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Business Compliance

Language Requirement

 

Every entrepreneur intending to conduct business in Indonesia is required to comply with the prevailing laws and regulations related to the use of Indonesian to complete business transactions in Indonesia; among others is the requirement to use Bahasa. The obligation to use Bahasa in conducting business transactions is emphasized under Law No. 24/2009 and PR No. 63/2019. Bahasa is the official language for transactions and commercial documents. The following documents are required to use Bahasa in respect to conduct businesses in Indonesia: 

 

  • state official documents;

  • MoU or agreement; and

  • for the name of trademarks and business institutions.

 

The Obligations to Use Indonesian in State Official Documents

 

Law No. 24/2009 obligates the state official documents, for instance decisions letters, commercial papers, statement letters, identity card, and court decisions to use Bahasa. Moreover, certain agreements for instance sale and purchase deed/akta jual-beli and agreement letters/surat perjanjian are also qualified as state official documents. The relevant laws allow state official documents which apply internationally to be accompanied with the foreign language version. It is worth noting that the nature of the foreign language version is complimentary to state official documents and the Indonesian version must be the official governing language of the documents. Hence, the Bahasa prevails as the main reference in the event of differing interpretations between the Indonesian and foreign language version.

 

The Obligations to Use Indonesian in MoU or Agreement

 

A MoU or an agreement involving a state institution, a government agency, an Indonesian private entity, or an Indonesian citizen must use Bahasa. This provision impacts the binding contractual language between the parties, which gives rise to the issue on how language is regulated for MoU or agreement that involves a foreign party.

 

The Involvement of Foreign Parties

 

A MoU or an agreement involving a foreign party is allowed to be executed in bilingual form, which consists of Bahasa and accompanied by a foreign language translation and/or English version. It is worth noting that the foreign language translation and/or English version of the MoU or agreement is only used as an equivalent or translation of the Bahasa to reconcile the understanding of the MoU or agreement involving foreign party. However, if there are any inconsistencies or different interpretation between the language versions, the governing language shall be determined upon agreement by the parties involved and as stipulated in the MoU or agreement.

 

Indonesian Parties

 

According to Article 31 (1) Law No. 24/2009 jo. Article 26 (1) PR No. 63/2019 affirm that any MoU and agreement involving an Indonesian party (i.e., an Indonesian state institution, an Indonesian government agency, an Indonesian private entity, or an Indonesian citizen) is mandatory to use Bahasa. Regarding use of foreign language translation and/or English version of MoU or agreement and the ability to choose the governing language, it only applies when the MoU or agreement involves a foreign party.

 

Obligations to Use Indonesian for Trademarks and Business Institutions

 

The name of trademarks is obliged to use Bahasa, as affirmed in Article 35 (1) PR No. 63/2019. The obligation to use Indonesian for the name of trademarks only limited to trademarks owned by Indonesian citizen or Indonesian legal entity, while foreign licensing trademarks are exempted from this obligation.

 

As stated in Article 36 PR No. 63/2019, the name of business institutions is required to use Bahasa. However, this obligation only applies to business institutions incorporated or owned by Indonesian citizens and Indonesian legal entity in the form of limited liability company where all its shares are owned by Indonesian citizen or Indonesian legal entity.

 

Legal Consequences for Non-Compliance to Use Indonesian

 

Law No. 24/2009 and PR No. 63/2019 do not provide for any provisions in relation to sanctions for non-compliance. The current laws and regulations state that the supervisory BoD of this regulation from central government is the ministry who is responsible for education which is MoECRT. Moreover, it also mentioned that the use of Bahasa is supervised by the regional government, which is carried out by the governor and/or mayor or regent in accordance with their authority.

 

Despite the uncertainty regarding the sanction for non-compliance, the failure to fulfill the obligation to use Bahasa would constitute as a breach and may result in the agreement being declared null and void.

 

 The Investment Activity Report/Laporan Kegiatan Penanaman Modal (LKPM)

General Provisions on LKPM

Every investor in Indonesia has the obligation to generate LKPM and submit it to BKPM.[1] LKPM is a report regarding development on investment realization and problems that are encountered by entrepreneurs. This report must be generated and submitted periodically. Subsequently, entrepreneurs are obliged to submit LKPM for each business sector and/or location through OSS system. LKPM submission will refer to data on business licensing, including data changes contained in OSS system based on the current period, and shall be conducted with the following provisions:

 

  • small business actors shall submit LKPM every 6 (six) months in 1 (one) year report;

  • large and medium business actors shall submit LKPM every 3 (three) months.

 

However, LKPM submission is not obliged for:

 

  • Micro business actors; and

  • upstream oil and gas, banking, non-bank financial institutions, and insurance business.

Accordingly, the LKPM submission is conducted with the following provisions:

  • Any entrepreneur shall have a right to access OSS system which is obtained after the entrepreneur conducted NIB registration;

 

  • the provision on LKPM submission for micro business actors with the following submission period:

    1. report of semester I is submitted no later than 10 July on the respective year; and

    2. report of semester II is submitted no later than 10 January on the following year;

 

  • LKPM for large and medium business actors shall consist of:

  1. LKPM on the construction/preparation stage for business activities that have not conducted production/operated commercially yet; and

  2. LKPM on production/commercial operations for business activities that have already been conducting production/operating commercially.

 

  • LKPM submission for LKPM on the construction/preparation/production/commercial stage with the following period:

 

  1. report of the quarter I is submitted no later than 10 April on the respective year;

  2. information of quarter II is submitted no later than 10 July on the respective year;

  3. report of quarter III is submitted no later than 10 October on the respective year;

  4. information of quarter IV is submitted no later than 10 January on the following year.

Sanctions

 

There is a consequence for the entrepreneur who does not conduct LKPM submission. The entrepreneur who does not submit LKPM will be subjected to the following administration sanctions by OSS Agency, provincial DPMPTSP, DPMPTSP in regency/city, KPBPB entrepreneur, KEK administrator, ministry/agency or other relevant institution:

 

  1. written warning;

  2. temporary suspension of business activities;

  3. revocation of business licenses; or

  4. revocation of business licenses to support business activities.

 

Legalization of Foreign Documents

 

Background

Under current regulations, requirements for the legalization of documents apply to public documents. The requirements apply to the MoLHR, MoFA, and the foreign embassy or consulate of the country where the document is to be produced. In practice, this process involves several authorities which may lead to an inconvenient and arduous waiting time.

 

However, in January 2021, Indonesia declared its accession to the Convention Abolishing the Requirement of Legalization for Foreign Public Documents or commonly known as “Apostille Convention” by way of the enacting of PR No. 2/2021.

 

Apostille Convention applies only to the following, which deemed as public documents:

  • documents emanating from an authority or official connected with state courts or tribunals, including those emanating from a public prosecutor, a clerk of a court, or a process-server;

  • administrative documents;

  • notarial acts; and

  • official certificates placed on documents signed by persons in their private capacity, such as official certificates recording the registration of a document or its existence on a specific date and notarial authentications of signatures.

 

Therefore, the abovementioned documents shall be exempted from the legalization requirement under current regulations. However, the Apostille Convention shall not apply to the following documents:

 

  • documents signed by a diplomatic or consular official; and

  • administrative documents directly related to commercial or customs activities.

 

Procedure on Legalizing Document at MoFA

The legalization of documents is to create administrative order and provide legal certainty in using documents inside and outside the territory of the Republic of Indonesia. Aside from the exempted documents above, the following documents are required to be legalized by MoFA:

 

  1. documents issued in the territory of the Republic of Indonesia and will be used abroad;

  2. documents issued abroad or issued by a foreign country representative domiciled in the territory of the Republic of Indonesia and will be used in the territory of the Republic of Indonesia; and

  3. documents issued by state representatives’ foreigners who are domiciled in the territory of the Republic of Indonesia and will be used abroad.

 

The procedures to legalize the above documents is as follows:

Legalization Process at Ministry of Foreign Affairs.png

Legalization Process at Ministry of Foreign Affairs

Source: MoFA Reg. No. 13/2019.

However, it is essential to note that the application to legalize documents may be rejected if the document is in the following condition:

 

  • the specimen is not suitable;

  • documents are unreadable;

  • information is not in line with the uploaded documents; and/or

  • there is a report which indicates data misuse and information by the applicant.

 

If the documents are not legalized based on the abovementioned procedures, the documents cannot be used correctly either in the territory of the Republic of Indonesia and abroad as a consequence. It is important to note that falsifying legalization is punishable by a maximum imprisonment of 6 (six) years. Moreover, forgery of documents is punishable by a maximum imprisonment of 8 (eight) years if the following documents are forged:

 

  • authentic deeds;

  • in debentures or certificates of debts of a state or part thereof or of a public institution;

  • in shares or debentures or share certificates or debt certificates of an association, foundation, partnership, or company;

  • in counterfoils, dividend or interest evidence belonging to one described documents under the preceding numbers, or in evidence issued in substitution for these documents; and/or

  • in credit or commercial papers intended for circulation.

 

The Role of Notary and Notarial Documentation

 

The involvement of a notary is required in conducting transactions in various sectors. The notary is a public official who is authorized to make authentic deeds and has other powers referred to in Law No. 30/2004. In general, public notaries are authorized to make authentic deeds regarding all agreements and stipulations required by laws and regulations and/or a matter needed to be stated in an authentic deed. Moreover, the notary is also authorized to guarantee the deed’s drafting date, keeping the deed, providing the grosse, copy, and except the deed.

