
As of the date of this writing, several courts in Indonesia have announced that hearings in civil
matters are postponed for two weeks to accommodate the Government’s efforts to battle the
COVID-19 outbreak.
These and similar court announcements are generally made publicly and need to be monitored
continuously.
9. Are arbitration proceedings in the Indonesian jurisdiction being suspended?
We have been informed verbally that proceedings administered by the Indonesian National
Arbitration Board (BANI) are suspended until March 27, 2020. This date is subject to change and
requires continuous monitoring.
(March 26, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 43
Indonesian Employment Law and COVID-19
As a result of the serious economic disruptions from COVID-19, many employers in Indonesia
may be forced to reduce costs for the foreseeable future.
What options are available to employers under Indonesian employment law?
Salary Cuts and Unpaid Leave
Employers that want to avoid terminations as much as possible can pursue the option of
reaching an agreement with employees on salary cuts and/or unpaid leave arrangements.
Key points to consider include:
If employees freely agree to the employer’s proposal to salary cuts and/or unpaid leave,
that agreement should be recorded in writing.
If there is a union at the company then the employer must consult with and secure the
approval of the union for any agreed salary cuts and/or unpaid leave.
If employees decline to agree to salary cuts and/or unpaid leave, the employer can seek
to encourage agreement by implying that employees who do not agree to the proposed
changes could potentially be made redundant, subject to a mutual termination agreement
(“MTA”) or, if disputed, approval from the labor court.
It is important to secure the consent from each employee for proposed salary cuts and/or
unpaid leave. Without that consent, employees remain entitled to their benefits under
their current employment agreement.
Note that the agreement with employees must be signed in the Indonesian language. A
dual-language form of the agreement can be drafted but the prevailing language must be
Indonesian. If the agreement is not signed in the Indonesian language, there is a risk that
it could be considered null and void if disputed in the courts.
Employee Terminations
There are a number of different scenarios employers might consider in response to COVID-19.
These include the complete closure of the business because it is no longer financially viable and
the redundancy of all the employees, or laying off only a portion of the workforce.
Some of the key considerations for these scenarios include the following:
SSEK Legal Consultants 44
Under the Indonesian Manpower Law, terminations for efficiency basically can be done
only when there is a closure of the business (including partial closure or a reduction of
overall business activities), either preceded with or without losses for two consecutive
years (this is relevant for determining termination entitlements).
Whether a force majeure event would be an acceptable reason for employee
terminations with minimal severance payment.
If the business is not being shuttered, employee terminations can still be done but only
with the express written agreement of employees by way of a mutual termination
agreement (“MTA”).
Note that without an MTA the proposed terminations will be deemed as being disputed
and can only be settled through the labor court, a process that can take six months or
more, during which the employees’ salaries must be paid.
Note that Indonesia does not recognize the concept of notice of termination. Unless an
MTA is reached, the lengthy and costly termination process for permanent employees is
as follows:
o The parties (the employer and employees, or if applicable, a labor union) are
required to meet in an attempt to reach an amicable termination settlement, a
process known as bipartite negotiation. If a settlement is reached, an MTA should
be executed and registered at the relevant labor court;
o If negotiations fail, either the company or the employee may file the dispute with
the relevant manpower affairs office. The manpower office will ask both parties
whether the dispute should be resolved through conciliation with private
conciliators or mediation with a mediator from the manpower office.
o If the non-binding written recommendation of the conciliator or mediator is
rejected, the matter must be brought by either party to the relevant labor court to
approve the termination and the benefits payable in connection with the
termination. If the labor court decision is appealed the case then goes to the
Supreme Court.
