INDONESIA: An Introduction to Corporate/M&A

Indonesian M&A Outlook

The new government under President Prabowo Subianto has reportedly set an ambitious target of IDR1,905 trillion (approximately USD119 billion) for overall investments for the year 2025, representing an approximately 13.3% increase compared to the national investment target for the year 2024 of IDR1,650 trillion (approximately USD104.4 billion). During President Prabowo’s first two months of presidency, his multi-nation tour to, among others, China, the USA, Peru, Brazil, the UK and the UAE, has demonstrated the President’s eagerness to continue inviting foreign investments into the country. These proactive engagements by the new government underscore Indonesia’s commitment to strengthening economic ties and co-operation with other nations, which is expected to create more opportunities for foreign investors.

Regulatory Updates (Selected Sectors) and Potential Investment Opportunities

We have set out below regulatory updates on some selected sectors and potential investment opportunities with respect to the sectors.

Telemedicine services

One of the key highlights in this sector is the creation of a comprehensive framework for telemedicine services, which is expected to stimulate investment in the healthcare sector. Government Regulation No 28 of 2024 on Implementing Regulation to the Healthcare Omnibus Law allows hospitals, healthcare centres, clinics, independent practices, health laboratories and pharmacies to offer telemedicine services to their respective customers. Additional requirements for telemedicine services are anticipated to be detailed in the forthcoming regulations to be issued by the Ministry of Health (Kementerian Kesehatan).

Financial sector

Law No 4 of 2023 on Development and Strengthening of Financial Sector (the “Financial Omnibus Law”) requires controllers of financial conglomeration groups in Indonesia to either (i) establish a new holding company, or (ii) designate one of their existing companies that operates as an Indonesian financial service institution, to serve as the financial holding company (perusahaan induk konglomerasi keuangan – “Financial HoldCo”). The deadline for the issuance of the implementing regulations (which will govern detailed requirements on, among others, establishment, capitalisation, business activities and obligations of Financial HoldCo) from the Indonesian Financial Services Authority (Otoritas Jasa Keuangan) is set for 12 January 2025, two years after the enactment of the Financial Omnibus Law. Once fully implemented, this requirement is expected to increase the number of internal restructurings within financial conglomeration groups in Indonesia.

Visa and immigration

A new type of visa, namely, “golden visa” could be granted for a maximum of ten individuals for each Indonesian foreign investment company (perseroan terbatas penanaman modal asing – PT PMA), including those who are appointed as members of the board of directors or board of commissioners of a PT PMA. The duration of the stay permit is determined by the investment levels, allowing: (i) a stay of up to five years for investments of at least USD25 million; or (ii) a stay of up to ten years for investments of at least USD50 million. In contrast to a limited-stay visa (intended for work purposes), which lasts a maximum of two years, this golden visa category represents another significant initiative by the Indonesian government to attract foreign investments.

M&A in Indonesia: Potential Regulatory Challenges

Pre-M&A approval from the Indonesia Competition Authority

The Indonesian Parliament has been in discussions to finalise a new antitrust bill (the “Antitrust Bill”), which is expected to introduce a pre-merger approval regime and replace the existing post-merger notification requirement under Law No 5 of 1999 on the Antitrust Act. However, there has been no definitive timeline announced for when this new Bill will be enacted. Under the current regulatory regime, businesses are required to submit a compulsory post-merger notification only, which also extends to offshore mergers and transfers of assets, encompassing both tangible assets (such as land/building) and intangible assets (such as intellectual property rights). If the proposed Antitrust Bill is enacted, a prior approval from the Indonesia Competition Authority is mandatory for any M&A, assets transfer and joint ventures. This potential shift raises concerns over potential delays in M&A transactions.

Personal data protection

Personal Data Protection Act No 27 of 2022 provides a comprehensive framework that outlines the various requirements that data controllers and data processors must follow, including specific obligations to notify data subjects before any M&A transaction takes place. While the requirements under the Personal Data Protection Act have been effective since 17 October 2024, the details on the method and content of notification are expected to be governed by the forthcoming implementing regulation.

Constitutional Court ruling on employment

On 31 October 2024, the Constitutional Court issued a ruling which confirms the obligation of employers to continue paying their employees’ salary during industrial relation disputes (with respect to termination of employment) until a final and binding decision is issued by the court. Under the previous regime, Circular Letter of Supreme Court No 3 of 2015 had limited the employer’s obligation to pay their employees’ salary during an industrial dispute to a maximum period of six months.