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It has been a mixed picture for Indonesia during 2013. The jurisdiction has witnessed a period of relatively strong economic growth, political stability, rising domestic consumption and improved credit ratings, with its rich natural resources and growing consumer population making it an attractive foreign investment target.
However, growth has been slowing, with the Indonesian rupiah taking a slide and a slowdown in China and Europe hitting exports. With the 2014 elections looming, the government has focused on policies aimed at controlling foreign investment in certain sectors such as mining and banking, and the failed takeover of Danamon by Singapore-based DBS has been portrayed as a direct result of this protectionist approach. Inconsistent regulatory changes and continued concern over corruption are fuelling uncertainty among investors and having a knock-on effect by delaying badly needed infrastructure development.
Alliances continue to be a popular measure for international firms seeking to access the market including, more recently, firms based elsewhere in Asia. White & Case Pte. Ltd. has established a local association with MD & Partners, which was set up by former Hadiputranto, Hadinoto & Partners, a member firm of Baker & McKenzie lawyer Mita Djajadiredja and has among its ranks Nadia Soraya, who joined from Makarim & Taira S.. DLA Piper has partnered with Ivan Almaida Baely & Firmansyah and Singaporean firm Rajah & Tann LLP set up an alliance with Assegaf Hamzah & Partners.
Clients are benefiting from increased competition amongst domestic law firms as the trend for partner moves continues. There is now a wider pool of key players, with well-established firms such as Hadiputranto, Hadinoto & Partners, a member firm of Baker & McKenzie and Ali Budiardjo, Nugroho, Reksodiputro competing alongside growing players such as Assegaf Hamzah & Partners and Ginting & Reksodiputro in association with Allen & Overy.
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Negative Investment List
The Government has issued Presidential Regulation No. 39 of 2014 (PR 39/2014), which sets out the new negative investment list containing the business sectors that are closed or are partially open to foreign and domestic investment. The new negative investment list will replace the previous list under PR 36/2010, with a view of integrating Indonesia's economy to ASEAN, as well as accelerating development in the regions.
Article 35 of Law No. 2 of 2008, as amended by No. 2 of 2011, on Political Parties ("Political Party Law") provides for contributions to political parties, Articles 94 to 96 of Law No. 42 of 2008 on Presidential and Vice Presidential Elections ("Presidential Elections Law") provides for contributions to political campaigns, and Law No. 8 of 2012 on the Election of the House of Representatives, the Regional Representative Council and Regional House of Representatives (the "Legislative Elections Law") provides for contributions to House of Representatives campaigns.
PT Bursa Efek Indonesia has issued Decision of the Board of Directors of the Indonesia Stock Exchange No. Kep-00001/BEI/01-2014 on an amendment of Rule I-A (" Rule "), on 20 January 2014, coming into force on 30 January 2014, except as discussed below. The Rule sets out the IPO and subsequent share offerings requirements and procedures and listing fees. Notably the revised Rule sets out a free float policy and limits independent directors and commissioners to 2 successive terms.
Indonesia's Government Regulation No. 1 of 2014 (" GR 1/2014 ") and Minister of Energy and Mineral Resources Regulation No. 1 of 2014 (" ESDM 1/2014 "), enacted on 11 January 2014, implement the ban on raw mineral exports legislated under Law No. 4 of 2009 on Mineral and Coal Mining (" Mining Law "). The two regulations are currently in force. However, the restriction is not in full effect as ESDM exempts 5 minerals from a higher standard of refinement for a period of three years, on the condition that the exporter owns sufficient reserves for eventual smelting and has a credible plan to construct a smelter or jointly process the ores.
The Minister of Finance has issued Regulation No. 6/PMK.011/2014, which imposes tax on the export of five mineral concentrates: copper, zinc, manganese, iron and lead. This tax reflects the Government's policy to discourage sales of impure minerals, as an implementation of Law No. 4 of 2009 on Mineral and Coal Mining, which requires processing and purification of minerals.
The National Development Planning Agency (Bappenas) has published the 2013 Public Private Partnership (PPP) book on 15 November 2013 (" PPP Book "). The PPP Book contains a list of 27 PPP projects currently being offered by the Indonesian government. The projects constitute a shorter, more focused, list compared with prior years, placing emphasis on high priority projects and focusing on ensuring successful implementation. However, the 27 projects do span a wide range in terms of size, location, and stage of completeness.
Head of the Indonesian Investment Coordinating Board ("BKPM") Regulation No. 12 of 2013 ("BKPM 12/2013") on the Amendment of Regulation No. 5 of 2013 ("BKPM 5/2013") on the Guide and Procedure of Investment Licenses and Non-Licenses has been issued on 11 September 2013, and came into force on 18 September, just over 5 months after BKPM 5/2013, issued on 8 April 2013, which is revises in order to tone down some of the more onerous provisions of the investment licensing regime. Most notably it retreats from the earlier infringement on the Capital Market regulatory regime by removing Article 49, which classified listed companies controlled by foreign shareholders as foreign direct investment companies (PMA), with the resulting application of a range of investment and operating restrictions.
