Indonesia Update: New Trade Minister Regulation on SIUP and TDP

Indonesia Update | February 23, 2017
Authors: Kim Yaeger, Artha Sirait and Ian Saccomanno
 
LOOKING AHEAD
 
 
  • The Council and the American Indonesian Chamber of Commerce will be hosting a luncheon with His Excellency Budi Bowoleksono, Ambassador of Indonesia to the United States on February 27 in New York. Please click here to register or contact mini@aiccusa.org for further information. 
  • Digital Economy Industry Mission, April 26-27: The ICT and Financial Services Committees will be leading a group of technology and financial services companies to Indonesia for an industry mission covering digital economy issues. The registration page may be found here. Please contact Matt Solomon (msolomon@usasean.org) for more information. 
 
THE COUNCIL'S TAKE
 
 

New Trade Minister Regulation on SIUP and TDP

On February 21, Trade Minister Enggartiasto Lukita announced that business permits (Surat Izin Usaha Perdagangan – SIUP) now, subject to extraordinary circumstances, have perpetual validity and that the renewal procedure for the registration certificates (Tanda Daftar Perusahaan – TDP) has now been simplified through e-registration process at no charge. SIUP is mandatory for companies wishing to conduct any business activities in Indonesia, except for certain qualified businesses such as representative offices and, small-scale businesses meeting a particular threshold as determined by the government. SIUP contains details about a company’s specific business activities, including identifying the person in charge of such company i.e. the President Director, meanwhile TDP is a certificate of compliance proving that a company has been registered in the Company Registry where such company is domiciled. SIUP and TDP previously needed to be renewed every five years, a process that is not costly, but is time-consuming. The SIUP and TDP licensing procedures have undergone several changes, historically required to be obtained separately, though since 2013, both licenses can be obtained simultaneously. The government’s recent effort in minimizing business hurdles has been received positively by the business community in Indonesia, seen as a step in the right direction as licensing simplification can be helpful in catalyzing business developments in the short-term. Please click here for Minister of Trade Regulation No. 7 of 2017 on SIUP and here for Minister of Trade Regulation No. 8 of 2017 on TDP (both available in Bahasa Indonesia).

Draft Government Regulation on Insurance Update

Law No. 40 of 2014 on Insurance requires an implementing regulation in the form of a government regulation be issued to provide further guidance for the insurance industry in Indonesia. Earlier this week, the government has prepared a draft regulation which was reportedly discussed with the House of Representatives (Dewan Perwakilan Rakyat – DPR) on February 22. Under the elucidation of Article 7 paragraph (3) of the Insurance Law, the government is required to consult with DPR and the Financial Services Authorty (Otoritas Jasa Keuangan – OJK) in regulating foreign ownership restriction in the insurance sector. The government has a deadline to issue the government regulation by April 17, 2017 as mandated in the Insurance Law. Isa Rachmatarwata, Assistant of Minister on Financial Services and Capital Markets Policies and Regulations, stated that the government regulation will set out three criteria for foreign parties aiming for equity participation in insurance companies in Indonesia. Such foreign firm must:

  1. itself be an insurance player or at a minimum has a subsidiary engaging in the insurance industry;
  2. meet the minimum capital requirement being five times its direct investment in the Indonesian insurance joint venture; and
  3. meet all of the technical requirements as determined by the Financial Services Authority.
Foreign ownership will be capped at 80 percent, though, while speaking to the press, Finance Minister Sri Mulyani stressed that it is in the government’s view that foreign insurance players are needed to develop the insurance sector in Indonesia.
 
