Regional Round-Up: Indonesia Q2 2024

Understanding the Latest Changes in IDX's Delisting and Relisting Rule

The Indonesia Stock Exchange (“IDX“) introduced Regulation No. I-N in May 2024 to strengthen transparency and accountability in its delisting and relisting processes for both shares and debt-linked securities or sukuk (“Regulation“). Under the Regulation, IDX has enhanced its oversight by mandating periodic announcements of potential delistings for companies whose shares remain suspended for six consecutive months. Delisting can occur either voluntarily by the company or upon orders from IDX or the Financial Services Authority (OJK). For instance, IDX can initiate delisting if a company fails to meet listing requirements, experiences significant financial or legal setbacks, or remains suspended for an extended period. The Regulation also streamlines the procedures for relisting, aligning with existing IDX frameworks. 

The new rules aim to protect public investors by ensuring they have timely and comprehensive information about the status of listed companies. In cases of delisting, companies must disclose plans for share buybacks triggered by IDX’s decision, enhancing transparency further. The Regulation also introduces stricter penalties, such as increased delisting fees, to discourage companies from voluntary delisting without due cause. Moreover, for debt or sukuk delistings, similar protocols apply, including public announcements and opportunities for companies to present recovery plans. Despite these advances, uncertainties remain regarding the exact impact on sukuk holders and the trading status of delisted debt instruments. Overall, IDX’s Regulation represents a significant stride towards bolstering market integrity and investor confidence through enhanced regulatory oversight and transparency measures.

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Time to Reflect on Indonesia's Local Content Requirement for Renewable Energy

Indonesia’s push towards integrating renewable energy into its national energy mix by 2025 and beyond is underpinned by stringent local content requirements outlined in Minister of Industry Regulation No. 54/M-IND/PER/3/2012 on Guidelines for the Use of Domestic Products for the Development of Electrical Infrastructure and its amendment from time to time (“Regulation 54/2012“). Aimed at promoting domestic industry participation, these requirements mandate independent power producers (“IPP“) to prioritise local goods and services in renewable energy projects. However, challenges arise as the current thresholds, largely unchanged since 2012, do not align with present market realities. This discrepancy often results in IPPs struggling to meet local content targets due to insufficient domestic supply or products that do not meet project specifications, leading to potential administrative sanctions and financial penalties under the law.

The inflexibility of Regulation 54/2012 contrasts with adaptive practices seen in the upstream oil and gas sector, where local content requirements adjust to market conditions through periodic updates and flexible application in project bidding. Comparatively, renewable energy projects face a more static framework, lacking clear procedures for waivers or exemptions when local requirements cannot be met. This legal uncertainty complicates project economics and may hinder the sector’s growth potential. Aligning renewable energy local content regulations with the dynamic approach seen in the oil and gas industry could foster a more responsive framework, ensuring sustainable development and strengthening Indonesia’s renewable energy ambitions in the long term.

For more information, click here to read our Legal Update.

Shift in Responsibility as Digital Service Platforms Become Responsible for Copyright Infringement in User-Generated Content

In February 2024, Indonesia’s Constitutional Court expanded the scope of “business premises” under Article 10 of the Copyright Law (Law No. 28 of 2014) to include digital service platforms which facilitate user-generated content (“UGC“). This landmark decision arose from a case where copyright holders, including a publishing company and recording artists, petitioned against inadequate protection from UGC platforms allowing unauthorised use of copyrighted material. The Court ruled that UGC platforms must now actively prevent copyright infringement, aligning with existing Safe Harbour Policy but imposing stricter responsibilities. Specifically, the amended Article 10 prohibits UGC platforms from facilitating the sale or reproduction of copyrighted goods without rights holders’ consent, reflecting a shift towards enhanced regulatory oversight in the digital space.

Moreover, the Court’s decision impacts Article 114 of the Copyright Law, which penalises entities managing business premises for copyright infringements. While petitioners sought further revisions to ensure fairness in liability distinctions between UGC platforms and users, the Court emphasised enforcing Article 114 in conjunction with the amended Article 10 to uphold copyright protection.

This decision highlights the evolving legal landscape for digital services in Indonesia, and serves as a prompt for UGC platforms to implement robust content moderation systems and cooperate closely with authorities to curb copyright violations effectively. As Indonesia navigates these regulatory adjustments, UGC platform operators face heightened compliance demands and operational adjustments to mitigate legal risks and uphold copyright integrity amidst evolving digital regulations.

For more information, click here to read our Legal Update.

A Brief Summary of Indonesia's New Regulations on Imports

In recent months, Indonesia’s Ministry of Trade has introduced two pivotal regulations aimed at refining the country’s import policies. Ministry of Trade Regulation No. 36 of 2023 on Import Policies and Provisions, effective from 10 March 2024, supersedes earlier regulations and expands the scope of permissible imports, including residuals for production and specific business purposes. Concurrently, Ministry of Trade Regulation No. 3 of 2024 on Amendment of Import Policies and Provisions (“Regulation 3/2024“), enacted in March 2024, further amends import policies, focusing on goods such as plastics, chemicals, aircraft spare parts, and horticultural products. These regulations tighten import supervision to stabilise domestic trade and enhance regulatory oversight, particularly by broadening the range of used goods eligible for importation and updating import permit requirements for various categories of goods, including iron, steel, and textiles.

Importantly, Regulation 3/2024 introduces stricter controls on goods carried by passengers, setting limits on items like electronics, food, and cosmetics to manage their entry into Indonesia. The regulations also align import procedures with updated classifications under the Indonesian Customs Tariff Book 2022, influencing how businesses navigate import restrictions and compliance. While the amendments seek to enhance regulatory clarity and trade stability, ongoing evaluations and potential revisions highlight the dynamic nature of Indonesia’s import framework. Businesses engaging in import activities must stay informed of these evolving regulations to ensure compliance, strategically plan for import permits based on commodity balance quotas, and monitor changes in Harmonised System Codes to mitigate operational risks and maintain regulatory alignment in the Indonesian market.

For more information, click here to read our Legal Update.

Navigating the Change in Share Ownership Reporting under OJK Regulation No. 4 of 2024

The Indonesia Financial Services Authority (“OJK“) introduced OJK Regulation No. 4 of 2024 (“POJK 4/2024“) in response to evolving regulatory needs, resulting in significant changes in reporting requirements for shareholders of public companies. Effective from 28 August 2024, this regulation shifts the focus from mere share count to calculating ownership based on valid voting rights, thus replacing OJK Regulation No. 11/POJK.04/2017. It mandates timely reporting within five business days of any changes in voting rights ownership exceeding 5%, whether through acquisition or inheritance. Additionally, POJK 4/2024 requires the disclosure of encumbrances on shares, a new measure aimed at protecting minority shareholders’ interests and ensuring transparency in corporate governance.

Under POJK 4/2024, shareholders must submit detailed reports that include pre- and post-transaction voting rights percentages, transaction specifics, and relevant party details. Exemptions are provided for changes resulting from corporate actions such as share buybacks or capital increases, promoting flexibility within regulatory compliance. Anticipated future enhancements, like an electronic reporting system, aim to further streamline reporting processes. Overall, POJK 4/2024 represents a significant stride toward strengthening Indonesia’s financial sector integrity. By enhancing market transparency and safeguarding investor confidence through stringent yet adaptable regulatory measures, this regulation ensures that the country’s capital market remains robust and well-regulated.

For more information, click here to read our Legal Update.

Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice

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