LGS Online was developed to modernize the practice of law by providing electronic access to the firm’s comprehensive legal database and by making available the wisdom and experience of LGS’s international corporate practice of more than 3 decades.

LGS database on massive laws and regulations are updated regularly. This legal database becomes LGS’ basis to serve varied needs of its clients.

This practice of knowledge and technological resources sharing with clients leads to improve measured partnership with the clients pursuant to their interests in order to reach strategic and implementative solutions.

Aside from laws and regulations, LGS database also provides legal memoranda, forms and agreements, boilerplate provisions and litigation reports, all accessible online to ease the business and professionals community to access comprehensive, user-friendly and affordable legal services and information.

With a simple click, the members of LGS Online will be able to access the information they need to protect their business interests in Indonesia. In addition to a database of laws and regulations, LGS Online offers document templates and template language, interpretive memos, and litigation analyses addressing all of the fields most commonly confronted in corporate practice. All are downloadable round the clock and from any corner of the globe with very reasonable pricing and high degree of professionalism.

Message from LGS Online CEO

Arief T. Surowidjojo

The lightning speed revolution of the IT industry including Artificial Intelligence roaming the world now is instigating traditional industries to accelerate adjustments to what they have been doing for the last few decades. Innovations from just 5 years ago now run the risk of becoming obsolete. The legal industry is also facing disruptions in ways we could never have imagined before. Of course, no service industry sector could escape this new status quo. The use of IT processes, tools, and systems were introduced back in the eighties, but the innovations of the last 5 years have been the most dramatic.

Lubis Ganie Surowidjojo, through LGSOnline (LGSOL), is one of the law firms, if not the first law firm, in Indonesia to use this technology-aided approach in the early 2000’s, at the same time when LGS Law Firm introduced the application of several ISO Certifications in their practices. Also, LGS was the first law firm in Indonesia to apply these certifications. We understand that what LGSOL did in early 2000’s, in terms of the choice of application and technology, cannot be compared with what the legal industry in developed countries has been developing in the last decade, however it has painted a bold and very important footprint for a start of modernized technology-aided legal services in Indonesia and surrounding regions. Clients and users around the globe, who do not understand Indonesia laws and policies, and how to do business effectively in Indonesia, appreciated it.

The focus of the renewed content of this site is no longer on publication of laws and regulations prevailing in Indonesia, but more in how the new or existing laws and policies, and also court decisions, may affect the public and private sectors. After being hit in the past by several economic crises in 1998 and 2018, we see that a lot of economic or business activities are initiated, performed, or supported by the Indonesian Government. In a vast number of infrastructure projects, being the focus of the existing Government’s programs, the public-private partnership scheme is used, which is in fact one of the special focuses and expertise of LGS practices. LGSOL will also give updates on present developments in politics, public debates, major law or policy changes, and issues in law enforcement that might have to be considered by new investors, and how LGS would advise its clients in maneuvering windfalls and trends, and in taking a position to legally protect their commercial interests.

For new players, whether in the business sector or law firms in particular, in Indonesia or abroad, LGSOL will update important memoranda, court decision reviews and analysis, forms and sample agreements that are prepared using the database and experience of LGS and its partners for more than 40 years.

LGSOL is eager to accompany and support you in any fashion we can to see that your business interests are protected by LGS directly or through the services of LGSOL.

1 May 2019

Surowidjojo Updates

Summer in Indonesia has never been catastrophic. In fact, we do not even call it summer, just the dry season as opposed to the wet. This apparent natural phenomenon of balancing happens also in Indonesian politics.

After a very divisive Presidential election, almost everyone with clear minds were pessimistic about the future of Indonesia, due to the populist and religion-centered campaigns; however, the political temperature subsided quickly simply by the President- elect Joko Widodo (“Jokowi”) reaching out to his only rival, the retired 3-star General Prabowo Subianto. Megawati, the Chairperson of PDIP, being the party that won the most seats in the parliamentary election compared to others, and biggest political support to Jokowi, flavors the national politics even more by giving a strong signal to the other political parties in Jokowi’s coalition, that Prabowo has always been a good close friend, and Gerindra, Prabowo’s party, may still be considered to be a partner in many future agenda, which only Megawati at the moment may know the details of.

