The Firm proudly announces our legal assistance to PT Golar Indonesia in the negotiation of the charter as well as in the incorporation of PT Golar Indonesia, with our Mr. Andre Rahadian as the lead partner.

Several amendments are: (1) amendment of Article 6 with regard to “private enterprise entities” as one of the applications which may apply for an IUP, in that PP 24/2012 clarifies what “private enterprise entity” means. It covers private enterprise entities in the context of both domestic investment (PMDN companies) and foreign investment (PMA companies) and elucidates that applications from PMA private enterprise entities for the issuance of an IUP may only be granted by the Minister of Energy and Mineral Resources, unlike other applicants whose IUP may be issued by the competent official depending on the location of the area covered by the mine, which may be the Regent, Governor, or Minister; (2) amendment to Article 97 with regard to the mandatory divestment by foreign investors whereby PP 24/2012 obliges business players in the mineral and coal mining industry with foreign ownership/capital to divest shares to Indonesians so that at least 51% of a mining company with an IUP is Indonesian held. This is different form previous PP under which only 20% of shares had to be Indonesian held after 5 years from when the company holding the IUP began production. The new divestment begins as from the fifth year from when the IUP holder began production and will be done in stages: 20% Indonesian held in the 6^th year, 30% in the 7^th year, 37% in the 8^th year, 44% in the 9^th year, and finally 51% in the 10^th year; and (3) a clarification in Article 112 with regard to the transitional provisions related to KK and PKP2B where PP 24/2012 provides that (a) the terms and conditions which must be met by an applicant for extension of a KK or PKP2B as an IUP; and (b) proposals for the remaining KK or PKP2B territories to be state reserve territories if they do not yet have a first and/or second extension as an IUP so that the status of such remaining territories is now clear and has binding legal force.

Led by Mr. Al Hakim Hanafiah, one of our partners who is an expert on law and the plantation industry, and two of our other partners, Ms. Fabiola Hutagalung and Mr. Sartono, HP&P team presented a series of materials from preparing a check-list in conducting a legal due diligence (LDD), LDD examination techniques, general legal issues facing plantation businesses, and how to prepare and provide a comprehensive LDD report.

The training was attended by in-house counsel from various plantation companies, notaries, and also legal counsel from various law firms.

Hanafiah Ponggawa & Partners proudly assisted Garuda Indonesia in both the purchase and lease transactions with our Mr. Andre Rahadian as the lead partner. In completion of the transactions, the Firm demonstrated its experience in assisting buyers from major commercial aircraft manufacturers including Airbus, Boeing, and Embraer to become the leading aviation law firm in Indonesia.

Cross-sector financial service problems, including moral hazard, non-optimization of protection for financial service consumers, and disruptions to the financial system are the reasons for the issuance of the Financial Services Authority Act to form an integrated body to oversee and supervise financial services. According to the definition in the Act, the OJK is an independent body which is free from intervention by other party(-ies) and has functions, tasks, and authority in the oversight, supervision, examination, and investigation of financial service activities in banking, capital markets, insurance, pension funds, financial institutions, and other financial service institutions.

As an institution, the OJK will not be part of the Government and will stand outside the Government though there is possibility of Government representatives on the OJK due to the nature of the OJK itself as the authority in financial services which has strong relation and linkages with other authorities, i.e. fiscal and monetary authorities. The OJK will be led by a Board of Commissioners (Dewan Komisioner) consisting of 9 (nine) members appointed by a Presidential Decree and having collective and collegial tasks. Among the members, there will be 1 ex-officio member from each of Bank Indonesia and the Ministry of Finance.