Statutory Severance Requirements:
o For contract/fixed-term employees: The balance of the contract must be paid
to fixed-term employees terminated before the end of their fixed-term
employment agreement.
o For permanent employees:
A permanent employee’s entitlement in connection with termination of
employment depends on their years of service and the circumstances of
the separation. The categories of possible separation entitlements under
Article 156 of the Manpower Law consist of (a) severance pay of up to
nine months’ wages, (b) service pay of up to 10 months’ wages, and (c)
SSEK Legal Consultants 45
other compensation (ie, for unused annual leave, any applicable
relocation costs or expenses, compensation for housing, medical and
hospitalization, and other separation benefits as may be agreed).
o Under the Indonesian Manpower Law, in the event of terminations as a result of
the company closing down due to two consecutive years of continuous losses or
due to force majeure, terminated permanent employees are entitled to single
severance pay, single service pay, and compensation
o In the event of terminations for downsizing due to efficiency reasons (ie, not due
to financial losses or force majeure), terminated permanent employees are
entitled to double severance pay, single service pay and compensation.
o Note that an ex gratia payment of two to three months’ salary on top of the
permanent employee’s mandatory severance entitlements may be necessary to
ensure the employee signs an MTA to avoid the costly labor court process.
(March 27, 2020)
For more information, please contact Fahrul S. Yusuf at [email protected]
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 46
Indonesia and COVID-19: New Tax Policies Aim to Stimulate Economy
By Michael S. Carl and Charvia Tjhai
The COVID-19 pandemic has slowed the Indonesian economy, cut state revenue and forced
increased state spending and financing. In response, the Indonesian government has issued a
new regulation aimed at providing tax relief for the coronavirus-battered economy.
The new regulation lowers corporate tax rates, imposes tax on electronic transactions by foreign
tax subjects, extends tax filing deadlines and empowers the Ministry of Finance to waive import
duties in the context of responding to the COVID-19 pandemic and/or in responding to a threat to
the economy or national stability.
This article takes a closer look at the implications of the new tax policies contained in
Government Regulation in Lieu of Law No. 1 of 2020 regarding State Financial Policy and
Financial System Stability for the Management of the Coronavirus or COVID-19 Pandemic and/or
in Facing Threats to the National Economy and/or Financial System Stability (March 31, 2020)
(“GR 1/2020”).
Lower Tax Rates for Domestic Companies
GR 1/2020 reduces tax rates for domestic corporate taxpayers and permanent establishments
from 25% to 22% applicable for the 2020 and 2021 tax years, and to 20% starting in the 2022 tax
year.
A further reduction of 3% will apply for any domestic taxpayers that meet the following criteria: (i)
in the form of a publicly listed company; (ii) trade at least 40% of their shares through the
Indonesia Stock Exchange; and (iii) meet certain other conditions to be further regulated by or
based on government regulations.
Tax Treatment for Electronic Transactions
GR 1/2020 provides a tax treatment for Trade Through Electronic Systems (Perdagangan
Melalui Sistem Elektronik or “PMSE”) that is intended to increase state revenue. This includes
imposing value added tax (“VAT”) on intangible taxable goods and/or taxable services originating
from outside Indonesia and utilized inside the country as part of PMSE activities.
VAT will be imposed subject to the provisions of Law No. 8 of 1983 regarding Value Added Tax
for Goods and Services and Sales Tax on Luxury Goods, as lastly amended by Law No. 42 of
2009 (the “VAT Law”). The VAT on PMSE activities is to be collected, deposited and reported by
SSEK Legal Consultants 47
foreign traders, foreign service providers, foreign electronic system trade providers (Foreign
PPMSE) and/or domestic electronic system trade providers (Domestic PPMSE), appointed by
the Minister of Finance.
Electronic system trade providers, or PPMSE, as referred to above, are business actors that
provide electronic systems used for trade transactions. Foreign traders and foreign service
providers are individuals or entities residing or domiciled outside Indonesia that engages in
transactions with buyers of goods or recipients of services in Indonesia through an electronic
system.
GR 1/2020 also imposes income tax or electronic transaction tax on PMSE activities carried out
by foreign tax subjects that meet certain criteria. Foreign traders, foreign service providers and
Foreign PPMSE deemed to have a “significant economic presence” in Indonesia can be treated
as a permanent establishment subject to income tax. Significant economic presence is
determined by sales in Indonesia, number of active users on digital media and the consolidated
gross turnover of the business group.
If foreign traders, foreign service providers or Foreign PPMSE are determined to have a
significant economic presence but cannot be treated as a permanent establishment due to the
application of agreements with other governments in the context of avoiding double taxation, they
will be subject to electronic transaction tax. This tax shall be imposed on the sale of goods or
services from outside Indonesia through PMSE activities to buyers or users in Indonesia by
foreign tax subjects, either directly or through a Foreign PPMSE.