IN THIS UPDATE
 
 

Regional Affairs
ASEAN determined to have South China Sea code: Philippines
FM Retno Addresses G20 on Terrorism, Global Peace Initiatives
RI, Austria to back each other`s bid for UNSC non-permanent seat
Indonesia, Germany agree G20 for economic development
Indonesia seeks to reenergize trade with Saudi Arabia
Singapore firms eye Indonesia for growth

National Affairs
Indonesia’s GDP to reach $9.1 trillion by 2045: Jokowi
Indonesia focuses on internal reform to enhance investment climate
Indonesia Game Changers
KPPU to Probe Fares for Ride-Hailing Services
Indonesia to declare war on marine plastic debris: Environment minister

Business permits no longer need renewing as of today


Economics
BI predicts lower GDP growth in first quarter
Jokowi focuses on three programs for even economic growth
C Java contributes significantly to national growth: BI
Inflation May Move Above 4% This Year: Bank Indonesia
Indonesia's Foreign Debt Growth Slows in Last Quarter of 2016
Government may need to borrow for certain spending: Sri Mulyani
Commodity prices to revive in 2017: BI official
Indonesia to Sell $5.5 Bln Bonds to Global Markets This Year : Official
Indonesian trade posts $1.4 billion surplus

Energy
RI has huge potential for investment in renewable energy
Investors sought for green energy projects on Sumba Island
Indonesia, Sweden to Cooperate on Wind-, Hydropower Projects
Indonesia to strengthen commitments with Iran in energy sector

Financial Services
Indonesia drafting rules to end bank secrecy
Bank of Indonesia: Credit Card Businesses Shouldn’t Go All-Out
BI to Form Central Counterparty for Derivative Transactions
Indonesia's Big Banks Told to Submit Plans for Coping With a Crisis
The OJK Issues New Regulation Good Corporate
BI Issues New Regulation on Dividends


Food & Agriculture
Indonesia's tough stance causes headache for tuna exporters
Indonesian coconut enjoys sweet spot in Hungary
Indonesia suspends importation of Indian buffalo meat
Two SOEs team up to develop livestock industry

Health & Life Sciences
17 health organizations reject draft bill on tobacco

ICT
Surabaya Mayor Invites Silicon Valley’s CEOs

Infrastructure
Operator to expand capacity of Soekarno-Hatta airport’s runways
Trans-Java toll road project boosts non-state funding model
Land acquisition issues continue to hinder strategic projects
Jokowi wants North Sumatra to become international hub

Manufacturing
Ministry suggests 5 percent tax cut for export-oriented industries
Illegal Textile Products Dominate Indonesian Market
Jokowi criticizes Trade Ministry for lack of innovation
Kupang to build new cement factory
Indonesia watchdog says Yamaha, Honda distributors guilty of price-fixing
 

 
ARTICLE CLIPS
 
 
Regional Affairs

ASEAN determined to have South China Sea code: Philippines The Jakarta Post 21st Feb 2017
The Association of Southeast Asian Nations (ASEAN) is fully committed to come up with a Code of Conduct on the South China Sea (COC) more than 14 years after the signing of a non-binding declaration of conduct.

FM Retno Addresses G20 on Terrorism, Global Peace Initiatives Jakarta Globe 20th Feb 2017
Speaking during the G20 ministerial meeting in Bonn, Germany, on Friday (17/02), Indonesian Foreign Minister Retno Marsudi emphasized the global role of the international forum and the United Nations. Retno said fellow G20 countries have a responsibility, as well as a collective interest, to make the world more peaceful, stable and prosperous. .

RI, Austria to back each other`s bid for UNSC non-permanent seat Antara News 19th Feb 2017
Indonesia and Austria have agreed to support each others bid for non-permanent membership of the United Nations Security Council (UNSC). Indonesia will go ahead with its candidacy for the UNSC non-permanent membership for the 2019-2020 term, the minister counsellor/Indonesian permanent representative to international organizations in Vienna, Dewi Kejora said on Sunday.

Indonesia, Germany agree G20 for economic development Antara News 19th Feb 2017
At a bilateral meeting between Indonesian Foreign Minister Retno Marsudi and her German counterpart Sigmar Gabriel in Bonn on Thursday (Feb 16), both sides agreed that the G20 foreign ministerial meeting can be addressed to create a condition conducive to economic development.

Indonesia seeks to reenergize trade with Saudi Arabia The Jakarta Post 17th Feb 2017
President Joko “Jokowi” Widodo is seeking help from the Saudi Arabian Consultative Assembly, or Majlis Asy-Syura, to improve slowing bilateral trade and economic cooperation between the Middle Eastern country and Indonesia.

