With increasing reports of sexual violence in Indonesia over the last three years, and the enactment of Law No. 12 of 2022 (the Sexual Violence Law), which created specific offences for sexual violence, Indonesia’s Ministry of Manpower saw the need to update their 2011 guidelines on sexual harassment in the workplace. Continue reading
On 6 April 2023 Indonesia’s Financial Services Authority, OJK, issued further amendments to the insurance financial soundness requirements (OJK Reg 5/2023), with immediate effect. These changes apply to all insurance and reinsurance companies operating in Indonesia but do not extend to insurance intermediaries such as brokers.
A brief summary of the changes introduced by OJK Reg 5/2023 follows.
- On the limits to investments in related parties (Article 12), investment linked insurance product sub-funds are now expressly excluded from the calculation of these limits. In short, these limits do not appear to apply to investment linked insurance product sub-funds. OJK appears to be following the approach taken in OJK Circular Letter 5/2022, which aimed to provide more clarity on these limits.
- Article 12.6 provides a much-needed safe harbour provision to accommodate market price fluctuations. So, if an investment in a related party exceeds the prescribed limit due to market price fluctuations (for instance, due to changes in currency exchange rates), this will not be deemed to be an event that triggers administrative sanctions.
- The qualitative criteria being used for the definitions of “related party” (pihak terkait) and “controller” (pengendali) for the purpose of Article 12 have also been refined. However, there is currently no indication whether these refined criteria will also apply to OJK Reg 67/2016, which defines the term “controller”.
- The regulation indirectly encourages insurers to invest in corporate bonds issued by the Indonesia Investment Authority (INA) by exempting such investments from the quantitative limits on permitted assets and investments set out in Article 11.
- A right-to-use contract (a PSAK 73 concept) is now recognised as a permitted asset for insurance companies for purposes of risk-based capital calculations.
- Subordinated loans are now expressly required to be provided only in cash (tunai).
- Insurers are now permitted to place their investment linked insurance product sub-funds in certain offshore assets and with offshore asset managers, as long as the underlying policies are not denominated in Indonesian rupiah.
- The new regulation adopts some of the concepts introduced under Law No. 4 of 2023 on Strengthening and Developing the Financial Services Sector (also known as the Financial Omnibus Law) enacted earlier this year (please see our April 2023 article here), including introducing a definition of Sharia Rural Banks (Bank Perekonomian Rakyat Syariah, in Indonesian).
More generally, the new regulation lays some of the groundwork for future financial soundness requirements for insurers, in preparation for the insurance policy fund program mandated by the Financial Omnibus Law.
By Abimata Putra and Fransiska Larasati
Indonesia’s Competition Commission (the KPPU) has issued a new merger control regulation with revised thresholds for triggering a merger filing in Indonesia. The changes include, among other things, removing the filing requirement for transactions that do not have a significant impact on the Indonesian market, which had contributed to a lengthy backlog in cases being handled by the KPPU over the past few years.
In tandem, the government has for the first time introduced a fee for making merger filings. Continue reading
On 2 January 2023, the Indonesian President approved a new law (the New Criminal Code) to replace the century-old Indonesian Criminal Code (the ICC), which dated back to 1915, during the Dutch East Indies colonial era. Continue reading