On 21 August 2017, the Minister of State-Owned Enterprises of the Republic of Indonesia (“MSOE”) has enacted MSOE Regulation No. PER-03/MBU/08/2017 concerning the Guidelines on Cooperation for State-Owned Enterprises (“MSOE Regulation No. 03/2017”). MSOE Regulation No. 03/2017 revokes MSOE Regulation No. Per-13/MBU/09/2014 concerning the Guidelines on the Utilization of Fixed Assets of State-Owned Enterprises (“MSOE Regulation No. 13/2014”).
Although MSOE Regulation No. 13/2014 has been revoked, any cooperation on the utilization of fixed assets, or any other forms of cooperation, which is in the process of being assessed and/or approved pursuant to the provisions of the articles of association of a State-Owned Enterprise at the time of the enactment of MSOE Regulation No. 03/2017, may still be subject to MSOE Regulation No. 13/2014, in the event that (i) the relevant standard operational procedure for cooperation has not been prepared or adjusted with the provisions of MSOE Regulation No. 03/2017 or (ii) for a period of maximum 6 (six) months (whichever applies first).
In addition to the above, any cooperation on the utilization of fixed assets, or any other forms of cooperation, which exists prior to the enactment of MSOE Regulation No. 03/2017, will be still valid.
NEW PROVISIONS UNDER MSOE REGULATION NO. 03/2017
MSOE Regulation No. 03/2017 sets out new provisions, specifically (i) the exemption to limited validity of cooperation, which is applicable to cooperation in the form of a joint venture company which going forward may be for an unlimited period of time and (ii) the requirement for a State-Owned Enterprise to establish a standard operational procedure.
The Exemption to Limited Validity of Cooperation Applicable to Cooperation in the Form of a Joint Venture Company
In principle, any cooperation in any form shall be conducted by a State-Owned Enterprise for only a limited period of time. It is not permitted to conduct any cooperation for an unlimited period of time. However, the aforementioned provisions shall not apply to any cooperation for the establishment of a joint venture company.
The Requirement for a State-Owned Enterprise to Establish a Standard Operational Procedure
In the event that a State-Owned Enterprise acts as a party who seeks a partner in regards to a proposed cooperation, then such State-Owned Enterprise shall conduct such cooperation in accordance with a standard operational procedure. Such standard operational procedure needs to be established by the Board of Directors of the State-Owned Enterprise within 6 (six) months of the date of the enactment of MSOE Regulation No. 03/2017 and shall be approved by the Board of Commissioners/the Board of Supervisors of the relevant State-Owned Enterprise.
As a requirement, the standard operational procedure shall at least stipulate: (i) the procedure for selecting a partner, including the procedure for selecting a partner through a direct appointment; (ii) the required documents consisting of, among others, a feasibility study, business plan, risk management study and risk mitigation; (iii) the requirements/qualifications for a partner; (iv) the maximum time for selecting a partner may not be later than 90 (ninety) business days as of the date of the receipt of the complete set of the required documents; (v) the procedure for extending cooperation agreement; and (vi) the terms and conditions of the cooperation agreement that shall protect the State-Owned Enterprise’s interest.
Any standard operational procedure, which has been established by the Board of Directors of a State-Owned Enterprise, along with its amendments (if any), shall be reported to the MSOE within 1 (one) month as of the date of the establishment of such standard operational procedure.
In addition to the above, in the event that the State-Owned Enterprise already has a standard operational procedure to conduct cooperation with a partner, then the standard operational procedure will need to be adjusted in accordance with the provisions of MSOE Regulation No. 03/2017 within 6 (six) months of the date of the enactment of MSOE Regulation No. 03/2017. Kindly note that the aforementioned standard operational procedure will also need to be reported to the MSOE within 1 (one) month as of the date of the establishment of such standard operational procedure.