Name : Ni Putu Atmanastuti
NIM :
Lecture : Prof . Dr . Faisal Santiago, SH, MM
Subject : Business Law
In December 2015, the asean economic community will
begin. The agremeent has been done 2 years ago by the president from asean
coutry, ( Indonesia included ). But are we ready to face AEC ? How about our
law, and rule ? Is it ready to face it ?. Before i explain much more about our
law regulation in AEC, first i will explain about what is law and aec.The ASEAN
Economic Community (AEC) shall be the goal of regional economic integration by
2015. AEC envisages the following key characteristics: (a) a single market and
production base, (b) a highly competitive economic region, (c) a region of
equitable economic development, and (d) a region fully integrated into the
global economy. And law is a system of rules that are enforced through social
institutions to govern behaviour. So basically law AEC is a rules that enforced
a region fully intergrated into the global economy.
The ASEAN Trading Link
The liberalisation and
integration of ASEAN members’ capital markets has been a key focus area in the
lead up to the AEC. The development of an integrated capital market in the AEC
will enable the free flow of capital within the region, and should mould ASEAN
into an asset class for international investors. The ASEAN Trading Link is a
vital cog to this development. The Link connects participating exchanges
through an electronic network, essentially allowing investors to freely trade
securities in any participating member’s market. Analysts claim that the
success of the AEC’s capital markets will be heavily dependent on Indonesia’s
participation. However, so far, only Singapore, Malaysia and Thailand have
joined the Link.
Indonesia’s Financial
Services Authority (OJK) recently admitted that the country’s stock market
still faces a number of challenges that need to be addressed before it is
integrated into the regional economy. One difficulty for foreign companies
looking to list in Indonesia is that their prospectuses must be audited by an
auditing commission recognised by OJK. “One of the things that the government
and regulators are struggling with is in the context of AEC, how do they make
that fit with our Capital Market Law of 1995, which still assumes that
auditors, securities companies and other supporting professionals to be an
Indonesian entity or have an Indonesian presence,” says Melli Darsa, founder
and managing partner of Melli Darsa & Co. “The Capital Market Law has been
in the works to be amended for so long. One would think they would have amended
the law to accommodate commitments under the AEC to be better implemented, but
it still hasn’t been changed,” says Darsa.
As it stands, foreign
companies are permitted to list on the Indonesia Stock Exchange (IDX) by
issuing Indonesian Depositary Receipts. However, no foreign company has gone
down that route to date. “One reason for this could be that we are still at the
very early stages of improving the governance and regulatory aspects of our
capital markets. There has been a dramatic improvement on various fronts, but
more improvements to the standards can still be made,” says Assegaf.
Despite the movement
towards market integration, competition is still fierce between ASEAN nations
in many industries. It is therefore possible that this perceived regulatory
inaction could be due to the IDX and OJK still viewing financial hubs like
Singapore as a major rival. For example, if all of ASEAN’s exchanges were to
join the Trading Link where securities can be freely traded across markets,
companies may choose to focus their listings on the more liquid and mature exchanges,
at the expense of other bourses in the AEC.
Forming alliances
The creation of the AEC
is likely to spur more cross-border transactions and investment, albeit not
immediately. This potential increase in deal flow should trickle down to
Indonesia’s law firms. While the current law in Indonesia prohibits
international law firms from opening in the country, a number of local firms
have forged cooperation agreements with regional law firms in the past 12 to 18
months to broaden their ASEAN reach. Jakarta-based Makes & Partners entered
into an alliance with Singapore’s WongPartnership last August, while Rosetini
& Partners inked an agreement with Japanese firm Nishimura & Asahi in
September. Others have looked to align themselves with international law firms.
Linda, Widyati & Partners entered into an association with Clifford Chance
in early 2014, while IP boutique K&K Advocates and business law firm
Nurjadin Sumono Mulyadi & Partners formed an alliance with Bird & Bird
last June. Hanafiah Ponggawa & Partners formed an alliance with Taylor
Wessing and its ASEAN network in late 2013. More integrated pairings like
Hiswara Bunjamin & Tandjung and Herbert Smith Freehills, Hadiputranto,
Hadinoto & Partners and Baker & McKenzie, and Allen & Overy and
Ginting & Reksodiputro, have been in place for several years.
Assegaf Hamzah &
Partners, meanwhile, formed an alliance with Singapore’s Rajah & Tann in
2013. Then in August last year, Rajah & Tann combined its eight regional
and associated law firms within Southeast Asia to form Rajah & Tann Asia,
an integrated platform for cross-border transactional and dispute resolution
services across the region. “Clients abroad are looking at firms that are able
to provide local expertise and solutions across ASEAN. Our tie-up with Rajah
& Tann Asia is a response to that growing requirement,” says Assegaf.