 

The public notaries are also authorized to do the following matters:

 

  • to validate the signature and set a specific date of the private letter by registering in a particular book;

  • to book personal letters by registering for a specific book;

  • to make a copy of the original private letters in the form of a copy containing a written description in the said letter;

  • to validate the compatibility of the photocopy with the original documents;

  • to provide legal education in connection with the making of the deeds;

  • to make the deeds relating to the land matters; and

  • to make a deed of auction minutes.

 

However, it is essential to note that aside from the abovementioned, a notary is specifically required for the matters relating to the legal entities such as limited liability company, foundation, and cooperatives and land matters as follows:

 

The Role of Notary related to the Existence of Limited Liability Companies

 

The Deed of Incorporation and Articles of Association of Limited Liability of Companies

The notary shall draft the deed of incorporation of limited liability companies in Indonesia. Besides, the deed of incorporation shall include AoA and other matters as follows:

 

  1. full name, place, and date of birth, occupation, residential, and nationality of the individual founder, or name, domicile, and complete address, as well as the number and date of the ministry of law and human rights decree regarding the ratification of legal entity promotors of the company;

  2. full name, place, and date of birth, occupation, residential, and nationality of the first members of the BoD and the BoC to be appointed; and

  3. names of shareholders who have subscribed to the shares, the detail of the number of shares and nominal value of shares subscribed and paid-up.

 

Moreover, AoA of the company must include the following matters:

  1. name and domicile of the company;

  2. purposes and objectives as well as the business activities of the company;

  3. period of incorporation of the company;

  4. amount of authorized capital and issued capital, and paid-up capital;

  5. number of shares, shares classification if any, including the number of the shares for each category, rights attached to each share, and share nominal value;

  6. name of title or position and the number of members of the BoD and the BoC;

  7. determination of the place and procedures for holding a GMS;

  8. methods of appointment, replacement, and dismissal of the members of the BoD and the BoC; and

  9. method for profit utilization and dividend distribution.

 

If the shareholders intend to amend the AoA, the amendments shall be declared under notarial deeds in Indonesian. However, it is essential to note that if the amendment is not drawn up in a notarial deed of minutes of the meeting, it shall be drawn up in a notarial deed not later than 30 (thirty) days the date of the resolution of the GMS.

 

It is worth noting that following amendments of the AoA shall obtain the approval of MoLHR:

  • name and/or domicile of the company;

  • purposes and objectives as well as business activities of the company;

  • period of incorporation of the company;

  • amount of authorized capital;

  • reduction of issued and paid-up capital; and/or

  • change of the status of the company from private company to issuer or otherwise.

 

The MoLHR must be notified of any other matters of amendments not mentioned above. The notary shall submit application for approval and/or notification of the amendment of AoA to the MoLHR within 30 (thirty) days since the date of the notarial deed containing the amendments of the AoA.

 

Transfer of Shares

 

The notary has an important role in the transfer of shares as such transfer shall be conducted in a deed of transfer of right. Transfer of shares can be executed by way of sale and purchase, grants, or inheritance. Subsequently, notary shall submit notification of the change of shareholding composition due to transfer of right to the MoLHR within 30 (thirty) days since the registration date of such transfer of right over the shares.

Mergers, Acquisitions, Consolidations, and Spin-offs

 

The plan of merger, consolidation, acquisition, and spin-off which has been approved by the GMS shall be set forth into the deed drawn up by notary in Indonesian. In addition, deed of acquisition which is executed directly from the shareholders shall be obliged to be stated in a notarial deed in Indonesian.

 

Specifically, for consolidation, deed of consolidation drawn up by notary shall be the basis for the drawing up the new consolidating company’s deed of incorporation. The notary shall enclose the copy of deed of consolidation in the application to the Ministry of Law and Human Rights for obtaining the Ministry of Law and Human Rights Decree regarding the ratification of consolidating company.

 

The Role of Notary related to the Existence of Foundations

 

The Deed of Incorporation and Articles of Association of Foundations

 

The incorporation of foundations shall be carried out by means of a deed of incorporation made in Indonesian. The deed of incorporation shall at least incorporate AoA and other matters as follows:

 

  1. name and domicile of the foundation;

  2. purposes and objectives;

  3. period of incorporation of the foundation;

  4. the amount of initial assets separated from the personal assets of the founder in the form of money or goods;

  5. how to acquire and use assets;

  6. procedures for the appointment, dismissal and replacement of members of Governing Board/Pembina, Executive Board/Pengurus, and Supervisory Board/Pengawas;

  7. rights and obligations of Governing Board/Pembina, Executive Board/Pengurus, and Supervisory Board/Pengawas;

  8. procedures for organizing foundation’s organ meeting;

  9. provisions regarding amendments to the AoA;

  10. merger and dissolution of foundations; and

  11. use of remaining assets upon liquidation or distribution of foundation’s assets after dissolution.

 

A foundation obtains its legal entity status upon the approval of deed of incorporation by the MoLHR. The notary shall file an application of such approval to MoLHR within 10 (ten) days from the signing date of foundation’s deed of incorporation. Such application shall be filed by the notary in writing. The approval of this application will be delivered within 30 (thirty) days from completion of application.

 

It is important to note that foundation’s AoA may be amended. An exception to this that the foundation’s aims and objectives cannot be amended. Amendments to the foundation’s AoA can only be executed based on a Governing Board/Pembina’s meeting resolution. Such meeting can be convened if attended by at least 2/3 (two thirds) of the number of Governing Board/Pembina’s members. The amendment of AoA shall be incorporated under notarial deed in Indonesian.

 

In Merger Process

 

A merger in respect of a foundation can be done by merging 1 (one) or more foundations with other foundation, resulting in dissolution of the merging foundations. The proposal for foundations mergers can be submitted by the Executive Board/Pengurus to Governing Board/Pembina. A merger in relation to a foundation can only be carried out based on the Governing Board/Pembina’s meeting resolution attended by at least ¾ (three quarters) of the number of Governing Board/Pembina’s members and approved by at least ¾ (three quarters) Governing Board/Pembina’s attending members.

 

Foundation merger plan shall be approved by each foundation’s Governing Board/Pembina. Upon approval, said merger plan shall be incorporated under merger deed drawn up by notary in Indonesian. Such merger plan deeds shall be conveyed by notary to Minister of Law and Human Rights to obtain approval in case the merger is followed by amendment of foundation’s AoA. The approval from MoLHR will be provided within 60 (sixty) days upon the acceptance date of application.

 

The Role of Notary related to the Existence of Cooperatives

 

The incorporation of cooperatives shall be carried out by means of deed of incorporation containing AoA. The AoA shall at least cover the following:

 

  1. list of promotors;

  2. name and domicile of the cooperatives;

  3. purposes and objectives as well as the business activities;

  4. provisions regarding membership;

  5. provisions regarding membership’s meeting;

  6. provisions regarding management;

  7. provisions regarding capital matters;

  8. provisions regarding the duration of association;

  9. provisions regarding remaining results of operations; and

  10. provisions regarding penalty.

 

Meanwhile, the amendment of cooperative’s AoA to be carried on based on members’ meeting resolution. If the AoA does not stipulate otherwise, the resolution can be carried out if the meeting is attended by at least ¾ (three quarters) of the members and approved by at least ¾ (three quarters) Governing Board/Pembina’s attending members.

 

MoCSME will provide the ratification of amendment of cooperative’s AoA within 30 (thirty) days at the latest if:

 

  1. it does not contravene with Law No. 25/1992; and

  2. it does not contravene with public order and decency.

 

The Deed, Legalization, and Waarmerking

 

Deed

 

A notary carries out their position in the context of providing legal services to the public, recording all legal events into an authentic deed and automatically guaranteeing the certainty of the making of the deed, keeping the deed, providing grosse, copies and quotations of the deed.

 

A deed functions as proof of rights in the form of authentic written evidence made before or by an authorized official. The authorization of the official will ensure that an agreement, stipulation, or a legal event made or carried out has received legal certainty and protection.

 

Moreover, the authenticated deed contains the rights and obligations of the parties. Should any dispute arise between the parties in the future, the authenticated deed can act as valid proof.

 

Legalization

 

Legalization is referred to the notary’s act of legalizing signatures and determining the certainty of the date of the private letter. The legalization is then recorded or registered in a special book. Such special book lists the validation of signatures and the determination of the date of a document related to letters, lists, household affairs letters, and other writing documents made without intermediaries or made not in the presence of a public official.

 

Waarmerking

 

Waarmerking is not clearly defined or regulated by prevailing regulations in Indonesia. However, Law No. 30/2004 implicitly stipulated waarmerking as the act of recording private letters by registration in a special book. In practice, the notary’s authorization is also known as underhand registration of letters with the code: "Register" or Waarmerking or Waarmerk.

 

The Role of Notary related to Land Transactions

 

The General Role of Notary in Land Transactions

 

A notary who is also eligible to act as PPAT plays important roles in transactions of land. PPAT can concurrently serve as a notary at the domicile of a notary. The main task of PPAT is to carry out land registration activities by making deeds as evidence of certain legal actions as follows:

 

  1. sale and purchase;

  2. exchange;

  3. grant;

  4. deposit in kind (inbreng);

  5. sharing of joint rights;

  6. granting of HGB or right to use over freehold title;

  7. granting security right; and/or

  8. granting power of attorney to encumber security right.

 

The PPAT’s working area is in one province region. In order to execute the abovementioned tasks, the PPAT is authorized to make authentic sales and purchase of land deeds in connection with all legal aspects concerning land titles and right of ownership over stacked units/hak milik atas satuan rumah susun located within their working area. Besides, the making of such deeds shall be witnessed by at least 2 (two) witnesses.

