Business risks

Australian companies are advised to spend time investigating the market, obtain professional advice where appropriate and thoroughly investigate the issues in entering the market and before establishing business relationships.

Australian firms wishing to operate in this country should commit to the highest level of corporate behaviour and familiarise themselves with Australia's laws and penalties pertaining to bribery of foreign officials.

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. Further information on the regulations governing bribery of foreign public officials is available.

For further information on frauds, scams, personal and asset security, intellectual property protection and other business risks please read more about legal issues.

Intellectual property protection

Intellectual Property Rights (IPR) or Hak Kekayaan Intelectual (HKI) is governed under the Ministry of Justice and Human Rights.

In 1994, Indonesia signed the international agreement administered by World Trade Organization, the Trade-Related Aspects of Intellectual Property Rights (TRIPS). Pursuant to this agreement in 2000 the Ministry of Justice and Human Rights authorised new legislations in Trade Secrecy, Industry Design, Layout Designs of Integrated Circuits and again in 2001 ratified the legislation for Patent and Brand regulation to accommodate relevant development in patent and brand requirements in Indonesia.

As at December 2014 there are up to 256 registered intellectual property rights consultants in Indonesia. All are registered with the Directorate General for Intellectual Property Rights of Ministry of Justice and Human Rights and must renew the registration every two years.

Applications usually take from four to 40 weeks.

For more information, visit Ministry of Industry website Kementerian Perindustrian or DJHKI (Indonesian only).

Dispute resolution

The dispute resolution process in Indonesian civil proceedings follows the Dutch civil law tradition. There are three levels – District Court (first instance), High Court (second instance) and Supreme Court (third and last instance) and will take approximately three years. There are no particular legal obstacles to go through the full three instances of court proceedings, enabling the losing party to appeal and then apply for Cassation at the Supreme Court, and this is therefore almost the rule in commercial disputes.

Amongst the specialist courts there are so-called Commercial Courts within the District Courts, which are charged with bankruptcy matters. The District Courts are now also charged with the hearing challenges against decisions issued by the Indonesian Antitrust Supervisory Commission (KPPU). Decisions of the district courts relating to antitrust proceedings can be further challenged with the Supreme Court through Cassation and in addition through Case Review. District Courts are also charged with the enforcement of foreign arbitral awards.

Indonesia also has a special Administrative Court tailored after the Dutch/French system pursuant to which both foreign and domestic plaintiffs can challenge administrative decisions of an Indonesian Government instrumentality. Finally, there are labour courts handling employment law matters, and religious courts handling certain family law matters.

Pure civil disputes (i.e. except for antitrust, trademark, labour, and certain other disputes) are subject to a mandatory round of mediation proceedings supervised by the court. Proceedings on the merits will only commence once the mandatory round of mediation has failed. In practice, however, the mandatory mediation stage has in many cases resulted in amicable settlements (Source: Corporate LiveWire, Dispute Resolution In Indonesia, 9 August 2013).

Australian companies should be aware that in recent years several prominent Indonesian Judges have been investigated by the Corruption Eradication Commission (KPK). A range of Indonesian and international NGOs have expressed serious concerns about levels of corruption within the Indonesian legal system.

It is also increasingly common for international companies contracting with Indonesian entities to include provisions for dispute resolution to be undertaken in foreign jurisdictions. This may include mediation, arbitration or judicial enforcement.