The other members of the coalition seem content to wait until after the cabinet is formed in next October, and until then hopefully nothing will hamper the current political condition in the near future. The business sectors, after all, have been waiting for too long for the political condition to become conducive enough for investment and business activities to restart its engines.

It’s noteworthy that there are three recent and important developments that need to be closely observed. The first one is the public discourse on the proposal from certain groups to amend the Indonesian Constitution again by reintroducing the concept of the Broad Guidelines of State Policies (Garis Besar Haluan Negara or GHBN), which during the Suharto Administration i.e. the New Order era, were decided by the People’s Consultative Assembly (Majelis Permusyawaratan Rakyat or MPR) under the strong direction of the Suharto’s authoritarian ruling. The now-reformed MPR consists of elected members of the People’s Representatives Council (DPR) and Regional Representatives Council (DPD). This is slightly different than the structure set up during the New Order regime, when the members consists of elected members of DPR and added with representatives of certain functional groups and regional representatives appointed personally by Suharto himself.

The GBHN, if it is to be accepted and reintroduced in our system, will require an amendment to the Indonesian Constitution, which could be decided by a simple majority of the MPR members. Looking into the composition of its existing members (from the results of the 2014 General Election), it seems that most if not all fractions in the MPR will likely propose to the newly elected members of MPR to amend the Constitution and reintroduce GBHN, realizing that such amendment will not happen during the remaining period of their tenure. It’s anticipated that the whole process will take at least one year.

This discourse is controversial. Although it only directly involves the political elites, the matter becomes too important to ignore. Pro-democracy groups have already been expressing their refusal to this proposal, and even Jokowi himself, being the number one leader elected directly by the voters in a democratic election, already expressed his objections to the idea of reintroducing GBHN.

The people who are promoting the reintroduction of GBHN including, strangely, PDIP members, argue that:

  1. there must be a guideline for the executive to sustainably and consistently implement comprehensive guidelines set out by MPR in GBHN every five years,
  2. recent experiences show that the Government frequently changes its programs, leading to ineffective and inefficient programs,
  3. the Government changes every 5 years, and if a newly elected President sets up a program which then becomes a law (which is required), the next President shall be bound by his or her predecessor, at least for a certain period before he or she could sets up own program and make it as a new law.

Critics of the reintroduction of GBHN argue that the move aims to change the structure and distribution of power within the state institutions by changing the existing presidential system to become a quasi-parliamentary system, a stronger control by the parliament through MPR, and that the move is also motivated by the desire for the ability to amend such other parts of the Constitution, i.e., (a) returning greater power of MPR so that it will be repositioned above the other state institutions including the President, DPR and the Judiciary (as vested in the Supreme Court); (b) by empowering MPR to decide the GBHN, the President will have no further power and flexibility to plan his own programs (the existing system allows the President to issue a law setting out his own programs), so that the President’s program will be guided to what has been set out by MPR in GBHN; this has a consequence that the President is accountable to MPR, and if for some reason President is deemed to have failed or breached GBHN, it will be easier for MPR to impeach President; (c) change the existing election systems so that President and Vice President will no longer be elected directly by the people, but merely by 500 or so members of MPR. The existing system also positions MPR, DPR, President, and Supreme Court at the same level, with no institution is above the others. If this happens, Jokowi’s second term may be adversely affected. He will then be controlled by MPR, a condition that he could not afford in order to continue his programs from his first administration term.

The second development is more on how Jokowi is going to elect his ministers. He promises that 55% of his ministers will be coming from professionals and 45% from members of political parties, most probably his supporters in the last election. Megawati bluntly asked Jokowi for more ministers from PDIP. Other political parties that support Jokowi seem to be demanding the same thing, except PSI, a new small media-darling political party consisting of young people that has no representation in the DPR as a result of the recent parliamentary election, but won some seats in local parliaments. In order to end the speculation, Jokowi said in public recently that he has already finalized all the names, and warned that nobody could intervene into his decision.