Land Registration and Encumbrance of Right

 

Transfer of land titles and right of ownership over stacked units/hak milik atas satuan rumah susun through sale and purchase, exchange, grants, deposit in kind (inbreng) and other legal actions of transfer of rights, except the transfer of rights through auction can only be registered if it is proven by deeds made by the authorized PPAT according to the provisions of prevailing laws and regulations.

 

Within 7 (seven) business days from the signing date of the relevant deed, PPAT is obliged to submit the deed made along with the relevant documents and written notification to BPN to be registered.

 

Moreover, PPAT is also obliged to register encumbrance of right over land such as security right, right to use and right to lease for buildings, and other encumbrance over land titles or right of ownership over stacked units/hak milik atas satuan rumah susun determined by drafting authorized deeds in accordance with applicable laws and regulations. Registration of encumbrance of rights over land must also be submitted within 7 (seven) business days from the signing date of the relevant deed to BPN, by attaching relevant documents and written notification.

 

Security Right/Hak Tanggungan

 

Security right is a right over collateral imposed on land title along with other objects which are an integral part of the land therewith for the settlement of certain debts, which give priority to certain creditors over others. A security right shall be stated in security right deed drafted by a notary who is also eligible to act as PPAT. The purpose of security right deed is to ensure the settlement of more than 1 (one) debts. If 1 (one) land is encumbered with more than 1 (one) security right, then the rank of each security right is determined according to the date of registration at the BPN. In the event that there is more than 1 (one) security right registered on the same date, then the rank is determined by the drafting date of relevant security right deed.

 

The security right shall be registered to BPN. Within 7 (seven) business days from the signing date of security right deed, PPAT shall submit such security right deed and other relevant documents to BPN to be registered. Moreover, the encumbrance of security right may also be performed by way of providing power of attorney from relevant party. The power of attorney shall be drafted by notarial deed and shall comply with the following terms, it must:

 

  1. not including the authorization to do other legal action other than the encumbrance of security right;

  2. not mention any substitution right; and

  3. provide clear information on the object of security right, outstanding amount, name and identity of creditor, name, and identity of debtor in case the debtor is not the grantor of security right.

 

The power of attorney shall not be revoked or terminated unless the expiration period has passed. The relevant power of attorney must also be followed by the drafting of security right deed within 1 (one) month at the latest, upon providing it to PPAT. The notary is also responsible for registering the transfer of security right to BPN due to cessie, subrogation, inheritance, or other reasons that caused the security right to be transferred to new creditor.

 

Taxation

 

Taxes are mandatory contributions from individuals or entities to the state, where it will be utilized to meet the state’s necessity and the people’s welfare. The government utilizes taxes to give equal distribution of welfare by providing health insurance, government support or aid, and public facilities procurement.

 

In regard to parties who are obligated to pay taxes, generally every individual whether Indonesian citizens or foreign citizens residing in Indonesia and entities that incorporated or domiciled in Indonesia are included as taxpayers, unless the laws and regulations stipulate otherwise. Hence, it can be understood that taxpayers are classified into 2 (two) categories, and along with these following provisions:

 

  • Individuals

    1. who receive income above Non-Taxable Income/Penghasilan Tidak Kena Pajak (PTKP), as the limit is determined and regulated under Law No. 7/1983; and

    2. who stay in Indonesia for more than 183 (one hundred and eighty-three) days in any 12 (twelve) months period, or individuals who live in Indonesia during a tax year and intend to reside in Indonesia.

 

  • Entity

  1. unity of a group of people and/or capital, whether doing business, including limited liability company, limited partnership, other form of companies, state-owned enterprise, or regional government-owned enterprise in any form, firm, joint venture, cooperative/koperasi, pension funds, associations, partnership, foundation, mass organization, socio-political organization, institutions, or any other organizations or institutions including collective investment contracts and permanent establishment/badan usaha tetap; and

  2. incorporated domiciled, or effective place of management in Indonesia

 

Tax Identity

 

Subsequently, for the purpose of tax administration and to implement self-assessment system, taxpayers have the obligation to register themselves to KPP, KP4, or through e-registration at www.pajak.go.id to be given tax identity. The form of tax identity is divided into 2 (two) categories, namely, NPWP and NPPKP.

NPWP

The NPWP is a number issued to a taxpayer as means of taxation administration which is used as a personal identity or taxpayer identity in conducting his taxation rights and obligations. The NPWP is necessary to be obtained by taxpayers, otherwise the taxpayer can be subject to a rate 100% higher than the tax rate applied to taxpayers who have NPWP. In addition, holding a NPWP is fulfilling one of the requirements in processing SIUP.

 

NPPKP

 

The NPPKP is an identity of taxpayers who are categorized as PKP and subject to both VAT and VAT on Luxury Goods. In order to be confirmed as a PKP, local research will be carried out to determine the existence and activities of business concerned. With the inauguration of an entrepreneur as PKP, a tax invoice/faktur pajak must be issued upon delivery of taxable goods or taxable services.

 

Tax Collection System

 

Self-Assessment System

 

Through the self-assessment system, taxpayers are required to carry out their tax obligations independently. They must register themselves, calculate their own payable tax, pay taxes to the bank or post office, and report the calculation results and tax payments that have been made to KPP. Furthermore, the tax collection system is applicable for the imposition of central taxes, such as income tax and VAT which will be explained further in the next section.

 

Official Assessment System

 

The official assessment system is one of the tax collection systems which enables the tax authority as tax collector to determine the amount of tax payable by taxpayers.  In this type of tax collection system, the taxpayer is passive as the payable tax is determined and informed by the tax authority. The official assessment system applies to regional taxes, such as land and building tax which will be explained further in the next section. 

 

Withholding Assessment System

 

In the withholding assessment system, the amount of payable tax is calculated by third parties who are neither taxpayers nor tax authorities. This type of tax collection system makes tax obligations easier to meet. This is because it is the role of third parties to calculate the tax payable and directly withdraw certain amount of taxes that should be paid by each taxpayer. An example of a withholding system is a deduction of employee income by the treasurer, other parties who are eligible to deduct or the related agency. Hence, the employees no longer need to fulfill or pay their payable tax themselves. Indonesia imposes a withholding assessment system for several types of taxes, including:

 

  • Article 4 (2) Law No. 7/1983 (PPh Final), regarding tax imposed on entity and/or personal taxpayers for several types of income specified in Article 4 (2) Law No. 7/1983, where both of the income and the withholding tax are final;

  • Article 21 Law No. 7/1983 (PPh 21), regarding tax imposed on income in the form of salaries, wages, allowances, and other payments in connection with employment, services, honorarium, and activities conducted by individuals who are resident tax subjects;

  • Article 22 Law No. 7/1983 (PPh 22), regarding income tax imposed on certain business entities, both government and private, who carry out export and import activities;

  • Article 23 Law No. 7/1983 (PPh 23), regarding tax imposed on income in the form of dividend, interest, royalty, gift, bonus, rent and other income in connection with the use of assets, excluded from rent for land and/or buildings, fees in connection with technical, management, construction, consulting services, and other services that have been deducted by Article 21 Law No. 7/1983 (PPh 21).

  • Article 26 Law No. 7/1983 (PPh 26), regarding tax imposed to tax subjects who provide income to foreign tax subjects.

 

Types of Tax in Indonesia

 

In Indonesia, taxes are classified into 2 (two), which are central taxes/pajak pusat and regional taxes/pajak daerah. Central taxes are managed by the central government, particularly by the Directorate General of Taxation under the Ministry of Finance. Subsequently, the types of taxes which categorized as central taxes are as follows:

 

  • income tax;

  • VAT;

  • VAT on luxury goods;

  • stamp duty;

  • land and building tax; and

  • acquisition of rights on land and buildings duty.

 

Whereas, regional taxes are taxes managed by the regional governments at both the provincial and regency level. In this case, regional taxes are handled by the Regional Revenue Agency/Dinas Pendapatan Daerah which governed under Law No. 28/2009. Regional taxes are further divided into 2 (two), namely provincial taxes and regency/city taxes.

 

  • provincial taxes

    1. motor vehicle and water vehicle taxes;

    2. excise/tax for transfer of ownership of motor vehicle;

    3. motor vehicle fuel tax;

    4. surface water tax; and

    5. cigarette tax.

 

  • regency/city taxes

    1. hotel tax;

    2. entertainment tax;

    3. restaurant tax;

    4. parking tax

    5. advertisement tax;

    6. tax on non-metal mineral and rock;

    7. street lighting tax;

    8. ground water tax;

    9. tax on sallows' nest.

    10. rural and urban and building tax; and

    11. excise/tax acquiring right on land and building.

 

Income Tax

Income Tax/Pajak Penghasilan (PPh) is a tax imposed on an individual or entity on income they earned or received in a tax year. Subsequently, the object of income tax is that any additional economic capacity derived from Indonesia or outside Indonesia that can be used by the taxpayer for consumption or to increase wealth’s of the respective taxpayer. The taxable objects of income tax can be in the form of salaries, bonuses, honorarium, any other compensation for the work’s performance, business profits, interests, royalties, and any other incomes stipulated in Law No. 7/1983. Subsequently, in order to support ease of doing business, the government exempts dividends distributed based on GMS (interim dividends) and dividends originating from within Indonesia received by domestic taxpayers, as the object of income tax.

