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Indonesian New Regulation On Private Electronic System Organization

Previously, the Indonesian Government has issued a regulation regarding the Organization of Electronic Systems and Transactions under Government Regulation Number 71 of 2019. However, such Government Regulation has yet to provide a comprehensive and detailed provision on the organization of electronic systems by private entities. Whereas in reality, the majority of electronic systems are conducted by private entities as online-based businesses continue to grow in its popularity in Indonesia.

Therefore, the Minister of Communication and Information Technology (“Minister”) recently issued Regulation No. 5 of 2020 on Private Electronic System Organizers (“Minister Regulation 5/2020”), which revokes and replaces (i) Minister Regulation No. 19 of 2014 on the Handling of Internet Websites Containing Negative Content; and (ii) Minister Regulation No. 36 of 2014 on Registration Procedures for Organizers of Electronic Systems.

Minister Regulation 5/2020 governs that private electronic systems Organizers (Penyelenggara Sistem Elektronik – “Private PSE”) which meet the following criterias shall be registered to the Minister via Online Single Submission (OSS) system:

  1. Private PSEs regulated or supervised by the Ministry or institution based on the provisions of laws and regulations; and/or
  2. Private PSEs that have portals, sites, or network applications through the internet to be used to:
    1. provide, manage, and/or make offers and/or trade goods and/or services;
    2. provide, manage, and/or operate financial transaction services;
    3. send materials or paid digital content through data networks either by downloading through portals or sites, dispatch through electronic mail, or through other applications to the equipment of the Electronic Systems User;
    4. provide, manage, and/or operate communications systems comprising but not limited to short messages, voice calls, video calls, elektronic mails, and network conversations in the form of digital platform, network services and social media;
    5. search engine services, electronic information services provider in the form of writings, sounds, pictures, animation, music, video, film, and games or combinations thereof in part and/or entirety; and/or
    6. personal data processing for public service operational activities related to electronic transaction activities.

This registration obligation applies not only to domestic Private PSEs, but also applies to all Private PSEs that are domiciled overseas and established according to other foreign laws and regulations, which fulfill the following categories:

  1. providing services within the territory of Indonesia;
  2. doing business in Indonesia; and/or
  3. the electronic system is used and/or offered in the territory of Indonesia.

After the registration requirements as referred to in Articles 2 to 5 are declared complete in accordance with Minister Regulation 5/2020, the Minister will issue a Registration Certificate of Private PSE.

It is noteworthy that Minister Regulation 5/2020 requires all Private PSEs to register their electronic system prior to any utilization of their electronic services by users. However, in the event of such private PSEs have already been established, the said registrations must be completed within 6 (six) months after the enactment of Minister Regulation 5/2020 or by 24 May 2021 at the latest.

Private PSEs are required to provide user information in Indonesian language as regulated. Private PSEs shall ensure that their electronic system does not:

  1. contain the electronic information and/or electronic documents that are prohibited by law; and
  2. facilitate the distribution of the prohibited electronic information and/or electronic documents.

The failure of private PSEs to comply with the abovementioned requirements shall be followed up with access blocking to their electronic system, as regulated under Minister Regulation 5/2020.

For More Information:

Teguh Maramis (Partner)
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Dr. Julius I.D. Singara (Partner)
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Dinda Raihan (Associate)
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Civil Lawsuit Against PT Bank J Trust Indonesia, Tbk., J Trust Co. Ltd., And PT J Trust Investment Indonesia.

Lawyers : Dr. Julius Singara (Partner) / Rando Purba (Senior Associate) / Adhindra Ario Wicaksono (Associate) / Bernard Moller (Associate) / Riska Fadilla (Associate)

Date : 2018

We are thrilled to announce a good news at the start of this 2021 that we have successfully defended our clients, PT Bank JTrust Indonesia, Tbk., J Trust Co. Ltd. and PT J Trust Investment Indonesia as the Defendants II, III and V in facing a civil lawsuit brought by an alleged shareholder as the Plaintiff with the Central Jakarta District Court (the “CJDC”), in respect of a major corporate action involving Bank Century. In this case, the Plaintiff seeks for compensation of more than IDR 1 trillion.

