INDONESIA Law and Practice Contributed by: Melissa Butarbutar, Ken Prasadtyo, Kevin Yehezkiel and Cindy Caroline, TnP Law Firm
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments There have been several legal developments in Indonesia in recent years that relate to M&A, including the following. Foreign Direct Investment As described in 2.3 Restrictions on Foreign Investments , Indonesia introduced a new policy on foreign investment activities in 2021, namely the “positive investment list” . The issuance of this “positive investment list” is aimed at improv - ing Indonesia’s investment climate by promoting simpler investment requirements and providing various incentives for prospective investors, as well as ensuring greater protection to MSMEs. One of the significant changes in this investment policy is the reduction of the number of lines of business that are subject to investment restric - tions, from more than 300 lines of business to only 48. Among these 48 lines of business that are still subject to foreign investment restrictions are the following: • investments that require a 100% domes - tic investment, such as the vessel industry, telecommunications tower providers and the traditional medicine industry; • investments in industries with a foreign capital ownership restriction, such as min - ing, scheduled commercial air transportation, published media and power generation below 1 MW; and • investment activities that require special licences, such as the defence equipment industry.
ment Regulation No. 35 of 2021 on Temporary Employment Agreements, Outsourcing, Working Hours and Breaks, and Termination of Employ - ment Relationships. Under the Company Law, if a company carries out a corporate action such as a merger, con - solidation, acquisition or spin-off, such company must inform its employees in writing regarding the proposed corporate action. If there is a change in policy due to such transaction and the change is deemed unfavourable to the employ - ees, the employees will then have the right to either retain or terminate their employment con - tracts with the company (with certain compensa - tion as further detailed below) after the change in policy occurs. If, upon a merger, consolidation or acquisition, the surviving entity (in the case of a merger or consolidation) or acquiring entity (in the case of an acquisition), as a new employer, decides not to retain an existing employee’s contract or the employee decides not to continue the employ - ment with the new employer, the employee is entitled to receive compensation, which includes severance pay ( uang pesangon ), tenure awards ( uang penghargaan masa kerja ) and compen - sation of rights ( uang penggantian hak ). The amount of compensation received by each employee may vary based on the employment tenure and other factors based on the relevant regulations. As an additional note, if each company involved in a merger has a collective work agreement, the collective work agreement that is more favour - able to the employees will prevail. 2.6 National Security Review There are no requirements for national security review of acquisitions in Indonesia.
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