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Legal Brief
Exploring the Legal Dimensions of
Regional Cooperation
Regional Cooperation is a joint effort between regions and other regions, between regions and third parties, and/or between regions
and institutions or regional governments abroad which is based on considerations of efficiency and effectiveness of public services as
well as mutual benefit.
Cooperation with Other Regions/Kerja
Sama Daerah dengan Daerah Lain
Cooperation between Regional
Government and Third Party/Kerja Sama
Daerah dengan Pihak Ketiga
Regional Cooperation
Cooperation between Regional
Government and Foreign Regional
Government/Kerja Sama Daerah dengan
Pemerintah Daerah di Luar Negeri
Cooperation between Regional
Government and Foreign Institution/Kerja
Sama Daerah Dengan Lembaga di Luar
Negeri
1
2
3
4
A H R P L e g a l B r i e f
Cooperation with Other Regions
Cooperation with Other Regions/Kerja Sama Daerah dengan Daerah Lain (KSDD) is a joint venture
undertaken by regions with other regions in order to administer governmental affairs that fall under
regional jurisdiction, aimed at the welfare of the community and the acceleration of public service
fulfillment.
Types of KSDD
Mandatory Cooperation
Cooperation carried out by 2 (two) or more adjacent regions for
the implementation of government affairs which have cross-
regional externalities and the provision of public services that are
more efficient if managed jointly, which consists of:
a. cooperation between regency/city and other adjacent
regency/city within one provincial area;
b. cooperation between regency/city and other adjacent
regency/city in different provinces;
c. cooperation between provincial regions and other adjacent
provinces; and
d. cooperation between regency/city and adjacent province
within one provincial area, or
Voluntary Cooperation
Cooperation carried out by 2 (two) or more adjacent or non-
adjacent regions for the implementation of government affairs
that fall under the jurisdiction of the region but are deemed more
effective and efficient when conducted collaboratively.
KSDD Object
The object of KSDD encompasses all government affairs
that fall under the jurisdiction of the region to achieve the
welfare of the community and accelerate the fulfillment of
public services. The Regional Government determines the
object of KSDD by considering:
a. priority of KSDD objects based on regional
development planning;
b. outside of regional development planning, with
provisions to: (i) address emergency conditions; (ii)
support the implementation of national strategic
programs; and/or (iii) carry out assignments based on
the principle of assistance duties.
Establishment of Cooperation Institution
The Head of Region may establish cooperation institution for
the implementation of KSDD in order to carry out mandatory
cooperation, with the provision that the cooperation must: (i)
conducted continuously; (ii) has high complexity; and (iii) has a
minimum cooperation period of 5 (five) years.
This institution is not a regional apparatus, and its funding is
borne by the APBD of each cooperating regions.
Termination of Cooperation
KSDD may end due to the following reasons:
a. the expiration of the KSDD period;
b. the objectives of KSDD have been achieved;
c. there is an agreement among the parties to terminate
the cooperation;
d. policy changes based on laws and regulations which
resulted in the KSDD not being able to be
implemented; and/or
e. KSDD object is lost or destroyed.
A H R P L e g a l B r i e f
Types of Regional Cooperation with Other Regions
Mandatory Cooperation
Relevant Parties
The initiating Regional Government has the following duties:
a. conduct the identification and mapping of government affairs
according to the potential and characteristics of the region, which will
be discussed by the adjacent Regional Government and included in
the List of Planned Programs and Activities for each collaborative
government affair per year;
b. carry out technical coordination at the provincial and national levels;
and
c. provide terms of references.
Duties of the Initiator Regional Government
Article 5 (1) and (2) GR 28/2018 jo. Article 5 (1), (3), and (4) jo. Pasal 7 (1) MoHA Reg. 22/2020
Types of Cooperation
a. cooperation between regency/city
and other adjacent regency/city
within one provincial area;
b. cooperation between regency/city
and other adjacent regency/city in
different provinces;
c. cooperation between provincial
regions and other adjacent
provinces; and
d. cooperation between regency/city
and adjacent province within one
provincial area.
a. Initiator Regional Government;
b. Regional Government Partner;
c. Ministry of Home Affairs;
d. Regional Cooperation Coordination Team (TKKSD); and
e. Provincial Legislatives Council (DPRD).
