Period of announcement | Key regulations | Issuer | Summarised key content on the regulation |
September 2022 | Personal Data Protection Law Bill (to be soon enacted as Law) | House of representative – which will become Law once it is ratified by the President | The Personal Data Protection (“PDP”) Law will be the first comprehensive law in Indonesia to govern personal data protection in both electronic systems and non-electronic systems. |
September 2022 | Acceleration of Renewable Energy Development for Electric Supply (“PR 112/2022“) | President of Indonesia | To accelerate the usage of renewable energy as an energy source as well as reducing greenhouse gas emission (“GHG“). restriction of operational period for steam power plants, limitation of new steam power plants construction, obligation to use local components in order to implement Electric Supply Business Plan by PT Perusahaan Listrik Negara (“PLN“), pricing of electricity based on a renewable source, electricity procurement, and many other provisions. |
October 2021 | Harmonisation of Tax Regulations (“Law 7/2021”) | Government of Republic of Indonesia | Several tax provisions in Indonesia which had previously been regulated in separate regulations are now being amended simultaneously. Some of these regulations are Law on General Provisions and Tax Procedures (General Provisions of Taxation Law), Law on Income Tax (Income Tax Law), Law on Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (VAT and Luxury Goods Sales Tax Law), Law on Excise (Excise Law), and other tax regulations issued during the Covid-19 Pandemic. |
March 2021 | Risk-Based Business Licensing Concept as part of the implementation law of Omnibus Law (“GR 5/2021“) | Government of Republic of Indonesia | Business licensing is the legality which is granted to business actors to start and run their business and/or business activities,1 and risk is the potential loss caused by hazards.2 Thus, risk-based business licensing is a business licence based on the risk level of such business (“Risk-Based Business Licensing”). The implementation of Risk-Based Business Licensing is aimed to improve the investment ecosystem and business activities, through4: a. the implementation of the issuance of business licences is more effective and simpler; and b. transparency, structured, and accountable supervision of business activities in accordance with provisions of laws and regulations. |
March 2021 | Investment Line of Business – as part of the implementation law under the Omnibus Law (“PR 10/2021“) | President of Indonesia | Offers ease of investment through amendment regarding the lists of lines of businesses that are open to investment, lines of business that are closed to investment, and lines of businesses that shall be carried out only by the central government |
1. Understand the basic nature and mechanics of Indonesian limited liability company regulations Gaining an understanding of the mechanics behind the Indonesian Limited Liability Company is your key first step to navigate this complexity. You may start by gaining an understanding of the Indonesia Standard Industrial Classification (or formally known as Klasifikasi Buku Lapangan Indonesia (KBLI)) and the various licences needed to operate certain businesses (or also known as Surat Izin Usaha Perdagangan (SIUP)). Beyond that, it is also important to understand the basic structure of Indonesia Limited Liability Company as coded by Law No.40 of 2007 (Company Law) as amended by Law No.11 of 2020 of Omnibus Law and Law No.25 of 2007 on Capital Investment (Investment Law), which governs the basic legal framework of investing into the country.
2. Go to the source and have your local Indonesian team vet through the regulations When in doubt, you should always go back to the source and not just rely on the interpretation of the law itself (or as reviewed/ commented by many legal advisors). Where necessary, it is definitely very important to have your Indonesian team members or representatives look into the original regulations as issued by the official source.
3. Seek advice from government investment services It is always important to get advice from not only your legal key person but also from government investment services and relevant trade associations. This is probably the only time that getting multiple pieces of advice from various sources is an efficient way to do business in the context of performing M&A in Indonesia, as a simple wrong step may cause a significant setback. Hence, other than getting reliable advice from your trusted legal advisor, it may also be necessary to contact the investment service department of the Investment Coordination Board (BKPM) OR your contacts in the relevant trade associations.
4. Always keep yourself updated and aware that many regulations are not always permanent In the example above, there was a ban imposed on the exports of coal – but this was only ephemeral – at the end of January 2022, which is just a few days from when the ban was announced, these regulations have been updated and there is no longer a ban imposed on such exports. This is to show that rules do change frequently.
