Rajah & Tann Regional Round-Up
your snapshot of key legal developments in Asia
Issue 4 - Oct/Nov/Dec 2019
 

Welcoming Indonesia's E-Commerce Regulation: A Snapshot

In closing 2019, the Indonesian government enacted the much-anticipated e-commerce regulation, which regulates various players in an e-commerce transaction and service providers.  It also regulates e-contracts, online advertisements and personal data protection. 


One of the key features of the e-commerce regulation is that it applies to foreign businesses that satisfy the thresholds in terms of the number of transactions, transaction value, number of delivery or the amount of traffic (which numbers are not yet provided in this regulation). A foreign business that satisfies the applicable thresholds will be subject to Indonesian tax. 


Another feature of the e-commerce regulation is the introduction of safe harbour provisions, similar to the provisions under the US Digital Millennium Copyright Act and the EU E-Commerce Directive. The safe harbour provisions of the regulation provide broad immunity to e-commerce service providers and intermediary service providers from the legal consequences arising from illegal third-party content. 


Lastly, the regulation also stipulates that a cross-border transfer of personal data out of Indonesia can only be made to countries which have standard personal data protection regimes that are on par with Indonesia.


Supreme Court Decision a Blow to Restructuring after PKPU

A recent Supreme Court decision involving PT Arpeni Pratama Ocean Line Tbk. ("APOL") cast a doubt on the practice of amending a composition plan, which is commonly done in the context of a suspension of debt payment or Penundaan Kewajiban Pembayaran Utang ("PKPU") in Indonesia. 

In the decision, the Supreme Court cancelled an amended composition plan pursuant to an application by one creditor to cancel the amended composition plan, despite approval from the majority of APOL's creditors to amend the plan. The Supreme Court stated that a court-approved composition plan is akin to a court decision, which means that it cannot be amended privately by the parties, and that an amendment of the composition plan contradicts the principle of fairness and equity in bankruptcy law. 

As a result of this decision, moving forward, it would be prudent for parties not to rely solely on the amendment to a composition plan as a means to restructure debts after the PKPU process.


Wading Through Indonesia's New Water Resources Law

After more than three decades, the Indonesian government finally issued a new law on water resources to replace the 1974 Irrigation Law (which was revived in 2015, when the Constitutional Court struck down a 2004 law governing utilisation of water resources). 


A key development in the new law is the introduction of a clear hierarchy of water utilisation, with usage for basic daily needs, public agricultural activities and drinking water supply systems at top of the hierarchy, and usage for activities relating to non-commercial purpose (e.g. for religious, cultural and social endeavours) and business purposes at the bottom of the hierarchy. 


The government also affirms control over water resources in the new law by, among other things, imposing a licensing regime for water utilisation for activities for non-commercial and business purposes. Here, state-owned entities enjoy a priority and private entities can only apply for a license if they comply with the water resources management outlines and plans and certain administrative technical requirements. 


While the new law is certainly welcomed, there are still questions, including those that relate to the drinking water sector. This would hopefully be addressed in the yet-to-be issued implementing regulations.


New Merger Control Regulation: Asset Acquisitions Subject to KPPU Notification and Update to New Merger Control Regulation

With effect from 3 October 2019, an asset acquisition transaction must be notified to the  Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha or "KPPU")  if such a transaction (not including a transaction involving parties in the banking sector):


  1. exceeds the applicable thresholds (either the combined Indonesian asset value of the transacting parties exceeds IDR2.5 trillion and/or the combined Indonesian sales value of the transacting parties exceeds IDR5 trillion); and

  2. results in a change of control over the acquired assets; and/or

  3. increases the acquirer’s ability to control certain markets.

While the first and second requirements are clear, the third requirement will be determined by the KPPU on a case-by-case basis by looking at certain objective criteria, such as whether the assets are sold under an ordinary sales activity and whether the acquisition may potentially increase the market share or allow a vertical integration of the purchaser or its group company. 


The new requirement was implemented pursuant to the KPPU Regulation No. 3 of 2019 on Assessment of Merger or Consolidation of Business Entities or Share Acquisition of Companies that Could Result in Monopolistic and/or Unfair Business Competition Practices in response to the need for KPPU to oversee non-share-based transactions that may raise anti-competitive concerns.




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

 

Assegaf Hamzah & Partners
Jakarta Office
Level 36 & 37, Capital Place
Jalan Jenderal Gatot Subroto Kav 18
Jakarta 12710, Indonesia

Surabaya Office
Pakuwon Center, Superblok Tunjungan City
Lantai 11, Unit 08
Jalan Embong Malang No. 1, 3, 5,
Surabaya 60261, Indonesia
http://id.rajahtannasia.com


Contacts:

Bono Daru Adji
Managing Partner
D +62 21 2555 7800
F +62 21 2555 7899
bono.adji@ahp.co.id

Ahmad Fikri Assegaf
Partner, Co-Founder
D +62 21 2555 7800
F +62 21 2555 7899
ahmad.assegaf@ahp.co.id

Chandra M Hamzah
Partner
D +62 21 2555 7800
F +62 21 2555 7899
chandra.hamzah@ahp.co.id

Eri Hertiawan
Partner
D +62 21 2555 7800
F +62 21 2555 7899
eri.hertiawan@ahp.co.id

Ibrahim Sjarief Assegaf
Partner
D +62 21 2555 7800
F +62 21 2555 7899
ibrahim.assegaf@ahp.co.id


Rajah & Tann Singapore LLP


Contacts:

Hamidul Haq
Partner
D (65) 62320398
hamidul.haq@rajahtann.com

Cheng Yoke Ping
Partner
D (65) 62320265
yoke.ping.cheng@rajahtann.com

Paul Ng
Partner
D (65) 62320429
paul.ng@rajahtann.com

Rajah & Tann Asia is a network of legal practices based in South-East Asia. Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

This Update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this Update.