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Few parties to international contracts support the idea of suing or being sued in a foreign country where differences and uncertainty in the law, language, and legal and business culture could present decisive disadvantages. Arbitration provides the advantages of a relatively inexpensive and expeditious dispute resolution process in a neutral locale with proceedings conducted according to familiar and well-established arbitration law. It also offers more flexibility in allowing parties to choose the arbitration tribunal, the arbitrators, and in some cases the arbitration rules and law.
It has been established that in Arbitration Law, many disputes in commercial sectors can be resolved under arbitration; from Trading, Banking, Finance, Capital Investment, Industry, to Intellectual Property Rights. In the last few years, many people and companies prefer solving their problems in arbitration to civil court proceeding. One of the advantages of arbitration as a dispute solution is its swift process that brings clients from legal uncertainty to the awaited certainty of final and binding decision.
Indonesia has three arbitral institutions accommodating the exercise of Arbitration Law in varied environments: the Indonesian National Board of Arbitration (BANI), the Indonesian Capital Market Arbitration Board (BAPMI) and the Sharia National Arbitration Body (BASYARNAS).
Being the fourth most populated country, it is quite given that Indonesia sees dynamic labor conditions. In 2004, the government completed a labor law reform program through the enactment of Law No. 2 concerning the Settlement of Industrial Relations Disputes. The Law was the last of the set of three major labor legislations that regulate labor issues in Indonesia along with Law No. 21 of 2000 concerning Trade Unions and Law No. 13 of 2003 concerning Employment.
Indonesia was also the first country in Asia and the fifth in the world to ratify all core ILO Conventions. Since the year of 1950, when Indonesia secured a membership at ILO, the state has ratified 18 conventions – eight core conventions, eight general conventions, and two other conventions. Despite all the regulations, Indonesia still sees labor problems.
Disputes between employers and workers are common in industrial relations. Industrial disputes in recent years have often end up in violence, either with workers taking out their frustration at the failure to resolve their grievances or employers enlisting security forces to put down protests.
To run a business, especially in Indonesia, is to enroll to a series of challenge. Business skill alone is unlikely to get entrepreneurs to success; sensitivity to comply with law and regulations related to corporation is also an essential factor, and regulations are changing dynamically. In BP Lawyers, we handle issues related to corporation and legal aspects under the category of Corporate Legal Matters.
Furthermore, Corporate Legal Matters are a set of obligations that should be taken care of by a company, including its shareholders, Board of Directors and Board of Commissioners. Basically, all things related to Corporate Legal Matters are regulated by Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”) and are further elaborated on respective industry regulations.
Company Law sets out imperative and non-imperative provisions to establish and manage a company properly. In regard to company establishment, Company Law requires a certain minimum capital and minister approval. In terms of management, the Company Law provides a set of guidance to record company’s documents, conduct annual and extraordinary meetings, and reporting obligation. Further, Company Law also determines the procedures of conducting corporate actions such as merger, acquisitions, spin-off, and many more.
Failure to adhere with those set of provisions and guidance will damage the company as they will be imposed with several sanctions, ranging from admonition to company dissolution.
Throughout the years, Indonesia remains one of the most appealing countries for Foreign Investors, especially in the Southeast Asia region. In 2007, the Government issued the legal basis of Investment Law through Law No. 25 of 2007 concerning Investment (“Investment Law”). Along with the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal), both serve as the two pillars of Investment Law and Regulation in Indonesia.
Two common forms of Foreign Investment are available in Indonesia. The first is Direct Investment, in which the investment must be in the form of establishing a limited liability company called Foreign Direct Investment Companies (FDI Companies), otherwise known as PT PMA, while the second is Indirect Investment. Of the two, only Direct Investment is regulated directly by the Investment Law.
Due to the vast constellation of industries and business sectors in Indonesia, investors have to liaise with several Government Agencies outside Indonesia Investment Coordinating Board pursuant to the business sector of their business whenever they want to invest. For some business sectors, foreign investments are limited and even restricted. Some also require the investors to obtain technical recommendations.
It is common for Foreign Investors to invest in existing Companies aside from establishing their own in Indonesia. Foreign Investors establishing Representative Offices to perform research, supervise and coordinate the business of their Parent Company are also prevalent in Indonesia.