 

Under the Law No. 7/1983, the subject of income tax is distinguished into 2 (two) types, there are domestic tax subject and foreign tax subject. Domestic tax subject includes any individuals who reside, or entities incorporated or domiciled in Indonesia within the period of time specify in Law No. 7/1983. While foreign tax subject includes any individuals who are not reside, or entities incorporated or domiciled outside Indonesia. Furthermore, income tax is imposed on tax subject who is obliged to pay, withhold, and collect taxes due on tax objects. Hence, the subjects of income tax could be either:

 

  1. individual;

  2. entity or corporate; or

  3. permanent establishment/badan usaha tetap.

 

Value Added Tax (VAT)

 

VAT is a tax imposed on the consumption of taxable goods or taxable services in a customs area. Customs area/daerah pabean refers to the territory of the Republic of Indonesia which includes land, waters, and air space thereon. Individuals, entities, or government who consume taxable goods or services are subject to the imposition of VAT. Generally, all goods and services are categorized as taxable goods or services, unless otherwise stipulated by the Law No. 8/1983. The following are the objects of VAT which will be imposed to entrepreneur who conduct:

 

  • local delivery of taxable goods and/or services;

  • import and export of taxable goods;

  • consumption of services and/or intangible foods from offshore within the Indonesian customs territory; and

  • export of intangible taxable goods and taxable services.

 

However, the goods and services which are exempted from the obligation of VAT are specified in Article 4A Law No. 8/1983, for instance basic necessities of the community.

 

The producer of goods and/or services, who is the PKP, collect, deposit, and report the VAT. However, the party who is obliged to pay the VAT is the end consumer of the goods and/or services produced by the PKP. The end consumer will be imposed on single VAT rate at 10% (ten percent), and in terms of exports, the VAT rate is 0% (zero percent).

 

Value Added Tax on Luxury Goods

 

Aside from being subject to VAT, the purchases of certain taxable goods which are classified as luxury goods are also subject to VAT on luxury goods/pajak pertambahan nilai atas barang mewah. This tax imposition has the same characteristics as VAT, which is imposed to the end consumer who consumes or utilizes the goods. The objects of taxable luxury goods and their rates are stipulated and regulated in the sectoral regulations regarding VAT on luxury goods, which includes:

 

  • goods that are not included as basic necessities;

  • goods that only consumed by certain communities;

  • goods that generally consumed by high-income communities; and/or

  • goods that are consumed to indicate the status.

Furthermore, Article 8 (1) Law No. 8/1983 stipulates the sales tax rate on luxury goods of at least 10% (ten percent) and a maximum of 200% (two hundred percent).

 

Land and Building Tax

 

Land and building tax are tax imposed on ownership or utilization of land and/or buildings. In basic terms, it is categorized as one of the central taxes, however almost all of the realization of land and building tax revenue is submitted to the regional government, both provincial and/or regency/city. Subsequently, the objects of land and building tax are:

 

  • environmental roads located within building area such as hotel, factory and its emplacement, and other buildings that are within the building area;

  • toll road;

  • swimming pool;

  • luxury fence;

  • sport venue;

  • shipyard and dock;

  • luxury garden;

  • oil, water and gas storages/refineries, and oil pipelines; and

  • other facilities that produce benefit.

 

The subject of land and building tax is a person or an entity that have the rights over the land and/or receive benefits over the land, and/control and/or receive benefit from a building. Based on Article 5 Law No. 12/1985, the tax rate imposed on land and building is 0.5% (five tenth percent). Subsequently, land and building tax is imposed based on sales value of taxable object/nilai jual objek pajak. Sales value of taxable object is the average price obtained from reasonable buying and/or selling transactions, and if there is no such transaction, the sales value of taxable object will be determined by price comparisons with other similar objects, obtaining new value, or selling value of the replacement tax object.

 

Aside from an obligation to pay land and building tax, ownership through the acquisition of rights over the land and/or buildings also gives rise to BPHTB. As well as land and building tax, BPHTB categorized as central tax, however its realization revenue is submitted to the regional government, both provincial and/or regency/city.

 

Stamp Duty

 

Stamp duty/bea materai is a tax imposed on certain documents. It is imposed on documents which represent the occurrence of civil relation and it can be used as a valid evidence in court. The documents which require stamp duty are specify in Law No. 10/2020, as follows:

 

  • letter of agreement;

  • certificate;

  • letter of statement;

  • notarial deed;

  • land deed made by PPAT;

  • securities transaction documents;

  • auction documents;

  • documents stating the amount of money with a nominal value more than Rp5.000.000,- (five million Rupiah) that mentions the receipt of money or contains acknowledgment that the debt in whole or in part has been paid or taken into account; and

  • other documents.

 

Stamp duty is payable as a fixed amount of Rp10.000,- (ten thousand Rupiah) for documents as mentioned above.

 

Taxes Exemptions

 

 

In relation to the ease of doing business in Indonesia, the government provides a facility in a form of tax holiday. Tax holiday is a tax incentive for entrepreneurs. Taxpayers who conduct a new investment in a pioneer industry may obtain reduction or even exemption of income tax for entrepreneur in a certain term. Provisions on tax holiday are regulated in Law No. 25/2007, tax holidays are provided through exemption or reduction of corporate income tax in a specific amount and period may only be granted to:

 

  • a new investor engaged in a pioneer industry;

  • entities with added value and high externality;

  • entities which introduces new technology.

  • entities with strategic value for the national economy;

  • entities with legal status as an Indonesian legal entity; and

  • entities which debt-to-equity ratio as prescribed by the ministry of finance of the Republic of Indonesia.

 

In accordance with MoF Reg. No. 130/2020, the tax exemption or reduction facility (tax holiday) applies to these following pioneer industries:

Business Sectors that are Exempted from Tax.PNG

Business Sectors that are Exempted from Tax

Source: MoF Reg. No. 130/2020.

Currency

 

Indonesian Rupiah is the prevailing currency for any transaction within the Republic of Indonesia. Transactions are obliged to use Indonesian Rupiah for any payment, and obligation settlements that require cash payment, and/or other financial transaction. The obligation to use Indonesian Rupiah is required for both cash and any transactions that are using cashless tools and mechanisms. However, there are some exemptions on the obligation for the use of Indonesian Rupiah as prevailing currency. In accordance with Article 4 BIR No. 17/2015, the obligation to use Indonesian Rupiah will be exempted for the following:

 

  • certain transactions involving national income and expenditures;

  • include grant to or from foreign countries;

  • international trade transactions;

  • foreign currency savings in banks; and

  • international financing transactions.

 

The exemption to use of Indonesian Rupiah also applies to transaction in foreign currencies, such as business activities in foreign currencies which are conducted by banks, transactions of securities issued by Indonesian government in foreign currencies, as well as other transactions in foreign currencies which are conducted in accordance with the laws and regulations

 

Antitrust

 

Indonesia issued Law No. 5/1999 in order to actualize democracy in the economic sector and to promote a healthy, effective and efficient business climate, which can in turn boost economic growth and market economy to function properly. The objective of Law No. 5/1999 is as follows:

 

  • to maintain public interest and improve the efficiency of the national economy as one of the means to improve public welfare;

  • to create a conducive business climate through healthy business competition, thus securing equal business opportunity for large/medium/small scale entrepreneurs;

  • to prevent monopolistic practices and/or unfair business competition by the entrepreneurs; and

  • to create effectiveness and efficiency in business activity, Indonesia issued Law No. 5/1999.

 

Monopolistic practice is centralization of economic power by one or more entrepreneurs causing the control of production and/or marketing of certain goods and/or services, resulting in an unfair business competition and can cause damage to the public interests. In addition, unfair business competition is the competition among entrepreneurs in conducting their production activities and/or in marketing goods and/or services, conducted in a manner which is unfair or contradictory to the law or hampering business competition.  For those reasons, Law No. 5/1999 prohibits certain agreement, act and abuse of position which may result in monopolistic practices and/or unfair business competition.

 

Prohibition in Antitrust Law

 

Prohibited Agreement

 

There are 10 (ten) types of agreements that entrepreneurs are prohibited from entering into based on Law No. 5/1999, namely oligopoly, price fixing, area distribution, boycott, cartel, trust, oligopsony, vertical integration, closed agreement, and agreement with foreign party.

  • Oligopoly

The entrepreneur is prohibited to make any agreement with other entrepreneur, with the intention to jointly control the production and/or marketing of goods and services which may cause monopolistic practices and/or unfair business competition. The entrepreneur can be suspected or considered as jointly controlling production and/or marketing of goods and/or services, if two or three entrepreneurs or groups of entrepreneurs own more than 75% (seventy-five percent) of the market share of one type of certain goods or services.

  • Price Fixing

The entrepreneur is prohibited to make any agreement with other business competitors in order to fix prices on certain goods and/or services to be borne by the consumers or clients in the same relevant market.

 

The entrepreneur is also prohibited to make any agreement with other entrepreneur which may cause:

  1. buyers to pay a different price from the price that must be paid by other buyers for the same type of goods and/or services; and

  2. unfair business competition from an agreement which sets the condition that the receivers of the goods and/or services are not to resell or resupply the goods and/or services they receive, under a price lower than the price agreed upon.

 

These prohibitions shall not be applicable to (i) an agreement made in joint partnership; or (ii) an agreement based on the prevailing law.

 

  • Area Distribution

The entrepreneur is prohibited to make any agreement with other business competitors with the intention to divide the marketing areas or market allocation of the goods and/or services that may cause monopolistic practices and/or unfair business competition.