At IGPI, we believe that it is very important to understand the local regulatory customs governing your business needs. We hope that the legal framework and advice above would be of great assistance when you explore M&A in Indonesia. Feel free to reach out to our M&A advisory team for any further discussion. **************************************************************************************************** [1] https://www.tmf-group.com/en/news-insights/publications/2022/global-business-complexity-index/ [2] https://www.esdm.go.id/en/media-center/news-archives/preventing-power-outages-govt-temporarily-bans-coal-export [3] The various provincial rules issued pertaining to PT Tambang Batu Bara Bukit Asam (Persero) Tbnk at Tanjung ENIM ****************************************************************************************************There are many industries that are not suitable for countries with low population density. Cell phone base stations, EV charging facilities, retail chains, and public transportation are some examples of extremely inefficient investments when population density is low. In Australia, there are existing policies to ensure minimal unsound or unnecessary investments or operations in these areas.
For example, only Sydney and Brisbane have train services from the international airport to the city center, while other airports offer cab or bus services. In addition, many gas stations are unmanned, and retail stores are closed at times of the day when customer traffic is low.
In Australia, a number of technologies have been developed to support low population density. For example, there are innovative technologies to support the operation of gyms that are open 24 /7 or to automate agriculture. Among these, a company that provides IoT technology called Myriota is attracting particular attention. Starting as a spin-off venture from the University of South Australia in 2015, the company aims to build a large-scale, low-cost, low-power consumption satellite communications network using nano-satellites. Its technology is currently being used in a wide range of applications, from monitoring wind farms to water tanks on farms.
It has raised more than A$50 million in funding to date, and investors include Innov8, a Singapore-based venture capital firm run by SingTel, one of Asia’s largest telecommunications companies, and HorizonX, Boeing’s venture capital arm.
A key factor in creating new industries in Australia is the federal government’s management of industry portfolios and state governments’ focus on specific industries. For new industries, startups in each state’s region focus on a specific business area, such as FinTech in New South Wales, AgriTech and HealthTech in Victoria, and CleanTech and SpaceTech in South Australia.
Moreover, each state governor has made efforts to develop their cities to maximize the growth of the industries they are focusing on. For example, in South Australia, the incubation hub Stone & Chalk is located within walking distance of the University of South Australia, the University of Adelaide, and research institutes. Myriota, introduced in 2) above, is also a university startup born in such an environment.
In the past, excessive population growth was considered a social issue in Japan – today, the paradigm has shifted and key challenges include a declining population due to the falling birthrate and aging population, as well as depopulation of regional cities. Instead of viewing environmental change as a risk, let us acquire and apply the skill of analogical thinking to find reference cases that will help us solve our current problems. Looking across the world, there is an abundance of solutions and resources that we can and should tap on. **************************************************************************************************** IGPI can provide strategy consulting for multiple aspects of your business. Get in touch with us on internationalization, strategic planning and fund raising related topics!Mr. Ryota Yamazaki is the Director of IGPI Singapore. Before joining IGPI, Ryota worked in Deloitte Consulting in Singapore, where he was a leader in the areas of Consumer Business and Supply Chain & Logistics in Southeast Asia. His areas of expertise are Strategy & Operations, such as market entry, Route-to-Market (RTM) strategy, business due diligence, and PMI. He started his career with A.P. Moller-Maersk Group as a management trainee and also worked for Kurt Salmon, where he had vast project experience, especially in Supply Chain & Logistics for the retail and consumer goods clients. Ryota graduated from the Faculty of Economics at Keio University.
Mr. Zhi Hao Thean is an Analyst in IGPI Singapore. Zhi Hao started his career with IGPI. He graduated from Singapore Management University with a Bachelor of Business Management, majoring in Finance. During his penultimate year, Zhi Hao embarked on an internship in Corporate Advisory, where he was engaged in M&A, financial due diligence, and valuation projects across various industries. He also worked as a Research Assistant at SMU, where he performed academic research on real estate investment trusts. Zhi Hao is proficient in English and Mandarin. He enjoys keeping up with the latest developments in consumer technology such as smartwatches and mobile operating systems in his free time.
