COVID-19 IMPACT IN INDONESIA

Introduction

On 31 March 2020, President Joko Widodo declared a national public health emergency status regarding the COVID-19 outbreak. [1]

As a follow up measure to manage and mitigate the impact of the COVID-19 outbreak in Indonesia, the Indonesian Government on the same day issued new policies and regulations regarding the (i) Large-scale Social Restriction (Pembatasan Sosial Berskala Besar) (“GR No. 21 of 2020”)[2] and (ii) the State Finance Policy and Financial System Stability (Kebijakan Keuangan Negara dan Stabilitas Sistem Keuangan) (“Perppu No. 1 of 2020”)[3]. Earlier this February, the government issued new regulation regarding the protection of employees’ rights with respect to COVID-19.

Summary of the regulations is as follow:

Large-Scale Social Restriction (pembatasan sosial berskala besar)

GR No. 21 of 2020 allows the government to enforce a semi-lockdown policy, known as the “Large-Scale Social Restriction” policy. As a result, from 31 March 2020, certain activities relating to schools, workplaces, religions, and other activities in public places/facilities are limited. Several approaches of the government to implement the policy, including:

remote work policy, except for those working in crucial sectors, such as, public defense, health, logistics, telecommunication, daily necessities ie. food supplies, etc.;
restriction of events, gathering, including any sport events; closing of places of worship; and
home study.
The Central Government will also have more authority to handle COVID-19 cases throughout Indonesia.

State Finance Policy and Financial System Stability

To protect national economy and maintain financial system stability, the Government, based on Perppu No. 1 of 2020, is allowed to take the following actions:

a. To authorize the central bank of Indonesia (Bank Indonesia), the Indonesia Deposit Guarantee Corporation (Lembaga Penjamin Simpanan – “LPS”) and the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) to take necessary measures in order to maintain national economic stability, including the following:

• Bank Indonesia is now authorized to buy long-term Government Bonds (Surat-Surat Utang Negara) and Government Sharia Securities (Surat Berharga Syariah Negara) in the primary market directly from the Government. Previously, Bank Indonesia was only permitted to buy Government Bonds in the secondary market (except for short-term Government Bonds).
• LPS is now allowed to take the following actions for restructuring of a Failing Bank (Bank Gagal):
  • sale/repurchase (repo) of Government Securities (Surat Berharga Negara);
  • issue Bonds (Surat Utang);
  • obtain loans from other third parties; and/or
  • obtain loans from the Government.
• OJK is now authorized to (i) instruct financial services institutions to conduct merger, consolidation, acquisition, integration and/or conversion; (ii) exempt issuers or public companies from certain disclosure requirements; (iii) allow financial services companies to hold their General Meeting of Shareholders or other regulatory corporate meetings through information technology communication media.

b. to reallocate state spending and sources towards the healthcare sector to help battle against the COVID-19.

Protection of Employees’ Right during COVID-19 outbreak

Employee salary protection scheme provided under Circular Letter of the Indonesian Minister of Manpower No. M/3/HK.04/III/2020 TAHUN 2020 (“Circular Letter”) is summarized as follows:

General Rule of Salary Payment

Manpower law[4] gives the right for employees to receive 100% of their salary for the first 4 months of absence caused by illness. Following the first 4 months, their salary will be reduced gradually depending on the period of absence.

Salary for COVID-19 Quarantined Employees

A. For People Under Monitor (Orang Dalam Pemantauan) (“PUM”) and COVID-19 Suspects
Employers have to pay full (100%) salary to:

• PUM who are unable to come to work for a maximum of 14 days; or
• COVID-19 Suspects who are placed under quarantine or in isolation based on a doctor’s note.

B. For COVID-19 Patients
Employers must pay salaries of COVID-19 patients in accordance with the provisions of the Manpower Law as described in point 1 above.

Salary Adjustment

In addition to the above, subject to mutual agreement with the respective employees, companies may have to issue and implement internal policies such as work-from-home and salary adjustment policies.

---

For further information on the above, please contact this form.

Click here for the Japanese translation article.

[1] Presidential Decree No. 11 of 2020 concerning COVID-19 National Public Health Emergency Situation.

[2] Government Regulation No. 21 of 2020 concerning Large-scale Social Restriction (Pembatasan Sosial Berskala Besar) to Mitigate COVID-19 Outbreak.

[3] Government Regulation jo Law No. 1 of 2020 concerning the State Finance Policy and Financial System Stability (Kebijakan Keuangan Negara dan Stabilitas Sistem Keuangan).

[4] Law No. 13 of 2013 concerning Manpower.

The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.