27 August 2008

Foreign Internships

The regulatory framework for foreign internships was previously based on Minister of Labor and Transmigration Decision No. KEP 226/MEN/2003 as amended by Decision No. KEP 112/MEN/VII/2004 and Regulation No. PER 22/MEN/V/2006 is no longer appropriate for the conditions and needs of the foreign internship program that is conducted by the Indonesian government and other Indonesian organizations. The internship program in this Regulation is that defined in Article 25(3) of the Labor Law (Law No. 13 of 2003).

The organizations and institutions that may be involved in the foreign internship program include private training institutions, companies, government agencies, and educational organizations. The institutional requirements for each of the above are listed in separate articles. The requirements for individuals to participate in the foreign internship program are also listed. Generally, the minimum requirements are a senior high school education or the equivalent.

Permits are to be issued by the Director General and the permit is valid for 3 years and can be renewed for additional 3-year periods.

The internship program must satisfy a number of conditions, namely: a clear purpose for any internship and follow-up activities that are to be undertaken post-internship. This will require that there be a curriculum and syllabus developed to provide structure to the program and to stipulate the expected outcomes.

The Regulation also sets out the rights and obligations of those involved in the internship program such as the right to a stipend, insurance cover, and certification once the internship is complete, among others.

For those who have permits under the previous regulatory framework have 12 months to comply with the provisions of this Regulation.

The Regulation has been in force since 12 May 2008.

Investment Incentives

The Government has made investment an integral part of its economic policy platform and the decentralization of certain powers to the regions means that it is necessary to put in place guidelines that stipulate the framework for the granting of incentives and the simplifying of procedures for capital investment in those regions. To this end the Government has issued Regulation No. 45 of 2008.

The primary purpose of the Regulation is to facilitate the implementation of Article 176 of Law No. 32 of 2004 which provides that regional governments may grant incentives and simplify the procedures for capital investment with a view to improving their respective regional economies.

The incentives and the simplified procedures are to be based on the following principles:
* legal certainty;
* equality;
* transparency;
* accountability; and
* effective and efficient.

The incentives include:
1. reduction, lessen, and exemption of regional taxes;
2. reduction, lessen, and exemption of regional levies;
3. stimulus funds; and
4. capital assistance.

The simplification of procedures include:
1. supplying of data and information;
2. provision of infrastructure and equipment;
3. provision of land and locations;
4. technical assistance; and
5. expedited licensing procedures.

Investors must satisfy one of fourteen specific criteria listed in the Regulation. These include, among others, making a contribution to the local community; employing large numbers of people; pioneering industries, partnership with micro, small, medium enterprises and cooperatives; and innovation.

The incentives and any other facilities are to be contained in a Regional Regulation (Perda).

The Regulation has been in force since 24 June 2008.

Advertising in Indonesia

A Joint Ministerial Regulation by the Minister of Communication and Information and the Minister of Culture and Tourism has been issued with a view to capitalizing on the rapid increase in the production of advertisements and advertising in the global advertising market. The basic premise is that there is a need to ensure that advertising in Indonesia exploits this opportunity to develop and expand the skills and resources base domestically.

The three primary features will therefore be:

* raising the quantity and quality of advertisements;

* drive growth in skills, resources, and facilities; and
* promote the rich cultural diversity of Indonesia.

The Regulation requires that all human resources and back drops or settings must be sourced in Indonesia. This requirement is absolute for advertisements that are for the Indonesian market. The editing process is also to be done locally. However, where there is a need for the editing or voicing to be done somewhere else then the reasons for this need to be explained and justified.

All foreign advertisements are prohibited. There are exceptions to this seemingly absolute prohibition:

* advertisements that deal with international tourism and tourist locations;
* advertisements for international property;
* advertisements for international sporting competitions;
* advertisements for global brands; and
* advertisement for national flag ships.

The Regulation has been in force since 30 May 2008.

Bill on Hospitals

The Minister for Health submitted this Bill to the Special Committee of Commission IX of the House of Representatives (DPR) on 2 July 2008 for the purposes of this Bill being discussed and then enacted into law.

The basic premise for this Bill is that the expansion in medical knowledge and technology combined with concurrent pushes for globalization and decentralization, plus greater demands from the community that health services be more open and transparent has meant that the managing of a hospital has become increasingly complex.

This complexity demands that there be strict regulations in place that are conducive to legal enforcement and thereby providing greater levels of community satisfaction and legal certainty.

The Bill contains 15 Chapters and 58 Articles:

Chapter I – deals with the general definitions of the terms used;

Chapter II – states that the Bill is based on Pancasila whilst incorporating norms of humanity, benefits, justice, equality of rights and anti-discrimination, protection and safety of patients, and the social functions performed by hospitals;

Chapter III – states the functions and duties of hospitals;

Chapter IV – deals with the obligations of both the Central and Regional Governments with respect to providing hospitals to meet the basic needs of the surrounding communities, including the provision of medical services to the disadvantaged;

Chapter V – regulates the physical requirements of a hospital with regard to location, infrastructure, equipment, and pharmacy issues;

Chapter VI – regulates the types and classifications of hospitals;

Chapter VII – stipulates licensing requirements;

Chapter VIII – sets out the rights and obligations of both hospitals and their patients;

Chapter IX – addresses the issues relating to hospital management;

Chapter X – regulates matters with regard to hospital fees, funding, and subsidies;

Chapter XI – stipulates the provisions regarding the recording of data, reporting, and the obligation to use an information management system for this purpose;

Chapter XII – deals with matters relating to guidance and supervision of hospitals;

Chapter XIII – sets out the criminal provisions;

Chapter XIV and XV – deal with transitional and closing provision respectively.

