Client Update 21 May 2018



Foreign & Of Counsels


Senior Associates




The New Public Procurement Rules: More Details Still to Come

On 22 March 2018, the Government of the Republic of Indonesia issued the new public procurement rules, i.e., Presidential Regulation No. 16 of 2018 on the Public Procurement of Goods and Services ("Regulation 16/2018") and replaced the previous rules under Presidential Regulation No. 54 of 2010 on the Government Procurement of Goods and Services, which was amended several times, most recently through Presidential Regulation No. 4 of 2015 ("Regulation 54/2010"). Regulation 16/2018 regulates the procurement of goods/services by government agencies (i.e. Ministries/Institutions/Regional Government Agencies) that are wholly or partially financed through the state/regional budget, including the procurement of goods/services that are wholly or partially financed by domestic or offshore loans or grants that are received by the government/ministries

Regulation 16/2018 will come into effect on 1 July 2018, so before that, Regulation 54/2010 continues to apply.

Regulation 16/2018 tries to simplify the procurement rules by putting details of the procurement procedures as much as possible in the implementing regulations, e.g., the Head of Public Procurement of Goods/Services Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah - "LKPP") Regulation. The Head of LKPP Regulation is easier to amend and, therefore, it is expected to change more easily with developments in business practice. The downside of moving the procedures to the implementing regulations, however, is that we currently do not know how the new rules will be applied in practice until the implementing regulations are issued.

There are many interesting new features in the new procurement rules, but their details are not known yet. For example, actions are exempted from the public procurement rules if the procurement is carried out in accordance with established business practices. Only after the implementing regulation is issued we will know what is meant by "established business practices."

Among all the revisions to the procurement rules, we set out below a few items that may be most interesting for businesses. Businesses should consider waiting for the issuance of the implementing regulations prior to undertaking the actions below.

Provision Regulation 54/2010 Regulation 16/2018
Limitations on direct procurement of consultation services Consultation services up to IDR 50 million. (see Article 45 paragraph (1)). Consultation services up to IDR 100 million. (see Article 41 para (3)).
Emergency procurement Not specifically mentioned. Emergency procurement can be carried out for emergency circumstances, i.e., natural disasters, social disasters, etc. (see Article 59).
International tenders International tenders can be open for foreign companies under the following conditions:
  1. Procurement of Construction Work with a value above IDR 100 billion (vide Article 104 paragraph (1a));
  2. Procurement of Other Goods/Services with a value above IDR 20 billion or below IDR 20 billion if domestic providers cannot supply them (vide Article 104 paragraph (1b) and (3)); and
  3. Procurement of Consultation Services with a value above IDR 10 billion or below IDR 10 billion if domestic providers cannot provide them (see Article 104 paragraph (1c) and (4)).
International tenders can be open for foreign companies under the following conditions:
  1. Procurement of Construction Works with a value above IDR 1 trillion;
  2. Procurement of Other Goods/Services with a value above IDR 50 billion;
  3. Procurement of Consultation Services with a value above IDR 25 billion;
  4. Procurement of Goods/Services funded by Export Credit Insurance Institutions or Foreign Private Creditors.
International tenders can be open below those values if there are no qualified domestic providers. (see Article 63).
Integrated works Not regulated. Regulation 16/2018 provides that the procurement of goods, construction projects, consultation services, and non-consultation services can be conducted in an integrated manner. (see Article 3 paragraph (2)).
Procurement consolidation Not regulated Procurement consolidation is a procurement strategy to consolidate/merge several packages of similar procurements at the following stages: procurement planning, procurement preparation through providers, and/or preparation for providers selection. (see Article 1 paragraph (51) and Article 21).
Repeat orders Not possible. Regulation 16/2018 allows direct appointment by way of repeating order from the same Consultant Services Provider. This direct appointment is limited to two times. (see Article 41 paragraph (5d) and (6)).
E-reverse auctions Not regulated. Regulation 16/2018 regulates that an e-reverse auction may now be implemented for bid offering to select providers. (see Article 50 paragraph (11)).
Exemption of certain procurements from the Regulation 54/2010 Not regulated. Regulation 16/2018 explicitly excludes the following type of procurements:
  1. Procurements by Public Service Agencies (Badan Layanan Umum);
  2. Procurements based on generally published tariffs;
  3. Procurements based on established business practices; and/or
  4. Procurements regulated under other laws and regulations.
(see Article 61).
Research Falls under procurement of consultation services. Research can be carried out by individuals or a group of individuals of civil servant/non-civil servants, the relevant government institutions, universities, mass organizations, or business actors. Research is decided upon competition or assignment.
(see Article 1 paragraph (34) and Article 62).
Procurement using e-marketplace Limited to e-auction and e-purchasing (e-catalogue). E-marketplace consists of e-catalogue, online shops, and providers selection. (see Article 1 paragraph (20) and Article 70)
Dispute-resolution mechanism Not possible. Regulation 16/2018 allows LKPP to act as a settlement body for contractual disputes between the tenderers and the providers (see Article 85)

