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Omnibus Law and Its Implementing Regulations

On 2 February 2021, the Indonesian Government enacted 49 implementing regulations to the Omnibus Law1. These consist of 45 Government Regulations and four Presidential Regulations. The Omnibus Law amends 76 laws across a wide range of sectors and industries, including the laws on energy and mining, plantations, telecommunications, healthcare, tourism, land and buildings and employment.

The Omnibus Law was first introduced during President Widodo’s speech after being appointed as president of the Republic of Indonesia for a second term in October 2019. It represents the first time in the country’s legal history that such extensive amendments are made to various laws through a single legal instrument.

The Omnibus Law has received a positive response from investors as it purports to open more doors to foreign investment and introduce employment provisions that are regarded as more favourable to business owners. Being almost 1,200 pages long, the Omnibus Law left a range of crucial matters to be addressed by implementing regulations. For example, the Omnibus Law promises that all business activities will be open for investments, save for activities which are stated otherwise, and listing six groups of business activities below (however, the issuance of Presidential Regulation No. 10 of 2021 shows that there are other business activities that are subject to other limitations). The Omnibus Law also leaves a gap on the calculation of severance package upon employment termination. As such, the recently issued suite of implementing regulations have been much anticipated by market participants. 

The implementing regulations are intended to flesh out the new regimes introduced by the Omnibus Law. In the weeks to follow, we will analyse over a series of client alerts the key issues arising from the implementing regulations that affect investments in major sectors (e.g., mining, telecommunication, healthcare). Among other matters, we will discuss the implications of the implementing regulations on the “Positive List of Investments” as well as the new employment and severance provisions.

Please contact us if you wish to understand how the Omnibus Law and the implementing regulations may affect your business.

Annex – List of the Implementing Regulations

  1. Government Regulation No. 5 of 2021 on Implementation of Risk Based Business Licensing. 
  2. Government Regulation No. 6 of 2021 on Regional Implementation of Business Licensing.
  3. Government Regulation No. 7 of 2021 on Convenience, Protection and Empowerment of Cooperatives and Micro, Small and Medium Enterprises.
  4. Government Regulation No. 8 of 2021 on Authorized Capital of the Company and Registration of Establishment, Amendment and Disbanding of Companies that Meet the Criteria for Micro and Small Businesses.
  5. Government Regulation No. 9 of 2021 on Tax Treatment to Support Ease of Doing Business.
  6. Government Regulation No. 10 of 2021 on Local Taxes and Levies in Support of the Ease of Doing Business and Regional Services.
  7. Government Regulation No. 11 of 2021 on Village Government-Owned Enterprises.
  8. Government Regulation No. 12 of 2021 on Amendment to Government Regulation No. 14 of 2016 on Implementation of Housing and Settlement Areas.
  9. Government Regulation No. 13 of 2021 on Implementation of Flats (Rumah Susun).
  10. Government Regulation No. 14 of 2021 on Amendment to Government Regulation No. 22 of 2020 on the Implementation Regulations of Law No. 2 of 2017 on Construction Services. 
  11. Government Regulation No. 15 of 2021 on the Implementation Regulations of Law No. 6 of 2017 on Architect.
  12. Government Regulation No. 16 of 2021 on Implementing Regulations for Law No. 28 of 2002 on Buildings.
  13. Government Regulation No. 17 of 2021 on Fourth Amendment to Government Regulation No. 15 of 2005 on Toll Road.
  14. Government Regulation No. 18 of 2021 on Management Rights, Land Rights, Apartment Units, and Land Registration.
  15. Government Regulation No. 19 of 2021 on Implementation of Land Acquisition for Development for Public Interest.
  16. Government Regulation No. 20 of 2021 on Control of Neglected Areas and Lands.
  17. Government Regulation No. 21 of 2021 on Spatial Planning.
  18. Government Regulation No. 22 of 2021 on Environmental Protection and Management.
  19. Government Regulation No. 23 of 2021 on Forestry.
  20. Government Regulation No. 24 of 2021 on Procedures for Imposing Administrative Sanctions and Procedures for Non-Tax State Revenues originating from Administrative Fines in the Forestry Sector.
  21. Government Regulation No. 25 of 2021 on Energy and Mineral Resources.
  22. Government Regulation No. 26 of 2021 on Agriculture.
  23. Government Regulation No. 27 of 2021 on Maritime Affairs and Fisheries.
  24. Government Regulation No. 28 of 2021 on Industry.
  25. Government Regulation No. 29 of 2021 on Trade.
  26. Government Regulation No. 30 of 2021 on Road Traffic and Transportation.
  27. Government Regulation No. 31 of 2021 on Shipping.
  28. Government Regulation No. 32 of 2021 on Aviation.
  29. Government Regulation No. 33 of 2021 on Railways.
  30. Government Regulation No. 34 of 2021 on Use of Foreign Workers.
  31. Government Regulation No. 35 of 2021 on Employment Contracts for Fixed Period, Transfer, Working Time, Working Relationship and Rest Time, and Termination of Employment.
  32. Government Regulation No. 36 of 2021 on Remuneration.
  33. Government Regulation No. 37 of 2021 on Implementation of the Job Loss Protection Program.
  34. Government Regulation No. 38 of 2021 on Accumulation Account for Hajj Pilgrimage Travel Expenses.
  35. Government Regulation No. 39 of 2021 on Implementation of Halal Product Guarantee.
  36. Government Regulation No. 40 of 2021 on Implementation of Special Economic Zones.
  37. Government Regulation No. 41 of 2021 on Implementation of Free Trade Zone and Free Port.
  38. Government Regulation No. 42 of 2021 on Ease of National Strategic Projects.
  39. Government Regulation No. 43 of 2021 on Resolving Inconsistencies in Spatial Layout, Forest Area, Permits and/or Land Rights.
  40. Government Regulation No. 44 of 2021 on Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition.
  41. Government Regulation No. 45 of 2021 on Administration of Geospatial Information.
  42. Government Regulation No. 46 of 2021 on Post, Telecommunication and Broadcasting.
  43. Government Regulation No. 47 of 2021 on Hospital Administration.
  44. Government Regulation No. 48 of 2021 on Third Amendment to the Government Regulation No. 31 of 2013 on the Implementation Regulations of Law No. 6 of 2011 on Immigration.
  45. Government Regulation No. 49 of 2021 on Tax Treatment of Transactions Involving Investment Management Institutions and/or Entities It Owns.
  46. Presidential Regulation No. 9 of 2021 on Agency for the Acceleration of Housing Management.
  47. Presidential Regulation No. 10 of 2021 on Investment Business Field.
  48. Presidential Regulation No. 11 of 2021 on Cooperation between the Central Government and State-Owned Enterprises in Providing Basic Geospatial Information.
  49. Presidential Regulation No. 12 of 2021 on Amendment to the Presidential Regulation No. 16 of 2018 on Procurement of Government Goods/Services.

 

1 Law No. 11 of 2020 on Job Creation, enacted on 2 November 2020

Rika Rusman (White & Case, Counsel, Jakarta ) contributed to the development of this publication.

 

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