It’s important that certain posts have to be in the hand of independent professionals. The posts in the following fields: Finance, Trade, Industry, Investment, Foreign Affairs, State Owned Enterprises, Defense, Energy, Public Works, Agriculture, Education, Law and Human Rights, Attorney General, Marine Affairs and Fisheries, Environment and Forestry, Transportation, Manpower, Health, National Planning, Land Use and Spatial Planning, and Bureaucracy Reform should be held firmly in the hands of professionals. Without which it will be difficult for Jokowi to continue his three main programs, infrastructure development, human capital development, and poverty alleviation.

The third development, which is worrying, is an old and latent problem on how, not only Indonesian Government, but also all components of this nation, deal with issues in Papua. It was unfortunate that two incidents, one in Surabaya, and another in Malang, both heavily populated cities in East Java, ignited a wave of protests and demonstrations, some looked violent with victims on both sides, the protesters, policemen, and military personnel. The incidents sparked in Papua and some other cities in Indonesia. A group of militia raided Papuan Students’ Dormitories, claiming that the Indonesian national flag was being disrespected. The sensitivity arose as this happened during the euphoria of Indonesia’s 72nd Independence celebration.

Analysts believe that what happened was not merely an ethnic or flag- incident sensitivity, but it is basically deeper, rooted in old unsettled issues of human rights, economic development, and unanswered calls for equal and better treatment of the Papuan people as inhabitants of a region rich in natural resources but remains underdeveloped, and neglected in many areas. Jokowi has showed from the first days of his administration, his genuine attention to Papua by frequently visiting Papua, more than any other Indonesian leaders, and has been developing infrastructure while trying to win the hearts of the Papuan people. This strategy appeared to work as he won 90% of votes there.

However, the underlying problems remain. Some people in Papua claim that infrastructure and economic developments have been done and are important, but human rights, respect to their culture, ethnic and tradition, also equal treatment, democratic process, and more attention to their voice remain equally important and as of yet unsatisfactorily addressed issues.

The Chief of Indonesian Military and Police are now temporarily residing in Papua trying to resolve the situation, claiming to be using social and cultural approach, and not from a security perspective. We hope this approach works, and not only succeeds in settling the discontent ignited by the Surabaya dan Malang incidents, but more deeply into the root of the problems. Such a result would require not only the right strategy of the Government, but also all components of this nation.

While the discussion on whether or not GBHN shall be reintroduced is ongoing, another very important development, which is more negative than promising, is the process to select the new commissioners of the Corruption Eradication Commission. After so many months of controversial process, the Selection Committee appointed by Jokowi filtered 10 candidates for the 5 commissioners’ position. The Committee has submitted the 10 names to the President who has already submitted the names to DPR for selecting the 5 commissioners including its chairperson. The controversy escalated when anti-corruption NGOs alleged that it is the intention of the Committee to render control of the KPK under the Police’s watch, which has of course been denied immediately by the Committee. Anti- corruption NGOs and even the KPK itself have mentioned publicly that one of the candidates had breached KPK’s code of ethics when he was serving KPK.

The new commissioners will be finally decided by DPR. The decision shall be made by the newly elected members of DPR from the recent 2019 election. It is going to be a good test for the new DPR as to whether they have a solid anti-corruption agenda in one of their first decisions. Or not.

The KPK has been so far the number one state institution getting national and international praise for its effective role in prosecuting large scale and systemic corruption. It also constitutes one of the big positive factor in supporting the success points of the Megawati, Yudhoyono, and Jokowi administrations. If the new 5 commissioners fail to maintain the KPK’s effectiveness, it will be very damaging for Jokowi’s next 5 years period. This issue of weakening the KPK is exacerbated by news as of the first week of September 2019 that all fractions of the Indonesian Parliament has approved a motion to propose the revision to Law No. 30 of 2002 on the KPK. The revised law includes amendments that appear to weaken the extraordinary powers of the KPK, which are still required to address the extraordinary nature of corruption crimes in Indonesia, apparently by limiting the KPK’s wiretapping powers, limiting independency of the investigators, and by putting further and much more specific and arguably unnecessary controls over the KPK’s functions, where previously the KPK was only beholden to the public.

The proposed law needs a decision of President Jokowi as to whether the Government agrees to proceed with the discussion with DPR in a very limited window before the existing DPR ends its term in several weeks.