Specifically in relation to the banking sector, the Act stipulates that the OJK has the tasks of oversight and supervision regarding (a) bank institutions covering (i) licencing in the establishment of banks, opening of branch offices, articles of association, work plans, ownership, management and human resources, mergers, consolidations and acquisitions, and revocation of licences, and (ii) business activities such as source of funds, provision of funds, hybrid products, and services sector activities; (b) bank soundness covering (i) liquidity, profitability, solvency, asset quality, minimum capital adequacy, legal lending limit, ratio of loans to deposits, and reserves, (ii) reports related to performance and soundness, (iii) debtors information system, (iv) credit testing, and (v) accountancy standards; (c) prudential aspects, covering (i) risk management, (ii) governance, (iii) know your customer and anti money laundering, and (iv) avoidance of terrorism funding and banking crime; and (d) inspection.

While in general, under the Act, in performing oversight tasks, OJK has the authority, among others, to determine (a) implementation regulations regarding the OJK, (b) regulations in the financial services sector, (c) OJK regulations and/or decrees, and (d) regulations regarding procedures for sanctions in accordance with the regulations in the financial services sector, and, in the supervision tasks, the OJK authorities are among others (a) to determine supervisory operational policy for financial service activities, (b) to perform supervision, inspection, investigation, consumer protection, and other actions against the financial service institution, business players, and/or financial service supporting activity body(-ies) (c) to determine administrative sanctions against any party(ies) in breach of the regulations in financial services sector, and (d) to grant and/or to revoke business licences, private business licences, effectiveness of registration statements, registration certificates, approvals to conduct business activity, ratifications, liquidation approval/decrees, and other decree(s) as determined under the regulations in the financial services sector.

The Act further provides that the functions, tasks, and authorities of oversight and supervision in capital markets, insurance, pension funds, financial institutions, and other financial service institutions will be transferred from the Ministry of Finance and/or Capital Markets and Financial Institutions Supervisory Body effective as from 31 December 2012, while in the banking sector the transfer from Bank Indonesia to OJK will be effective on 31 December 2013.

Permenaker 16/2011 differentiates between Company Rules (Peraturan Perusahaan/PP) and Collective Labour Agreements (Perjanjian Kerja Bersama/PKB) whereby PP means rules made in writing by the employer detailing the company’s work requirements and orders while PKB means an agreement as the result of negotiation between the labour union registered before the employment authorized institution and the employer, several employers, or the employer’s association detailing work requirements and rights and obligations.

Some provisions in Permenaker 16/2011 are: (a) an employer must have a PP or PKB if it employs at least 10 workers; (b) PP or PKB consists of work requirements not provided for in prevailing regulations and details of their implementation; if the PP or PKB covers the same subject matter as the prevailing regulations it should equal or better conditions for employees than those provided in the prevailing regulations; (c) 1 (one) PP or PKB should cover for all employees in a company; if the company has branch(es) than the main PP or PKB should prevail for all branches and a subsidiary PP or PKB can be made for each branch; (d) in a group of companies, separate PP or PKB will be applicable for each company; (e) for the purpose of ratification of PP with the relevant institution the employer must attach the advice and considerations from the employees’ representative and/or labour union in the PP document; in the absence of such advice and considerations after the lapse of the time given under Permenaker 16/2011 for providing the response, evidence in the form of a letter of request for advice and considerations will be sufficient, (f) the negotiations in the making of PKB shall be based on good faith and free will of both of the employer and the labour union and for the purpose of PKB registration, the PKB document to be submitted must be signed by the employer’s representative and the labour union; and (g) the employer must submit a renewal of the PP at the latest 30 working days before the expiration of the PP; in the event that the PP expires and the company is still in the negotiating the making of a PKB then it may apply for a PP extension which extension shall be given at the longest for 1 (one) year.

A PP ratified or a PKB registered must be before the following institutions: (i) a company located in a regency/city area with the head of regency/city employment institution, (ii) a company located in more than 1 (one) regency/city within a province with the head of the provincial employment institution, and (iii) a company located in more than 1 (one) province with the Director General of Industrial Relations and Labour Social Security Development.