However, Assegaf Hamzah & Partners has no immediate plans to enter into
formal agreements on a larger scale, he says. “We work with a number of
international firms and we want to maintain the ability to do so. By tying up
with one international firm, you are closing doors to your relationships with
other international firms,” says Assegaf.
For some law firms,
remaining independent is the preferred modus operandi. “If your firm is at a
manageable size and you know what your niche market is, you’d like the
flexibility of working with any law firm at any one time. In fact, the
Indonesian clients really rely on us to help them find the best law firm that
can do work in the region at any given time,” says Darsa. Melli Darsa & Co.
recently ended its alliance with Squire Patton Boggs to focus on its best
friend relationships with regional and international law firms. “With Squire
Patton Boggs, although we entered into the alliance as part of its independent
network, people read more into it. It didn’t benefit us because we weren’t
really integrated and indeed our relationship was focused on more long-term
strategies in any event like moving beyond our core securities and public
M&A practice. As such, we decided that it is better to stay independent,
which allows us to realign our relationship with several of the premium U.S.
firms which generally do not have any presence in Indonesia,” says Darsa.
While foreign firms are
prohibited from opening offices in Indonesia, the country’s Ministry of Law is
able to issue up a recommendation for up to five foreign lawyer work permits to
be employed in each local firm, says Bunjamin. “Many industry players hope that
the government will consider allowing the issuance of more than five foreign
lawyer permits per firm, considering the industry is also growing. The five
permit limit has been in place for a long time, but the industry has grown
significantly since then, so it would be good for business if the limit was
raised,” he says.
‘Waiting on the
sidelines’
The creation of the AEC
this year should strengthen the competitiveness and bargaining power of ASEAN
countries in the global marketplace. At the same time, the free flow of goods,
services, labour and capital will undoubtedly spark some competition between
ASEAN countries. For Indonesia, as the region’s largest economy, this could
pose a challenge. “The extent of the AEC attracting big deals in Indonesia also
depends on how the country is perceived as an investment target. Laws have to
be clearer, and regulators have to understand that foreign investment is
required and be less protectionist. Investors are literally waiting on the
sidelines, but Indonesia might not be completely ready yet for full integration,”
says Darsa.
The Indonesian government
needs to play a pivotal role in getting Indonesia ready for the AEC, and clear
regulations regarding the implementation of the AEC could help Indonesia’s
businesses – both big and small – and legal industry benefit from a fully
integrated market and trading bloc. “We need to see clear guidance from the new
government in terms of preparing ourselves for this liberalisation. I am sure
opening up the market will ultimately be good for Indonesia, but it takes time,
and the industry needs to adjust itself,” says Bunjamin.
The key benefit of the
AEC for Indonesia is that the ASEAN countries will be able to present
themselves as one market and one community, says Assegaf. “When you present the
AEC as one trading bloc, which will be the third biggest market in the world,
that will attract more investors into this region and add to economic growth,”
he says. “For many years, we have been talking about the AEC in 2015 as if it
was so many years in the future. But we are already in 2015, so maybe people
will begin to properly discuss real implementations of the AEC blueprint.”
Illumination about AEC
must be exercised by the Government internally in Indonesia not just on how to
penetrate the Asean market, but more important was how national businesspeople
could resist storming of goods from other countries.
With just 2 month time
before installment of the new President, it was indeed not easy to make
preparations. Each sector would need consolidation and inter sectoral
consolidation. Also it was necessary to safeguard the acceleration process of
infrastructure development whereby Indonesia could benefit from the Asean
community era, which would trigger competition.
Southeast Asia was
preparing to establish an economic community with potential to enhance trading
and capital flow, unfortunately the integration it self had the potential to
widen discrepancy. The point was that gender wise, women would have less job
opportunity than men. Ten Asean member countries would share a common market
next year.
The integration would
create 14 million additional job opportunities in 2005 where skilled workers
would be free to perform. Such was report made by the Asian Development Bank
[ADB] and International Labor Organization [ILO].
Economic growth of the
region could be jacked up to 7%. Unfortunately Indonesia was most unlikely to
be advantaged. By estimate the new job opportunities would encompass only 1.9
million workers or 1.3% of total workers. By estimate, around half of the
highly skilled workers would work in Indonesia. While most of the vacancy would
be filled by less trained, low educated workers. The gap means less
productivity and competitiveness for Indonesia.
Most of the job
opportunities would be in the sectors of trading, construction and
transportation informal occupations mostly held by male rather than female
workers. Shifting of low and middle skilled workers would also be jack up,
hence signaling the need for protective measures for local workers.
The Government was aware
of the need for better regulation of placement for foreign workers; and
Indonesia had to step up quality of goods and services by conducting training
and accommodating more workers.
To grab job
opportunities, skill was the key factor. Applicants must have the right skill
for the right job. Although many job opportunities needed low and medium skill,
the sectors that needed high skilled workers would grow fastest.