The value of industry in Indonesia saw a considerable increase in the last few years. The increase of industrial activity in a country should be accompanied by the society’s awareness in the protection of intellectual properties related to their business.
Regretfully, appreciation towards Intellectual Property Rights does not get the deserved amount of attention in Indonesia, leading most people to believe that Intellectual Property Rights are not important. The Intellectual Property Rights could in fact be of use to protect the businessman from the possibility of unauthorized use of the rights.
Indonesia has been a member of World Trade Organization since 1994. As a member of WTO, Indonesia needs to adjust any legislation related to Intellectual Property Rights with the Trade Related Aspects of Intellectual Property Rights (TRIPs) standard. The types and regulation of Intellectual Property Rights in Indonesia are Copyright by Law No. 28 of 2014, Patent by Law No. 14 of 2001, Trademarks by Law No. 15 of 2001, Industrial Design by Law No. 31 of 2000, Integrated Circuit Layout Design by Law No. 32 of 2000, Trade Secrets by Law No. 30 of 2000, and Varieties of Plants by Law No. 29 of 2000.
Indonesia is recognized as the potential market in investment in the food and beverages sector, especially in providing such services in restaurant setting through franchise system offered by local or foreign brands.
For food and beverages franchise, based on the record of one of the franchise associations in Indonesia, the food sector plays out as one of the biggest contributors in the franchise business turnover in Indonesia. In order to see the more intensified development of franchising in Indonesia, the government attempted to provide legal certainty by issuing a number of regulations related to the franchise. Since 1997, records show that Indonesia has regulated the franchise business through Government Regulation No. 16 of 1997. Given that franchising has seen lightning-speed growth, the government then adjusted through Government Regulation No. 42 of 2007.
In 2012 and 2014, the government issued new regulations through Regulation of Minister of Trade No. 53/M-DAG/PER/8/2012 concerning franchise organization and its regulation through Regulation of Minister of Trade No. 57/M-DAG/PER/8/2014 concerning amendment to the Regulation of Minister of Trade No. 53/M-DAG/PER/8/2012, stating that each franchise owner must have franchise agreement.
To begin investing in food and beverage franchise sector, investors must first have operational license in tourism sector, i.e. Certificate of Tourism Business Registration (Tanda Daftar Usaha Pariwisata) issued by the Ministry of Culture and Tourism and then register the franchise agreement to the Ministry of Trade.
Energy resources, both renewable and non-renewable, are the natural treasure that gives Indonesia its reputation. In order to maintain sustainable national energy resources and industry, since 2001 the country has made a major amendment and issued several laws and provisions, from Law No. 32 of 2001 concerning Oil and Natural Gas in 2001 to the latest, Law No. 21 of 2014 concerning Geothermal deemed to complete all of the prevailing law and regulations in the renewable and non-renewable energy sector.
In addition, there is also Law No. 4 of 2009 concerning Mineral and Coal Mining, a notable regulation stipulating that mining companies are obliged to process and purify their raw mine products domestically in Indonesia and prohibited to export any mineral mines and coal products without going through the processing and purifying phases, which has been applied since 2014.
The abovementioned law and provisions have specifically regulated the industry from downstream to upstream. Business owners and company executives hence need to have a clear legal perspective before admitting themselves to the business sector so as to prevent complaints from coming or for when they need assistance in legal dispute regarding their business in Indonesia.
Telecommunications sector in Indonesia is developing and is characterized by the emergence of various telecommunication service providers, especially in cellular telecommunication provider. This sector has a growing number of users, which leads to the competitive environment where telecommunication providers try to offer the best services.
With the increasingly sophisticated telecommunication technology, this particular sector bears complex arrangements in the laws of Indonesia not only on the organization of telecommunications, but also the content of the telecommunications in its relation to Intellectual Property Rights or the customer services with regard to consumer protection regulation.
Therefore, in telecommunications, Indonesia has produced the regulations through Law No. 36 of 1999 for telecommunication and Government Regulation No. 52 of 2000 for organized telecommunication.
The elaborate regulation in telecommunications sector requires organizers of telecommunications industry to be aware of every aspect, which does not only concern the organization of telecommunications, but also the content of the telecommunication related to Intellectual Property Rights or the customer services regarding consumer protection regulation and the other aspects of law.