Voluntary Cooperation
Relevant Parties
The initiating Regional Government has the following duties:
a. conduct the identification and mapping of government affairs according to the potential and characteristics of the
region, which will be discussed by the adjacent Regional Government and included in the List of Planned Programs
and Activities for each collaborative government affair per year;
b. carry out technical coordination at the provincial and national levels; and
c. provide terms of references.
Type of Cooperation
Cooperation carried out by 2 (two) or more adjacent or non-adjacent
regions for the implementation of government affairs that fall under
the authority of the region but are deemed more effective and
efficient when conducted collaboratively.
a. Initiator Regional Government;
b. Regional Government Partner;
c. Ministry of Home Affairs;
d. Regional Cooperation Coordination Team
(TKKSD); and
e. Provincial Legislatives Council (DPRD).
Duties of the Initiator Regional Government
Article 5 (1) and (2) GR 28/2018 jo. Article 5 (1), (3), and (4) jo. Article 7 (1) MoHA Reg. 22/2020
A H R P L e g a l B r i e f
Cooperation between Regional Government and Third Party
Cooperation between Regional Government and Third Party/Kerja Sama Daerah dengan Pihak Ketiga
(KSDPK) is a joint venture undertaken by regional government with third party in order to administer
governmental affairs that fall under regional jurisdiction, aimed at the welfare of the community and the
acceleration of public service fulfillment.
Types of KSDPK
Cooperation to provide public services
KSDPK Result
The result of KSDPK are in the form:
a. money, which is deposited into the regional
treasury as regional revenue; and/or
b. goods, which are recorded as assets of the
regional government.
Termination of Cooperation
KSDPK may end due to the following reasons:
a. the expiration of the KSDPK period;
b. the objectives of KSDPK have been achieved;
c. there is an agreement among the parties to terminate the
cooperation;
d. policy changes based on laws and regulations which resulted in the
KSDPK not being able to be implemented;
e. KSDPK object is lost or destroyed;
f. court decisions that have obtained permanent legal force; and.or
g. the third party is declared bankrupt in accordance with the provisions
of statutory regulations.
Cooperation in asset management to increase
added value which provides income for the region
Investment cooperation
Other cooperations, namely (i) cooperation with
business entities in providing infrastructure (PPP);
or (ii) cooperation in the procurement of goods
and services (Barjas Cooperation)
KSDPK Object
The object of KSDPK includes government affairs that fall under the
authority of the region in order to achieve efficiency and effectiveness in
public services, as well as mutual benefits. Specifically, the objects of
cooperation within the KSDPK scheme include:
a. priority objects based on regional development planning; or
b. outside of regional development planning, with provisions to: (i)
address emergency conditions; (ii) support the implementation of
national strategic programs; and/or (iii) carry out assignments based
on the principle of assistance duties.
KSDPK Criteria
In the event that the initiative of KSDPK comes
from a third party, the KSDPK must meet the
following criteria:
a. technically integrated with the master plan in
the related sector;
b. economically and financially feasible; and
c. The third party proposing the initiative has
sufficient financial capacity to finance the
cooperation implementation.
A H R P L e g a l B r i e f
Types of Cooperation between Regional Government and Third Party (1/3)
Public Services Facilities
Related Parties
If the initiator is Regional Government:
a. allocating of governmental affairs in
accordance with the potential and
characteristics of the said region as
well the region’s need(s); and
b. producing feasibility study as
regulated in Article 27 of Minister of
Home Affairs Regulation Number 22
of 2020 (“MoHA Reg. 22/2020”)
Third Party
Regional
Government
DPRD
Responsibilities of the Initiators
If the initiator is the Third Party, then the Third Party shall
compose feasibility study on the proposed cooperation.
Further, the Third Party acting as initiator shall fulfil the
following criteria:
a. technically integrated with the master plan of the
related sector;
b. economically and financially feasible; and
c. monetarily capable, by means of adequate level to
finance the execution of cooperation.
Art.17 GR 28/2018 Art. 18 (1) and (2) GR 28/2018
Cooperation on Investment
Related Parties
Responsibilities of the Initiators before the
commencement of the investment cooperation
comprise of:
a. drawing up General Plan on Investment and
Strategic Plan on Investment;
b. drawing up Regional’s investment allocation
map; and
c. other responsibilities as regulated by each
regional regulations.
Counterparties in investment, which
comprise of (i) other Regional/Municipal
Government(s); and (ii) foreign counterparty or
third party based on cooperation.
