As Indonesia moves towards 2027, businesses need to pay closer attention to regulatory developments that may affect corporate governance, employment arrangements, operational structures, and financial management. Regulatory changes require more than administrative compliance. They also call for management to reassess existing policies, operational practices, and business strategies.

Recent developments indicate that the government is strengthening corporate compliance and regulatory oversight. From beneficial ownership transparency and corporate administration to employment protection, outsourcing restrictions, and the management of natural resource export proceeds, each development carries implications that business leaders should understand.

During the Business & Regulatory Watchlist: What Companies Cannot Afford to Ignore session by Salsabila Dara at Business Outlook 2027, TGS AU Partners highlighted four regulatory areas that deserve particular attention as companies prepare for the year ahead.

1. Beneficial Ownership and Dormant Corporations: Risks to Corporate Administrative Standing

Corporate ownership transparency remains a key priority in Indonesia's efforts to strengthen corporate governance. Through Minister of Law Regulation No. 2 of 2025 concerning the Verification and Supervision of Corporate Beneficial Owners, the government has reinforced companies' obligations to identify, report, and update information regarding their beneficial owners (BO).

These obligations apply to various forms of corporations, including limited liability companies, foundations, associations, cooperatives, and other business entities covered by the relevant regulations.

Corporations are also required to update beneficial ownership information at least once a year, maintain supporting documentation, and complete the relevant beneficial ownership questionnaire. These requirements form part of broader efforts to improve corporate transparency and prevent the misuse of legal entities for money laundering and terrorist financing activities.

The government has further strengthened its oversight through Circular Letter of the Director General of General Legal Administration No. AHU-AH.01-36 of 2026 concerning the Administrative Designation of Inactive Corporations and Beneficial Ownership Reporting and Verification Obligations.

Under this circular, corporations that have not reported administrative updates or changes during the preceding five-year period may be included in a preliminary list of inactive corporations. The Directorate General of General Legal Administration (Ditjen AHU) will subsequently announce the preliminary list through newspapers, its official website, and other communication channels.

If a corporation fails to update its administrative information within six months following the announcement, it may be included in the final list and receive an "Inactive" status in the Ditjen AHU system and its corporate profile.

It is important to distinguish administrative inactive status from dissolution or revocation of legal entity status. Nevertheless, this designation may create significant obstacles when a company needs to process corporate and administrative matters.

Permenkum 49/2025: Corporate Filing Deadlines That Should Not Be Overlooked

In addition to beneficial ownership requirements, Minister of Law Regulation No. 49 of 2025 establishes important procedures and deadlines governing the administrative lifecycle of limited liability companies.

Key requirements include:

  • Beneficial Ownership Documentation: Beneficial ownership documents must be included in the establishment and relevant corporate data amendment processes, in accordance with applicable requirements.

  • Annual General Meeting of Shareholders (GMS): Directors must submit the annual report to the GMS no later than six months after the end of the financial year. For companies with a financial year ending on 31 December 2026, the annual GMS must be held no later than 30 June 2027.

  • Notarial Deed: Approval of the annual report by the GMS must be documented in a notarial deed. Resolutions concerning amendments to the articles of association must also be formalized in accordance with the applicable deadlines.

  • SABH Filing: Approval of the annual report must be submitted through the Legal Entity Administration System (Sistem Administrasi Badan Hukum or SABH) within 30 days from the date the notarial deed is signed.

  • Individual Companies: Although individual companies (PT Perorangan) are not subject to the same GMS requirements as ordinary limited liability companies, they remain required to submit their annual financial statements electronically through SABH.

Failure to meet administrative obligations may result in written warnings and restrictions on SABH access, subject to applicable regulations. Once access is blocked, corporate actions such as changes to directors, commissioners, shareholders, capital structure, or articles of association may be disrupted.

This is particularly relevant for companies that have been inactive for an extended period. A lack of operational activity does not automatically eliminate a company's administrative obligations.

What should businesses do now?

  1. Review and update beneficial ownership information.

  2. Ensure that directors, commissioners, and ownership records reflect the company's current circumstances.

  3. Establish a compliance calendar covering GMS meetings, notarial deeds, and SABH submissions.

  4. Check the company's administrative status through the Ditjen AHU system.

  5. Ensure that companies no longer conducting business continue to meet their administrative obligations or follow the appropriate dissolution procedures.

2. Employment Protection Law: Changes Businesses Should Anticipate

The separation of employment regulations from Indonesia's Job Creation Law represents an important development in the country's employment regulatory framework.

This initiative follows Constitutional Court Decision No. 168/PUU-XXI/2023, which mandated the establishment of a separate employment regulatory framework. On 6 October 2026, the Indonesian House of Representatives (DPR RI) approved the Employment Protection Bill to become law.

This development marks a new direction in the regulation of employment relationships, worker protection, and employers' obligations.