Industrial Growth Platform Inc. (IGPI) is a premier Japanese business consulting firm with a presence and coverage across Asian markets. IGPI was established by former members of the Industrial Revitalization Corporation of Japan (IRCJ) in 2007. IRCJ, a US $100 billion Japanese sovereign wealth fund, is known as one of the most successful turn-around funds supported by the Japanese government. In 2017, IGPI collaborated with Japan Bank for International Cooperation (JBIC) to form JBIC IG, providing investment advisory services and supporting overseas investment. In 2019, JBIC along with BaltCap jointly established Nordic Ninja, a €100 million venture capital fund to focus on deep tech sectors such as autonomous mobility, digital health, AR/VR/MR, artificial intelligence, robotics and IoT in the Nordic and Baltic region. In 2019, IGPI established IGPI Technology to focus on the area of science and technology. The company invests in technological ventures and provides hands-on management support. The company also provides business development support for the commercialisation and monetization of technologies. IGPI Australia is a branch office of IGPI Singapore. The latter, which was established in 2013, focuses on management consulting and M&A advisory in Southeast Asia across various sectors. We act as a bridge between Japan and wider APAC, having advised on market entry strategy, potential target search, valuation, due diligence, M&A process management, post-merger integration and change management for leading Japanese clients. In addition, we have helped businesses in Southeast Asia enter Japan and acted as sell-side advisors for SMEs and private equity funds looking to divest. IGPI Australia was established in 2020 with a dual focus of helping Australian businesses enter and grow in ASEAN / Japan and attracting Japanese investments into Australia. We have since successfully helped to connect multiple Australian businesses with Japanese businesses within IGPI’s network.
This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness, and accuracy of such information. All rights reserved by IGPI.
SUNRICE – One of Australia’s leading food exporters with 30 brands in 50 countries About the company : One of the largest rice food companies in the world and one of Australia’s leading branded food exporters Mode of entry : In 2018, SunRice accomplished the acquisition of a rice processing mill in Dong Thap Province to establish a fully vertical integrated supply chain in Vietnam. How it solved issues : The investment helps to introduce advanced production know-how accompanying agronomic expertise to upskill and improve the quality, safety standards and reputation of Vietnam’s rice exports. |
CBH Group – Western Australian grain grower co-operative About the company : grain grower’s cooperative that handles, markets and processes grain from the wheat belt of Western Australia Mode of entry : Created a joint venture (Interflour Group) with another regional player through the acquisition of six flour mills in Indonesia, Malaysia and Vietnam12. How it solved issues : Using grain from Australian and around the world, Interflour supplies better quality flour to Vietnam domestic market for baking, noodle and confectionery production and malt to supply Vietnam’s drinks industry |
Icon Group – Australia’s largest dedicated cancer care provider About the company : Reshaped cancer care by integrating distinct treatment disciplines. It has expanded globally, including some Asian countries such as Singapore, China and Hong Kong16. Mode of entry : Entered partnerships with two of Vietnam’s leading healthcare providers – The National Cancer Hospital in Hanoi (the K Hospital) and the Military 175 Hospital in Ho Chi Minh City. How it solved issues : The partnership helped upgrade Vietnam’s cancer care infrastructure to a larger scale, applying an international standard in medical excellence across hospital management and utilise innovative technologies to provide remote care as necessary17. They have also brought in experts from Icon Group’s Australian and Singaporean businesses to assist the Vietnamese healthcare providers. |
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Raiz Invest Limited – an Australian fintech startup About the company : Australian fintech startup operating in Australia, Indonesia and Malaysia that allows customers to round-up everyday purchases and pool their spare change to invest in equities, bonds and other securities. Mode of entry : It is expected for Raiz to enter into strategic partnership with a local player similar to their strategy in Malaysia where they partnered with a local unit trust player How it can solve issues : Raiz provides a platform that increases the access to capital for the users (e.g. access to larger sum of money for investment). |
RMIT University – an internationally recognised Australian university of technology, design and enterprise About the company: Innovative university in Melbourne, recognized for its study and research in technology, design and enterprise23. Mode of entry: In 2001, RMIT entered Vietnam by investing directly and opening its first campus in HCMC with services and facilities mirroring the Melbourne campus. A second campus opened in Hanoi in 2004 and in 2017, an English language centre opened in Da Nang. How it solves: RMIT Vietnam is assisting in the development of human resources capability in Vietnam. Degrees are awarded by RMIT University in Australia, allowing Vietnamese students to receive an overseas education without having to leave home. |
English Learning Company (ELC) – an Australian award-winning English language school About the company: ELC offers a range of major English courses which are supplemented by a choice of electives. ELC has partnerships with a number of Australian universities and education providers. Mode of entry: In 2017, ELC entered Vietnam via a partnership with HUTECH University (Vietnam) to establish ELC Vietnam in HCM City to meet the demand for English in Vietnam. How it solved issues: Operating as a private English language centre, ELC Vietnam aims to provide students with a quality on-campus option for English language lessons. ELC works with a number of educational organisations in Vietnam to offer a paid teaching internship working in local primary and high schools with competitive prices for all English programmes. |
Kohki Sakata Chief Executive Officer +65 81682503 k.sakata@igpi.co.jp