 

  • Boycott

The entrepreneur is prohibited to make any agreement with other business competitors that may hamper other entrepreneur in engaging in the same type of business, either for domestic or export purposes. Moreover, the entrepreneur is also prohibited to make any agreement with other business competitors to refuse to sell goods and/or services from other entrepreneur which:

 

  1. cause losses or could be suspected to cause damage to another entrepreneur; or

  2. restricts other entrepreneur to sell or buy goods and/or services from the relevant market.

 

  • Cartel

The entrepreneur is prohibited to make any agreement with other business competitors with the intention to influence the price by determining production and/or marketing of goods and/or services which may cause monopolistic practices and/or unfair business competition.

 

  • Trust

The entrepreneur is prohibited to make any agreement with other entrepreneur in a form of joint cooperation by combining the companies into a bigger holding company or larger limited liability, by keeping and maintaining the continuation of each subsidiary or member company, with the intention to control production and/or marketing of goods and/or services, thus causing monopolistic practices and/or unfair business competition.

 

  • Oligopsony

The entrepreneur is prohibited to make any agreement with other entrepreneur with the intention to jointly control the buying or receiving of supplies in order to control prices of the goods and/or services in the relevant market that may cause monopolistic practices and/or unfair business competition. The entrepreneur can be suspected or considered as jointly controlling the buying or receiving of supplies, if 2 (two) or 3 (three) entrepreneurs or groups of entrepreneurs own more than 75% (seventy five percent) of the market share of one type of certain goods or services.

 

  • Vertical Integration

The entrepreneur is prohibited to make any agreement with other entrepreneur with the intention to control production of several products belonging to a chain of certain goods and/or services production in which each chain of production is a result of the continued process, either in one direct or indirect chain, which may cause unfair business competition and/or damages to the public.

 

  • Closed Agreement

The entrepreneur is prohibited to make any agreement with other entrepreneur which imposes the following provisions:

 

  1. agreement which imposes terms by which the parties receiving the goods and/or services shall or shall not resupply the said goods and/or services to certain parties and/or at certain places;

  2. agreement which imposes terms by which the parties receiving certain goods and/or services must be willing to purchase goods and/or other services from the supplier company; and

  3. agreement regarding prices or certain discount prices of the goods and/or services, which impose terms by which the entrepreneurs receiving the goods and/or services from the supplier company;

  4. be willing to purchase the goods and/or other services from the supplier company; and

  5. shall not purchase the same or similar type of goods and/or services from other entrepreneurs which are the competitors of the supplier company.

 

  • Agreement with Foreign Party

In conducting business in Indonesia, entrepreneurs commonly arrange agreements with foreign parties. However, the entrepreneur is prohibited to make any agreement with other parties overseas which imposes provisions that may cause monopolistic practices and/or unfair business competition.

 

Prohibited Act

 

Moreover, the entrepreneur is also prohibited from doing certain act that cause unfair business competition.  Furthermore, the following act is prohibited since it may cause monopolistic practices and/or business competition.

 

Monopoly

 

The entrepreneur is prohibited from controlling any production and/or marketing of goods and/or services that can cause monopolistic practices and/or unfair business competition that can be suspected or considered as controlling production if:

 

  • the said goods and/or services do not have substitutions at that time;

  • causes other entrepreneurs to be unable to enter business competition for the same type of goods and/or services; or

  • one entrepreneur or one group of entrepreneurs controls more than 50% (fifty percent) of the marketing share of one type of certain goods or services.

 

Monopsony

 

The entrepreneur is prohibited from controlling the supplies received or being the sole buyers of goods and/or services in the relevant market which may cause monopolistic practices and/or unfair business competition. The entrepreneur can be suspected or considered as controlling the supplies received or being the sole buyer if one entrepreneur or a group of entrepreneurs controls more than 50% (fifty percent) of the market share of the same type of certain goods or services.

 

Market Controlling

 

The entrepreneur is prohibited from conducting one or more activities, either separately or jointly with other entrepreneurs, which may cause monopolistic practices and/or unfair business competition by:

 

  • refusing and/or hampering certain entrepreneurs from conducting the same type of business in the relevant market;

  • hampering the consumers or clients of their company’s competitors from conducting any business contact with those company’s competitors;

  • restricting distribution and/or selling of the goods and/or services in the relevant market;

  • conducting discrimination practices against certain entrepreneurs.

  • supplying goods and/or services by selling without making any profits or by setting a very low price with the intention to eliminate or end their competitors’ business in the relevant market; or

  • cheating in setting the production cost and other expenses which is part of the ‘goods and/or services’ component.

 

Conspiracy

 

The entrepreneur is prohibited from conspiring with other parties to:

  • arrange and/or determine the winner of the tender thus causing unfair business competition;

  • obtain information of their competitor’s business activities classified as company’s secret thus causing unfair business competition; or

  • hamper production and/or marketing of the goods and/or services of their competitors with the intention to reduce the quantity, quality, and the required delivery punctuality of the goods and/or services offered or supplied in the relevant market.

Abuse of Dominant Position

 

Other than agreement and act which is prohibited since it may cause unfair business competition, Law No. 5/1999 also explains a position and/or action that may cause monopolistic practice and/or unfair business competition. Certain position and/or position which may cause monopolistic practice and/or unfair business competition will be elucidated further below.

 

Dominant Position

 

Dominant position is a position where (i) 1 (one) entrepreneur or a group of entrepreneurs controls 50% (fifty percent) or more; or (ii) 2 (two) or 3 (three) entrepreneurs or groups of entrepreneurs control 75% (seventy five percent) or more of the market share on one type of goods or service.

 

The entrepreneurs are prohibited from taking advantage of their dominant position, either directly or indirectly, in order to:

 

  • import trade terms with the intention to prevent and/or hamper the consumers to acquire competitive goods and/or services, both in prices or quality;

  • restrict the market and technology development; or

  • hamper other entrepreneurs having the potential to become their competitors to enter the relevant market.

 

Concurrent Positions

 

A person who serves as the director or commissioner of a company is prohibited from concurrently being the director or commissioner at other enterprises, if the said enterprises:

 

  • are in the same relevant market;

  • are closely related to the field and/or type of business; or

  • can jointly control the market share of certain goods and/or services, which could cause monopolistic practices and/or unfair business competition.

Merger, Consolidation, and Acquisition

 

In accordance with Article 29 Law No. 5/1999 jo. Article 5 GR No. 57/2010, the entrepreneurs are required to notify certain merger, consolidation, and acquisition to KPPU regarding keep a fair business competition. Accordingly, the entrepreneurs are prohibited from (i) conducting merger; (ii) conducting consolidation; and/or (iii) acquiring shares of other entrepreneur which may cause monopolistic practices and/or unfair business competition. Monopolistic practices and/or unfair business competition may occur if the merged/consolidated company or an entrepreneur who conducts acquisition of other company allegedly do:

 

  • prohibited agreement;

  • prohibited act; or

  • abuse of dominant position.

 

Subsequently, merger, consolidation, and acquisition which resulting (i) total asset value of Rp2.500.000.000.000,- (two trillion and five hundred billion Rupiah); and/or (ii) total sales value of Rp5.000.000.000.000,- (five trillion Rupiah) must give a written notification to KPPU no later than 30 (thirty) business days from the day on which the merger, consolidation, or acquisition is effective. Furthermore, the value of asset and sales are calculated based on:

 

  • merged/consolidated company or an entrepreneur who conducts acquisition; and

  • entrepreneur which directly or indirectly controls or being controlled by the merged/consolidated company or an entrepreneur who conducts acquisition and acquired company.

 

Additionally, in the event of 2 (two) or more parties who conduct merger, consolidation, and acquisition are engaged in banking sector, the entrepreneurs are required to notify KPPU if the value of total asset of the business entity resulting from the merger/consolidation/acquisition exceeds Rp20.000.000.000.000,- (twenty trillion Rupiah). But, if 1 (one) of the parties who conducts merger, consolidation, and acquisition is engaged in banking sector but the other party is not engaged in banking sector, the entrepreneur is required to notify KPPU if the asset value of the business entity resulting from the merger or consolidation or acquisition exceeds Rp2.500.000.000.000,- (two trillion five hundred billion Rupiah).

 

Total value of assets and/or sales resulting from merger, consolidation or acquisition is the total sales value and/or assets calculated based on the sum of the audited sales value and/or assets of the respective parties carrying out the merger, consolidation, and acquisition plus the value sales and/or assets of all business entities that directly or indirectly control or are controlled by the business entity conducting the merger, consolidation, and acquisition.

 

Consequently, an entrepreneur who does not submit a written notification to KPPU, will be subjected to a sanction in the form of administrative fine in the amount of Rp1.000.000.000,- (one billion Rupiah) for each day of delay, provided that the overall administrative fine is no higher than Rp25.000.000.000,- (twenty-five billion Rupiah).

 

Moreover, notification of merger, consolidation, and acquisition to KPPU must be conducted no later than 30 (thirty) business days from the date the merger, consolidation, and acquisition becomes effective. The provision on effective date is as follows:

 

  • for business entities in the form of limited liability companies, the date is:

  1. approval of the MoLHR of the Republic of Indonesia for amendments to the AoA in the event of a merger.

  2. notification is received by the MoLHR in the event of a change in the AoA;

  3. ratification of the MoLHR on the company's deed of incorporation in the event of consolidation;

 

  • if one of the parties conducting the merger, consolidation, and acquisition is a limited liability company and the other party is a non-limited liability company, then the notification will be made no later than 30 (thirty) days from the date the parties have signed the merger, consolidation, and acquisition ratification. The date of ratification is the effective date of merging or merging of a business entity and transfer of share ownership in the company that was taken over (closing date); or

  • especially for a share acquisition that occurs on a stock exchange, the notification will be made no later than 30 (thirty) days from the date of the information disclosure letter on the acquisition of public company shares.

