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.
25 August 2008
National Energy Council
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.
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.
24 August 2008
Registration of Legal Consultants for Activities in the Capital Market
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.
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
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.
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
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.
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
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.
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
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
I will try and update more regularly here.
Cheers
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