Indonesia was advantaged
in the sectors of construction, trading, and transportation. The question was:
how to prepare a labor force that meets the requirement for high skill. As
known, Indonesia had the most numerous workworde in Asean.
Population of the young
was high in Indonesia, while in countries like Thailand and Singapore aged
people would prevail in the statistical data. Indonesia’s domestic market was
high, the young people were many, and fresh innovations were plentiful.
Policy making in
Indonesia were flexible. Many initiatives had been taken for the medium term.
There was political will in the next Government which emphzized priority on
efforts to be biased in taking advantage from Asean Economic Community.
For example Indonesia
applied the Minimum Wages Policy which was not done by other countries, which
means that Indonesia’s position was notably good. Besides Indonesia was Asean’s
leader in terms of population. So Indonesia’s role was import as a whole to the
region as well as for her own people.
By next year, Indonesia
would be having a competitive momentum, particularly in economy and industry
when Indonesia would be facing AEC as consequences of regional
agreements.Pursuant to that matter, it was important for the Government to
identify problems and face challenges of making productive and excellent
workers for Asean’s labor market. Spontaneous response came from the KADIN, the
Indonesian Chamber of Commerce who had prepared 3 programs in facing AEC 2015
and also supported the Indonesia Economic Development Expansion Program
[MP3EI].
Firstly to identify need
for skilled workers to support 22 economic activities in 6 economic corridors
and to step up competitiveness in 12 prioritized sectors in AEC 2015.
Secondly o facilitate
standard of competence and to set up Professional Cerification Agency [LSP] by
related industrial associations.
Thirdly to develop KADIN
Training Center [KTC] for promoting development of competence based training
programs in accordance with industry need by provincial KADIN. Furthermore
KADIN made inventory of 12 prioritized sector for AEC 2015 called free flow of
skilled labor, health care, tourism. Logistics service, air travel transport,
agro-based products, electronics, fisheries, rubber-based products, textile and
apparels, automotives, and wood based products.
To embark on
competition-packed AEC era, high quality huma n resources must be prepared as
there were many labor intensive industry which had storage of competent workers
which affected productivity especially in industry applying high-technology.
There were some basic
problems faced by Indonesia in facing MEA 2015:
One: high number of disguised unemployment
Two: low number of
newcomer entrepreneurs to speed up expansion of working opportunities.
Three: most of Indonesian
workers were uneducated workers so productivity which was why productivity was
low.
Four: Growing number of
educated workers, due to mismatch between university graduates and need for
workforce.
Five: Inter-sectoral discrepancy of
productivity of workers.
Six: the informal sectors
prevailed in offering job opportunities, a sector which was not given enough
attention by the Government.
Seven: unemployment in
Indonesia was the highest among 10 Asean nations including joblessness among
skilled workers in facing AEC 2015.
Eight: workers’ demand
for minimum wages and fringe benefits in employment.
Nine: the problem of
Indonesian migrant workers [TKI] spread out in many countries abroad.
The Bank of Indonesia
encourages entrepreneurs and the Indonesian community to use the rupiah
currency ahead of the establishment of the ASEAN Economic Community (AEC) in
2015.
"Bank of Indonesia
has asked all entrepreneurs and the Indonesian community to use the rupiah
currency in every transaction across the nation, as the bank feared that other
countries will be one step ahead of Indonesia," said the Bank of Indonesias
Deputy Governor Ronald Waas, here on Wednesday.
Indonesia as a large
market in the AEC should encourage its currency to boost the international
markets trust and prestige among foreign countries, Ronald added.
The high demand for
foreign currency will trigger the depreciation of the rupiah, and increasing
inflation will also lower Indonesian product competitiveness.
According to Law No. 7 of
2011 on the mandate, the rupiah currency should be used in any transaction
related to payment, settlement of other obligations that must be met with
money, and/or other financial transactions that are carried out in the country.
Unfortunately, the law
has not been enforced with a government regulation, which can describe the law
in detail, Ronald said.
The statement was made at
a national seminar with the theme "Rupiah as a Symbol of National
Integrity and the Obligation of Rupiah Currency in the Indonesian Soil,"
held in Batam.
The AEC is expected to
achieve the goal of regional economic integration by 2015. The community is
envisaged as a single market and production base, a highly competitive economic
region, a region of equitable economic development, and a region fully
integrated into the global economy.
So basically the regulation in indonesia didn't
prepared too much because there is some law that cannot being approved by the
ministry and house of representatives. So the new regulation need much time to
being done and applicationing in the citizens.
Resource :
-http://en.m.wikipedia.org/wiki/Law
-http://www.asean.org/communities/asean-economic-community
-http://www.legalbusinessonline.com/features/aec-approaches-indonesia-ready/68315
-http://m.antaranews.com/en/news/94505/bank-of-indonesia-encourages-use-of-rupiah-ahead-of-aec
-http://kusnandarlaw.blogspot.com/2014/09/aec-2015-and-readiness-of-indonesias.html?m=1
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