 

Approach to Determine the Unfair Business Competition

To determine whether an agreement or an act has violated the provisions of business competition, the law adopts illegal per se and rule of reason approach. The term “illegal per se”, refers to “per se violation” which means a trade practice that is considered inherently anti-competitive and injurious to the public without any need to determine whether it has actually injured market competition. Whereas, rule of reason is a legal approach by competition authorities or the courts where an attempt is made to evaluate the pro-competitive features of a restrictive business practice against its anticompetitive effects in order to decide whether or not the practice should be prohibited.

 

These approaches do not explicitly mention Law No. 5/1999, but based on the explanation abovementioned, Law No. 5/1999 uses the illegal per se approach on the provisions that strictly “prohibit” entrepreneur to do monopolistic practice and rule of reason approach which implies in the provisions that use “which may cause monopolistic practice or business competition” clause.  Furthermore, the implementation of Law No. 5/1999 is conducted by KPPU, an independent institution – free from government or other parties influence, who is accountable to the president in conducting its duties. KPPU also applies these approaches for decision making on business competition.

 

Exemption

There are certain exemptions for certain agreements and actions which is stipulated in Article 50 Law No. 5/1999 as follows:

  • actions and/or agreements with the intention to implement the prevailing law;

  • agreements related to intellectual property rights such as license, patent, trade brand, copy right, industrial product design, integrated electronic series, and trade secrets, and contracts related to franchise;

  • agreements on technical standardization of products of goods and/or services which do not restrict and/or hamper competition;

  • agreements for a distribution purpose which do not stipulate to resupply of goods and/or services with the price lower than the price agreed upon in the agreement;

  • agreements of research cooperation for the purposes of promoting or improving the living standards of the people in general;

  • international agreements which have been ratified by the government of the Republic of Indonesia;

  • agreements and/or actions intended for export which do not distract domestic needs and/or market supply;

  • entrepreneurs categorized as engaging in small scale business; or

  • cooperative business activities serving specifically only its members.

The Sanctions on the Prohibited Agreement and Act

 

Based on the discussion in the sub-chapter above, if an entrepreneur violates those provisions, the entrepreneur will be subject to sanctions explained below.

Sanction

 

The commission council is formed in the framework of exercising the authority to supervise business competition and for the purposes of case examination up to the imposition of sanctions in the form of administrative actions against entrepreneur who violate provisions of the Law. The commission has the authority to impose sanctions in the form of administrative measures against entrepreneurs who violate the provisions of laws and regulations. Sanctions in the form of administrative measures are imposed:

 

  • according to the level or impact of the violation committed by the entrepreneur;

  • by taking into account the continuity of business activities of entrepreneur; and or

  • on the basis of clear considerations and reasons.

 

Administrative actions can be in the form of:

  • determination of the cancellation of the agreement;

  • ordering the entrepreneur to stop vertical integration;

  • ordering the entrepreneur to stop activities proven to have caused monopolistic practices, causing unfair business competition, and / or detrimental to society;

  • ordering the entrepreneur to stop abuse of dominant position;

  • determination of cancellation of the merger or consolidation of business entities and the acquisition of shares;

  • determination of compensation payments and / or;

  • imposition of a fine of at least Rp1,000,000,000.00 (one billion Rupiah), with due observance of the provisions concerning the amount fines as regulated in this Government Regulation.

 

Actions based Sanctions

  • Administrative Action in the Form of Stipulating the Cancellation of the Agreement

Administrative action in the form of determination of cancellation can be imposed if the entrepreneur:

 

  1. enters into agreements with other entrepreneur to jointly control the production and or marketing of goods and or services which may result in monopolistic practices and or unfair business competition (Article 4 Law No. 5/1999);

  2. enters into agreements with business competitors to fix prices for goods and or services that must be paid by consumers or customers in the same relevant market (Article 5 Law No. 5/1999);

  3. enters into an agreement that results in one buyer having to pay a price different from the price paid by another buyer for the same goods and or services (Article 6 Law No. 5/1999);

  4. enters into agreements with business competitors to set prices below market prices, which may result in unfair business competition (Article 7 Law No. 5/1999);

  5. enters into agreements with other entrepreneur that state that the recipient of the goods and or services will not sell or resupply the goods and or services they receive, at a price lower than the agreed price, which may result in unfair business competition (Article 8 Law No. 5/1999);

  6. enters into agreements with business competitors with the aim of dividing the marketing area or market allocation for goods and or services (Article 9 Law No. 5/1999);

  7. enters into agreements, with business competitors, which may prevent other entrepreneurs from doing the same business, both for the domestic market and for the foreign market (Article 10 Law No. 5/1999);

  8. enters into agreements, with business competitors, which intend to influence prices by regulating the production and or marketing of a good or service (Article 11 Law No. 5/1999);

  9. enters into agreements with other entrepreneurs to cooperate by forming a larger company association, while maintaining and maintaining the viability of each company or member company, with the aim of controlling the production and or marketing of goods and or services (Article 12 Law No. 5/1999);

  10. enters into agreements with other entrepreneurs with the aim of jointly controlling the purchase or receipt of supplies in order to control prices for goods and or services in the relevant market (Article 13 Law No. 5/1999);

  11. enters into agreements with other entrepreneurs that contain requirements that the party receiving the goods and or services will only supply or not re-supply the said goods and or services to certain parties and/or at certain places (Article 15 (1) Law No. 5/1999);

  12. enters into agreements with other parties that state that the party receiving certain goods and or services must be willing to buy other goods and or services from the supplying entrepreneur (Article 15 (2) Law No. 5/1999);

  13. enters into agreements with other parties abroad that contain provisions that may result in monopolistic practices and or unfair business competition (Article 16 of Law No. 5/1999).

 

  • Administrative Actions in the Form of Orders to Entrepreneur to Stop Vertical Integration

 

Administrative action in the form of an order to an entrepreneur to stop vertical integration is carried out if the entrepreneur enters into an agreement with another entrepreneur with the aim of controlling the production of a number of products that are included in the series of production of certain goods and or services where each series of production is the result of processing or further processing. either in a direct or indirect manner, which may result in unfair business competition and/or harm to society.

 

  • Administrative Actions in the Form of Orders to Entrepreneur to Stop Activities

 

Administrative action in the form of orders to entrepreneur to stop activities in the form of:

  1. cessation of activities that result in control over the production or marketing of goods or services;

  2. cessation of activities that result in controlling the receipt of supplies or becoming the sole buyer of goods or services;

  3. cessation of rejection or actions to prevent certain entrepreneur from carrying out the same business activities;

  4. termination of activities to prevent the consumers or customers of a competing entrepreneur from engaging in business relations with such competing entrepreneur;

  5. cessation of activities that limit the circulation or sale of goods or services in the relevant market;

  6. cessation of discrimination;

  7. cessation of selling loss or setting a very low selling price;

  8. cessation of fraud in determining production costs and other costs that are components of goods or services;

  9. termination of the conspiracy to arrange or determine the winner of the tender;

  10. termination of conspiracy to obtain information on business activities of competitors classified as company secrets,

  11. termination of conspiracy to impede the production and/or marketing of competing entrepreneur;

  12. orders to entrepreneur to dismiss the BoD or BoC who hold concurrent positions; and/or

  13. order to the affiliated entrepreneur to release cross-share ownership.

 

  • Administrative Action in the Form of Orders to the Entrepreneur to Stop the Abuse of Dominant Position

 

Entrepreneur uses a dominant position either directly or indirectly to:

  1. establish terms of trade with the aim of preventing and or preventing consumers from obtaining competitive goods and or services, both in terms of price and quality; or

  2. limit market and technology development; or

  3. inhibit other entrepreneurs who have the potential to become competitors from entering the relevant market.

 

  • Administrative Action in the Form of Determination of Cancellation of the Merger or Consolidation of Business Entities and Acquisition of Shares

 

Administrative action in the form of determination of the cancellation of the merger or consolidation of business entities and acquisition of shares if the business actor:

  1. merger or consolidate business entities which may result in monopolistic practices and or unfair business competition; or

  2. take over shares of another company if the action may result in monopolistic practices and/or unfair business competition.

 

Obligation to Comply with Laws on TKDN

The Local Content Requirements in Indonesia

 

Common with many developing countries, Indonesia aspires to upgrade its industrial competitiveness, as well as increase the value-added of its manufacturing sector. One of the ways is by using local content requirement policy, which is frequently known as TKDN policy in Indonesia. According to RPJMN 2020-2024, one of the policy directions in order to increase economic value-added in 2020-2024, is by increasing high value-added exports as well as strengthening TKDN. The said policy directions shall be conducted through the following strategies:

Strategies to Increase High Value-Added Exports and Strengthening TKDN.png

Strategies to Increase High Value-Added Exports and Strengthening TKDN

Source: Appendix I PR No. 18/2020.

In congruence with RPJMN 2020-2024, Law No. 3/2014 requires the government to increase the use of local products. The local products must be used by:

 

  • state institutions, ministries, non-ministry government institutions, and regional working units in the procurement of goods/services if their sources of financing come from APBN or APBD including domestic or foreign loans or grants; and

 

  • BUMN, BUMD, and private business entities of which financing for the procurement of goods/services comes from the APBN, APBD, and/or of which work activities are conducted through any cooperation between the government and private business entities and/or which utilize resources controlled by the state.

