carpe diem Indonesia

Foreign Internships

2008-08-27T04:49:00.000-07:00

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

2008-08-27T04:46:00.000-07:00

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

2008-08-27T04:41:00.000-07:00

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

2008-08-27T04:37:00.000-07:00

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

2008-08-27T04:33:00.000-07:00

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.

Court-Based Mediation Procedures

2008-08-25T02:10:00.000-07:00

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

2008-08-25T02:06:00.001-07:00

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.

Government Regulation on Ground Water Confirmed

2008-08-25T02:02:00.001-07:00

After a somewhat long and tortuous journey the government has confirmed and issued a Regulation on Ground Water. This Regulation is No. 43 of 2008. The Regulation has been in force since the date of its confirmation, 23 May 2008.

The need for this Regulation was that the following Articles from the Law on Water Resources (Law No. 7 of 2004) regulate the exploitation and management of ground water, specifically Articles 10, 12(3), 13(5), 37(3), 58(2), and 59.

The rationale for the Regulation is that ground water plays a critical role in the sustaining of life generally but more importantly is that it sustains the life of the broader community. The Regulation provides for the taking of an inventory of ground water resources while promoting conservation and sustainable management of the resource for the long-term.

Recent debate on the need to more strictly regulate ground water usage is that experts have stated that parts of Jakarta have sunk up to 1.5 meters over the last decade because of the unregulated pillaging of Jakarta’s ground water. It is expected that further subsidiary legislation at the local level will see an increase in fees and levies on those that use ground water as their primary water source.

Ground water policy has a national, provincial, and municipal element in that each of the distinct government levels has a degree of policy control over the water resources. Nevertheless, it is clear that provincial and municipal policies will not be permitted to run counter to any national ground water policy determined by the Central Government.

Generally, ground water management will cover aspects of planning, implementation, monitoring, evaluation, conservation, and exploitation. The terms themselves are self-explanatory and need to be as some of them are only briefly regulated in the Regulation. However, other provisions are much more comprehensive such as the taking of an inventory of ground water resources which states that the inventory process will include mapping, examination, research, exploration, and evaluation of the data obtained.

The Regulation also stipulates licensing provisions; who needs a license, what licenses are to be granted, and the procedures for securing a license.

National Energy Council

2008-08-25T01:58:00.000-07:00

The government has issued Presidential Regulation No. 26 of 2008 in order to facilitate the implementation of Articles 12 and 13 of Law No. 30 of 2007 on Energy as these Articles relate to the establishment of the National Energy Council. The National Energy Council is a national, independent, and permanent body whose main responsibilities relate to the formulation of a national energy policy.

This Presidential Regulation establishes the National Energy Council. The members of the Council are:

Chair : President;
Deputy Chair : Vice President;
Day-to-Day Chair : Minister of Energy and Mineral Resources (in the current cabinet structure)

The Members of the Council will include 7 government officials and 8 stakeholders.

The Council is to establish a Secretariat which is to be tasked with assisting the Council in the performance of its duties.

Appointment and dismissal from the Council will be by the President. The government officials that may be appointed to the Council will be determined by the President based on the relevance of the respective official’s employment to the work of the Council. The government will also determine a list of prospective stakeholder members for appointment to the Council. However, stakeholders are to be approved by the House of Representatives before taking up any appointment.

The Regulation sets out the qualifications that prospective appointees to the Council must hold.

The Regulation has been in force since 7 May 2008.

Registration of Legal Consultants for Activities in the Capital Market

2008-08-24T14:34:00.000-07:00

The registration of legal consultants for activities in the Capital Market is based on a Decision issued in 1996 which is no longer relevant for current conditions nor is it in compliance with current legislation. The Advocates Law (Law No. 18 of 2003) sets out specific requirements for advocates and legal consultants.

This Decision, No. KEP-261/BL/2008, issued by the Head of the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) is intended to perfect Rule No. VIII.B.1. The basic premise of the Rule is to protect the interests of capital investors by ensuring that those legal consultants that work in the capital market sector are independent, objective, and professional. As was noted earlier the other primary feature of the Decision is to ensure that there is accord between the Rule and the prevailing law in this area, the Advocates Law.

The Decision states that for legal consultants that have already registered with Bapepam-LK but who have yet to be:

1. sworn in as an advocated based on the provisions of the Advocates Law;
2. accepted as a member of the Capital Market Legal Consultants Association (Himpunan Konsultan Hukum Pasar Modal / HKHPM);
3. appointed as a partner in a firm with the requisite authority to act in the firm’s name; or
4. a partner in a firm that has implemented the necessary quality assurance measures with respect to thorough testing of the law;
5. are required to be in compliance with the provisions of Rule No. VIII.B.1 by 31 December 2010.

