INDONESIA Law and Practice Contributed by: Ira A. Eddymurthy, A. Charlie R. Malessy, A. Ramadinan Saptara and Medita F. Siregar, SSEK Law Firm
be exposed, under the supervisory oversight of the BOC. With respect to international sanctions, unilateral sanctions imposed by foreign jurisdictions do not automatically bind Indonesian companies. Howev - er, Indonesian companies with international expo - sure may be effectively compelled to observe such sanctions in practice. Whether this obligation arises depends on the nature of the company’s business activities and international dealings and should be identified and managed by the BOD under the super - vision of BOC. In certain industries, such as financial institutions, directors and commissioners have a duty to oversee and manage risk management and internal control systems. In general, ESG reporting obligations are closely linked to corporate social responsibility (CSR) obliga - tions under the Company Law. Under the Company Law, CSR implementation is mandatory only for com - panies whose business activities are related to natural resources. Under Government Regulation No 47 of 2012 regard - ing the Social and Environmental Responsibilities of Limited Liability Companies (“GR 47/2012”), CSR is implemented by the BOD based on the company’s annual work plan, which must be approved by the BOC or GMS in accordance with the company’s arti - cles of association. The implementation of the CSR must then be reported in the BOD’s annual report, which is submitted for approval by the GMS. Specific CSR implementation and reporting obliga - tions are imposed on public companies and finan - cial institutions. These obligations are regulated by the OJK under OJK Regulation No 51/POJK.03/2017 regarding the Implementation of Sustainable Finance for Financial Service Institutions, Issuers, and Public Companies (“OJK Reg 51/2017”), which requires pub - 7. Environmental, Social and Governance 7.1 ESG Requirements
lic companies and financial service providers com - panies to implement CSR and subsequently report on their CSR implementation to the OJK, as well as publish such information to the public. 7.2 ESG Developments At present, the development of ESG-related matters has been incremental, with no major regulatory chang - es to date. Nonetheless, the Indonesian government continues its effort to embed the ESG principles within the national legal framework. This is reflected in the issuance of several recent policies, including in the financial sector, where the OJK has issued Version 3 of the Indonesia Taxonomy for Sustainable Finance, demonstrating the sector’s commitment to contribut - ing to Indonesia’s Sustainable Development Goals. Moreover, in line with this commitment, the OJK is currently preparing a new regulation on sustainable finance to replace OJK Reg 51/2019, with the aim of aligning its policies on sustainable finance with evolv - ing developments. There are no specific requirements under Indonesian laws and regulations that mandates companies in Indonesia to establish an AI-dedicated board or com - mittee. 8.2 AI Use-Related Risks There are no specific laws or regulations in Indonesia governing the use of AI. The Ministry of Communica - tion and Digital Affairs (MOCDA) is in the process of preparing a draft regulation on AI. In the absence of a dedicated regulatory framework, AI may fall within the category scope of “Electronic Agent” as regulated under Law No 11 of 2008 regarding Electronic Infor - mation and Transactions, as last amended by Law No 1 of 2024 (the “EIT Law”). There are also several non-legally binding instruments issued by the govern - ment in the form of codes of ethics and guidelines governing the use of AI. Given the absence of specific laws and regulations on AI, there is currently no requirement for companies to establish dedicated bodies or committees to oversee 8. Artificial Intelligence 8.1 Board Oversight of AI
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