 

Additionally, in the case of procurement above-mentioned, the use of local product becomes mandatory when there is a local product with a combined volume of TKDN and BMP of 40% (forty percent). The circumstances also specifies that the volume of TKDN should be 25% (twenty five percent). This policy is in accordance with the obligations on BMP, since the maximum amount of BMP is 15% (fifteen percent). These rules are very critical because the minimum specifications for local content would be specified on the tender documents.

 

Other than the obligation to use local content, the government also encourages private business entities to increase the use of local products. For those purposes, the government may provide facilities which are at least in the form of:

  • price preferences and administrative incentives in the procurement of goods/services; and

  • certification on the local component level.

 

The requirement to use local items shall be carried out in compliance with the amount of local content accommodated in any goods/services as indicated by the percentage of local content used. Such percentage which is generally referred to as TKDN, shall be measured in compliance with the regulations stipulated by the Minister of Industry. TKDN is the utilization of local items, which is measured on the basis of the amount of local components found in goods, services and a combination of goods and services. The composition of TKDN consists of (i) TKDN of goods; (ii) TKDN of services; and (iii) TKDN of combination of goods and services. Further description of the local components contained on each output can be found below:

The Composition of TKDN on each Output.png

The Composition of TKDN on each Output

Source: MoI Reg. No. 16/2011.

The Calculation Procedure for Local Content Requirements in Indonesia

 

TKDN of Goods

 

TKDN for goods shall be calculated based on the ratio between the prices of finished goods reduced by the price of foreign components upon the price of finished goods. The price of the finished goods  is the production cost incurred by the company to produce an item. The production costs include (i) costs for direct materials/supplies; (ii) direct labor costs; and (iii) factory indirect costs (factory overhead). The calculation of production costs does not include the calculation of profit variables, company overhead, and output taxes.

The Equation for TKDN of Combination of Goods and Services Percentage.PNG

The Equation for TKDN for TKDN of Goods Percentage

Source: MoI Reg. No. 16/2011.

TKDN of Services

 

TKDN for services is calculated based on ratio between the overall services price reduced by price of foreign services against the overall services price. The overall services price as mentioned before, is a cost which is incurred to produce services which are calculated until the onsite location. The overall services costs shall consist of: (i) workers’ cost; (ii) working tool/working facility cost; and (iii) general service cost. The calculation of production costs does not include the calculation of profit variables, company overhead, and output taxes.

The Equation for TKDN of Service Percentage.PNG

The Equation for TKDN of Service Percentage

Source: Appendix V MoI Reg. No. 16/2011.

TKDN of Combination between Goods and Services

 

TKDN of combination of goods and services is the ratio between overall local component cost against the overall price of goods and services. The overall cost of goods and services is the costs which are incurred to produce the combination of goods and services which are calculated up to the onsite location. TKDN for the combination of goods and services is calculated in any work activity of the combination of goods and services, including construction works and integrated construction works.

The Equation for TKDN of Combination of Goods and Services Percentage.PNG

The Equation for TKDN of Combination of Goods and Services Percentage

Source: Appendix VII MoI Reg. No. 16/2011.

The Sectors with Specific Local Content Requirements in Indonesia

 

According to GR No. 29/2018, beyond the general requirements, the Minister may provide a minimum limit of TKDN specifically for each sector. Sectors that have specific regulations can be seen on the following chart:

Sectors with Specific Local Content Requirements in Indonesia.png

Sectors with Specific Local Content Requirements in Indonesia

Source: Consultant Analysis.

The Sanctions of Local Content Requirements Violation

 

In order to promote the use of local products, any official in the procurement of goods/services who violates the regulation regarding utilization of local products shall be subject to administrative sanctions, in the form of:

 

  • written warnings;

  • administrative fines; and/or

  • dismissal from the position as an official for the procurement of goods/services.

 

Those sanctions are, however, excluded where local products are neither available nor sufficient. Aside from sanctions in relation to officials, financial sanctions can also apply to violators of the obligation, with the aim of facilitating the compulsory use of local components. The application of financial sanctions in the form of administrative fines must firstly be proved against a breach of the duty to cooperate with the use of local items in the procurement of goods/services.

 

All composition of TKDN calculations, including TKDN for Goods, TKDN for Services, as well as TKDN of combination of goods and services are carried out based on accountable data. If the data used in the equation cannot be accounted for, the value of the TKDN for the variable involved would be assessed as zero. In this regard, financial penalties would be imposed on suppliers of goods/services who are knowingly providing goods/services with the TKDN implementation value that does not satisfy the TKDN quoted on the tender phase.

 

Such financial sanctions shall be determined on the basis of the gap between the TKDN quoted value and the TKDN implementation value multiplied by the bid price, with the difference in the TKDN value being no more than 15% (fifteen percent). The calculation for financial sanctions can be seen below:

The Equation for Financial Sanctions for the Violation of Local Content Requirements.PNG

The Equation for Financial Sanctions for the Violation of Local Content Requirements

Source: MoI Reg. No. 16/2011.

Data Protection

Indonesia does not have a codified law on personal data protection. Instead, the provisions on personal data protection can be found separately in several laws and regulations. The associated primary law on personal data protection is Law No. 11/2008, which predominantly accommodates the need to regulate the use of technology. It is worth pointing out that Law No. 11/2008 is not Indonesia's personal data protection law. However, it sets the foundation for personal data protection as it defines personal data protection as part of privacy rights, which has expanded to the digital space. The privacy rights are defined as follows:

Definition of Privacy Rights.png

Definition of Privacy Rights

Source: Elucidation of Article 26 (1) Law No.11/2008.

Subsequently, Law No. 11/2008 gives birth to GR No. 71/2019 and MoCI Reg. No. 20/2016 as the implementing regulations. Though both implementing regulations provide the measures for personal data protection, they regulate in different areas, and it is evident as they define personal data differently. GR No. 71/2019 defines personal data as every data concerning a person, whether identified and/or identifiable separately or combined with other information directly or indirectly through electronic and/or non-electronic systems. Whereas  MoCI  Reg. No. 20/2016 defines personal data as certain types of personal data that  have their validity preserved, maintained, and safeguarded, as well as their confidentiality protected. Based on both definitions, we can conclude that personal data protection means protecting every activity concerning personal data and protecting privacy rights, while personal data means every data that identifies  a  person,  individually  or combined with  other  information,  which  is  preserved and  its  confidentially  protected. 

 

National Laws on Personal Data Protection

 

Article 26 (1) Law No. 11/2008 stipulates protection on privacy rights by obligating personal data usage shall require consent from the personal data owner. Consequently, any person whose privacy rights are violated may file a lawsuit for the losses incurred. On the other hand, it also prohibits the transfer of electronic information deliberately and without any rights or against the law to an electronic  system owned by another person that is not entitled. The  right  to  be forgotten is set out in Article 26 (3) Law No. 11/2008 states that every electronic system provider is obliged to delete irrelevant electronic information and/or document under its control at the request of the related person concerned by court order. Subsequently, the electronic system provider shall provide a mechanism for deleting irrelevant electronic information and/or document. As the implementing regulation of Law No. 11/2008, GR No. 71/2019 regulates that electronic system provider is obliged to conduct personal data protection principles in processing personal data consisting of:

  • personal data collection is conducted in a limited and specific manner, legally valid, fair, with consent and agreement of personal data owner;

  • personal data processing is conducted following its objectives;

  • personal data processing is conducted by ensuring the rights of personal data owner;

  • personal data processing is conducted accurately, completely, not misleading, up-to-date, accountable, and considering   the   intention   of   personal data processing;

  • personal data processing is conducted by protecting the personal data security from loss, misappropriation, access and illegal disclosure, as well as alteration or destruction of personal data;

  • personal data processing is conducted by notifying the purpose of collection, processing   activities, and failure in protecting personal data; and/or

  • personal data processing is destroyed and/or deleted unless in a retention period following the need based on laws and regulations.

Suppose there has been a failure in protecting personal data in accordance with the principles as   stipulated above, the electronic system provider shall notify in writing the personal data owner.

 

In terms of irrelevant electronic information or document, the electronic system provider shall delete the irrelevant electronic information or document under its control based on the request of the relevant person. Hence, the obligation to delete certain electronic information or document introduces the right to erasure and delisting, reflecting the right to be forgotten in Law No. 11/2008. Data that is subject to erasure may consist of personal data that:

  • was obtained and processed without the consent of the personal data owner;

  • the consent of personal data owner has been withdrawn;

  • are acquired and processed illegally;

  • no longer in accordance with the acquisition purpose based on the agreement and/or laws and regulations;

  • the utilization has exceeded the period in accordance with the agreement and/or laws and regulations; and/or

  • is displayed by the electronic system provider, which causes a loss for the personal data owner.

 

Data owners may request deletion of irrelevant electronic information or/document from the search engine list (right to delisting) by acquiring a court order.

 

This provision ensures protection for personal data owners to take down information when it is transmitted or spread unlawfully.  Article 26 MoCI Reg. No. 20/2016 stipulates that the data owner is entitled of:

 

  • on the confidentiality of their personal data;

  • file a complaint to MoCI in the context of resolving dispute of personal data for the failure in protection the confidentiality of their personal data by the electronic system operator;

  • gain access or opportunity to change or update their personal data without interfere with the personal data management system, unless otherwise stipulated by the prevailing laws and regulations;

  • gain access or opportunity to obtain historical of personal data that has been submitted to the electronic system operator as long as it is still in accordance with the prevailing laws and regulations; and

  • request the destruction of their certain personal data in the electronic system managed by electronic system operators, unless otherwise stipulated by the prevailing laws and regulations.