Failure to comply with the relevant provisions will result in the imposition of administrative sanctions in the form of the cancellation of any registration.

Those parties already recognized and acknowledged by Bapepam-LK with regard to providing professional education to practitioners or potential practitioners remain so accredited for that purpose.

The Decision repeals the provisions contained in Head of Bapepam Decision No. Kep-37/PM/1996.

This Decision has been in force since 3 July 2008.

Syariah Banking

2008-08-24T14:31:00.000-07:00

The House of Representatives (DPR) passed the Bill on Syariah Banking on Tuesday (17/06/08). This is the culmination of considerable effort to ensure that Indonesia is in a position to capitalize on the expanding global demand for Syariah based banking and financial services and products. The Minister of Religion, Maftuh Basyuni, has stated that the new law was necessary to accommodate changes in the banking sector as those changes relate specifically to Syariah banking. It is clear to the Minister that this is a sector that is growing rapidly and a sector that Indonesia can quickly develop expertise in.

Previously Syariah banking was regulated under the Banking Law, Law No. 7 of 1992 as amended by Law No. 10 of 1998, and it was becoming increasingly evident that the provisions contained in the Banking Law were not suitable in terms of regulating the needs of a vibrant Syariah based banking sector.

Conventional banks, banks that other banking services other than Syariah based ones will have to establish Syariah Business Units (Unit Usaha Syariah / UUS) and ensure that these units are separate from their other banking activities. It is expected that Syariah based banks will not only offer Syariah based variants of traditional banking products but will also offer other Syariah based fund managing alternatives.

Generally, Bank Indonesia will play the primary supervision role. However, the new law calls for the establishment of a Syariah Supervisory Board (Dewan Pengawas Syariah / DPS). The DPS will include a role for the Indonesian Ulemas Council (Majelis Ulama Indonesia / MUI). The MUI is expected to provide advice on the validity of any Syariah based banking product.

Interestingly, the Religious Courts are given primary responsibility for resolving disputes. This is interesting in the sense that the Religious Courts have traditionally dealt with Islamic family law matters. Therefore, to ensure that litigants have confidence in the court’s ability to handle what are likely to be complex financial transactions and issues it is expected that the court will see the appointment of specialized expertise in this area. Nevertheless, it must be noted that the new law permits alternative dispute resolution to take place and it does not absolutely absolve the general courts from the dispute resolution process.

Bank Indonesia is responsible for drafting and enacting implementing regulations in order to give effect to many of the provisions.

The Focus of the 2008 – 2009 Economic Program

2008-08-24T14:25:00.000-07:00

The purpose of most Presidential Instructions is to provide guidance and in most, if not all, instances the demands they contain are not legally binding or enforceable. However, this does not mean Presidential Instructions can be ignored.

A Presidential Instruction highlights the intent and direction of government policy and in the case of Presidential Instruction No. 5 of 2008 it is the focus of the 2008 – 2009 economic program.

This particular Presidential Instruction is directed to the Cabinet and is designed to put into place a framework for government business over the course of the next 12 to 18 months. The Presidential Instruction follows on from Presidential Instruction No. 6 of 2007 which focused on the development and expansion of micro, small, medium enterprises (usaha micro, kecil, dan menengah / UMKM) in the real sector.

The Presidential Instruction itself is not as important as the Attachment that it contains. It is the Attachment that sets out all the directives that the various government departments and agencies are tasked with achieving.

Essentially, the Coordinating Minister of Economic Affairs is responsible for ensuring the implementation of the Presidential Instruction and then reporting the outcomes to the President.

In terms of regulatory development the Attachment sets out a number of outcomes to be achieved. For example by June 2008 there is supposed to be Presidential Regulations, Head of the Capital Markets and Financial Institutions Supervisory Agency Regulations, and a public policy relating to the single entry point for capital investment confirmed and released.

Furthermore, the Attachment includes guidelines for the development of new tax regulations relating to land taxes and valuations for taxable objects. There are also to be Department of Transport regulations issued that are designed to ensure that ports can expedite the export and import of goods. There are also to be additional regulations issued to clarify the national single window framework for customs purposes.

Historically some departments and agencies have failed to meet the targets stated in previous Presidential Instructions and therefore it would not be wholly unexpected that the same will occur again. Nevertheless, it is expected that these targets will be met.

The Presidential Instruction was confirmed on 22 May 2008.