We will keep you updated on this matter.






AHP Client Alert is a publication of Assegaf Hamzah & Partners. It brings an overview of selected Indonesian laws and regulations to the attention of clients but is not intended to be viewed or relied upon as legal advice. Clients should seek advice of qualified Indonesian legal practitioners with respect to the precise effect of the laws and regulations referred to in AHP Client Alert. Whilst care has been taken in the preparation of  AHP  Client Alert, no warranty is given as to the accuracy of the information it contains and no liability is accepted for any statement, opinion, error or omission.



  • Pic Mgmt

    Capital Markets

    As a full-service firm, we do a broad range of transactions covering the entire spectrum. Many are high profile and cement our position as a top-tier firm, including global equity offerings in reliance on Reg. S/Rule 144A, private placements, rights issues and other share-related offerings, such as convertible and exchangeable bonds. We also frequently advise on foreign offerings by issuers having significant interests in Indonesia, bond issuances under global offering rules, mergers, acquisitions, combinations of acquisitions and IPOs, consent solicitations and exchange offers of debt instruments listed on the Indonesia Stock Exchange or offshore.

  • Pic Mgmt

    Banking & Finance

    We are a leading force in the Indonesian banking & finance sector, advising on all manner of structured financing transactions, from simple secured or unsecured bilateral lending to multifaceted and complex credit facilities. We handle syndicated, club and bilateral loan documentation; project finance; property finance; acquisition finance; securitization and structured finance; regulatory and compliance issues; banking documentation and legal due diligence reporting.

  • Pic Mgmt

    General Corporate/M&A

    Our General Corporate/M&A practice provides advice on corporate governance, compliance, negotiating and drafting agreements, transaction structure, management and succession, legal due diligence reporting, formation of new entities, preparation of internal corporate documents and approvals, and completion of regulatory filings. With a wealth of experience amassed over the years in a wide variety of industries, we are strategically placed to provide you with everything you need to satisfy your corporate or M&A needs.

  • Pic Mgmt

    Debt & Corporate Restructuring

    We offer a full range of services in the debt & corporate restructuring arena, including advice on capital reduction, recapitalization and rescue schemes, financial sector takeovers, global asset recovery measures, mergers, creation of new entities, compromise schemes, demergers, buyouts, preparing documents and agreements, and ensuring statutory and regulatory compliance. As an AHP client, you will benefit from the unparalleled expertise gained by many of our senior lawyers as advisors or counsel to the Indonesian Bank Restructuring Agency (IBRA), which restored the country’s banking sector to health in the wake of the Asian financial crisis of 1997/98.

  • Pic Mgmt

    Foreign Direct Investment

    As an Indonesian law firm, we are obviously very much at home in our own jurisdiction, and so are able to make you feel at home as well. We know how things work in Indonesia, and have excellent relations with all the relevant government and regulatory agencies. We advise on the establishment of foreign investment companies, permanent business establishments, subsidiaries and joint ventures under the Indonesian FDI regime, merger & acquisition issues, foreign ownership caps, manpower issues, regulatory and environmental compliance, land acquisition, taxation matters -- in fact, everything you will need to get your venture off the ground and to keep it running smoothly throughout the investment lifecycle.

  • Pic Mgmt

    Competition Law

    We are widely recognized as being at the forefront of competition law in Indonesia, a rapidly developing field in which we have been instrumental in securing a number of ground-breaking judicial precedents in recent years. We consistently focus on the practicality and commerciality aspects, and combine legal expertise with in-depth experience across a wide range of industries so as to support the achievement of your strategic goals.