The proceedings lasted more than two years, during which we meticulously navigated our clients with a bunch of strategic advices and actions, one of which was to file a demurrer aiming at contesting the CJDC jurisdiction by mainly arguing that the key element of the Plaintiff’s lawsuit does fall under the jurisdiction of an administrative court as opposed to that of the CJDC, which is wholly granted by the CJDC. As a result, the Plaintiff’s lawsuit has been declared to be inadmissible. Congratulations to our clients and all related parties for this remarkable history.


Investor Singapura Gugat LPS dan Bank JTrust ( issued on 5 September 2018
LPS dan Bank J Trust digugat atas kasus Bank Century ( issued on 5 September 2018
Pemegang saham Bank Jtrust ajukan gugatan ( issued on 6 September 2018
Penggugat LPS dan Bank JTrust (BCIC) buka opsi damai ( issued on 2 October 2018

New BKPM Regulation On Tax Holiday For Pioneering Industry

In 2020, Indonesia has fallen into a recession after its economy shrank for the second consecutive quarter in the July to September period due to the COVID 19 pandemic situation, which is inarguably Indonesia’s greatest economic challenge since 1997-1998 Asian Economic Crisis. However, the Indonesian Government is optimistic that they can pursue an economic growth rate of 4.5 to 5.5% in 2021.

In order to achieve said economic growth target, the government plans to attract more foreign investments that provide strategic value to the national economy by giving tax holidays to pioneering industries, which are industries that have broad linkages, provide added value and high externalities, introduce new technologies, and have strategic value for the national economy. Such policy on tax holidays for pioneering industries is regulated under Minister of Finance Regulation No. 130 of 2020 on Corporate Income Tax Reduction Facility Granting (“PMK No. 130/2020”). However, the Ministry of Finance fully delegated the tax holiday granting authority to the Indonesian Investment Coordinating Board (BKPM). Further, BKPM promulgated BKPM Regulation No. 7 of 2020 on Details of Business Fields and Types of Pioneering Industry Production and Procedures for the Granting of Corporate Income-Tax Deduction Facilities (“Reg No. 7/2020”).

PMK No. 130/2020 determines the eligibility of corporate taxpayer for obtaining this facility, namely:

  1. The corporate taxpayer shall constitute a pioneer industry as follows:
    1. Upstream base metal industry (steel or non-steel) without or with its integrated derivatives;
    2. Oil and gas refining industry without or with its integrated derivatives;
    3. Basic organic chemical industry based on petroleum, natural gas and/or coal without or with its integrated derivatives;
    4. Basic organic chemical industry based on agricultural, plantation or forestry products without or with its integrated derivatives;
    5. Inorganic chemical industry without or with its integrated derivatives;
    6. Main pharmaceutical raw material industry without or with its integrated derivatives;
    7. Manufacturing industry of irradiation, electro-medical or electro-therapy equipment;
    8. Manufacturing industry of major components of electronic or telematics equipment such as semiconductor wafer, back light for LCD, electrical driver, or display;
    9. Manufacturing industry of machinery and its main components;
    10. Manufacturing industry of robotic component that supports which supports manufacturing industry machines manufacture;
    11. Manufacturing industry of the power plant engines main components;
    12. Manufacturing industry of motor vehicles and its main components;
    13. Manufacturing industry of shipbuilding main components;
    14. Manufacturing industry of train main components;
    15. Manufacturing industry of aircraft main components and supporting activities for the aerospace industry;
    16. Agricultural, plantation, or forestry product-based processing industries that produce pulp without or with their derivatives;
    17. Economic infrastructure; and
    18. Digital economy which includes data processing, hosting and related activities.
  2. The corporate taxpayer shall hold the status of an Indonesian legal entity (perseroan terbatas).
  3. The corporate taxpayer has a new investment plan that has never been invoked with a decision on granting or rejecting a tax holiday by the Minister of Finance.
  4. The corporate taxpayer shall have a new investment plan in a minimum amount of IDR 100,000,000,000.00 (one hundred billion rupiah).
  5. The corporate taxpayer shall satisfy the debt to equity ratio requirements.
  6. The corporate taxpayer has committment to realize the investment plan at the latest one year after the the tax holiday is granted.

The rate of tax holidays varied from 50% to 100% for a maximum of 20 (twenty) years and then 25% to 50% corporate income tax reduction for the subsequent two years, depending on the investment value.

