A Guide to Establishing a Joint Venture in Indonesia

PART ONE: DETERMINING THE BUSINESS SECTOR OF THE JOINT VENTURE, NEGATIVE INVESTMENT LIST, AND NOMINEE ARRANGEMENTS

This is the first part of a consecutive series on how to establish a joint venture in Indonesia, which will discuss the first step: determining the business sector of the joint venture and ensuring that it is open or at least conditionally open for foreign investment.

The next parts of the guide will elaborate the following:

  1. Setting up a joint venture agreement with an Indonesian partner;

  2. Establishment of the joint venture;

  3. Introduction to Indonesian corporate law for joint ventures; and

  4. How to prepare the joint venture for commercial operation.

This guide only specifically addresses incorporated joint ventures in the form of a foreign investment limited liability company and does not discuss unincorporated joint ventures, such as construction joint operations and oil and gas. Reference to joint venture in this article means an incorporated joint venture in the form of a foreign investment limited liability company.

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Indonesia to Change Data Localization Rules, Require Startups to be Registered, and Cement Right to be Forgotten

Entering into the new year the Indonesian government has taken strides in developing Indonesia’s technology law by circulating the draft amendment to Government Regulation No. 82 of 2012 on Application of Electronic Systems and Transactions (Draft Amendment)[1] as follow-up to the recent amendment to Law No. 11 of 2008 on Electronic Information and Transactions by Law No. 19 of 2016 (EIT Law).[2]

The recent amendment to the EIT Law introduced the right to be forgotten under Indonesian law, which will be further elaborated in the Draft Amendment. In addition, the Draft Amendment changes the data localization rules under Government Regulation No. 82 of 2012 on Application of Electronic Systems and Transactions (Electronic Systems Regulation) by revising the definition of public services.

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Indonesia E-Court System

As follow-up to Supreme Court Regulation No. 3 of 2018 on Electronic Court Proceeding Administration,[1] the Director General of General Court Administration at the Supreme Court has issued Decree No. 271/DJU/SK/PS01/4/2018 to launch the operation of the Indonesian E-Court system.

The E-Court system aims to almost fully process court proceedings electronically, which includes most stages of a court proceeding, covering court summons and notification, reply, rejoinder, surrejoinder, and conclusion (excludes examination of evidence). Even the payment of the court fees will be done electronically and the court decision or determination will be issued electronically to the concerned parties.

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Mandatory Registration for Startups in Indonesia and Right to be Forgotten Implementation

(This article is outdated. Please see the new update at: “Indonesia to Change Data Localization Rules, Require Startups to be Registered, and Cement Right to be Forgotten“)

Following the amendment to Law No. 11 of 2008 on Electronic Information and Transactions through Law No. 19 of 2016, the Indonesian government has started work on amending the current Government Regulation No. 82 of 2012 on Application of Electronic Transactions and Systems.

A couple of topics addressed in the Draft Amendment include mandatory registration for electronic system providers[1] and elaboration on the right to be forgotten that was introduced in the EIT Law Amendment.

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Indonesia Court Proceeding Administration Now Online


UPDATE


After going through several discussions earlier this year,[1] the Supreme Court has launched the online court proceeding administration system via the issuance of Supreme Court Regulation No. 3 of 2018 on Electronic Court Proceeding Administration.

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Rules on Drones Updated: Hobbyists

Taking note of the sharp rise in the use of drones, the Indonesian government has updated the legal framework on drones with the issuance of Minister of Transportation Regulation No. PM 180 of 2015 regarding Control of Unmanned Aerial Vehicle Operations in Indonesia’s Serviced Airspace, which was recently amended by Minister of Transportation Regulation No. PM 47 of 2016 (“2016 Regulation”).

The 2016 Regulation repeals and replaces the previous drone regulation under Minister of Transportation Regulation No. PM 90 of 2015 regarding Control of Unmanned Aerial Vehicle Operations in Indonesia’s Serviced Airspace (“2015 Regulation”).

The 2016 Regulation mainly serves to update the rules on drone use after the issuance of Minister of Transportation Regulation No. PM 163 of 2015 on Civil Aviation Safety Regulations Part 107 on Small Unmanned Aircraft System (“CASR Regulation”), which sets out technical requirements that must be satisfied by drones and drone operators, as well as rules that must be complied with in any drone operation.

This article will explain the 2016 Regulation and CASR Regulation specifically for hobbyists, which means that the drone is flown strictly for recreational or hobby use (in other words not for business purposes).

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Religious-Holiday Allowance for Workers

As Eid Al-Fitr Day draws nearer, most of the Indonesian working population awaits anxiously to receive their religious-holiday allowance (tunjangan hari raya or commonly known as THR) and soon to embark on their collective homecoming tradition.

The government has also reminded[1] every state-owned and private-owned companies of their legal obligation to provide their employees with their rightful religious-holiday allowance as stipulated by the Minister of Employment (“THR Regulation”).[2]

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Indonesia to Introduce Personal Data Protection Rules in Electronic Systems

Continuing the momentum of developing Indonesia’s personal data protection, in addition to proposing the Draft Bill on Personal Data Protection (“PDP Bill”) to Indonesia’s parliamentary body,[1] the House of Representatives (“House”), the Minister of Communication and Information Technology (“MOCIT”) has drafted a regulation on personal data protection in electronic systems (“PDP Draft Regulation”).

According to recent updates, the PDP Draft Regulation’s issuance will be prioritized over the PDP Bill, which has not been included into the 2016 Priority National Legislative Program (“Legislative Program”),[2] and as such is likely to be further delayed until 2017 at the earliest. Based on confirmation from an official from the Ministry of Communication and Informatics, the PDP Draft Regulation will be enacted in June this year.

This article will elaborate the provisions set out under the PDP Draft Regulation along with any related provisions under the PDP Bill.

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