  • Pic Mgmt

    Dispute Resolution

    AHP has a very strong litigation team made up of one partner and 15 associates, all of whom are licensed advocates. We regularly represent clients in tort, contract, employment, internal corporate fraud, real estate, trademark and intellectual property disputes, to name but a few, with our primary focus being on commercial disputes. In the arbitration field, we have developed a formidable reputation for expertise and successful outcomes with the result that AHP advocates regularly appear before the Indonesian National Arbitration Board (BANI), as well as overseas arbitration bodies, such as the Singapore International Arbitration Centre.

  • Pic Mgmt

    Energy, Oil and Gas

    Our Energy, Oil and Gas practice provides top-quality legal advice and transactional support to domestic and international companies operating in the oil and gas, geothermal and renewable energy sectors. As a relatively compact firm, we are able to offer advice across the entire range of practice areas, thereby allowing us to deliver outstanding legal and commercial results for our clients in a practical and cost effective way.

  • Pic Mgmt

    Projects & Natural Resources

    As an Indonesian law firm, we know our country, our regulatory environment and our governmental system. Armed with this knowledge, we have garnered a wealth of experience down the years guiding both domestic and international companies through areas that are often fraught with competing interests and controversy. This experience provides us with the expertise and breadth of vision needed to ensure successful outcomes for your business objectives. In doing so, we offer a comprehensive suite of services, all of which dovetail seamlessly one with the other so as to provide holistic solutions to all your legal needs.

  • Pic Mgmt

    Telecommunications & Media

    Indonesia has seen exponential growth over the last decade in both the telecommunications and media sectors -- both areas in which AHP is in the vanguard of legal development. Besides having a professional interest in the two sectors, all of our lawyers in the T&M practice share a genuine passion for what they do and are therefore able to offer a combination of solid technical legal knowhow and an excellent understanding of the industries, the technical aspects, the principal factors at work, and the key players in Indonesia.

  • Pic Mgmt

    Real Property

    We offer a full range of real property services, including assisting with purchase and sale agreements, leasing agreements, title searches and registrations, conveyancing, and real property dispositions and bequests,.We also provide effective and reliable advice on the complex rules governing property ownership by non-nationals in Indonesia, an area of the law that is set for liberalization in the near future.

  • Pic Mgmt

    Intellectual Property

    Our IP practice offers trademark, copyright, patent and design searches and registration, and regularly mounts successful challenges on behalf of clients against decisions of the trademark authorities. Our IP associates are all members of key associations and are frequently engaged to speak at international events as recognized leaders in the field. Combing cutting-edge expertise and a high level of commercial acumen, we take pride in our results and a high level of customer satisfaction, and do our utmost to help ensure the protection of your rights and your peace of mind.

  • Pic Mgmt

    Islamic Finance

    At AHP, we understand Islamic finance and have been in the vanguard of the sector’s rapid expansion and development in Indonesia. With an in-depth understanding of the religious and conventional legal principles that underpin the Shariah sector, we believe we are uniquely well-positioned to offer expert and innovative advice on how to conduct any transaction in a Shariah-compliant manner, and to provide the kind of end-to-end solutions that you need.

  • Pic Mgmt

    Shipping & Aviation

    As an archipelagic nation, the shipping and aviation industries are of the utmost importance to the Indonesian economy. To accommodate the needs of ship owners, charterers, and marine insurers, we provide advice on all aspects of shipping law, including ship finance & security, sale and purchase, disputes arising out of charter parties, bills of lading, insurance, and collisions, and all other admiralty matters, while in the aviation sector, we assist with aircraft financing, sale and purchase, statutory obligations related to aviation, aviation safety and the aftermath of aviation accidents.

  • Pic Mgmt

    Labor Law

    We have a outstanding record in representing both individuals and corporations in employment matters, and in general advisory work on the complex rules governing the employment of expatriates in Indonesia. On the litigation front, we are frequently called upon to advise in cases involving internal fraud and embezzlement, and on the remedies available to employers. We also offer expert advice on employee compensation and incentive schemes (stock options, benefits, allowances), the employment implications of mergers, acquisitions and amalgamations, and the rights and benefits available to employees upon termination.

Assegaf Hamzah & Partners