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REGULATORY & POLICY INSTRUMENT UPDATES

REGULATORY & POLICY INSTRUMENT UPDATES TO RESPOND TO THE SPREAD OF COVID-19 – PART 2

 
Date
Policies
23 March 2020
Following a fiscal stimulus part II that has been introduced by the MoF on the 11th of March 2020, the MoF has officially enacted a MOF regulation number 23/PMK.03/2020 ("PMK 23") concerning Tax Incentives for Industries who are affected by the Covid-19. A key principle of this regulation is to give certain industries relaxation in terms of income tax due under article 21 of the Indonesia Income Tax Act, import tax due under article 22 of the Indonesia Income Tax Act, tax installment due under article 25 of the Indonesia Income Tax Act, and acceleration of the Value Added Tax Restitution.
Association of Indonesian Notary/ Ikatan Notaris Indonesia enacted a Recommendation to Prevent COVID-19 Outbreak/ Himbauan Pencegahan Penyebaran COVID-19 No. 67/35-III/PP-INI/2020. This recommendation provides that work-from-home policy and social distancing will certainly limit the implementation notary public’s duty. Thus, delay of the completion of the transaction (which requires a notarial deed such as M&A transaction) might be inevitable. This recommendation provides alternatives such as:
  • rearrange the signing schedules with the parties, until the conditions allow;
  • for agreements, deeds, or meetings according to the laws and regulations, documents can be made under the hand (bawah tangan), by including the clause of "will be made / restated in an authentic deed as soon as the emergency conditions of COVID-19 are revoked by the Government”.

 

24 March 2020
OJK has ordered the IDX through a press release number SP 23/DHMS/OJK/III/2020 to limit the trading session, which normally goes from 09:00 – 12:00 (for the first session) and 13:30 – 16:00 (for the second session). Starting from the 30th of March 2020, the trading session will begin from 09:00 – 11:30 (for the first session) and 13:30 – 15:00 (for the second session).
OJK has enacted a regulation number 12/POJK.03/2020 concerning the Consolidation of Commercial Banks aims to prevent a potential decline in the banking sector by strengthening the structure of bank ownership and increasing the minimum capital limit for banks as well as the minimum threshold for Capital Equivalency Maintained Assets.
 
 
31 March 2020
The President of the Republic of Indonesia has officially established, through a Presidential Decree No. 11 of 2020 (“DECREE 11/2020”) that Corona Virus Disease 2019 (COVID-19) as a disease that raises the emergency of public health.
Following the enactment of a DECREE 11/2020, the Government of the Republic of Indonesia (“GoI”) then issued Government Regulation No. 21 of 2020 on large-scale social restrictions to accelerate the handling of Corona Virus Disease 2019 (COVID-19) (“GR 21/2020”). Generally, this regulation provides that a regional government can only implement a large-scale social restriction policy with prior approval from the Minister of Health of the Republic of Indonesia.
The GoI also enacted Government Regulation in Lieu of Law Number 1 of 2020 concerning State Financial Policy and Financial System Stability to Combat the Pandemic Corona Virus Disease 2019 (COVID-19). This regulation provides a set of new policies that will be implemented during and after the COVID-19 outbreak. New tax policies are introduced by this regulation, such as tax that will be applied to foreign digital products/services traded in Indonesia, allowance for corporate tax up to 22% (twenty-two percent) in 2020 and 2021 financial year, and up to 20% (twenty percent) in 2020. Further, this regulation enables the Indonesia Central Bank (“Bank Indonesia”) to buy a government bond in the primary market.
The Minister of Law and Human Rights enacted a regulation number 11 of 2020 that will temporarily restrict foreigners from entering into Indonesia. However, this provision will be exempt for: (i) foreigners who hold a limited stay permit and a permanent stay permit, (ii) foreigners who hold diplomatic visa and official visa, (iii) foreigners who hold diplomatic stay visa and official stay visa, (iv) medical and food air personnel, (v) flight attendants, (vi) foreigners who work for national strategic projects.
 