Singapore firms eye Indonesia for growth The Straits Times 16th Feb 2017
Indonesia has jumped to top spot as the most attractive overseas destination for Singapore companies looking to spread their wings. For many companies here, it is a no brainer, given the vast size of the market of 250 million people sitting right at Singapore's doorstep.

National Affairs

Indonesia’s GDP to reach $9.1 trillion by 2045: Jokowi The Jakarta Post 21st Feb 2017
The government predicts that Indonesia’s gross domestic product (GDP) will reach US$9.1 trillion by 2045. President Joko “Jokowi” Widodo said he recently ordered the Finance Ministry to calculate the figure in order to predict the country’s standing over the next two decades, during which Indonesia’s population is expected to reach around 310 million.

Indonesia focuses on internal reform to enhance investment climate The Jakarta Post 21st Feb 2017
While it is fully aware of the importance of promoting the country’s huge potential overseas, the Investment Coordinating Board (BKPM) aims to focus on overcoming domestic bottlenecks to improve the overall investment climate.

Indonesia Game Changers Channel NewsAsia 20th Feb 2017
The largest economy in Southeast Asia and the world’s tenth largest. The world’s fourth-most populous country with an emerging middle class. And despite the challenging regional environment, Indonesia’s growth remains robust since overcoming the Asian Financial Crisis in 1997. If Indonesia continues to deliver on economic growth, that will also be an important boost to regional growth.

KPPU to Probe Fares for Ride-Hailing Services Tempo 20th Feb 2017
The Commission for the Supervision of Business Competition (KPPU) will investigate into predatory pricing by ride-hailing services, such as Uber, Go-Car and Grab. “We will summon parties related to this case,” the KPPU chairman Syarkawi Rauf said.

Indonesia to declare war on marine plastic debris: Environment minister The Straits Times 19th Feb 2017
Indonesia will declare its commitment to combat plastic debris in marines on Feb 23 when it hosts the fourth World's Ocean Summit in Bali, the country's environment minister said.Studies indicate that the country may be the second-biggest contributor to marine plastic debris worldwide, with an estimated 1.3 million tonnes originating from the archipelago annually.

Business permits no longer need renewing as of today The Jakarta Post 21st Feb 2017
The Trade Ministry has distributed circulars to inform officials that business permits (SIUP) no longer need to be renewed and that registration certificates (TDP) can be renewed online. “We’ve eliminated the SIUP renewal obligation. For TDP, as the law obliges its renewal [every five years], we have shifted the procedure to online for free. The circulars have been issued today,” said Minister Enggartiasto “Enggar” Lukita in a press conference before joining a Trade Ministry working meeting on Tuesday.

Economics

BI predicts lower GDP growth in first quarter The Jakarta Post 23rd Feb 2017
Bank Indonesia (BI) has projected the economy may see slower growth in the first quarter than its previous prediction of 5.05 percent year-on-year (yoy) on account of weak push in government spending.

Jokowi focuses on three programs for even economic growth Antara News 22nd Feb 2017
President Joko Widodo (Jokowi) has planned to focus on three programs to spread economic growth more evenly in the country. "We will conduct three programs to spread economic development more evenly," the president said, in the presence of around 25 thousand cadres of Hanura Party at the confirmation of the new party board for 2016-2020 at International Convention Center in Sentul, Bogor, West Java, here on Wednesday.

C Java contributes significantly to national growth: BI Antara News 20th Feb 2017
Central Java province contributed significantly to the national economic growth last year, Bank Indonesia (BI) Deputy Governor Sugeng said. "Under the leadership of Governor Ganjar Pranowo who won Adhikarya Pangan Nusantara awards from President Joko Widodo in 2015 and 2016, Central Javas economy expanded 5.28 percent for all of 2016," he said here on Monday.