Income tax or electronic transaction tax on PMSE activities is to be paid and reported by foreign
traders, foreign service providers and Foreign PPMSE. Note that they may appoint
representatives domiciled in Indonesia to collect, deposit and report VAT owed and/or to fulfill
their income tax or electronic transaction tax obligations.
Failure to fulfill the above provisions shall be subject to administrative sanctions as provided by
the VAT Law. Additional government regulations will be issued as necessary to further regulate
the imposition, calculation, collection and other matters related to the above taxes.
Tax Filing Deadlines Extended
GR 1/2020, in light of the COVID-19 outbreak, provides extensions for the fulfillment of tax
obligations, as follows:
a. the deadline for a taxpayer to file an objection as referred to in Article 25 (3) of Law No. 6
of 1983 regarding General Provisions and Procedures on Tax, as lastly amended by Law
No. 16 of 2009 (the “KUP Law”), is extended by six months;
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b. the deadline for filing a request for the return of tax overpayment as referred to in Article 11
(2) of the KUP Law is extended by one month; and
c. the deadline for taxpayers to apply for the return of tax overpayment as referred to in
Article17B (1) of the KUP Law, file an objection letter as referred to in Article 26 (1) of the
KUP Law, or apply for the reduction or cancellation of administrative sanctions or incorrect
tax assessment or the cancellation of examination results, as referred to in Article 36 (1)
KUP Law, is extended by six months.
These extensions are subject to future changes based on the situation with the coronavirus
outbreak.
Ministry of Finance Empowered to Provide Customs Facilities
Lastly, GR 1/2020 authorizes the Minister of Finance to provide customs facilities in the form of
exemption or relief of import duties, which is to be further regulated by Minister of Finance
regulations. (April 9, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 49
Navigating Sea Transportation in Indonesia During COVID-19
By Stephen Igor Warokka and Shafira Nindya Putri
The Indonesian Directorate General of Sea Transportation (“DGST”), at the Ministry of
Transportation, has issued several circular letters aimed at preventing the spread of COVID-19.
This article discusses measures taken in Indonesian ports, including terminals, as well as
measures concerning ship crews.
Indonesian Ports and Terminals
During the early spread of COVID-19, and in response to Indonesian Director General of Disease
Prevention and Control of the Ministry of Health the Circular Letter No. PM.04.02/III/43/2020
dated January 3, 2020, and International Maritime Organization Circular Letter No. 4204 dated
January 31, 2020, the DGST issued Circular Letter No. 5 of 2020 regarding Anticipating
Coronavirus Spread in Port Areas in Indonesia dated February 5, 2020 (“DGST CL 5/2020”). The
DGST instructs all port operators to identify all ships arriving from abroad, including those in
transit, especially from countries with COVID-19 cases. Port operators are also instructed to
intensify supervision of ships, especially those from mainland China and Hong Kong. Under this
Circular Letter, the DGST also establishes a special integrated task force to handle the spread of
severe pneumonia disease from sea transportation.
The DGST then issued Circular Letter No. 8 of 2020 regarding Preventive Steps Against the
Spread of Coronavirus in Indonesian Ports dated March 5, 2020 (“DGST CL 8/2020”). This
Circular Letter provides guidelines for handling passengers arriving in Indonesian ports. It
instructs all DGST Technical Implementation Units to take the following preventive measures:
a. determine if incoming ships are arriving from countries affected by COVID-19;
b. coordinate with health quarantine personnel to identify and handle arriving passengers
with COVID-19 symptoms;
c. ensure the international terminal and other locations in the port are equipped with
sufficient body temperature scanners and hand sanitizer;
d. ensure port operators are vigilant in maintaining the hygiene of terminals by spraying
disinfectant periodically; and
e. report any potential spread of COVID-19.
Limitations on Sea Transportation
DGST Circular Letter No. 13 of 2020 regarding Limitations on Passengers Aboard Ships,
Logistics Transportation and Port Services During the COVID-19 Outbreak Management
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Emergency Period (“DGST CL 13/2020”) emphasizes the importance of cooperation between
regional governments where ports are located and the DGST with respect to potential port
closures. The aim of such cooperation is to ensure the DGST is able to carry out a proper
evaluation before any closure is decided.