1 April 2020
The Ministry of Transportation of the Republic of Indonesia (“MoT”) enacted a circular letter Number SE.5 BPTJ of 2020 concerning large-scale limitation in the use of public transportation. This circular letter aims to reduce the movement of people in Jakarta, Depok, Bogor, and Bekasi. However, according to the GR 21/2020, such limitation and restriction can only be implemented upon the determination of a large-scale social restriction status by the Ministry of Health for Jakarta, Depok, Bogor, and Bekasi.
Bank Indonesia has implemented a few monetary policies as a countermeasure to the COVID-19 pandemic. Below are few monetary policies implemented by Bank Indonesia according to their press release number 22/26/DKom on the 1st of April 2020:
  • reducing BI7DDR policy rates in February and March by 25bps, respectively;
  • increasing the intensity on a spot market, Domestic Non-Delivery Forward (DNDF), and investment in government securities in the secondary market;
  • Reducing the foreign currency statutory reserves requirement from 8% to 4%; and
  • Reducing the national currency statutory reserves requirement by 50bps for commercial banks that facilitate export-import activities
 
Following the enactment of Presidential Regulation Number 26 of 2020 and Coordinating Ministry of Economic Affairs Regulation Number 3 of 2020, the GoI announces benefits of a pre-work card program (kartu pra kerja) through a Coordinating Ministry of Economic Affairs press releases number HM.4.6/39/SET.M.EKON.2.3/04/2020. This program aims to reduce the burden of living costs faced by employees/employers due to the COVID-19 outbreak. Few benefits that may be given are as follows:
  • Rp3.550.000 credits will be given, which comprise of:
  • Rp1.000.000 for training;
  • Rp 600.000/month will be provided after completing the training (employees/employers will be entitled to receive this for four months period); and
  • additional Rp150.000 will be granted.
  • Employees/employers may choose a wide variety of training provided by companies that already partnered with the GoI in actualizing this program.

 

2 April 2020
The Ministry of Industry of the Republic of Indonesia (“MoI”) enacted two circular letters, number B/312/M-IND/IND/IV/2020 and B/313/M-IND/IND/IV/2020, concerning business operations during the COVID-19 outbreak. This circular letter advises the governor not to limit industrial activities/business operations in cities or provinces or regencies unless such cities have been determined as a large-scale social restriction status by the Ministry of Health. In practice, both of these circular letters are not practical due to the bureaucratic process in obtaining large-scale social restriction status. Currently, each governor has implemented limited business operations policies in their relevant cities to prevent further widespread COVID-19.
 
3 April 2020
The Ministry of Health of the Republic of Indonesia (“MoH”) enacted a regulation number 09 of 2020 (“Reg 09/2020”) concerning a guideline for implementation of the large-scale social restriction policy. This regulation provides that the MoH have the sole authority to determine whether particular areas will be eligible for large-scale social restriction policy upon the application from the governor in relevant areas. The consequences of the implementation of large-scale social restriction policy are there will be a restriction to school and work activity, religious activity, public facilities, as well mode of transport.
 
4 April 2020
Ministry of Housing and Public Works of the Republic of Indonesia (“MHPW”) enacted a fiscal stimulus for housing subsidies to low-income society with a total of Rp1,500,000,000,000 or USD 93,750,000 (assuming 1 USD = Rp 16,000). Implementation of this policy will be given in the form of a credit to the low-income society.
 
6 April 2020
Following the enactment of PMK 23, the GoI introduces a new regulation concerning value-added and import tax incentives for businesses that are affected by the COVID-19 pandemic through an MoF Regulation Number 28/PMK.03/2020 on the 6th of April 2020 ("PMK 28"). Please be informed that this regulation only applies to products and services that are required to contend the COVID-19 pandemic. There are two incentives under this regulation; first, taxable employers are exempted from paying value-added taxes for particular products and services; second, importers are exempted from paying import tax due under article 22 for particular products and services. This incentive will come into effect starting from the tax period of April 2020 to September 2020. Taxable employers and importers should take into account the tax formalities that should be satisfied by using this incentive. Lists of products that are exempted from value-added tax and import tax are:
a. drugs;
b. vaccines;
c. lab equipment;
d. detectors;
e. safety equipment;
f. patient care equipment; and
g. other supporting equipment required to combat the COVID-19.
 