Tax Amendments -- Income Tax

2008-08-24T14:23:00.001-07:00

The amendment of the Income Tax Law has been in the pipeline for some time. However, the list of problems identified with the amendments runs to some 770 issues. This means that Commission XI of the House of Representatives (DPR) and the Work Committee set up to resolve these issues has plenty of work to do.

It is nevertheless expected that this work will be resolved by the end of 2008 and the amended legislation will be passed by the DPR. The general consensus is that the amendments are technical in nature and are unlikely to trigger a significant ideological or policy debate.

The amendments will see a reduction in the number of taxation levels from the current five to just four. The maximum rate of taxation will fall from 35% to 30%. Salaries up to IDR 50 million will be taxed at 5%, salaries between IDR 50 and IDR 250 million will be taxed at 15%, salaries from IDR 250 to IDR 500 million will be taxed at 25%, and salaries above IDR 500 million will be taxed at 30%.

The amendments would see the removal of the Fiscal Tax that is paid by residents leaving the country. This will be phased in commencing in 2009 and be in full operation from 2011. The idea of phasing out the fiscal tax is based on the assumption that people will obtain a tax file number. Therefore, those who already have a tax file number appear to be the most likely to see an immediate benefit from this initiative.

Other amendments include incentives for those making contributions to religious activities; incentives for listed companies; incentives for micro, small, and medium enterprises; the taxing of revenue not currently classed as taxable objects (such as the Bank Indonesia surplus), and incentives designed to make Indonesia an attractive destination for both domestic and foreign capital investments.

The amendments are expected to ensure that Indonesia has in place a modern, effective, and efficient tax code that will contribute significantly to national development.

Apologies

2008-08-24T14:20:00.000-07:00

My apologies to one and all for being too lazy in the period since November 2007.

I will try and update more regularly here.

Cheers

Criminal Procedure in Indonesia

2007-11-20T23:53:00.000-08:00

The Bill on the Criminal Procedure Law is expected to be finalized and ready for submission to the House of Representatives (DPR) by August 2007. However, this target date is far from being assured and further delays are possible. Nevertheless, the Bill introduces some significant changes to criminal procedure and these changes will have an immediate impact on the conduct of criminal matters from the investigation stage through to the verdict and appeal stages.

The most interesting of these changes is the incorporation of the Judge de Liberte de la Detention concept as the Judge Commissioner in the Bill. In essence the Judge Commissioner has the authority to evaluate the investigation and prosecution phases and other powers as granted under the provisions of the Bill.

Some of these other authorities include re-interrogating suspects and witnesses to ensure that a proper trial has been conducted. These authorities permit the Judge Commissioner to make determinations regarding the legality or not of any arrest or detention, to issue search and seizure orders, and the tapping of telecommunications, among others. The Judge Commissioner will also oversee the cooperation between the various law enforcement agencies to ensure that the case file does not bounce around these agencies and cause a delay to a fair and speedy trial process.

The position of Judge Commissioner will be held by a judge selected from the High Court and then appointed by the President for a term of 2 years.

The time a suspect can be kept in detention is reduced to 15 days and any extension to this period of detention is to be based on an application to the Judge Commissioner. If the application is granted the detention period can be extended.

In terms of legal recourse for the parties to a proceeding, all decisions may be appealed to a higher court; District Court to High Court and High Court to Supreme Court. However, acquittals are specifically excluded from this list. The current practice within the courts makes a distinction between absolute and conditional acquittals however this distinction is not made within either the current law or the Bill. On face value this distinction would appear to allow subjective discretion to be applied by the courts in accepting lower court decisions on appeal.

The judicial review (peninjauan kembali / PK) for cases will only be granted if there is new evidence or a situation existed that was not know at the time or adduced in the hearings that would have resulted in a different decision. Decision where there are conflicting decisions handed down for the same crime to different defendants, one is found guilty and the other is acquitted. In these cases the decisions will be subject to review.

The other issues in the Bill of interest are the broadening of the authorities for prosecutors to set aside cases where the allegations relate to minor offences subject to a term of imprisonment of less than a year or a fine or where the suspect / defendant is above 70 years of age.
Even if the Bill were to come before the DPR in August as planned it would be unlikely that this Bill would pass the DPR in 2007.

Syariah Banking

2007-11-20T23:49:00.000-08:00

The fact that the State with the world’s largest Muslim population still does not have a Syariah banking Law should be, or perhaps is, a source of some embarrassment for Indonesia. The Syariah Banking Bill has been on the table since late 2005 when the DPR took it up as an initiative on 27 September 2005. However, despite being allocated to Commission XI and a number of hearings and comparative study tours, the only real development on the enactment front has been an ever-expanding list of problems and contentious issues.