Under DGST CL 13/2020, passenger ships can continue to operate, with some limitations that
must be communicated to the relevant stakeholders in the shipping industry as well as potential
passengers. Despite the ongoing COVID-19 pandemic, the measures put in place by DGST CL
13/2020 are not as strict as some may have hoped in limiting the traffic of individuals and goods
going in and out of Indonesian ports. For example, instead of suspending all travel by sea
transportation, DGST CL 13/2020 only instructs relevant port authorities to disseminate
information to passengers on the risks of traveling during the COVID-19 outbreak.
DGST CL 13/2020 does prioritize access for ships carrying Indonesian nationals from abroad,
on-duty police officers and military personnel, primary and crucial goods and supplies, and
people who are ill and need to be moved to COVID-19 referral hospitals. DGST CL 13/2020 also
ensures that port services, such as berthing and unloading services, shall be made available for
cargo ships carrying supplies, goods for infrastructure development and export commodities.
Ban on Foreign Cruise Ships
DGST CL 13/2020 bans foreign-flagged cruise ships from berthing at Indonesian ports. If a
foreign-flagged cruise ship needs to refuel and disembark crew members for such purpose, it
must first apply for a permit in the determined anchorage area and only for the period stated in
the Foreign Ship Agency Approval (Persetujuan Keagenan Kapal Asing). Specifically for foreign-
flagged ships sheltering in the Riau Islands, crew disembarkation and refueling may only be done
in the Ship-to-Ship and Lay-Up locations at Nipah Island, Balai Karimun Cape and Galang Island.
Foreign crew members are prohibited from disembarking except in the determined anchorage
area. In the event of an emergency medical situation involving a foreign crew member, such
person may be disembarked from the ship only after the COVID-19 Task Force in the relevant
port has issued its authorization.
DGST CL 13/2020 also emphasizes the importance of maintaining good hygiene, practicing
social and physical distancing and supplementing ships with sanitation facilities and COVID-19
prevention announcements. Only if perceived as necessary in preventing the accelerating spread
of COVID-19 can ship operators limit the number of passengers allowed onboard.
SSEK Legal Consultants 51
Ship Crews and Operators
DGST Circular Letter No. 11 of 2020 regarding Contingency Plan for Seafarers and Vessel
Operators dated March 24, 2020 (“DGST CL 11/2020”) prescribes exemptions and relaxations
for ship crews and ship owners and/or operators with respect to the management of crew
certification and documentation in the midst of the COVID-19 pandemic. It provides an exemption
for the Minimum Safe Manning Document in case there are crew members who must be
disembarked due to COVID-19 and the ship owners are unable to find replacements. If a
Seaman’s Book (Buku Pelaut) expires while the relevant crew member is onboard and not
permitted to enter the port or the transit country has implemented a lockdown in response to
COVID-19, the expired Seaman’s Book may be deemed as valid until the relevant authorities in
the transit country allow the crew member to disembark and renew the Seaman’s Book at the
Indonesian Embassy.
DGST CL 11/2020 also relaxes the Medical Certificate for Seafarers, pursuant to Standards of
Training, Certification and Watchkeeping Regulation 1/9 and Maritime Labor Convention 2006,
allowing the certificate to remain valid for an additional three months after its expiration in certain
circumstances such as the COVID-19 pandemic. In addition, foreign nationals working on
Indonesian-flagged ships whose Certificate of Recognition (“COR”) expires between March 1 and
May 31, 2020, may email a copy of their certificate and DGST CL 11/2020 to the Directorate of
Shipping and Navigation and a temporary COR valid for three months will be issued. (April 8,
2020).
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.
SSEK Legal Consultants 52
Indonesian Capital Market Update During the Coronavirus Pandemic
By Ira A. Eddymurthy and Callista Putri Mayari
To generally calm the market from its consistent downward volatility amid the global coronavirus
pandemic, the relevant Indonesian government authorities have taken several actions. These
include (i) the suspension of all short selling transactions implemented by the Indonesia Stock
Exchange (“IDX”) and (ii) the introduction by the Indonesian Financial Services Authority (“OJK”)
of a new policy on share buybacks.