Based on the matters discussed during Business Outlook 2027, several areas deserve management attention.

Fixed-Term Employment Agreements (PKWT)

Fixed-term employment agreements, known as Perjanjian Kerja Waktu Tertentu (PKWT), are among the key areas businesses should reassess.

The proposed changes discussed during the session covered contract duration, employees' entitlement to compensation upon contract expiration, and restrictions on probationary periods under fixed-term employment agreements.

The speaker's briefing highlighted a maximum overall PKWT duration of five years, including extensions. It also addressed compensation entitlements for employees with at least one month of service when their contracts end.

Companies should also pay attention to probationary provisions in PKWT arrangements, as clauses that conflict with applicable employment regulations may create legal disputes.

Wage Structure and Scale

Companies should also review their Wage Structure and Scale (Struktur dan Skala Upah or SUSU). Compensation policies should not be based solely on length of service. Instead, companies should consider factors such as employee competencies, positions, responsibilities, and other relevant considerations.

A well-defined wage structure promotes greater transparency while providing management with a more systematic basis for workforce cost planning.

Overtime Regulations

Overtime arrangements are another important area highlighted during the session.

The presentation discussed a maximum overtime limit of four hours per day and 18 hours per week, together with specific compensation calculations that employers need to consider.

For overtime performed on regular working days, the calculation discussed includes 1.5 times the hourly wage for the first overtime hour and twice the hourly wage for each subsequent hour.

These developments demonstrate that employment regulations can affect more than HR administration. Changes to employment contracts, wage structures, and overtime calculations may also influence workforce budgets and overall operating expenses.

What should businesses do now?

  1. Review all active fixed-term employment agreements.

  2. Examine probationary clauses and compensation obligations.

  3. Establish or update the company's formal wage structure and scale.

  4. Review overtime policies and compensation calculation procedures.

  5. Reassess workforce budgets in light of employment regulatory developments.

Companies should note that the specific changes discussed above must be checked against the officially promulgated law and applicable implementing regulations. Employment policies should not be revised solely on the basis of presentation materials or draft provisions without confirming the final legal requirements.

3. Outsourcing: Tighter Rules on Outsourced Work Arrangements

Outsourcing has long been used by businesses as a strategy to improve operational efficiency and workforce flexibility.

However, through Minister of Manpower Regulation No. 7 of 2026 concerning Outsourced Work, the government has clarified the types and fields of supporting activities that may be assigned to outsourcing service providers.

Effective from 30 April 2026, the regulation identifies six categories of supporting activities that may use outsourced labour arrangements:

  1. Cleaning services.

  2. Food and beverage provision or catering.

  3. Security services.

  4. Driver and employee transportation services.

  5. Supporting activities in the mining, petroleum, gas, and electricity sectors.

These provisions require companies to reassess the functions currently performed by outsourced personnel. Businesses relying on outsourcing arrangements outside the permitted categories should review their operational structures and prepare the necessary adjustments.

Employee Rights Must Be Clearly Stipulated in Agreements

Permenaker 7/2026 also emphasizes the importance of clearly documenting employee rights and protections in outsourcing agreements.

Such agreements must, at a minimum, specify the outsourced activities, contract duration, work location, number of outsourced employees, and their employment rights.

These rights include:

  • Wages and overtime compensation.

  • Working hours and rest periods.

  • Annual leave.

  • Occupational safety and health (OSH).

  • Social security.

  • Religious holiday allowances (THR).

  • Rights upon termination or the end of employment.

The company engaging an outsourcing provider is also responsible for ensuring that the provider fulfils its obligations to protect outsourced workers in accordance with applicable regulations.

Mandatory Registration of Outsourcing Agreements

Another important administrative requirement concerns the registration of outsourcing agreements.

Outsourcing service providers must submit their agreements for registration with the relevant local Manpower Office no later than three working days after the agreements are signed.

Failure to comply with this requirement may expose the parties involved to administrative risks.

For companies with outsourcing agreements established before Permenaker 7/2026 came into force, existing agreements remain valid until their respective expiration dates. However, the types and fields of outsourced work must be brought into compliance no later than two years from the regulation's promulgation.

What should businesses do now?

  1. Identify all activities currently performed through outsourcing arrangements.

  2. Verify whether these activities fall within the six permitted categories.

  3. Review agreements with outsourcing service providers.

  4. Ensure that employee rights and protections are clearly stipulated in contractual arrangements.

  5. Coordinate with service providers to ensure agreements are registered within the applicable timeframe.

  6. Develop an adjustment plan for contracts and operational functions affected by the new requirements.

Companies should treat these changes as an opportunity to reassess their operating models rather than merely updating contractual documentation.