For the new following laws and proposals, it is noteworthy to see how the development may affect business and economic activities:

  1. The Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia) has been proposing for the Draft Bill on Financial Reporting to be included in the Priority National Legislative Program (Prolegnas). The Draft Bill contains provisions on who shall be obliged to be reporting entities under the regulation, the scope and parameters of financial reports, a Financial Reporting Authority, the Financial Accounting Standards Board and the Accountancy Profession Association, users and recipients of financial reports, and sanctions for breaches under the regulation.
  2. The Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal, ‘BKPM’) has been preparing a Draft Regulation on the Guidelines for the Implementation of Electronically Integrated Business Licensing Services. The Draft Regulation is intended to impose standards on relevant licensing requirements within the online licensing services. The process under the Draft Regulation would include a process whereby businesses that require infrastructure for their operations shall commit to acquiring relevant permits, licenses, and documentation, if they have not done so.
  3. The Indonesia Financial Services Authority (Otoritas Jasa Keuangan, ‘OJK’) has issued OJK Circular No. 15/SEOJK.05/2019 on the Reassessment of Primary Parties of Non- Bank Financial Institutions, which provides for the reassessment of primary parties of non-bank financial institutions as parties who own, manage, supervise, and/or have significant influence over such financial institutions, including: Boards of Directors and Boards of Commissioners (among others) of insurance companies, pension funds of employers, financing companies, guarantee institutions, venture capital companies, and pawn broker companies; managers of pension funds of financial institutions; and controlling interests as well as controlling shareholders for companies and guarantee institutions. The reassessment involved shall focus on the integrity, financial expedience issues, financial reputation, and/or competence issues involving controlling primary parties and managing primary parties.
  4. The Regulation of the President No. 55 of 2019 on the Acceleration of Battery-Powered Electric Motor Vehicles for the Road Transportation Program has been issued, which includes provisions on the planned transition to battery-powered electric motor vehicles. Such provisions include the types of such vehicles, namely two or three-wheeled vehicles and four-wheeled or more electric motor vehicles; the local electric motor vehicle industry and imports of electric motor vehicles, incentives, required infrastructures, tariffs on electric power for electric motor vehicles, and technical requirements.
  5. The Minister of Agrarian Affairs and Spatial Layout/Head of the National Land Agency has issued Regulation No. 7 of 2019, which amends Regulation No. 3 of 1997 on the Implementation of the Provisions of Government Regulation No. 24 of 1997 on Land Registrations. The amendments specifically adds provisions on the use of electronic documents, systems, and signatures in relation to Deeds prepared by Land Deed Officials (Pejabat Pembuat Akta Tanah, ‘PPAT’); Land Books; Certificates for land rights, land management rights, wakaf land, strata titles, and mortgages; and the administration of land registration data as well as documents.
  6. The Supreme Court has issued Regulation No. 1 of 2019 on the Administration of Cases and Legal Proceedings in Courts via Electronic Means, which provides for the electronic administration of court procedures, as well as the use of Information Technology innovations in the examination and adjudication of litigation cases, which shall include civil, religious, military, and administrative cases. The electronic system shall be accessible both to lawyers of parties as well as to parties and their proxies.
  7. The Supreme Court has also issued Regulation No. 4 of 2019, which amends Regulation No. 2 of 2015 on Procedures for the Resolution of Small Claims Lawsuits. The amendment provides for several matters, including:
    • increasing the maximum threshold for material claims which may be demanded
    • from IDR 200 million to IDR 500 million;
    • allowing plaintiffs who do not reside in the same jurisdiction as the defendant to file a suit, provided it is filed through his/her proxies, incidental proxies, or representatives;
    • administration of cases through the e-court system;
    • ability for defendants to challenge verstek (in absentia decisions) decisions by filing for verzet (challenge of the in-absentia decision) by no later than seven days after the granting of such decisions;
    • ability to seize defendants’ assets or plaintiffs’ assets currently in possession of
    • defendants; and
    • ability for head of relevant district court in a small claims case to issue an aanmaning (reprimand) for the execution of a decision relating to such case.