Lists of services that are exempted from value-added taxes and import tax are:
a. construction;
b. consultation, technical, and management services;
c. a rental service; and/or;
d. other supporting services required to combat the COVID-19.
 
7 April 2020
The MoH has declared a large-scale social restriction policy in DKI Jakarta through a decree number HK.01.07/MENKES/239/2020. As a result, there will be a mass limitation on activities in DKI Jakarta, starting from businesses, schools, transportations, malls, public parks, etc. The operational procedure during a large-scale social restriction policy in Jakarta special region will be regulated through a governor regulation and decree.
Bank Indonesia has declared that all kinds of financial services will still be operated despite a large-scale social restriction policy in DKI Jakarta. However, Bank Indonesia and OJK suggest financial institutions to implement their internal policy on physical distancing in their workplace. Customers are advised to utilize online banking services during the COVID-19 pandemic to prevent the spread of the virus.
The MoI enacted a circular letter number 4 of 2020 concerning a standard operational procedure for factories during the COVID-19 pandemic. This circular letter urges companies to prioritize the health and safety of the workers by strictly monitoring the health conditions of the workers. For workers who are back from cities that are/were infected from COVID-19, should inform the companies of such circumstances. No sanctions provided by this circular letter if companies or employees fail to fulfill requirements stipulated in this circular letter.
 
8 April 2020
The GoI gives a new incentive for people's business loans (kredit usaha rakyat) by providing an exemption of payment up to 6 (six) months for businesses who are affected by the COVID-19 outbreak. The Coordinating Ministry of Economic Affairs made this official announcement through a press release number HM.4.6/44/SET.M.EKON.2.3/04/2020. The GoI states two options may be given for the borrowers. First, for existing borrowers, an extension of the maturity date or new credit facility may be provided. Second, for new borrowers, flexible requirements will be provided in the context of obtaining new loans. However, only particular borrowers may apply to this incentive. The GoI states that the borrowers are entitled to this incentive if they satisfy the following criteria: 
  • General Terms: quality of the credit as per the 29th of February 2020 is classified as a performing loan, the borrowers are cooperative and have a good faith to repay the loan;
  • Particular Terms: the business premise is located in the area infected by the COVID-19, declining in business revenue, and there is an interruption in the context of production due to the COVID-19.
9 April 2020
The MoT enacted an MOT Regulation Number PM 18 of 2020 concerning a limitation in the transportation sector to prevent the spread of COVID-19 disease. This regulation provides a guideline for passengers and operators of private vehicles, busses, trains, ships, and airplanes in dealing with the COVID-19 pandemic, specifically during the Eid-Al Fitr exodus. Generally, this regulation obliged passengers and all operators in every mode of transport to implement a safety and healthy procedure (i.e., physical distancing, mandatory to use a mask, etc.). Further, this regulation obliged passengers of busses, trains, ships, and airplanes to obtain a health certification before on-boarding. This regulation also provides that port operators may limit their port operation provided that unloading and loading activities for safety equipment/drugs/vaccines/basic needs/food supply and other supporting equipment in relation to combating the COVID-19 should not be limited.
The MoI enacted a circular letter number 7 of 2020 concerning a guideline to obtain a license in industrial activity during the COVID-19 pandemic. This circular letter provides a guideline to business players in the manufacturing sector in how to continue their business operation following the enactment of MoH decree number HK.01.07/MENKES/239/2020 on a large scale social restriction policy in Jakarta special region. As we know that the GoI has officially declared that Jakarta is now under the status of a large-scale social restriction (PSBB); thus, all business premises in Jakarta special region are now limited. This MoI regulation provides that business players in the manufacturing sector may continue their operation and production amidst the COVID-19 pandemic provided that they have an operational license and mobility of industrial activity license. Operational license and mobility of industrial activity license can be obtained through the Ministry of Industry's website (siinas.kemenperin.go.id).
The Governor of Jakarta special region enacted a regulation number 33 of 2020 concerning a large-scale social restriction operational procedure in Jakarta special region. This regulation is enacted following the enactment of MoH decree number HK.01.07/MENKES/239/2020. Further, according to the Governor of DKI Jakarta’s decree number 380 of 2020, this restriction will come in effect for 14 (fourteen) days starting from the 10th of April 2020 to the 23rd of April 2020. Here we provide lists of policies during the large-scale social restriction in DKI Jakarta:
  • All kind of conferences or events are prohibited;
  • All schools are closed;
  • All worship places are closed
  • All businesses are closed, except businesses that provide a utility/public/essential services (i.e., supermarkets, hospitals, financial institutions, power plants, gas stations, etc.); and
  • Mode of transport (planes, ships, trains, private vehicles) are allowed with a certain limitation on the number of passengers on board