4. Tightened DHE SDA Requirements: Implications for Liquidity and Cash Flow Management

Businesses operating in Indonesia's natural resource export sectors should also pay close attention to developments concerning Foreign Exchange Earnings from Exports of Natural Resources (Devisa Hasil Ekspor Sumber Daya Alam or DHE SDA).

The government has introduced several revisions to its DHE SDA framework. The latest amendment, Government Regulation No. 21 of 2026, took effect on 1 June 2026 and strengthened the requirements for retaining export proceeds within Indonesia's financial system.

Under the regulation, non-oil and gas natural resource exporters are required to place 100% of their DHE SDA in designated special accounts within Indonesia for a minimum period of 12 months. Meanwhile, oil and gas exporters are required to place at least 30% of their export proceeds for a minimum period of three months.

For non-oil and gas exporters, placement must generally be made through qualifying state-owned foreign exchange banks, subject to specific arrangements and exceptions for eligible exporters under bilateral trade policies.

Restrictions on Foreign Currency Conversion

One of the key aspects of the DHE SDA framework is the restriction on converting foreign currency into Indonesian Rupiah.

For non-oil and gas DHE SDA, conversion into Rupiah is limited to a maximum of 50% of the relevant export proceeds, subject to applicable requirements.

The funds may also be used for certain permitted purposes, including payments to the government, dividends, procurement of goods and services, and loan repayments, provided that the relevant placement and special-account requirements are fulfilled.

Therefore, the retention requirement does not mean that all funds are completely inaccessible for the entire 12-month period. However, the flexibility to use these funds is more limited and subject to specific purposes and procedures.

Why DHE SDA Matters for Cash Flow Management

For natural resource exporters, these requirements may have a direct impact on liquidity planning and foreign currency requirements. Consider a nickel mining company that exports products worth USD 50 million in a single month.

Under the non-oil and gas DHE SDA requirements, the company must place 100% of its export proceeds in a designated special account, subject to the applicable conditions.

Of this amount, conversion into Rupiah is limited to a maximum of 50%, while the use of the remaining foreign currency must comply with the permitted purposes and mechanisms.

If the company has an upcoming obligation to pay an overseas heavy equipment supplier USD 10 million the following month, management must assess whether the payment can be made using DHE SDA funds under the applicable provisions or whether alternative funding sources are required.

This illustrates why DHE SDA compliance is not merely an export administration issue. It also has direct implications for treasury management, working capital requirements, and cash flow planning.

What should businesses do now?

  1. Determine whether the company's export activities fall within the DHE SDA requirements.

  2. Identify the applicable placement obligations and retention periods.

  3. Assess foreign currency requirements for supplier payments, loans, and other international obligations.

  4. Review cash flow projections and working capital requirements.

  5. Prepare alternative financing arrangements where liquidity gaps may arise.

  6. Ensure that all DHE SDA transactions comply with the permitted purposes and applicable procedures.

For exporters, DHE SDA requirements should be integrated into broader treasury strategies to ensure that regulatory compliance does not disrupt business continuity.

Preparing Businesses for Regulatory Changes

These four regulatory developments demonstrate how corporate compliance is increasingly connected to business decision-making.

Beneficial ownership transparency and corporate administrative discipline form the foundation of sound corporate governance. Meanwhile, employment regulations and outsourcing restrictions may influence workforce structures and operating costs. For exporters, DHE SDA requirements introduce additional considerations for liquidity and foreign currency management.

As businesses prepare for 2027, they should not wait until regulatory warnings, administrative restrictions, or operational disruptions arise before taking action.

Key priorities should include conducting regular compliance reviews, updating corporate documentation, reassessing internal policies, and involving finance, HR, legal, and management teams in monitoring regulatory developments.

Ultimately, regulatory readiness is not simply about fulfilling legal obligations. It is an essential part of maintaining business continuity, managing risks, and making informed decisions in an evolving business environment.

Official References:

  1. Minister of Law Regulation No. 2 of 2025 concerning Verification and Supervision of Corporate Beneficial Owners.

  2. Circular Letter of the Director General of General Legal Administration No. AHU-AH.01-36 of 2026 concerning Administrative Designation of Inactive Corporations and Beneficial Ownership Reporting and Verification Obligations.

  3. Minister of Law Regulation No. 49 of 2025 concerning Terms and Procedures for Establishment, Amendment, and Dissolution of Limited Liability Companies.

  4. Constitutional Court Decision No. 168/PUU-XXI/2023.

  5. Minister of Manpower Regulation No. 7 of 2026 concerning Outsourced Work.

  6. Government Regulation No. 21 of 2026 concerning Foreign Exchange Earnings from Exports of Natural Resources.

Disclaimer: This article has been prepared for general informational purposes only and does not constitute advice tailored to the circumstances of any particular parties. The application of these provisions should take into account the relevant facts, party status, transitional provisions, and applicable implementing regulations.

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