Regional Government
Responsibilities of the Initiators
Art. 15 and 19 Law 25/2004 jo. Art. 15(4), 18(4), and 20 (4) GR 21/2021 jo. Art. 4 PR 16/2012
Types of Cooperation
Regional Government’s Investment refers to placement of funds and/or regional-owned
assets by the Regional Government in a long-term time frame to conduct investment in
the form of securities purchase and direct investment, with the aim to gain returns by
virtue of its principal value and its additional economic, social and/or other benefits
within certain period.
Types of Regional Government’s Investments comprise of:
a. securities investment (purchase of shares and/or debt securities); and/or
b. direct investment (equity participation by the regional government and/or providing
loan).
Responsibilities of the
Initiators before the post-
commencement of the
investment cooperation is to
provide guarantee and
ensure protection of the
domestic and international
investors.
Art. 1 (3) jo. Art. 9 -11 MoHA Reg. 52/2012
A H R P L e g a l B r i e f
Regional Asset Management
Related Parties
Third Party, as tenant, borrower, KSP counterparty, BOT counterparty, BTO
counterparty, or KSPI counterparty.
Regional-owned asset (BMD) management, upon Governor/Regent/Mayor’s
approval for BMD which are under the authority for BMD management vested to them.
BMD user, upon the agreement to manage the BMD, in the form of piece(s) of
land(s) and/or building(s), which are still used by the user, as well as other assets
beyond land and/or building.
Responsibilities of Initiators
Types of Cooperation
Types of regional asset management comprise of:
a. rent;
b. lend-use scheme;
c. cooperation on utilization (KSP);
d. build-operate-transfer (BOT) or build-transfer-
operate (BTO) schemes; or
e. cooperation on infrastructure facilities (KSPI).
Types of Cooperation between Regional Government and Third Party (2/3)
Generally, the responsibilities of third
party as the counterparty are as follows:
a. providing payment upon the utilization
of BMD;
b. handing over the returns gained from
the utilizations;
c. conducting protection and
maintenance of BMD and its
utilization result;
d. returning BMD after then end of
utilization; and
e. fulfilling the other responsibilities as
determined in the BMD utilization
agreement.
Art. 83 MoHA Reg. 19/2016.
Specifically, the responsibilities and/or obligations of the initiator in the context of KSDPK in
asset management are as follows:
Rent
The initiator shall draw up agreement with the managing-counterparty/user of BMD and to
pay the rent based on the agreed terms. Procedure on such is further specified in GR
27/2014 and MoHA Reg. 19/2016.
Lend-Use
The initiator shall draw up agreement with the managing-counterparty/user of BMD and to
pay operational and maintenance fees during the tenure. Procedure on such is further
specified in GR 27/2014 and MoHA Reg. 19/2016.
KSP
The initiator shall request for approval to the managing-counterparty/user of BMD, join the
tender or obtaining direct appointment (for certain BMD), and to pay annual contribution.
Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016.
BOT or BTO
The initiator shall join the tender and if the initiator is chosen, then it shall pay contribution
fees, maintaining the assets, utilizing the assets for execution of duties and functions of
Regional Government minimum 10%, as well as to draw up and sign the agreement.
Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016.
Kerja Sama Penyediaan Infrastruktur
The initiator shall draw up and sign the agreement, conduct assets maintenance, and share
the exceeding profits (clawback) ke Regional treasury (if exists). Procedure on such is
further specified in GR 27/2014 and MoHA Reg. 19/2016.
A H R P L e g a l B r i e f
Public-Private Partnership
Related Parties
GCA’s scope of obligations and responsibilities
are usually regulate in PPP Agreement, which
can be simplified as follows:
a. minister/head of institution/head of regional
government/state-owned enterprise/regional-
owned enterprise conducts planning;
Probity Advisor
Government
Contracting
Agency (GCA)
Duties
Art. 27, 36, 42, and 60 MoNDP Reg. 7/2023
Types of Cooperation
Public-Private Partnership means cooperation between government and business entity
in providing infrastructures for public purposes which are procured based on the pre-
determined specifications by the minister/head of institution/head of regional
government/state-owned enterprise/regional-owned enterprise which partially and
wholly utilizes business entity resources by considering the risk allocation among the
parties.
Implementing
Business Entity
(IBE)
Preparatory Body
b. GCA conducts preparatory duties;
c. in transaction phase, GCA conducts its
activity once the pre-feasibility study is
completed and in the process of or
has completed the supporting
activities; and
d. in management phase, GCA
conducts preparation for PPP
management and control the
execution of PPP Agreement after
the IBE is declared to fulfil financial
close.