 

 

 

 

 

 

 

 
 
10 April 2020

The MoH gives new incentives for hospitals that provide a COVID-19 treatment through a decree number of HK.01.07/238/2020. Through this decree, hospitals are eligible to claim all costs incurred in connection with the treatment of COVID-19 provided that such treatment is given to:

  • people in monitoring (ODP) who are at least 60 years old or older; or
  • people in monitoring (ODP) who are bellow 60 years old with particular symptoms; or
  • patient under surveillance (PDP); or
  • a positive of COVID-19 patient.
11 April 2020
Following the Coordinating Ministry of Economic Affairs press releases number HM.4.6/39/SET.M.EKON.2.3/04/2020, the registration of a pre-work card program is now officially opened. The Coordinating Ministry of Economic Affairs makes this official announcement through a press release number No. HM.4.6/45/SET.M.EKON.2.3/04/2020. Indonesian citizens who are at least 18 years old and currently not taking any part of formal education are eligible to apply (this includes employees who lose their job due to the COVID-19 pandemic). Starting from the 11th of April 2020 to the end of November 2020, the quota of this program is capped at 164.000. Applicants may apply for this program every day through the pre-work card program’s official website (www.prakergja.go.id).
 
12 April 2020
The MoH has declared a large-scale social restriction policy in Bogor, Depok, and Bekasi through a decree number HK.01.07/MENKES/248/2020. A relevant limitation to business premises, schools, public transportations, etc., will be applied in this area.
The MoH has declared a large-scale social restriction policy in Pekanbaru city through a decree number HK.01.07/Menkes/250/2020. A relevant limitation to business premises, schools, public transportations, etc., will be applied in this area.
 
13 April 2020
The MoH has declared a large-scale social restriction policy in Tangerang through a decree number HK.01.07/MENKES/249/2020. A relevant limitation to business premises, schools, public transportations, etc., will be applied in this area.
The President of the Republic of Indonesia enacted a decree number 12 of 2020 concerning a determination of COVID-19 as a national disaster. According to this decree, each Governor should take into account a central government policy before implementing a policy related to the countermeasure of COVID-19 in their respective province. 
 
 
CONTACT
BAHAR CRISIS RECOVERY TEAM
E-mail: crisisrecoveryteam@bahar.co.id
 
The Crisis Recovery Team is a task force formed by the Bahar Law Firm to provide advice and input in the context prevention of the COVID-19 outbreak. With five associates from Bahar, the Crisis Recovery Team of Bahar reviewed the Indonesian Government's policies and conducted a comparative study with other countries' policies regarding the COVID-19 outbreak to assist Indonesia in dealing with the COVID-19 outbreak.