Inflation May Move Above 4% This Year: Bank Indonesia Jakarta Globe 20th Feb 2017
The annual rate of inflation may move above 4 percent due to the fuel price hike and the gradual increase in electricity tariffs, a director at the central bank said on Saturday (18/02). "Those factors may result in an increase in the inflation rate this year; that is why we need to put in more effort to contain volatile food prices to be able to achieve our targets," Bank Indonesia economic and monetary policy director Yoga Affandi told reporters.

Indonesia's Foreign Debt Growth Slows in Last Quarter of 2016 Jakarta Globe 20th Feb 2017
Indonesia's foreign debt growth slowed in the fourth quarter of 2016 compared to the previous quarter, in line with a corresponding slowdown in its long-term foreign debt, according to a report by Bank Indonesia released on Friday (17/02).

Government may need to borrow for certain spending: Sri Mulyani The Jakarta Post 20th Feb 2017
Finance Minister Sri Mulyani Indrawati has said the government may need to borrow money to cover spending on certain sectors. She said spending on education, health and infrastructure, for example, could not be postponed and if funding could not be taken from the state budget, the government would need to find other financial resources to cover the spending.

Commodity prices to revive in 2017: BI official Antara News 19th Feb 2017
A central bank official has predicted that the most strategic commodity prices would rise this year to boost exports as one of the important components to drive economic growth. The Director of Bank Indonesias (BI) Department of Monetary and Economic Policies, Yoga Affandi, said here on Saturday that the prices of a number of commodities, such as copper, nickel, and aluminum that were corrected in 2016 due to weaker demand, would increase.

Indonesia to Sell $5.5 Bln Bonds to Global Markets This Year : Official Jakarta Globe 16th Feb 2017
Indonesia will sell $5.5 billion worth of bonds to global markets this year, a finance ministry official said on Thursday, adding that they will be yen- and euro-denominated conventional bonds, as well as U.S.-dollar Islamic bonds.

Indonesian trade posts $1.4 billion surplus The Jakarta Post 16th Feb 2017
Indonesian trade posted a US$1.4 billion surplus in January, a drastic surge from only $10 million in January 2016, the Central Statistics Agency (BPS) has said. “This is the highest surplus since January 2014,” BPS head Suhariyanto said during a press conference in Jakarta on Thursday.

Energy

RI has huge potential for investment in renewable energy Antara News 20th Feb 2017
Indonesia has a huge potential for investment in renewable energy, especially for waste and geothermal energy, according to the Energy and Mineral Resources Ministry. "There are 13 regions in Indonesia which have geothermal energy potential," the ministrys Director of Geothermal, Yunus Saefulhak said in a discussion held here, Monday.

Investors sought for green energy projects on Sumba Island The Jakarta Post 20th Feb 2017
The government has invited investors and financial firms to build power plants powered by renewable energy in trying to meet the 2020 electrification deadline on Sumba Island in East Nusa Tenggara (NTT). Energy sources for the power plants for the Sumba Iconic Island (SII) project include solar, wind, hydro and biomass.

Indonesia, Sweden to Cooperate on Wind-, Hydropower Projects Jakarta Globe 19th Feb 2017
Indonesia has agreed to cooperate with Sweden in developing renewable energy in the archipelago, Energy Minister Ignatius Jonan said on Friday (17/02). Jonan said the cooperation with Sweden would focus on the development of wind and hydropower potential in Indonesia.

Indonesia to strengthen commitments with Iran in energy sector Antara News 19th Feb 2017
Indonesia will strengthen its commitment to developing the energy sector with Iran, including investment in an oil field in that country, Deputy Minister of Energy Arcandra Tahar said here on Friday.

Financial Services

Indonesia drafting rules to end bank secrecy The Jakarta Post 23rd Feb 2017
The government is mulling whether to issue an urgent regulation that would scrap the country’s bank secrecy policies, while at the same time allowing tax officials to hunt for recalcitrant taxpayers who continue to hide their assets, having declined to avail of the tax amnesty.

Bank of Indonesia: Credit Card Businesses Shouldn’t Go All-Out Tempo 20th Feb 2017
Bank Indonesia urged banks not to go all-out in attracting transactions through credit card promotions. "There's one that has a Rolls Royce as a prize, discounts up to 70 percent for purchasing certain products, they went all-out, other countries are not like us, because the cost is assured by the banks," said Eni V. Panggabean, Executive Director and Head of Bank Indonesia's Department of Payment System Policy last week.

