Indonesia

Screenshot 2020-03-04 at 1.34.06 PM

By Heru Mardijarto, Stephen Sim and Annisa Tharian, Makarim & Taira S.

 

On 12 December 2019, the new Minister of State-Owned Enterprises, Erick Thohir, issued new Ministry of State Owned Enterprises Regulation No. PER-08/MBU/12/2019 on General Guidelines on the Implementation by State Owned Enterprises of the Procurement of Goods and Services (MSOE Reg 8/2019), which came into force on 16 December 2019. This regulation replaces the previous regulation, MSOE Regulation No. PER-05/ MBU/2008 as amended by MSOE Regulation No. PER-15/MBU/2012 on General Guidelines on the Implementation by State Owned Enterprises of the Procurement of Goods and Services (MSOE Reg 5/2008).

This new regulation introduces several new important provisions, including among others:

1. Price preference for local content
MSOE Reg 9/2019 now allows state-owned enterprises (SOE) to apply a price preference for local products with a local content component value equal to or more than 25 percent.

The price preference for goods given can be up to 25 percent and for construction services up to 7.5 percent.

The local content requirements for procurement will be determined by the Local Content Team (Tim Tingkat Komponen Dalam Negeri) formed by the Board of Directors of the SOE.

Screenshot 2020-03-04 at 1.27.47 PM
2. Changes to the definition of a subsidiary and an affiliated company of a state-owned enterprise
Under MSOE Reg 5/2008, a subsidiary was defined as a company at least 90 percent of the shares of which are owned by the SOE. MSOE Reg 5/2008 further defined an affiliated company of an SOE as a company at least 90 percent of the shares of which are owned by a subsidiary, joint subsidiary, or joint subsidiaries of the SOE.

Under the new regulation, the subsidiary of an SOE is a company more than 50% of the shares of which are owned by the SOE. MSOE Reg 9/2019 defines an affiliated company as a company more than 50 percent of the shares of which are owned by a subsidiary, joint subsidiary, or joint subsidiaries of the SOE.

3. Procurement for a subsidiary or affiliate of an SOE
Under the previous regulation, the procurement regulations for SOEs should also apply to their subsidiaries and affiliates. Now, under the current regulation, their subsidiaries and affiliates may opt to follow the procurement rules under MSOE Reg 8/2019. The General Meeting of Shareholders must be held by the subsidiary or affiliate of the SOE to confirm its application of the procurement rules under MSOE Reg 8/2019.

4. The conditions for a direct appointment
The conditions for a direct appointment under MSOE Reg 8/2019 are mainly still the same as under MSOE Reg 5/2008. However, MSOE Reg 9/2019 introduces 2 (two) new conditions for a direct appointment, which are: (i) the goods and services are to be procured in a certain amount and at a certain price determined by the Board of Directors of the SOE which has been approved by the Board of Commissioners; and/or (ii) the consultants are needed the procurement of which was not planned in advance to face certain issues which cannot be postponed and require an immediate response.

 

Screenshot 2019-11-27 at 8.28.37 PM 

W: www.makarim.com

E: info@makarim.com

E: heru.mardijarto@makarim.com
E: stephen.sim@makarim.com

Related Articles by Firm
Domestic non-deliverable forwards under Indonesian law
It is hoped that DNDF transactions in the market will provide confidence to business actors regarding owning assets in rupiah.
Indonesia: The Omnibus Law on Job Creation
What the bill has to offer ...
Indonesian government simplifies outsourcing requirements
But users and providers still need to be aware of their restrictive and far-reaching breadth and scope.
Regulation on integrated mortgage services through electronic systems
The service aims to improve disclosure, punctuality, simplicity and affordability.
New Indonesian franchise regulation relaxes certain requirements
The new regulation aims to simplify the registration process and facilitate investment.
New amendment to Indonesia’s KPK Law
The main purpose of the amendments is to change the corruption eradication paradigm from prosecution measure to prevention measure.
Aircraft finance and leasing in Indonesia
The Indonesian aviation sector has grown rapidly over the past few years. Due to this, airlines and lessors have been capitalising on the general availability of diverse sources of funding ...
New KPPU regulation on merger filings
Simplification yet some clarity is needed.
Reminder – Requirement in the OSS System for companies to adjust their Business Classification Code
This joint notice requires limited liability companies to adjust their purpose and objectives.
Requirement to use the Indonesian language is regulated further
Indonesia has finally issued an implementing regulation of the Language Law.
BKPM amends its regulation on the procedures for licence and investment facilities
Divestment and foreign directors and commissioners’ requirements.
Indonesia's new regulation on e-litigation
The Supreme Court aims to have e-litigation operating in all courts of first instance by early 2020.
Latest amendment to the procedure for the resolution of small claims lawsuit
The new procedure provides more optimal and effective regulation than the previous regulation.
New government regulation on organisation of electronic systems and transactions
The Government of Indonesia finally issued Government Regulation No. 71 of 2019 on Organisation of Electronic Systems and Transactions on 4 October 2019, gaining momentum as the country sees the rise of ‘unicorns’ and President Joko Widodo boasting about the country’s digital economy ...
New decree on foreign workers in Indonesia
The Ministry of Manpower has issued a codified list of businesses in which foreign employees may be employed.
Regulating the sale and provision of digital content through mobile cellular networks
Regulations on digital content are becoming more relevant as investor interest in the Indonesian market rises.
Joko Widodo re-elected: How will it affect doing business in Indonesia?
In his election campaign, Jokowi declared nine missions ...
Indonesia: New regulation on Foreign Construction Representative Offices and Construction Foreign Investment Companies
On 13 June 2019, the Minister of Public Works and Public Housing issued Regulation No. 09/PRT/M/2019 on Guidelines on Licensing Services for Foreign Construction Business Entities ...
Settlement of disharmony between laws and regulations through mediation
On February 12, 2019, the Minister of Laws and Human Rights (MOLHR) issued Regulation No. 2 of 2019 on The Settlement of Disharmony between Laws and Regulations through Mediation (MOLHR Reg 2/2019), which came into effect on February 14, 2019 ...
Bank Indonesia issues a new regulation on the reporting of foreign exchange flows
Bank Indonesia (BI) recently issued Regulation No. 21/2/PBI/2019 on the Reporting of Foreign Exchange Flow Activities ...
Related Articles
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...
JV Compliance Issues during the Transition Period under the new FIL
On 1 January 2020, the Foreign Investment Law of the People’s Republic of China came into force ...
Related Articles by Jurisdiction
S. Korean firm Yulchon establishes 'Jakarta Desk' following trends in investment
South Korea is currently the third biggest investor in Indonesia ...
Combating private sector corruption in Indonesia: A challenge to address in 2019
With elections just around the corner, corruption involving government and public service agencies will likely be a top issue ...
Latest Articles
Watch again: “Is Covid-19 taking women lawyers’ careers back to the 1950s?”
A second chance to watch….. the opening Women In Law Dialogue Series Webinars: Asia and North America time-friendly (first aired ‘live’ in August 2020) ...
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...