Cooperation on Goods and Services
Related Parties
Procurement of Goods and Services Officials are obliged to:
a. conduct preparation and execution of Direct Appointment;
b. conduct preparation and execution of Direct Appointment for
procurement of other Goods/Construction Work/Services with
maximum value of Rp200.000.000,00 (two hundred million Rupiah);
Duties
Art. 12 PR 16/2018
Types of Cooperation
Procurement of goods and services activity by Ministry/Institution/Regional Apparatus,
with State/Regional Budget, in which the process starts identifying the needs until the
transfer of work result.
c. conduct preparation and execution of Direct Appointment for
procurement of Consultancy Services with maximum value of
Rp100.000.000,00 (one hundred million Rupiah); and
d. conduct E-purchasing with the maximum value of
Rp200.000.000,00 (two hundred million Rupiah).
a. Budget User;
b. Proxy of Budget
User;
c. Commitment Making
Official;
d. Procurement Official;
e. Selection Team;
f. Procurement Agent;
g. Self-Management
Executor; and
h. Provider.
Types of Cooperation between Regional Government and Third Party (3/3)
A H R P L e g a l B r i e f
Cooperation between Regional Government
and Foreign Regional Government
Cooperation between Regional Government and Foreign Regional Government/Kerja Sama Daerah
dengan Pemerintah Daerah di Luar Negeri (KSDPL) refers to cooperation by region with foreign regional
government for the purpose of execution of governmental affairs which are within the authority of regional
government to enhance the public prosperity and acceleration of public services fulfillment.
Types of
KSDPL
Twin or sister provincial cooperation
Twin or sister municipal cooperation.
other cooperation.
Objects of
KSDPL
KSDPL objects comprise of:
a. science and technology development;
b. culture;
c. technical and management capability enhancement;
d. governance;
e. regional potential promotion; and
f. other objects which are not in contradiction to the prevailing laws
and regulations.
KSDPL Criteria
KSDPL shall fulfil the following criteria:
a. has diplomatic relation;
b. is a part of Regional Goverment’s affairs;
c. Regional Government does not open out of
country’s represntative office;
d. foreign regional government and institution do
not intervene with the domestic governmental
affairs;
e. in line with the national and regional policies
and planning;
f. equivalent adminitration status and/or region;
g. complement each other; and
h. development of intrapublic relation takes
place.
KSDPL Initiators
KSDPL can be initiated by:
a. Regional Government;
b. foreign regional government; or
c. foreign regional government through Ministry and/or ministry who
deals with international relation.
Art. 24 GR 28/2018 Art. 23 (2) GR 28/2018
Art. 28 (1) GR 28/2018
Art. 27 (1) and (3) GR 28/2018
A H R P L e g a l B r i e f
Cooperation between Regional Government
and Foreign Institution
Cooperation between Regional Government and Foreign Institution/Kerja Sama Daerah Dengan
Lembaga di Luar Negeri (KSDLL) refers to cooperation which is done by regional government and foreign
institution for the purpose of execution of governmental affairs which are within the authority of regional
government to enhance the public prosperity and acceleration of public services fulfillment.
Objects of
KSDLL
KSDLL Initiators
Types of
KSDLL
On the basis of Central Government
cooperation continuation.
Other cooperations by virute of Central
Government approval.
KSDLL execution is done by:
a. international organization;
b. foreign legal enitity of non-profit institution; and
c. foreign evelopment counterparty.
KSDLL Criteria
Art. 25 (a) and 36 (1) GR 28/2018
Art. 28 (2) GR 28/2018
KSDLL objects comprise of:
a. science and technology development;
b. culture;
c. technical and management capability enhancement;
d. governance;
e. regional potential promotion; and
f. other objects which are not in contradiction to the prevailing laws
and regulations.
Art. 23 (2) GR 28/2018
KSDLL shall fulfil the following criteria:
a. has diplomatic relation;
b. is a part of Regional Goverment’s affairs;
c. Regional Government does not open out of
country’s represntative office;
d. foreign regional government and institution do
not intervene with the domestic governmental
affairs; and
e. in line with the national and regional policies
and planning.
Art. 27 (1) GR 28/2018
KSDLL can be initiated by:
a. Regional Government; or
b. foreign regional government through Ministry and/or ministry who
deals with international relation.