BI to Form Central Counterparty for Derivative Transactions Tempo 17th Feb 2017
Bank Indonesia (BI) will form a central counterparty (CCP) in the near future to facilitate derivative transactions conducted by corporations with banks. "Banks will root this [transactions] via the CCP. Currently, all countries are preparing CCPs based on recommendations from world organizations," BI Governor Agus Martowardojo said at the BI Complex in Jakarta on Friday, February 17, 2017.

Indonesia's Big Banks Told to Submit Plans for Coping With a Crisis Jakarta Globe 22nd Feb 2017
Indonesia's biggest banks must write up plans for recovering from potential insolvency, a measure to ensure that authorities do not have to bail them out, the chairman of the banking regulator said on Wednesday (22/02). Muliaman Hadad, chairman of the Financial Services Authority (OJK) told a parliamentary hearing that all "systemically important banks" — which he did not define — had to file internal recovery plans to his agency by year-end.

The OJK Issues New Regulation Good Corporate Baker McKenzie 16th Feb 2017
On 23 December 2016 the Financial Services Authority (OJK) issued Regulation 73/POJK.05/2016 on Good Corporate Governance (GCG) for Insurance Companies (Regulation 73). Regulation 73 became effective on 28 December 2016. The first specific regulation on GCG for insurance companies was Regulation of Minister of Finance No. 152/PMK.010/2012 on Good Corporate Governance for Insurance Companies (Regulation 152). On 8 April 2014, the OJK issued a new regulation on GCG for Insurance Companies, that is, OJK Regulation No. 2/POJK.05/2014 (Regulation 2).

BI Issues New Regulation on Dividends Tempo 17th Feb 2017
Bank Indonesia (BI) will issue a new regulation on the management of dividends provided by corporations to shareholders. The policy is aimed at strengthening macroprudential framework amid limited room for monetary relaxation.

Food & Agriculture

Indonesia's tough stance causes headache for tuna exporters The Jakarta Post 20th Feb 2017
Despite their support for the government’s efforts in the fight against illegal fishing, Indonesia’s tuna exporters have urged the authorities to loosen their stance on requirements for tuna ships, which they claim have hampered the commodity’s export performance.

Indonesian coconut enjoys sweet spot in Hungary The Jakarta Post 19th Feb 2017
Hungarian businesses have urged their Indonesian counterparts to export more coconut products to their country. “Today’s coconut supplies from around the world, including Indonesia, don’t meet demand in Hungary and other countries in central and eastern Europe,” said Hungarian businessman Adam Kapas, whose company Mayers Kft is a major Indonesian coconut importer.

Indonesia suspends importation of Indian buffalo meat ABC News 16th Feb 2017
The Indonesian Government has suspended the importation of Indian buffalo meat following a ruling by the nation's Constitutional Court, but there are many who believe the ban will not last. Last week the court ruled that meat from countries prone to foot and mouth disease (FMD) could only be imported under emergency circumstances.

Two SOEs team up to develop livestock industry The Jakarta Post 17th Feb 2017
Two state-owned companies – PT Rajawali Nusantara Indonesia (RNI) and PT Berdikari – have signed an agreement to develop the livestock industry, specifically cattle and chicken breeding, as well as the animal feed industry. Citing data from the Central Statistics Agency (BPS), he said the consumption of animal protein in Indonesia amounted to just 53.91 grams per capita per year, below to the recommended minimum of 57 grams. PT Berdikari is appointed by the government to develop the country’s livestock industry, while PT RNI also has experience in the industry and owns large farms. The two companies, for example, will develop the cattle business, from the import and fattening of cattle to the breeding and selling of livestock. In the poultry business, the two companies plan to engage in activities from chicken breeding to sales of ready stocks, as well as develop chicken- feeding plants.