The District Court of West Jakarta rendered decision No. 451/Pdt.G/2012/ PN.Jkt.Bar. on 10 July 2013. The Court ruled that a loan agreement between an Indonesian limited liability corporation (PT) and a Texas-based lender was void on the grounds of illegal cause. The court reasoned that the loan agreement was drafted in the English language, thereby violating Article 31 of Law No. 24 of 2009 (Law 24), which mandates all contracts and MOUs involving an Indonesian national or entity to be written in Indonesian. As a consequence, the agreement was set aside, deemed to have never existed, and the Court ordered the parties to reinstate each other.
The Exempted Limited Partnership Law, 2014 (the New ELP Law ) has replaced the Exempted Limited Partnership Law (2013 Revision) (the Previous Law ). The New Law includes significant changes to the Cayman Islands' statutory framework regulating exempted limited partnerships ( ELPs ) that will increase the attractiveness of ELPs and will be appreciated by managers, investors and creditors alike. Private equity sponsors in particular will notice substantial improvements that are indicative of Cayman's continuing commitment to balanced and commercially sensible legislation. Read more...
RESTRUCTURING - COURT PROCEDURES
On 23 May 2014, the States of Jersey passed the Companies (Amendment No. 11) (Jersey) Law 201- (the Amendment Law ). This will now be sent to the UK Privy Council for consideration, then laid before the States of Jersey for a final time before coming into force. The latest information we have is that the Privy Council will be approving the law on 19 July 2014 and it may come into effect as soon as 4 August 2014.
The Hague, 4 July 2014 - BarentsKrans has appointed Joost Fanoy as a partner in the Antitrust & Public Procurement department, effective as of July 1, 2014. Joost specializes in European law in general with a particular focus on European and Dutch competition, public procurement and state aid law and is the head of the Antitrust and Public Procurement Practice Group. Joost is also a member of the Cartel damages team of BarentsKrans.
PineBridge Investments Middle East, a global multi-asset class investment manager with regional headquarters in Bahrain, and nearly 60 years of experience in emerging and developed markets, has acquired a 50% equity stake in Romatem, the leading physical therapy and rehabilitation services chain in Turkey.
Isbank issued 750 million USD notes under its GMTN programme established in 2013. The notes are listed on the Irish Stock Exchange and bear interest at the rate of 5 % with a maturity date 2021. Mr. Omer Collak (partner) and Mr. Baris Kencebay (head of tax practice) have acted for the joint lead managers Barclays, Citigroup, HSBC, National Bank of Abu Dhabi and The Royal Bank of Scotland.
Halkbank issued five-year term fixed interest rate US currency notes, with a total amount of USD 500 million with an interest rate of 4.765 % and an annual coupon rate of 4.750 %. The notes offered the lowest borrowing rate in the first five-month period of 2014, and total demand rose nearly nine-fold due to high investor interest. The note issuance drew great interest from international investors settled in the Middle East and Asia, as well as those investors based in the US and Europe. Mr Omer Collak (partner) and Mr Baris Kencebay (head of tax practice) have advised the joint lead managers.
Turkiye Finans issued the first ringgit sukuk originating from Turkey. The bank initially raised MYR 1 billion with a five-year commodity sukuk on June 30, with an annual return of 6 %. The sukuk under the programme will have tenure of one to 20 years. Funds raised will go towards general corporate purposes. The sukuk will be issued through TF Varlik Kiralama A.S., a wholly-owned subsidiary of Turkiye Finans. Malaysia's RAM Ratings has accorded the programme an indicative long-term rating of AA3. HSBC Amanah Malaysia and Standard Chartered Saadiq were the joint advisers. Mr Omer Collak (partner) and Mr Baris Kencebay (head of tax practice) have advised Turkiye Finans and the issuer TF Varlik Kiralama A.S.
Ziraat Bank, the largest state owned bank of Turkey, established GMTN programme on 21 May 2014, for the notes to be issued up to USD 2 billion listed on Irish Stock Exchange. The notes are unconditional, unsubordinated and unsecured obligations, and rank pari-passu with Ziraat Bank's other senior unsecured obligations.
Vakifbank issued EUR 500 million 5-year unsecured and unsubordinated notes under the first GMTN programme of Turkey established in 2013. The notes are listed on Irish Stock Exchange and bear interest at the rate of 3.5 % p.a. with a maturity date 17 June 2019. This is the very first EUR denominated RegS offering of a Turkish entity.