A H R P L e g a l B r i e f
We will continue to follow the developments on this topic and provide additional information as it becomes
available. If you have any questions on this topic, please contact:
Aryangga Pradana Febrianto
aryangga@ahrplaw.com
Indira Jauhara Pratiwi
indira@ahrplaw.com
Zaneta Axel Winata
zaneta@ahrplaw.com
This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not
intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning
the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your
circumstances before deciding to take any action.
World Capital Tower 19th floor
Jl. Mega Kuningan Barat No.3, Kuningan
Jakarta 12950 Indonesia
P: +6221 50917915
+6221 50917916
E: office@ahrplaw.com
www.ahrplaw.com

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Exploring the Legal Dimensions of Regional Cooperation.pdf

  • 1. Legal Brief Exploring the Legal Dimensions of Regional Cooperation
  • 2. Regional Cooperation is a joint effort between regions and other regions, between regions and third parties, and/or between regions and institutions or regional governments abroad which is based on considerations of efficiency and effectiveness of public services as well as mutual benefit. Cooperation with Other Regions/Kerja Sama Daerah dengan Daerah Lain Cooperation between Regional Government and Third Party/Kerja Sama Daerah dengan Pihak Ketiga Regional Cooperation Cooperation between Regional Government and Foreign Regional Government/Kerja Sama Daerah dengan Pemerintah Daerah di Luar Negeri Cooperation between Regional Government and Foreign Institution/Kerja Sama Daerah Dengan Lembaga di Luar Negeri 1 2 3 4 A H R P L e g a l B r i e f
  • 3. Cooperation with Other Regions Cooperation with Other Regions/Kerja Sama Daerah dengan Daerah Lain (KSDD) is a joint venture undertaken by regions with other regions in order to administer governmental affairs that fall under regional jurisdiction, aimed at the welfare of the community and the acceleration of public service fulfillment. Types of KSDD Mandatory Cooperation Cooperation carried out by 2 (two) or more adjacent regions for the implementation of government affairs which have cross- regional externalities and the provision of public services that are more efficient if managed jointly, which consists of: a. cooperation between regency/city and other adjacent regency/city within one provincial area; b. cooperation between regency/city and other adjacent regency/city in different provinces; c. cooperation between provincial regions and other adjacent provinces; and d. cooperation between regency/city and adjacent province within one provincial area, or Voluntary Cooperation Cooperation carried out by 2 (two) or more adjacent or non- adjacent regions for the implementation of government affairs that fall under the jurisdiction of the region but are deemed more effective and efficient when conducted collaboratively. KSDD Object The object of KSDD encompasses all government affairs that fall under the jurisdiction of the region to achieve the welfare of the community and accelerate the fulfillment of public services. The Regional Government determines the object of KSDD by considering: a. priority of KSDD objects based on regional development planning; b. outside of regional development planning, with provisions to: (i) address emergency conditions; (ii) support the implementation of national strategic programs; and/or (iii) carry out assignments based on the principle of assistance duties. Establishment of Cooperation Institution The Head of Region may establish cooperation institution for the implementation of KSDD in order to carry out mandatory cooperation, with the provision that the cooperation must: (i) conducted continuously; (ii) has high complexity; and (iii) has a minimum cooperation period of 5 (five) years. This institution is not a regional apparatus, and its funding is borne by the APBD of each cooperating regions. Termination of Cooperation KSDD may end due to the following reasons: a. the expiration of the KSDD period; b. the objectives of KSDD have been achieved; c. there is an agreement among the parties to terminate the cooperation; d. policy changes based on laws and regulations which resulted in the KSDD not being able to be implemented; and/or e. KSDD object is lost or destroyed. A H R P L e g a l B r i e f
  • 4. Types of Regional Cooperation with Other Regions Mandatory Cooperation Relevant Parties The initiating Regional Government has the following duties: a. conduct the identification and mapping of government affairs according to the potential and characteristics of the region, which will be discussed by the adjacent Regional Government and included in the List of Planned Programs and Activities for each collaborative government affair per year; b. carry out technical coordination at the provincial and national levels; and c. provide terms of references. Duties of the Initiator Regional Government Article 5 (1) and (2) GR 28/2018 jo. Article 5 (1), (3), and (4) jo. Pasal 7 (1) MoHA Reg. 22/2020 Types of Cooperation a. cooperation between regency/city and other adjacent regency/city within one provincial area; b. cooperation between regency/city