It should be noted that the submission of applications for such tax holiday should be filed online by taxpayers through the Online Single Submission (OSS) system. If the OSS system is unavailable, then assessments of criteria fulfilment and applications for corporate income-tax deduction facilities shall be completed offline to BKPM using the application form set out under Appendix II of Reg No. 7/2020.

For More Information:
Teguh Maramis (Partner)
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Dr. Julius I.D. Singara (Partner)
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Gilang M. Santosa (Associate)
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Appointed By PT PLN (Persero) For Defending Its Ex-President Director In Corruption Case

Lawyers : Lelyana Santosa (Partner) / Dr. Julius Singara (Partner) / Hamonangan Buddhiwisnu Harahap (Senior Associate) / Yosua L. Situmorang (Associate) / Riska Fadilla (Assiciate)

Date : 2020

LSM Law Firm is defending Nur Pamudji, ex-President Director of PT PLN (Persero) [State Owned Electricity Company), before the Anti-Corruption Court at at the Central Jakarta District Court.

Nur Pamudji has been awarded the Bung Hatta Anti-Corruption Award for his various policies in building the integrity of PT PLN (Persero). But now, he is accused by the Criminal Investigations Board of the Indonesian Police Force (Bareskrim Polri) and the Attorney General’s Office for committing corruption due to his policies in the procurement of high speed diesel for electric power plants of PT PLN (Persero) thereby causing losses to state finances even though Nur Pamudji has not made any personal gain from such procurement process. This is the irony of law enforcement in Indonesia as stated by Judge Suparman Nyompa, S.H., M.H., in his dissenting opinion in the judgment in the first instance, whereas:

“...Defendant Nur Pamudji should receive an award from the state for having endeavored to use the PT. PLN budget as efficiently as possible, but conversely the good intentions and hard work of the Defendant to build and increase productivity of PT. PLN by the efficient use of the budget, the Defendant is under criminal process and has now been declared a Defendant”.

The same was stated by High Court Judge Lafat Akbar, S.H in his dissenting opinion in the appellate judgment that:

“in the procurement of Goods/Services of PT. PLN, Defendant Nur Pamudji has factually endeavored to conserve the use of state finances and has shown an annual average saving of state finances amounting Rp.351.016.281.301 (three hundred fifty-one billion sixteen million two hundred eighty-one thousand three hundred and one rupiah)...”

Presently this case in being heard by the Supreme Court.

Covid-19: Can an Employer Furlough Employees And Reduce Their Wages?

Indonesia has officially entered into recession for the first time since the Asian financial crisis more than twenty years ago as the country still fighting to control the Covid-19 outbreak. In light of this severe financial impact and with the end of the pandemic nowhere in sight, many employers were forced to take measures to temporarily shut down offices and furloughed their employees in order to reduce expenses and keep the company afloat.
Since employment matters are sensitive issues and should be treated carefully, the question has arisen as to the appropriate approach for employers to put their employees on furlough. It is worth noting that Law Number 13 of 2003 on Manpower is silent as to whether an employer has the right to furlough employees, put them on unpaid leave of absence, or reduce their wages due to economic conditions. However, the Minister of Manpower issued three circular letters related to the economic situation namely:

  1. Circular Letter Number SE-05/M/BW/1998 of 1998 regarding the Remuneration of Employees who are Temporary Laid Off is not towards Termination Employment Relationship;
  2. Circular Letter Number: SE-907/MEN/PHI-PPHI/X/2004 regarding Prevention of Termination Mass Employment Relationship; and
  3. Circular Letter Number: SE-643/MEN/PHI-PPHI/IX/2005 regarding Prevention of Termination Employment Relationship.

The above Circular Letters allow the employer to furlough the employees or to put the employees on rotating furlough to avoid employment termination. However, it is pivotal to understand that the wages (basic wages and fixed allowance) of those furloughed employees shall be paid in full during the period of furlough. If the employer wishes to not pay the wages in full, then the employer shall obtain employees’ consent.
In addition to the above, the Minister of Manpower has issued Circular Letter Number M/3/HK.04/III/2020 on Protection of Workers and Business Continuity in Precaution and Prevention of Covid-19 as a response to the pandemic. In this letter, it is stated that if an employer is unable or constrained to conduct its business based on the respective regional government policy, which in turn results in all or some of the employees being unable to work, in consideration of business sustainability, such employer may amend or adjust wage amounts and the means of payment based on a mutual agreement between the employer and the employees.

