By : AYMP
President Joko Widodo has recently enacted Presidential Regulation Number 63 Year 2019 on the Use of Bahasa Indonesia (“PR 63/2019”) which comes into effect on 30 September 2019 that is more than 10 years after Law Number 24 Year 2009 on National Flag, Language, Coat of Arms and National Anthem (“Law 24/2009”) was promulgated which in Article 40 of Law No. 24/2009 mandate the issuance of the presidential regulation. Below are several key provisions from PR 63/2019:
I. MoU or Agreement
Article 31 paragraphs (1) and (2) of Law 24/2009 are restated as Article 26 paragraphs (1) and (2) of PR 63/2019 as such PR 63/2019 reaffirm the requirement for any memorandum of understanding or agreement which involves Indonesian party (state institution, governmental institution, private entity or citizen) and foreign party to be made in bahasa Indonesia and the language of such foreign party and/or English language.
In addition, PR 63/2019 now adds two additional paragraphs under Article 26 paragraphs (3) and (4) which clarify (i) the purpose of having the the foreign language and/or English language in a MoU or agreement is to be used as translation or document with equal meaning with the bahasa Indonesia version so the foreign party will have the same understanding, and (ii) that parties to the contract may contractually agree on the prevailing language if there is any discrepancy between the two versions.
However, PR 63/2019 does not provide stipulation on the sanction should an agreement between Indonesian party and foreign party does not have bahasa Indonesia version or whether a foreign law governed agreement must also have bahasa Indonesia translation.
Having bahasa Indonesia version for MoU or agreement is a must when the governing law of such MoU or agreement is Indonesia law. However the rule is less clear when dealing with foreign law contract with cross border performance. Nonetheless, market practice since 2009 is to sign a bilingual version agreement or to also to have the bahasa Indonesia translation of the relevant agreement.
Furthermore, PR 63/2019 also does not provide stipulation on when the bahasa Indonesia version of the agreement must be provided, namely whether it shall exist prior to the parties sign the English version or bilingual version of the agreement or it may be provided later. The preferred approach since the enactment of Law No. 24/2009 is to sign the agreement in bilingual version or to sign the bahasa Indonesia version simultaneously with its English version. However, the parties to the agreement may contractually agree to provide the bahasa Indonesia version later within a reasonable time frame after the date of the English version.
II. Name of Buildings, Apartments or Offices, and Business Entities
Name of buildings, apartments or houses, offices, and trading complexes, established or owned by an Indonesian legal entity (including foreign investment company- PT PMA) and Indonesian citizens are also required to use bahasa Indonesia. However, the provision excludes buildings that have historical, cultural, customary, and/or religious values. The name of such building can be in local or foreign language.
With regards to the name of business entities, bahasa Indonesia shall be used in the name of business entities which are entirely owned by Indonesian legal entity or Indonesian citizens (100% local ownership). Therefore, the business name of PT PMA is exempted from the obligation to use bahasa Indonesia.
PR 63/2019 does not regulate a transition period for the compliance with the abovementioned rules. Unless sectoral regulation issues further implementing regulation to provide a transition period, then the obligation as elaborated above does not apply retroactively.
The requirement to use bahasa Indonesia for trademark owned by Indonesian legal entity (including PT PMA) and citizens has been previously regulated under Law 24/2009. PR 63/2019 now provides that such requirement does not apply for trademark licensed from foreign party.
Similar with point (II) above, no transition period is provided by the PR 63/2019 to comply with the obligation to use bahasa Indonesia for trademark. Unless sectoral regulation issues further implementing regulation to provide a transition period, then the obligation to use bahasa Indonesia for trademark does not apply retroactively.
IV. Supervision on the Use of Bahasa Indonesia
PR 63/2019 authorizes the Minister of Education and Culture to supervise the use of bahasa Indonesia by central government, while the relevant Governor and/or Regent / Major (in accordance with their respective authority and jurisdiction) are tasked to supervise the use of bahasa Indonesia by local government.
However, no further stipulation is provided on whether the use of bahasa Indonesia in business-to- business sector, e.g. an agreement entered into by Indonesian party and foreign party, also become the object of supervision. The Minister of Education and Culture will issue supervision guidelines on the use of bahasa Indonesia.
This summary only highlights particular issues under PR 63/2019 and may not reflect the entire issues and requirements in the implementation of the said regulation.
For more specific inquiry about this matter or other emerging legal issues in Indonesia, please contact the following lawyers:
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- Benny Handoko (firstname.lastname@example.org)
- Bianca Timothie (email@example.com)