This is in stark contrast to the positive outlook of some of my earlier writings which did not envisage the sorts of problems that have arisen.

Some of the issues that have arisen and developed over time include:

Overlapping responsibilities between the Syariah Banking Committee (Komite Perbankan Syariah) and the National Syariah Board which is under the authority of the National Ulema Council (Majelis Ulema Indonesia / MUI). Both of these organizations are to play a role in issuing fatwas and/or opinions about Syariah banking products and services (see Articles 32-34);
Syariah banks obligations to open their books and report to Bank Indonesia (BI) which in effect provides not only a supervisory role but also an investigative role that will ultimately overlap with the role to be played by investigators tasked with investigating alleged breaches of prevailing banking provisions (see Articles 56-58); and
A lack of standardized and acceptable Syariah banking accounting methods and principles.

The positioning of the Syariah Banking Committee is critical as fatwas and opinions issued by the MUI or the National Syariah Board have no legal binding authority as such. Therefore, it is BI’s position that the more appropriate placement of the Syariah Banking Committee is under the auspices of BI so as there will be subsequent binding authority to any fatwas issued by the Committee.

This is an issue that will continue to generate heated and intense debate, particularly with respect to who has the legal and religious qualifications to make determinations regarding the validity of Syariah banking products and services.

Potentially, divergent opinions on what constitutes a valid Syariah banking product or service will negatively impact on the ability of Syariah banks to carry on their business as there will be no, or only limited, legal certainty.

Public Order in Jakarta - One for the Ages!

2007-11-20T23:38:00.000-08:00

Sneaking in under the radar is the new Government of Jakarta Regional Regulation on Public Order. The impact of this Regulation will be heavily dependent on enforcement of its somewhat draconian provisions because without adequate law enforcement it is likely to go the way of other public order ordinances, irrelevancy. The public needs to be aware of these provisions for no other reason than the many practices that Jakartans have taken for granted are no subject to severe criminal penalties and fines. Ignorance of the law is not a valid excuse.

The reality of the Regulation is that law enforcement must be more serious in enforcing the provisions as failure to do so would make a mockery of the stiff penalties. Nevertheless, the reality exists that the new and revised provisions are a potential income boon for police officers and other law enforcement officials prepared to accept “compensatory payments” in lieu of issuing a formal citation.

For long-term residents of the capital, the Regulation may be amusing in that perversely funny kind of a way as just about everyone will be able to recall an incident where they have breached these new provisions themselves and question whether the serious penalties and fines provided by the Regulation will be sufficient incentive to change their behaviors. The provisions of the Regulation will not only require a commitment to compliance but will demand a more significant cultural shift in acknowledging what is acceptable public behavior and what is not.

The examples are too numerous to list in this ILB however there are some notable mentions that must be made:

jay walking is prohibited;
public buses must stop at bus stops and people must board at bus stops;
no road closures without permission;
people can not offer themselves as “jockeys” to assist others in avoiding 3 in 1 traffic provisions;
vehicle operators are prohibited from employing the services of jockeys;
areas under bridges and overpasses cannot be used for any purpose except with the permission of the Governor;
nobody is permitted to direct traffic unless they have permission to do so; and
no illegal parking fares are to be collected or demanded.

Article 9 makes it an offence for passengers on public transport to dispose of rubbish, dispose of their chewing gum, spit, or smoke. Enforcement is clearly the key on the success of these provisions.

All pet owners need to take note that the Regulation requires them to register their pets with the appropriate authorities.
The Regulation also in effect prohibits prostitution by making it an offence to be a prostitute or a pimp and also an offence to use the services of a prostitute or pimp. However, more interesting is that the Regulation outlaws beggars, buskers, hawkers, and windscreen cleaners, which is a move that is decidedly anti-poor particularly when there is not a concurrent program to provide alternative sources of work or income.

Fines range from between IDR 100,000 and IDR 20 million and terms of detention range from 10 days to 180 days depending on the seriousness of the offence.
The Regulation repeals Regional Government Regulation No. 11 of 1988. The Regulation was approved and signed on 10 September 2007 but as yet has not been allocated a number.

Coastal Management

2007-11-20T23:36:00.000-08:00

As an archipelago State it is surprising that Indonesia has never had specific legislation in place to manage such a vast and potentially long-term sustainable economic resource. The basic numbers here of 17,504 islands and more than 81,000 km of coastline serve to highlight the huge economic potential of proper and effective coastal management. The current legislative framework sees Indonesia’s vast coastal resources fall under Law No. 84 of 1992 on Spatial Planning.