 

It is worth pointing out that MoCI Reg. No. 20/2016 is the first regulation that specifically regulate personal data protection in electronic systems in Indonesia. Beyond the definition, personal data protection comprises protection toward the acquisition, collection, processing, analyzing, storage, display, announcement, delivery, dissemination, and erasure of   personal data. Personal data protection is conducted in the process of:

 

  • acquisition and collection;

  • processing and analysis;

  • retention;

  • display, announcement, transfer, dissemination, or granting access; and/or

  • destruction.

 

To ensure the foregoing, MoCI Reg. No. 20/2016 obliges the electronic systems to be certified and that each electronic systems provider must have internal policy on data protection as a preventive action to avoid any form of failure. The internal policy must be drafted by considering certain aspects, such as technology implementation, human resources, method, and costs. Other preventive actions to avoid protection failure include:

 

  • by increasing awareness of personal data protection to its human resources; and

  • by holding training on how to prevent personal data protection failure.

 

Although the regulation has determined the forms of preventive measures, it does not eliminate the potential failure from occurring. When it does, the electronic systems provider must notify the personal data owner in writing with the following conditions:

 

  • it should be accompanied with the reasons or causes of the failure;

  • may be carried out electronically if the personal data owner has granted approval for its which has been declared at the time when the acquisition and collection of their personal data takes place;

  • should ascertain that the personal data owner has received it if such failure contains potential   harm against the personal data owner; and

  • written notice should be sent to the personal data owner no later than 14 (fourteen) days after   the failure is known.

 

In the event that the electronic systems provider does not give the aforesaid written notification to the personal data owner, the electronic systems provider is subject to administrative sanctions by the MoCI. However, it is worth noting that the imposition of administrative sanctions does not eliminate criminal or civil responsibilities. The administrative sanctions shall be imposed in the form of:

 

  • written reprimand;

  • administrative fine;

  • temporary suspension;

  • access termination; and/or

  • removal from the list.

 

From the owner's perspective, all personal data owners have the right to file a complaint to the MoCI for the failure of personal data protection based on the following reasons:

 

  • there is no written notice of the failure of personal data protection made by the electronic system provider to the personal data owner, regardless of it being potentially or non-potentially harmful; or

  • the personal data owner in relation to the failure of personal data protection has suffered a loss, even though written notice of the failure has been carried out, yet the notification is too late.

 

The  MoCI  may  coordinate  with  the  head  of Supervisory Institutions and Sector Administrators to follow up on the complaint. The aforesaid complaint shall be settled by way of deliberation or through other alternative dispute resolution and the settlement authority is delegated to the DGIA by the MoCI. Consequently, the DGIA may establish a personal data dispute settlement panel. Following the said settlement has not been agreed upon,  the personal data owner may file a lawsuit on the occurrence of the failure. The timeline for the explained above is as follows:

Data Breach Procedure.png

Data Breach Procedure

Source: MoCI Reg. No. 20/2016.

Sectoral Laws on Personal Data Protection

 

Apart from MoCI Reg. No. 20/2016, there is no other existing regulation that is comprehensive nor specifically designated to regulate personal data protection in Indonesia. Nevertheless, the recognition of personal data protection is spread in various sectoral regulations outlined below:

Telecommunication and Information Sector

Personal data protection in the telecommunication sector is regulated under Law No. 36/1999, which protects individuals from the misuse of telecommunication means. Individual privacy rights are recognized and protected through the prohibition of wiretapping on information channeled through telecommunication networks in any form. Wiretapping means an activity of installing tools or enhancements to telecommunication networks for the purpose of obtaining information in an invalid way. However, in special cases, wiretapping is allowed by virtue of laws and regulations, for instance, in the event there is a presumption of corruption, the Corruption Eradication Commission may perform wiretapping in conducting preliminary investigation and investigation.

 

Apart from wiretapping, Law No. 36/1999 also obliges telecommunication services provider to ensure the confidentiality of information sent and/or received by customers of telecommunication networks and/or telecommunication services provided, unless required for criminal justice process purposes, which allows the telecommunication services provider to record information and provide the necessary information based on: (i) a written request from the Office of the Prosecutor and/or the Chief of the Indonesian National Police for certain crimes; or (ii) a request form an investigator for certain crimes.

 

Furthermore, Law No. 14/2008 stated that the information related to privacy rights are not part of the public information that the government agency shall provide. The aforesaid provision also supported by Article 17 Law No. 14/2008 that stipulated the restriction of the public information may be obtained by the applicant of public information, which stated the public information should not include public information which opened and provided may reveal confidential personal information, namely:

 

  • history and condition of family members;

  • history, condition, and treatment of a person's physical or psychological health;

  • a person's financial condition, assets, income, and bank account;

  • evaluation results in relation to capability, intellectuality, recommendation based on capability of a person; and

  • records in relation to a person's activities of formal education or non-formal education units

 

Administration Sector

 

As for personal data protection in the administration sector, Law No. 23/2006 regulates that the resident personal data must be stored and protected by the state. The  resident  personal  data that must be protected consists of:

  • information on physical and/or mental disability;

  • fingerprint;

  • iris;

  • signature; and

  • other data element that is a person's ignominy.

 

The responsible minister for protection and granting access of personal data to the province officer or officer of implementing agency is the MoHA. As consequence of spreading the personal data without any rights, may be sentenced to maximum imprisonment of 2 (two) years and/or maximum fine of Rp25.000.000,- (twenty five million Rupiah).

Finance and Banking Sector

 

In the banking sector, Law No. 7/1992 states that banks and its affiliations are obliged to keep the information on the depositors and their deposits confidential except in the following events:

 

  1. For the purpose of taxation, the Chairman of BI based on MoF's request authorizes to issue a written instruction for the bank to provide information and written proof as well as documents on the Depositors financial condition;

  2. for the purpose of settlement of bank receivables that have been submitted to the Accounts Receivable Agency and State Auction Committee for State Receivable Affairs, the Chairperson of BI issues permit to obtain information from the bank regarding the deposit of the depositors;

  3. for the purpose of criminal justice process, the Chairperson issues permit to the police, prosecutor, or judge to obtain information from the bank regarding the deposit of the suspect or defendant in the bank;

  4. in civil cases between the bank and its customer, the board of directors may inform the court regarding the financial condition of the customer concerned and provide other information relevant to the case; and

  5. in the event of exchanging information between banks, the board of directors may inform its   customers financial condition to the other bank.

 

Moreover, OJK regulates the data protection in OJK Reg. 1/2013. It stipulates that the financial services business actor is prohibited in any way from providing data and/or information related  to its customers  to a third party. Nonetheless, there are exceptions to the said prohibition, whereby those exceptions  are triggered in the event that: (i) the customers give written consent; or (ii) it is obligated by the laws and regulation. In this regard, when the financial services business actor obtains personal information from a third party in conducting its activities, the financial services business actor shall    make a written statement conveying that the third party has obtained written consent from the  related person to give the referred information to any party, including the financial services business actor. Other than that,  the financial services business actor shall uphold consumer protection in performed its business activities. Additionally, OJK regulates personal data protection by issuing OJK Circular Letter Number 14/SEOJK.07/2014 that defines the scope of data and/or personal information and constraints for the financial services business actor related to the data/personal information.

 

Trade Sector

 

In respect of the trade sector, Law No. 7/2014 stipulates that the use of electronic system for any business trading goods and/or services must comply with the provisions of Law on Electronic Information which is Law No. 11/2008 and its implementing regulations.

 

Considering how digital transactions has evolved, the Indonesian government formed and enacted GR No. 80/2019 to ensure data protection in digital commerce, specifically on transactions by means of electronic system that has to optimize protection on personal data. In particular, GR No. 80/2019 regulates the personal data protection standards, or the prevalence shall at least meet the following    rules of protection:

 

  • personal data must be obtained legally from the personal data owner accompanied by the    existence of choices and guarantees for the safeguarding and prevention of loss to the owner of said personal data;

  • personal data must be owned for one or more purposes that are described in a specific and valid  manner, as well as cannot be further processed in a way that is not  in accordance with the said purposes;

  • personal data that are obtained must be proper, relevant, and not too broad in relation to the    purpose of their processing as previously conveyed to personal data owner;

  • personal data must be accurate and up to date by way of giving opportunities to the personal  data owner to update its personal data;

  • personal data must be processed in accordance with the purpose of the acquisition and  allocation, as well as cannot be possessed longer than the required time;

  • personal data must be processed in accordance with the rights of the personal data owner as regulated under the laws and regulations;

  • the party which stores personal data must possess a proper security system to prevent leaks or prevent any unlawful utilization or processing of personal data, as well as be responsible for unexpected losses and damages to the said personal data; and

  • personal data cannot be sent to another country or area outside Indonesia, except the country  and area that have been declared as having the same protection level and standard as Indonesia by the Minister of Trade.

 

Health Care Services Sector

 

Compared to other sectors above, the health care services sector is the first sector that regulates data protection in detail, especially for  data  found  in  patient's  medical  record. According  to  Law No. 29/2004,  the patient's medical record must be stored and kept confidential by the doctor or dentist and the directors of the health care facility. This provision is restated in Law Number 36 of 2009 on Health, Law Number 44 of 2009 on Hospital, Law Number 36 of 2014 on Health Workers, and Law Number 38 of  2014 on Nursing.

 

A  patient's rights include the right to confidentiality in relation to the health condition that has been  shared with the health care provider. In the event a data loss occurred due to leakage of data and information on a patient's health condition obtained by health worker while conducting its work, then  the related patient may claim compensation from person, health  worker, and/or health care services  provider who causes loss due to error or negligence.