and other adjacent regency/city in different provinces; c. cooperation between provincial regions and other adjacent provinces; and d. cooperation between regency/city and adjacent province within one provincial area. a. Initiator Regional Government; b. Regional Government Partner; c. Ministry of Home Affairs; d. Regional Cooperation Coordination Team (TKKSD); and e. Provincial Legislatives Council (DPRD). Voluntary Cooperation Relevant Parties The initiating Regional Government has the following duties: a. conduct the identification and mapping of government affairs according to the potential and characteristics of the region, which will be discussed by the adjacent Regional Government and included in the List of Planned Programs and Activities for each collaborative government affair per year; b. carry out technical coordination at the provincial and national levels; and c. provide terms of references. Type of Cooperation Cooperation carried out by 2 (two) or more adjacent or non-adjacent regions for the implementation of government affairs that fall under the authority of the region but are deemed more effective and efficient when conducted collaboratively. a. Initiator Regional Government; b. Regional Government Partner; c. Ministry of Home Affairs; d. Regional Cooperation Coordination Team (TKKSD); and e. Provincial Legislatives Council (DPRD). Duties of the Initiator Regional Government Article 5 (1) and (2) GR 28/2018 jo. Article 5 (1), (3), and (4) jo. Article 7 (1) MoHA Reg. 22/2020 A H R P L e g a l B r i e f
  • 5. Cooperation between Regional Government and Third Party Cooperation between Regional Government and Third Party/Kerja Sama Daerah dengan Pihak Ketiga (KSDPK) is a joint venture undertaken by regional government with third party in order to administer governmental affairs that fall under regional jurisdiction, aimed at the welfare of the community and the acceleration of public service fulfillment. Types of KSDPK Cooperation to provide public services KSDPK Result The result of KSDPK are in the form: a. money, which is deposited into the regional treasury as regional revenue; and/or b. goods, which are recorded as assets of the regional government. Termination of Cooperation KSDPK may end due to the following reasons: a. the expiration of the KSDPK period; b. the objectives of KSDPK have been achieved; c. there is an agreement among the parties to terminate the cooperation; d. policy changes based on laws and regulations which resulted in the KSDPK not being able to be implemented; e. KSDPK object is lost or destroyed; f. court decisions that have obtained permanent legal force; and.or g. the third party is declared bankrupt in accordance with the provisions of statutory regulations. Cooperation in asset management to increase added value which provides income for the region Investment cooperation Other cooperations, namely (i) cooperation with business entities in providing infrastructure (PPP); or (ii) cooperation in the procurement of goods and services (Barjas Cooperation) KSDPK Object The object of KSDPK includes government affairs that fall under the authority of the region in order to achieve efficiency and effectiveness in public services, as well as mutual benefits. Specifically, the objects of cooperation within the KSDPK scheme include: a. priority objects based on regional development planning; or b. outside of regional development planning, with provisions to: (i) address emergency conditions; (ii) support the implementation of national strategic programs; and/or (iii) carry out assignments based on the principle of assistance duties. KSDPK Criteria In the event that the initiative of KSDPK comes from a third party, the KSDPK must meet the following criteria: a. technically integrated with the master plan in the related sector; b. economically and financially feasible; and c. The third party proposing the initiative has sufficient financial capacity to finance the cooperation implementation. A H R P L e g a l B r i e f
  • 6. Types of Cooperation between Regional Government and Third Party (1/3) Public Services Facilities Related Parties If the initiator is Regional Government: a. allocating of governmental affairs in accordance with the potential and characteristics of the said region as well the region’s need(s); and b. producing feasibility study as regulated in Article 27 of Minister of Home Affairs Regulation Number 22 of 2020 (“MoHA Reg. 22/2020”) Third Party Regional Government DPRD Responsibilities of the Initiators If the initiator is the Third Party, then the Third Party shall compose feasibility study on the proposed cooperation. Further, the Third Party acting as initiator shall fulfil the following criteria: a. technically integrated with the master plan of the related sector; b. economically and financially feasible; and c. monetarily capable, by means of adequate level to finance the execution of cooperation. Art.17 GR 28/2018 Art. 18 (1) and (2) GR 28/2018 Cooperation on Investment Related Parties Responsibilities of the Initiators before the commencement of the investment cooperation comprise of: a. drawing up General Plan on Investment and Strategic Plan on Investment; b. drawing