Unfortunately, the Spatial Planning Law has focused almost exclusively on land-based spatial planning at the expense of any serious contemplation of Indonesia’s vast coastal resources. Commission IV of the House of Representatives (DPR) is currently debating the Bill on Coastal Management and if the Bill successfully passes the DPR then the new regulatory framework for coastal management will provide clearer mechanisms for the exploitation of coastal resources and legal certainty for investors. The exploitation of Indonesia’s coastal resources is expected to generate trillions of Rupiah in the future.

In the absence of a national regulatory framework on coastal management the regions have attempted to compensate for this deficiency by issuing Regional Regulations. To date 6 Regions have issued regulations; Gorontalo Province, Southeast Sualwesi Province, West Tanjungjabung Municipality, East Kotawaringin Municipality, Maros Municipality, and Gorontalo Municipality.

The Bill is comprehensive and addresses not only the exploitation of coastal resources but also issues of conservation, reclamation, and rehabilitation. The rights and access of the community is also regulated, as are the criminal sanctions for breach of the provisions. These criminal sanctions provide for fines up to IDR 2 billion and terms of imprisonment of up to 10 years.

The need for a specific coastal management law is likely to drive the passage of this Bill through the DPR.

Monorail to Nowhere...

2007-11-20T23:35:00.000-08:00

The Minister of Finance (MoF) has issued Regulation No. 30/PMK.02/2007 to facilitate the implementation of Presidential Regulation No. 103 of 2006, particularly as it relates to the guidelines for implementing the government’s guarantee for additional borrowings by the government of Jakarta to ensure the completion of the Jakarta monorail project.

The provision of the guarantee is conditional on the fulfillment of certain conditions. The first of these conditions is that the guarantee must be approved by the House of Representatives (DPR) and will be accounted for in the State budget. The Jakarta Regional House of Representatives (DPRD) must approve the agreed guarantee, make provisions in the Regional budget for the agreed guarantee, and produce a verifiable report relating to the daily capacity of the monorail project.

The guarantee will cover passenger shortfall to an agreed maximum expenditure. The passenger shortfall in dollar terms cannot exceed USD 11.25 million per annum over a five-year period. It must also be noted that the Central Government’s shortfall obligations only kick-in after the Jakarta Government has made their proportional payments on the agreed shortfall level.

The Closing Provisions of the Regulation are explicit in stating that within 36 months of this Regulation being signed the monorail project must be in commercial operation with a capacity of 270,000 passengers per day. This is a critical provision because any failure to be in commercial operation within 3 years will render the guarantee void.

This Regulation has been in force since 15 March 2007.

National Holidays 2008

2007-11-20T23:33:00.000-08:00

As is done every year the Ministers of Labor and Transmigration (Menteri Tenaga Kerja dan Transmigrasi), Religion (Menteri Agama), and State Administrative Reforms (Menteri Negara Pendayagunaan Apartur Negara) have issued a Joint Decision (Decision) to stipulate the National Holidays and Group Leave for 2008. Also similar each year is the premise for the issue of this Decision; to ensure the effectiveness and efficiency of working days and to increase productivity over periods of national holidays.

The Decision sees an increase in the total number of days that employees will be able to take off from 19 days in 2007 to 23 days in 2008. These 23 days comprise of 15 days of National Holidays and 8 days of Group or Joint Leave. The joint leave is to be counted against annual leave and in accordance with prevailing laws and regulations. However, with most employees enjoying an annual quota of just 12 days annual leave then there is a possibility that they may only have 4 days annual leave to use at their own discretion as the rest is regulated by the Government as Group Leave.

The exact dates of Ramadhan, Idul Fitri, and Idul Adha are to be determined by the Minister of Religion at a later date. These dates will then be announced in a specific Minister of Religion Regulation enacted for that purpose.

The Decision includes an Attachment that lists the National Holidays and Group Leave for 2008. The Decision was issued on 30 May 2007.

Welcome

2007-09-09T09:18:00.000-07:00

Seize the Day!

Welcome to this blog...The title is simple and it is so for simple reasons. There is much happening in Indonesia and to say that "these are interesting times in which we live" is an extreme understatement of the reality that is Indonesia.

The real question that confronts Indonesia and its people is: "Are we ready to 'seize the day' or are we going to let that day pass us by?" The underlying theme of this blog is to confront this question head on by not only challenging ourselves to seize the day but to actively encourage others to seize each and every day with us!

Our work and that of our readers, who will ultimately be collaborative contributors to this blog, will never be done...so as long as there is cyberspace and so long as there is blogging we will be here...

Once again welcome to our world!