All of the factions in the DPR have already agreed to proceed with discussion on the Bill. However, it is expected that this process may take some time in spite of the enthusiasm of the various factions to discuss it. The responses of some of the factions indicates that there will be issues to be resolved such as whether hospitals should be left completely to market forces or if not what involvement should the government have. Or is the most natural mechanism to have a private and public hospital system catering to different parts of the community.

CSR -- Government Regulation

The Government has been drafting a Regulation for the purposes of implementing Article 74 of Law No. 40 of 2007 on Limited Liability Companies. The Draft Regulation includes a list of definitions for the terms that it contains and these are in essence a reiteration of the basic provisions of the prevailing Law.

The key definition is that the Regulation applies to companies that have business activities or who are in some way connected to business activities that relate to natural resources. These businesses have an obligation to fulfill the CSR provisions contained in the Law and further regulated here.

The intentions of the relevant companies to carry out their respective CSR obligations are to be contained in their annual work or business plans. Then these CSR objectives are to be implemented in accordance to that plan. All CSR obligations are to be budgeted for to a degree that allows for their proper implementation.

Each company must then include their respective CSR achievements for the year in their annual report. This report is then presented to the General Meeting of Shareholders. The implementation is subject to accountability and therefore the directors of the company are responsible for any failures relating to the implementation of the CSR obligations.

The Regulation provides for written submissions to be made to the Minister by members of the community. If a member of the community feels that a certain company has not fulfilled their CSR obligations pursuant to the prevailing laws and regulations then they have a right to notify the Minister in writing.

The majority of the Draft Regulation has already been agreed in March. However, there are still a number of provisions to be agreed. The discussion to finalize this Draft Regulation is scheduled for 15 July 2008. It is expected that this discussion should see the finalization of the Draft Regulation.

Finally, it is worth remembering that there are a number of business associations and organizations that have indicated that the possibility of seeking a judicial review of Article 74 remains.

25 August 2008

Court-Based Mediation Procedures

The Supreme Court has issued Regulation No. 1 of 2008 to set out the procedures for court-based mediation. The underlying premise of the Regulation is that mediation is an alternative dispute mechanism available to the courts and the parties to a dispute that will allow for the dispute to be settled quickly and cheaply. The Regulation goes on to state that the mediation process is not only quicker and cheaper but provides satisfaction and fulfills the needs of feeling that justice has been done.

The procedures set out in the Regulation only apply to cases that are before the courts.

Generally, the fees for the mediation process are to be borne by the applicant. However, if the mediation reaches a mutually acceptable settlement then it is expected the division of these fees will form part of any agreement reached.

Mediation is to be undertaken by all parties to civil law suits that are lodged with the first instance courts. Nevertheless, the focus of mediation is clearly on commercial issues, labor disputes, consumer disputes, and objections to decisions of the Business Competition Supervisory Commission (KPPU).

Mediators are to be certified. To facilitate the parties ease in choosing a mediator the Chief Justice of the relevant court is to furnish a list of at least five mediator names to the parties. Where the chosen mediator is a judge then there is no fee for mediation services. However, if a private mediator is chosen then the responsibility for any fees charged by this mediator are to be borne by the relevant parties to the dispute.

All parties are to enter the mediation in good faith.

The mediator is to declare that the mediation has failed if one or both parties fail to attend to consecutive hearings. The other duties of the mediator are listed in the Regulation.

Expert witnesses and testimony can be used if both parties agree to the witness being called.

The Regulation is also explicit in stating that any evidence adduced during the mediation cannot be used as evidence in any subsequent trial if a settlement is not reached.

This Regulation replaces Supreme Court Regulation No. 2 of 2003.

The Regulation has been in force since 31 July 2008.

Draft Amendments to the Law on General Courts

This series of amendments has been proposed by the Legislation Agency of the DPR and these amendments reflect recent developments in judicial reform. A regular complaint of the Indonesian judiciary relates to its inconsistency in the decision making process and the frequent claims that justice is administered in favor of those who know best how to “tweak” the system.

A quick survey of judicial related news over the last 12 – 24 months highlights that the big issues of concern have been the manner in which general courts accept and administer cases, the court ‘mafia’, and the long-term stand-off between the Supreme Court and the State Audit Board with regard to the auditing of court or case fees. Each of these issues has been regulated in the Draft Bill.

The basic premise for the Bill is that there is a need for general courts to be seen as clean, accountable, transparent, and judicious in the provision of the court’s judicial, administrative, and financial functions. Furthermore, there is a need for greater supervision and discipline with respect to the behavior of judicial officers.

The Bill includes the insertion of five articles between Article 1 and Article 2, namely: 1A through 1E. In essence, these articles regulate that the general courts are based on the application of Pancasila, the involvement of external parties in case administration is prohibited, there is equality of the relevant parties before the law, the general courts may not refuse to hear matters, and there is to be full and equitable access to the courts.

Other interesting amendments to the Law see explicit reference that the Judicial Commission is responsible for the supervision of judges. However, this is clarified to state that the supervision must not impinge on the independence of judges to carry out their judicial functions of hearing and deciding cases.

The final amendment of note is that the Bill states unequivocally that general courts have a right to demand fees for the hearing of cases. The management and responsibility for this money would appear to require further regulation in a specific legal instrument for that purpose. However, the amendment leaves no doubt that the State Audit Board may audit these monies to ensure that the fees collected are not misused or abused.

It is not expected that these amendments will be subject to extensive debate as most of this debate has already been carried out in other public forums and the amendments appear to reflect the lowest common denominator that all stakeholders seem to be resigned to accepting.

The amendments will, if passed in this form, serve to strengthen the credibility of the general courts and the belief that judicial reform in Indonesia is a serious undertaking which has considerable support from the courts themselves.