IDX Suspends Short Selling
The IDX suspended short selling as the Jakarta Composite Index (“JCI”) was in a free-fall,
continuing its losses since the start of 2020. The IDX believed the stock market correction in
Indonesia was mirroring similar losses around the world over fears of the coronavirus pandemic.
The IDX suspension resulted from a coordination meeting attended by IDX officials and
Indonesian President Joko Widodo, together with other financial industry regulators, including
OJK, Bank Indonesia and Ministry of Finance officials.
The suspension of short selling was declared effective upon the issuance of IDX Circular Letter
No. S-01419/BELPOP/03-2020 on Provisions Relating to Short Selling Transactions dated March
2, 2020. It is further reiterated through IDX Announcement No. Peng-00058/BEI.POP/03-2020 on
the Revocation of the List of Securities that Can Be Transacted Through Short Selling dated
March 2, 2020 (“IDX Announcement 058”).
Under IDX Announcement 058, all securities stipulated by the IDX as securities or shares eligible
for short selling transactions, as stated in item I.e. of IDX Announcement No. Peng-
00054/BEI.POP/02-2020 on Securities that Can Be Transacted and Guaranteed in the Context of
Margin Transactions and/or Short Selling Transactions dated February 28, 2020, are now
prohibited from being transacted by way of short selling in Indonesia for an indefinite period.
Current IDX Policy on Short Selling
In essence, the IDX has adopted three policies regarding short selling transactions as of this
writing:
1. The IDX will not issue any list of securities that can be traded through short selling
transactions for an indefinite period;
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2. The IDX will not entertain any applications requesting short selling transactions, even if
requested by Securities Exchange members, for an indefinite period; and
3. Securities Exchange members are obliged to ensure that any transaction carried out,
both for the benefit of Securities Exchange members and/or their customers, is not a
short selling transaction.
The above prohibition applies to any natural or legal person irrespective of their country of
residence, including all qualified investors and securities companies listed on the IDX website
which had previously obtained approval from the IDX to carry out short selling transactions.
OJK Policy on Share Buybacks
The week after the IDX introduced its prohibition on short selling, the OJK, also taking into
account the pressure of the global pandemic and the plunging JCI, which had fallen about
18.46% since the start of the year, issued Circular Letter No.3/SEOJK.04/2020 dated March 9,
2020, on Other Significantly Fluctuating Market Conditions for the Performance of Buyback of
Shares Issued by Issuers or Public Companies (“OJK Circular Letter No. 3/2020”).
On March 16, 2020, the OJK issued Circular Letter No. S-89/D.04/2020 to further clarify
procedures for share buybacks as set forth in OJK Circular Letter No. 3/2020 (“OJK Circular
Letter No. S-89/2020”). In principle, OJK Circular Letter No. S-89/2020 regulates procedures for
issuers or public companies (i) to provide written disclosure of information according to the
required timeline and (ii) to satisfy the stipulated mechanism for the refloat of treasury shares.
Share Buyback Without a GMS
Under OJK Circular Letter No. 3/2020, issuers and public companies can now conduct share
buybacks without convening a General Meeting of Shareholders (“GMS”). In addition, the
number of shares that can be repurchased by issuers and public companies can now be more
than 10% of paid-up capital and at most 20% of paid-up capital, provided that the outstanding
shares are at least 7.5% of paid-up capital.
For the sake of clarity, the relaxed process of share buybacks without obtaining prior GMS
approval is not mandatory in nature. This is merely an option for issuers and public companies,
to allow them if they choose to expedite the timeline by being able to skip the approximately two
months required to plan and hold a GMS to approve a share buyback.
With the issuance of OJK Circular Letter No. 3/2020 and OJK Circular Letter No. S-89/2020, the
OJK is seeking to help reduce the impact of the coronavirus pandemic on the market by
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empowering issuers and public companies to execute expedited share buybacks without
violating the provisions of applicable laws and regulations. (March 30, 2020)
This publication is intended for informational purposes only and does not constitute legal advice.
Any reliance on the material contained herein is at the user’s own risk. You should contact a
lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and
may not be reproduced without the express written consent of SSEK.