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Exception from Speaking Bahasa Indonesia

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By Shinta Dewi F.B., S.H., Associate

Foreigners who intend to work in Indonesia generally must possess a sufficient knowledge of Bahasa Indonesia in order to satisfy the Minister of Manpower Regulation Number 12 of 2013 on Procedure for Utilization of Foreign Employees (MoM Regulation 12/2013). The obligation to speak Bahasa Indonesia is stricter stipulated in the Government Regulation Number 57 of 2014 on Development, Guidance, and Protection as well as Improvement of the Function of Bahasa Indonesia (GR 57/2014), under which foreigners should meet the required standard proficiency of Bahasa Indonesia. How the standard is set would be relied on the stipulation of the Minister of Manpower. If a foreigner cannot meet the required standard, then he/she must attend a class to achieve the required standard of Bahasa Indonesia proficiency.

Although pursuant to Article 26 paragraph (2) of MoM Regulation 12/2013 the position of director and commissioner have been exempted from the obligation to speak Bahasa Indonesia, the fact that in terms of hierarchy GR 57/2014 is superior to MoM Regulation 12/013, has been inflicting confusion to foreigners as they are now questioning whether they need to meet the required standard of Bahasa Indonesia proficiency. One argument that is often posed to support such exception is the fact that many of them are not living in Indonesia during their position as director and commissioner. Another argument is that they represent the interest of the shareholders. This is also the reason why they are exempted from the mandatory transfer of knowledge.

Despite of the ongoing debate on the issue, the intention to make Bahasa Indonesia the official language of ASEAN might reflect the standing of the Indonesian Government. Upon the coming ASEAN Economic Community, the Indonesian Government is likely to require every foreigner to master Bahasa Indonesia before they are able to work in Indonesia by requiring them to achieve the standard of Bahasa Indonesia proficiency.

Source: Edition 1, Law & Taxes Newsletter published by EKONID (Deutsch-Indonesische Industrie – und Handelskammer) in June 2015:

Implementing the Indonesian Currency Law

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By Gilang M. Santosa, S.H., Associate

Since 28 June 2011, the Indonesian Government has been prohibiting the use of foreign currencies in payment transactions performed in Indonesia. Although the Currency Law has imposed imprisonment and fine for offenders of such mandatory use of Rupiah, there are still many transactions using foreign currencies.This is mainly because of the existence of loopholes in the Currency Law that is being interpreted allowing the use of foreign currencies as long as it is agreed in writing and the interpretation of the Ministry of Finance that excludes non-cash transaction from the scope of the Currency Law.

To implement the Currency Law, Bank Indonesia has enacted BI Regulation 17/3/PBI/2005 on the mandatory use of Rupiah within the territory of Indonesia (BI Regulation). Under the BI Regulation, the use of foreign currencies in non-cash transactions is prohibited, in addition to the prohibition to use foreign currency in cash transactions that has been introduced since 2011. Refusal of the Rupiah as currency is also prohibited, except where there is doubt regarding the authenticity of the Rupiah or if payment in foreign currencies has been agreed in writing. Differing from the Currency Law, the BI Regulation explains that "written agreements" that may exempt one from using Rupiah are agreements (i) within the framework of the implementation of the State Budget (APBN), (ii) on grants to or from offshore, (iii) in international trade transactions, (iv) related to bank savings in foreign currencies, or (v) international financing transactions and (vi) strategic infrastructure projects and subject to BI approval.

The BI Regulation also introduces the obligation to use Rupiah in price quotations for good and/or services. To bridge the impositon of mandatory use of Rupiah in transactions within the territory of Indonesia, the BI Regulation sets 1 July 2015 as the latest date for any party to use foreign currencies.

Source: Edition 1, Law & Taxes Newsletter published by EKONID (Deutsch-Indonesische Industrie – und Handelskammer) in June 2015:

Enforceability of Non-Competition Clause

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by Edo Yudanto, S.H., M.Kn., Associate

Business competition has been forcing entrepreneurs to apply various business strategies to be ahead of their competitors. One strategy that is often used is to obstruct workers holding key positions from changing sides and providing their expertise to competitors. One way of doing it is by including a provision in the work agreement that prohibits the worker from working at company that engages in the same business. This provision is commonly called the ‘non-competition clause’. In principle, Indonesian Law is silent on the enforceability of non-competition clause. However, the right to work is one of the fundamental human rights protected by the 1945 Constitution under Article 27 paragraph (2) and Article 28 (D) paragraph (2), which is also being recognized under the Human Rights Law of 1999 and the Manpower Law of 2003.

Every person and citizen has the right to work, to earn a humane livelihood, to receive fair and proper remuneration and fair treatment in employment, to be employed in line with their ability and capacity, and to freely choose employment and to equitable conditions of employment (Human Rights to Work). Thus, in the case that the non-competition clause is being construed as preventing a person from accessing any of said rights, then the provision should be deemed violating the fundamental Human Rights to Work. Therefore, such provision should be null and void pursuant to Article 1335 of the Indonesian Civil Code. On the contrary, if the provision containing a non-competition clause is (somehow) formulated in such a manner so as not to violate the Human Rights to Work, then it should be enforceable.
Source: Edition 1, Law & Taxes Newsletter published by EKONID (Deutsch-Indonesische Industrie – und Handelskammer) in June 2015 :

PT Krakatau Semen Indonesia to Build Slag Grinding Plant at the Krakatau Industrial Estate in Cilegon-Banten

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PT Krakatau Semen Indonesia to Build Slag Grinding Plant at the Krakatau Industrial Estate in Cilegon-Banten

PT Krakatau Steel (Persero), Tbk. and PT Semen Indonesia (Persero), Tbk. have signed a joint venture agreement back in December 2013 in which the parties agree to establish a joint venture company, namely PT Krakatau Semen Indonesia (“KSI”).  KSI is going to build the Grinding Machine of granulated blast furnace slag (“Slag Grinding Plant”) in Cilegon, Banten, which will require a total investment at Rp. 440 billion.  This Slag Grinding Plant is planned to have a production capacity of 750,000 tons of granulated blast furnace slag per year.

LUBIS, SANTOSA & MARAMIS Law Firm has been appointed by KSI to assist them in this Slag Grinding Plant project.

PT Krakatau Osaka Stell To Build Plant at The Krakatau Industrial Estate in Cilegon-Banten

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PT Krakatau  Osaka Stell To Build Plant 
at The Krakatau Industrial Estate in Cilegon-Banten
On 19 May 2015, PT Krakatau Osaka Steel, the joint venture between Osaka Steel (the subsidiary of Nippon Steel & Sumitomo) and PT Krakatau Steel (Persero), Tbk., has conducted a groundbreaking ceremony for construction of a new plant which will produce a total of 500,000 tons per year of plain/deformed bar, small section, and flat bar with total investment worth USD 220 million.  Osaka Steel will cover about 16 billion yen (USD 150 million) or 80% of the total investment.  The new plant is targeted to commence its production in 2016 and will be the first overseas production site for Osaka Steel.
LUBIS, SANTOSA & MARAMIS Law Firm has supported PT Krakatau Osaka Steel  in this project.”

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