REGULATORY UPDATES TO RESPOND TO THE SPREAD OF COVID-19
The novel coronavirus disease (officially known as COVID-19) brings unprecedented consequences to us and the national economy. Many countries around the globe have to take moderate and/or restrictive counter-pandemic efforts, from social distancing to lockdown policies (incl. cross border travel ban) for diminishing the spread of Coronavirus Disease.
Indonesia government, without exception, has been taking appropriate and evolving countermeasures of COVID-19 in respect to the disease escalation. For example, the Governor of Jakarta Capital City issued series of policies and action plans to contain the virus, inter alia, urging business to restrict their office work operation, massive area disinfection, limiting public transport operation, monitoring people to stay at home and prohibition of gathering in public (https://corona.jakarta.go.id/id).
The Government of the Republic of Indonesia also use fiscal and non-fiscal policies to safeguard economy and business climate against fore impacts of Covid-19, especially those private parties who have been directly or indirectly affected by Covid-19 so that they can continue their operation during the outbreak. Several policies and regulations in respond of COVID-19 are implemented by the government, as follows:
9 March 2020
- The Financial Supervisory Authority of the Republic of Indonesia (Otoritas Jasa Keuangan – “OJK”) announces that to respond to the declining of Indonesia Stock Exchange (the “IDX”) Composite Index (Indeks Harga Saham Gabungan - IHSG) up to 18,46% from the beginning of 2020, OJK allows public listed companies to buyback their listed shares in the IDX without prior approval from their GMS. The maximum number of shares that can be repurchased is 20% from the total of the public listed companies paid-up capital, with at least 7,5% of shares from the total of the public listed companies paid-up capital is still listed on the IDX. This regulation came into effect from the 9th of March 2020. This regulation aims to prevent a further decline of the IDX Composite Index.
10 March 2020
- IDX enacted a new guideline in handling trade continuity on the IDX during emergency conditions as stipulated in the IDX’s Board of Directors Decree number KEP-00024/BEI/03-2020, which came into effect on the 10th of March 2020. This guideline aims to prevent further decline of the IDX Composite Index during the Covid-19 outbreak. In essence, this guideline provides three new policies as follow:
- Trading halt for 30 minutes if the IDX Composite Index is declining for more than 5%;
- Trading halt for 30 minutes if the IDX Composite Index encounter further decline for more than 10%;
- Trading suspends if the IDX Composite Index encounter further decline for more than 15%, provided that:
- the suspension will remain in effect until the end of such trading session; or
- the suspension may remain in effect for more than one trading session subject to written approval or order from the OJK.
13 March 2020
- The President of the Republic of Indonesia enacted a decree number 7 of 2020 concerning a Task Force to Combat the Coronavirus Disease. The member of the task force will include Government Ministries, the National Disaster Management Authority (BNPB), state police, and private sectors. The primary focus of this task force is to stop/prevent the spread of the Covid-19. Not only that, but this task force will also help businesses to continue their operation during the outbreak by preparing new policies (i.e., fiscal and non-fiscal policy). In this task force, private sectors are expected to give feedback to the government policies to maintain business continuity during the outbreak.
- The Ministry of Finance of the Republic of Indonesia (the "MoF") has enacted a fiscal incentive part II, which will come in effect starting April until September 2020 to respond to the outbreak of Covid-19. In particular, this fiscal incentive envisaged:
- relaxation of withholding tax under Article 21 of the Indonesia Income Tax Act, where withholding tax that is due under Article 21 of the Indonesia Income Tax Act will be covered 100% (one hundred percent) by the Government. This policy only applies to the manufacturing industry and with a limit of annual earnings equal to 200 million rupiahs.
- exemption of the import tax due under Article 22 of the Indonesia Income Tax Act to 19 (nine-teen) business sectors, KITE's Taxpayer, and KITE IKM's Taxpayer. The 19 (nine-teen) business sectors namely: (i) chemical industry, (ii) electricity equipment industry, (iii) automotive, trailer, and semi-trailer industry, (iv) pharmacy industry, (v) metal industry, (vi) conveyance industry, (vii) pulp & paper industry, (viii) food industry, (ix) computer, electronic, and optic industry, (x) machinery and equipment industry, (xi) textile industry, (xii) rubber and plastic industry, (xiii) furniture industry, (xiv) printing and recording production industry, (xv) non-metal mining industry, (xvi) non-machinery and equipment metal industry, (xvii) leather industry, (xviii) beverages industry, (xix) shoe industry.