up Regional’s investment allocation map; and c. other responsibilities as regulated by each regional regulations. Counterparties in investment, which comprise of (i) other Regional/Municipal Government(s); and (ii) foreign counterparty or third party based on cooperation. Regional Government Responsibilities of the Initiators Art. 15 and 19 Law 25/2004 jo. Art. 15(4), 18(4), and 20 (4) GR 21/2021 jo. Art. 4 PR 16/2012 Types of Cooperation Regional Government’s Investment refers to placement of funds and/or regional-owned assets by the Regional Government in a long-term time frame to conduct investment in the form of securities purchase and direct investment, with the aim to gain returns by virtue of its principal value and its additional economic, social and/or other benefits within certain period. Types of Regional Government’s Investments comprise of: a. securities investment (purchase of shares and/or debt securities); and/or b. direct investment (equity participation by the regional government and/or providing loan). Responsibilities of the Initiators before the post- commencement of the investment cooperation is to provide guarantee and ensure protection of the domestic and international investors. Art. 1 (3) jo. Art. 9 -11 MoHA Reg. 52/2012 A H R P L e g a l B r i e f
  • 7. Regional Asset Management Related Parties Third Party, as tenant, borrower, KSP counterparty, BOT counterparty, BTO counterparty, or KSPI counterparty. Regional-owned asset (BMD) management, upon Governor/Regent/Mayor’s approval for BMD which are under the authority for BMD management vested to them. BMD user, upon the agreement to manage the BMD, in the form of piece(s) of land(s) and/or building(s), which are still used by the user, as well as other assets beyond land and/or building. Responsibilities of Initiators Types of Cooperation Types of regional asset management comprise of: a. rent; b. lend-use scheme; c. cooperation on utilization (KSP); d. build-operate-transfer (BOT) or build-transfer- operate (BTO) schemes; or e. cooperation on infrastructure facilities (KSPI). Types of Cooperation between Regional Government and Third Party (2/3) Generally, the responsibilities of third party as the counterparty are as follows: a. providing payment upon the utilization of BMD; b. handing over the returns gained from the utilizations; c. conducting protection and maintenance of BMD and its utilization result; d. returning BMD after then end of utilization; and e. fulfilling the other responsibilities as determined in the BMD utilization agreement. Art. 83 MoHA Reg. 19/2016. Specifically, the responsibilities and/or obligations of the initiator in the context of KSDPK in asset management are as follows: Rent The initiator shall draw up agreement with the managing-counterparty/user of BMD and to pay the rent based on the agreed terms. Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016. Lend-Use The initiator shall draw up agreement with the managing-counterparty/user of BMD and to pay operational and maintenance fees during the tenure. Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016. KSP The initiator shall request for approval to the managing-counterparty/user of BMD, join the tender or obtaining direct appointment (for certain BMD), and to pay annual contribution. Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016. BOT or BTO The initiator shall join the tender and if the initiator is chosen, then it shall pay contribution fees, maintaining the assets, utilizing the assets for execution of duties and functions of Regional Government minimum 10%, as well as to draw up and sign the agreement. Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016. Kerja Sama Penyediaan Infrastruktur The initiator shall draw up and sign the agreement, conduct assets maintenance, and share the exceeding profits (clawback) ke Regional treasury (if exists). Procedure on such is further specified in GR 27/2014 and MoHA Reg. 19/2016. A H R P L e g a l B r i e f
  • 8. Public-Private Partnership Related Parties GCA’s scope of obligations and responsibilities are usually regulate in PPP Agreement, which can be simplified as follows: a. minister/head of institution/head of regional government/state-owned enterprise/regional- owned enterprise conducts planning; Probity Advisor Government Contracting Agency (GCA) Duties Art. 27, 36, 42, and 60 MoNDP Reg. 7/2023 Types of Cooperation Public-Private Partnership means cooperation between government and business entity in providing infrastructures for public purposes which are procured based on the pre- determined specifications by the minister/head of institution/head of regional government/state-owned enterprise/regional-owned enterprise which partially and wholly utilizes business entity resources by considering the risk allocation among the parties. Implementing Business Entity (IBE) Preparatory Body b. GCA conducts preparatory duties; c. in transaction phase, GCA conducts its activity once the pre-feasibility study is completed and in the process of or has completed the supporting activities; and d. in management phase, GCA conducts preparation for PPP management and control the execution of PPP Agreement