Based on all the above mentioned Circular Letters, it should be noted that the employer is permitted to furlough the employees. However, the employees’ consent is required in the event the employer wishes to reduce wages. This is because any policy affecting the wages of the employees would be considered as an amendment to the employment terms and therefore, it must be mutually agreed between the employer and the employees.

For More Information:

Teguh Maramis (Partner)
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Dr. Julius I.D. Singara (Partner)
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Adhindra Ario Wicaksono (Associate)
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Global Acquisition By UK Based Company

Lawyers : Dr. Julius Singara (Partner) / Kenzo Hadi Bangga (Senior Associate) / Adhindra Ario Wicaksono (Associate)

Date : 2020

LSM Law Firm advises a UK based Company on its global acquisition of companies specializing in oil and gas services.


The COVID 19 pandemic situation has caused economic shock all over the world, including Indonesia, which in turn caused state revenues to decline drastically, due to the shortfall of tax and non-tax revenues. In order to generate more income, the Indonesian Government has introduced Law No. 10 of 2020 on Stamp Duties (the “Stamp Duty Law”) which came into effect on 1 January 2021 to replace Law No. 3/1985 (the “1985 Stamp Duty Law”) which has not been amended for 35 years and is deemed not in line with technological developments. The Stamp Duty Law is also intended to help the community and Small and Medium Enterprises by exempting transaction documents with nominal value of up to IDR 5 million.

The Stamp Duty Law stipulates that stamp duties shall be affixed for one time to all documents used to elaborate upon civil-related events or which are used as evidence in court (whether in hard copy or electronic form) with a flat tariff of IDR 10,000 regardless of the transaction values stated in documents, whereas the 1985 Stamp Duty Law in conjunction with Government Regulation No. 24 of 2000 adopts a two-tariff system, namely a Rp 3,000 stamp duty for documents regarding matters worth between IDR 250,000 and IDR 1 million and IDR 6,000 for documents regarding matters worth more than IDR 1 million.

The Stamp Duty Law broadly covers documents concerning civil matters such as:

  1. Agreements, certificates, statement letters, or other similar letter and their copies;
  2. Notarial deeds, as well as their executorial deeds (grosse) and copies; and
  3. Deeds that are drawn-up by land-deed officials and their copies.
  4. Securities under any name and in any form;
  5. Securities transaction documents, including transaction documents for futures contracts;
  6. Auction documents in the form of minutes of auction excerpt, minutes of auction, minutes of auction copy, and minutes of auction executorial deeds (grosse);
  7. Documents stating sums of money in nominal values that exceed IDR 5 million and which address the receipt of money or which contain acknowledgment on full or partial payments or calculations of loans; and
  8. Documents which are to be used as evidence in court.

The stamp duty is to be paid via the following media:

  1. Stamps, including affixed stamp duty (meterai tempel), electronic stamps or other forms of stamp as determined by the Minister of Finance; or
  2. Tax-payment slips.

Electronic stamps shall possess their own unique codes and certain information, it is intended to cover electronic commercial transaction documents with an amount exceeding IDR 5 million and its implementation will be regulated in an incoming Minister of Finance Regulation. However, as of January 2021 Indonesian Minister of Finance, Sri Mulyani Indrawati said in a statement that the electronic stamps is yet to be implemented on the grounds that the implementing regulation on electronic stamps are yet to be promulgated and the infrastructure for electronic stamps, is not yet ready.

The Stamp Duty Law will have 1 (one) year of transition period, whereas all affixed duty stamps printed under the 1985 Stamp Duty Law can still be used until 1 January 2022 by affixing multiple stamps until the value amounts to at least IDR 9,000 instead of the required IDR 10,000 (e.g., IDR 6,000 stamp and IDR 3,000 stamp, 2 (two) of IDR 6,000 stamps, or 3 (three) of IDR 3,000 stamps), however such duty stamps cannot be sold or traded in any way or form after 1 January 2021.

For More Information:
Teguh Maramis (Partner)
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Dr. Julius I.D. Singara (Partner)
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Gilang M. Santosa (Associate)
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