After being approved by both the BUMN Minister and the Finance Minister, this RMA will serve as the umbrella agreement in relation to the accomplishment of Tuban Petro’s and PT TPPI’s debt restructuring with PT Pertamina (Persero) (“PERTAMINA”), PT Perusahaan Pengelolaan Aset (Persero) (“PPA”), and Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi (“BP MIGAS”).  The approximately USD 900 million of restructured debts will be paid to PERTAMINA, PPA, and BP MIGAS.

Hanafiah Ponggawa & Partners (“HP&P”) is delighted to announce our involvement in this restructuring transaction by representing PERTAMINA as its legal counsel led by one of its partners, Mr. Fabian B. Pascoal.

The funds invested as a soft loan to PT PLN (Persero) total IDR7.5 trillion and will be used for PT PLN (Persero)’s need for funding to procure and replace transformers, and boost installations, transmission, distribution, and other investment. The funds will also be used for funding ongoing contracts for transmission and distribution construction.

The granting of this soft loan serves as a reflection of the mandate pursuant to Article 22A of Law No.2 of 2010 concerning Amendment to Law No.49 of 2009 concerning State Budget for Financial Year 2010.

Hanafiah Ponggawa & Partners (“HP&P”), led by one of its partners, Mr. Giovanni Mofsol Muhammad, is proud to announce its role as legal counsel to Badan Layanan Umum Pusat Investasi Pemerintah (BLU PIP) in completing this transaction.

Mr. Giovanni presented a paper on the development of renewable energy in Indonesia focusing on the latest renewable energy laws & regulations, and the utilization and sources of renewable energy used for non-electricity and electricity generation; and, together with other practitioners in the energy sector such as Conergy Group, Greenpower Fuels, and partners of RHT Law and TaylorWessing, Mr. Giovanni was involved in a panel discussion on the trends and potential for renewable energy in Asia.

PBI 20/2011 stipulates among others that the debtor of a foreign currency loan (utang luar negeri or “ULN”) who drawdown the foreign loan in a foreign currency (devisa utang luar negeri or “DULN”) must do so through a Foreign Exchange Bank (Bank Devisa). The obligation is valid for all DULN in the form of cash funds derived from the following: (a) a non-revolving loan agreement which is not used for refinancing; (b) the margin from a facility refinancing previous loan; and (c) debts based on debt securities in the form of bonds, medium term notes, floating rate notes, promissory notes or commercial paper. The accumulated value of the DULN drawdown by the debtor must be the same amount as the commitment value. If it is smaller, then the debtor must deliver a written explanation to BI. PBI 20/2011 further provides that failing to make the report and not delivering the required supporting documents may cause the debtor to be liable to an administrative penalty of IDR 10,000,000 for every DULN drawdown which penalty must be paid to the state treasury account after receiving written notification from BI which comes into effect on 2 July 2012.

BI may verify documents evidencing the debtor’s compliance with DULN drawdown obligations by requesting evidence, records, and other supporting documents with or without involving the relevant institution.  An exception given by PBI 20/2011 is that the DULN pursuant to a loan agreement signed before 2 January 2012 need not be drawdown through a Bank Devisa, except where the DULN drawdown derives from an additional ceiling due to the amendment of a loan agreement which is signed after 2 January 2012.

PBI 22/2011 provides that the report must be submitted to BI (by online media, offline media or hardcopy) together with supporting documents (by courier, post, facsimile or other media) between the 1^st and the 10^th of the following month. It also regulates that if the accumulates value of the DULN drawdown is smaller than the commitment value the debtor must deliver a written explanation to BI at the latest before the expiry of the loan agreement. Failure to do so will make the margin between the commitment and the accumulation of the withdrawal DULN will be deemed to have not been drawn down through a Bank Devisa.

Besides PBIs 20/2011 and 22/2011, BI also issued BI Regulation No.13/21/PBI/2011 concerning Monitoring Bank  Foreign Exchange Traffic Activities (“PBI 21/2011”) which came into effect on 30 September 2011.