after the IBE is declared to fulfil financial close. Cooperation on Goods and Services Related Parties Procurement of Goods and Services Officials are obliged to: a. conduct preparation and execution of Direct Appointment; b. conduct preparation and execution of Direct Appointment for procurement of other Goods/Construction Work/Services with maximum value of Rp200.000.000,00 (two hundred million Rupiah); Duties Art. 12 PR 16/2018 Types of Cooperation Procurement of goods and services activity by Ministry/Institution/Regional Apparatus, with State/Regional Budget, in which the process starts identifying the needs until the transfer of work result. c. conduct preparation and execution of Direct Appointment for procurement of Consultancy Services with maximum value of Rp100.000.000,00 (one hundred million Rupiah); and d. conduct E-purchasing with the maximum value of Rp200.000.000,00 (two hundred million Rupiah). a. Budget User; b. Proxy of Budget User; c. Commitment Making Official; d. Procurement Official; e. Selection Team; f. Procurement Agent; g. Self-Management Executor; and h. Provider. Types of Cooperation between Regional Government and Third Party (3/3) A H R P L e g a l B r i e f
  • 9. Cooperation between Regional Government and Foreign Regional Government Cooperation between Regional Government and Foreign Regional Government/Kerja Sama Daerah dengan Pemerintah Daerah di Luar Negeri (KSDPL) refers to cooperation by region with foreign regional government for the purpose of execution of governmental affairs which are within the authority of regional government to enhance the public prosperity and acceleration of public services fulfillment. Types of KSDPL Twin or sister provincial cooperation Twin or sister municipal cooperation. other cooperation. Objects of KSDPL KSDPL objects comprise of: a. science and technology development; b. culture; c. technical and management capability enhancement; d. governance; e. regional potential promotion; and f. other objects which are not in contradiction to the prevailing laws and regulations. KSDPL Criteria KSDPL shall fulfil the following criteria: a. has diplomatic relation; b. is a part of Regional Goverment’s affairs; c. Regional Government does not open out of country’s represntative office; d. foreign regional government and institution do not intervene with the domestic governmental affairs; e. in line with the national and regional policies and planning; f. equivalent adminitration status and/or region; g. complement each other; and h. development of intrapublic relation takes place. KSDPL Initiators KSDPL can be initiated by: a. Regional Government; b. foreign regional government; or c. foreign regional government through Ministry and/or ministry who deals with international relation. Art. 24 GR 28/2018 Art. 23 (2) GR 28/2018 Art. 28 (1) GR 28/2018 Art. 27 (1) and (3) GR 28/2018 A H R P L e g a l B r i e f
  • 10. Cooperation between Regional Government and Foreign Institution Cooperation between Regional Government and Foreign Institution/Kerja Sama Daerah Dengan Lembaga di Luar Negeri (KSDLL) refers to cooperation which is done by regional government and foreign institution for the purpose of execution of governmental affairs which are within the authority of regional government to enhance the public prosperity and acceleration of public services fulfillment. Objects of KSDLL KSDLL Initiators Types of KSDLL On the basis of Central Government cooperation continuation. Other cooperations by virute of Central Government approval. KSDLL execution is done by: a. international organization; b. foreign legal enitity of non-profit institution; and c. foreign evelopment counterparty. KSDLL Criteria Art. 25 (a) and 36 (1) GR 28/2018 Art. 28 (2) GR 28/2018 KSDLL objects comprise of: a. science and technology development; b. culture; c. technical and management capability enhancement; d. governance; e. regional potential promotion; and f. other objects which are not in contradiction to the prevailing laws and regulations. Art. 23 (2) GR 28/2018 KSDLL shall fulfil the following criteria: a. has diplomatic relation; b. is a part of Regional Goverment’s affairs; c. Regional Government does not open out of country’s represntative office; d. foreign regional government and institution do not intervene with the domestic governmental affairs; and e. in line with the national and regional policies and planning. Art. 27 (1) GR 28/2018 KSDLL can be initiated by: a. Regional Government; or b. foreign regional government through Ministry and/or ministry who deals with international relation. A H R P L e g a l B r i e f
  • 11. We will continue to follow the developments on this topic and provide additional information as it becomes available. If you have any questions on this topic, please contact: Aryangga Pradana Febrianto aryangga@ahrplaw.com Indira Jauhara Pratiwi indira@ahrplaw.com Zaneta Axel Winata zaneta@ahrplaw.com This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your circumstances before deciding to take any action. World Capital Tower 19th floor Jl. Mega Kuningan Barat No.3, Kuningan Jakarta 12950 Indonesia P: +6221 50917915 +6221 50917916 E: office@ahrplaw.com www.ahrplaw.com