- relaxation of corporate income tax due under Article 25 of the Indonesia Income Tax Act up to 30% rebate for 19 (nine-teen) business sectors that are directly/indirectly affected by the Covid-19.
- The MOF has enacted the MOF Regulation Number 19/PMK.03/2020 concerning the use of profit-sharing funds, general allocation funds, and regional incentive funds. In essence, this regulation provides that the regional Government can use profit-sharing funds from tobacco product excise and mineral resources to combat the Covid-19 in their respective region. Further, the regional Government should also prioritize the regional incentive funds to prevent the spread of the Covid-19 in their region.
- IDX enacted a new limit for auto rejection applicable to the stock trading on the IDX as stipulated in the IDX’s Board of Directors Decree number KEP-00025/BEI/03-2020, which came into effect on the 13th of March 2020. This new limit aims to hold a recent decline in the IDX Composite Index. The new auto rejection limit (with an equal lower bound in each fraction of the price) is now reduced from 10% to 7%. Meaning, investors who bid/offer a stock (as may be relevant) that is lower than or equal to 7% from the price on the previous closing trading session will be automatically rejected by the Jakarta Automated Trading System (JATS).
16 March 2020
- OJK issues a regulation number 11/POJK.03/2020 ("POJK 11") concerning National Economic Stimulus as a Countercyclical Policy to Respond to the Spread of Coronavirus Disease. This regulation aims to maintain the quality of the Bank's assets that may be affected by the outbreak, specifically the quality of the credits. POJK 11 provides that loans that have a value up to Rp10,000,000,000 (ten billion rupiahs) may be evaluated by the Bank using only one criterion, in this case, borrower's ability to repay the loan, regardless of borrower's business prospects and financial performance. Further, POJK 11 also provides that loans will be deemed as performing loans upon completion of the restructuring of such loans. This regulation came into effect from the 16th of March 2020 until the 31st of March 2021.
17 March 2020
- Ministry of Trade enacted Ministerial Regulation 23/2020 on Temporary Prohibition on Export of Antispectics, Mask Raw Materials, Personal Protective Equipment, and Masks. The export prohibition is effective until 30 June 2020.
18 March 2020
- OJK extends the deadline in reporting an annual financial statement, company annual report, and procuring Annual General Meeting of Shareholders ("GMS") by the public listed companies. Further, OJK introduces a new approach in procuring an annual GMS by way of electronic GMS (e-GMS) using a specific proxy provided by PT Kustodian Sentral Efek Indonesia. OJK also states that they are currently preparing a regulation that will regulate the details of e-GMS. These policies introduced by OJK through a press release number SP 18/DHMS/OJK/III/2020 on the 18th of March 2020. The timeline in reporting annual financial statement, company annual report, and procuring an annual GMS is extended as follows:
- For reporting an annual financial statement, it is extended from 30th of March 2020 to 31st of May 2020;
- For reporting a company annual report, it is extended from 30th of April 2020 to 30th of June 2020; and
- For procuring an annual GMS, it is extended from 30th of June 2020 to 31st of August 2020.
- Ministry of Health posted its counter-measures policies and regulations in the maintained internet link (URL) related with Covid-19, as follows:
“KESIAPSIAGAAN MENGHADAPI INFEKSI NOVEL CORONAVIRUS” https://www.kemkes.go.id/article/view/20012900002/Kesiapsiagaan-menghadapi-Infeksi-Novel-Coronavirus.html
19 March 2020
- Ministry of Trade give the Import Approval exemption for garlic and onions until 31 May 2020.
- Ministry of Communication and Informatics takes place press conference (Siaran Pers No. 46/HM/KOMINFO/03/2020) on the Excellence Telecommunication and Broadcasting Services Support to Overcome COVID-19
20 March 2020
- IDX extends the deadline for public listed companies to submit their annual financial report, interim financial report for Q1 2020, and annual company report as stipulated in the IDX’s Board of Directors Decree number KEP-00027/BEI/03-2020, which came into effect on the 20th of March 2020. This extension of time is given for 2 (two) months from the expected time frame as stipulated under the IDX regulations.
- The Governor of DKI Jakarta enacted a Limitation Movement Order as stipulated under Governor of DKI Jakarta Order number 6 of 2020. This order aims to stop/harshly limit business activities in DKI Jakarta to prevent further spread of the Covid-19. This order came into effect on the 20th of March 2020 and will remain to continue in effect until the 2nd of April 2020.