Health & Life Sciences

17 health organizations reject draft bill on tobacco Antara News 20th Feb 2017
Seventeen health organizations in Indonesia have issued a joint declaration urging President Joko Widodo to reject the draft bill on tobacco. "To agree deliberation of the draft bill on tobacco means that we have risked human resources in facing global competition," the statement, read by a deputy secretary of the Indonesian Heart Association (Perki) Ario Soeryo Kuncoro said here, Monday.

ICT

Surabaya Mayor Invites Silicon Valley’s CEOs Tempo 23rd Feb 2017
Surabaya Mayor Tri Rismaharini said that the Surabaya regional government administration is committed to turning the city into a digital startup center in Indonesia. Risma announced a plan to hold a conference and technical training with a number of technology and business experts from Silicon Valley, San Francisco, US.

Infrastructure

Operator to expand capacity of Soekarno-Hatta airport’s runways The Jakarta Post 20th Feb 2017
State-owned airport operator PT Angkasa Pura II (AP II) will invest Rp 625 billion (US$46.25 million) to expand the capacity of Soekarno-Hatta International Airport’s runways in Tangerang, Banten, so that it can serve 86 flights an hour.

Trans-Java toll road project boosts non-state funding model The Jakarta Post 17th Feb 2017
The trans-Java toll road has come up as the first project to reach financial closure under the non-state budget infrastructure funding (PINA) model. National Development Planning Board (Bappenas) head Bambang Brodjonegoro on Friday announced the financial closure for the project run by developer PT Waskita Toll Road, a subsidiary of state-owned construction firm PT Waskita Karya. 

Land acquisition issues continue to hinder strategic projects The Jakarta Post 17th Feb 2017
Land acquisition issues still seem to make up the bulk of problems that hinder strategic project development across the nation. Acting North Sumatra governor Tengku Erry Nuradi confirmed that the province had experienced speed bumps in land acquisition and in procuring forest land.

Jokowi wants North Sumatra to become international hub The Jakarta Post 16th Feb 2017
President Joko “Jokowi” Widodo has instructed his ministers to prepare North Sumatra to become an international hub because geographically, the province is strategically positioned in the international shipping line.

Manufacturing

Ministry suggests 5 percent tax cut for export-oriented industries The Jakarta Post 23rd Feb 2017
The Industry Ministry has proposed a tax cut incentive for income tax (PPh) in export-oriented, labor-intensive industries to make domestic business more competitive.

Illegal Textile Products Dominate Indonesian Market Tempo 22nd Feb 2017
Illegal imported textile product continues to dominate Indonesia’s domestic market. The origin of around 16.7 percent of all textile product consumption could not be traced. Secretary General of the Synthetic Manufacturers Association of Indonesia (Apsyfi), Redma Wirawasta, predicted that the textile and garment products that were illegally available throughout 2016 reached 310,000 tons.

Jokowi criticizes Trade Ministry for lack of innovation The Jakarta Post 21st Feb 2017
President Joko “Jokowi” Widodo criticized the Trade Ministry for not being more ambitious and coming up with new innovations to penetrate new markets abroad. He claims the ministry has long worked in its comfort zone and has been unable to harness new markets outside traditional markets in the United States, Japan, China and Europe. 

Kupang to build new cement factory Antara News 20th Feb 2017
The plan to build the Kupang Cement Indonesia factory in Kupang will soon be materialized, Governor of East Nusa Tenggara Frans Lebu Raya noted. "The preparation phase has been completed. The groundbreaking ceremony is scheduled to be held on Mar 10 this year," he informed ANTARA in Kupang, Monday.

Indonesia watchdog says Yamaha, Honda distributors guilty of price-fixing NASDAQ 20th Feb 2017
Indonesia's anti-monopoly agency said on Monday that two companies that make and distribute Yamaha and Honda motorbikes there were guilty of price-fixing. A tribunal by the Indonesian Business Competition Supervisory Commission (KPPU) ruled that PT Yamaha Indonesia Motor Manufacturing and PT Astra Honda Motor had agreed to set prices for automatic scooters with an engine capacity of 110-125 cubic centimetres.