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Rights of an Indonesian Business Owner

6 min read|Last Updated: August 29, 2022|
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If you are a business owner in Indonesia, or looking to incorporate a company, having a solid understanding of your rights granted to you is important. The Indonesian government grants these rights in order to assist the development and growth of your Indonesian economy through increasing company ownership and activity.

Business owners in Indonesia should be aware of the rights available so that they can defend themselves against unjust or illegal acts made against them or their company. However, not all business owners in Indonesia are completely aware of their rights as individuals and how they might exercise their rights.

What are your Land Use and Ownership Rights?

In Indonesia, there are various regulations that govern the use and ownership of land for economic reasons under the Act No. 5 of 1960. This law outlines the specifics of land leases, building rights, agricultural rights, and land use rights.

Any Indonesian company or representative office has the right to lease someone else’s land. This will be done through a pre-arranged agreement between the two parties involved in the leasing. In Indonesia, business owners have land rights as well.

These rights apply to every Indonesian citizen who owns a business or works for an Indonesian enterprise. Foreign business owners, on the other hand, must use a rights-to-build document that will expire after a certain amount of time.

Cultivation Rights in Indonesia

Cultivation rights apply to business owners who operate in the agriculture industry. These rights are valid for a period of 25 years and can be extended for another 35 years. To apply for these rights, an applicant must first register with the National Land Agency’s Land Register (BPN).

A business owner can use cultivation rights to obtain a loan. This is accomplished by giving the lender a certificate of cultivating rights. Any Indonesian agricultural firm or Indonesian citizen who owns one can have cultivation rights to utilise land that is either owned by the government or privately owned.

Rights of Business Owners Who Are Active Partners in Indonesia

In Indonesia, several enterprises are run as partnerships. Silent and active partners are both participants in a partnership, however, active partners have more rights than silent partners.

1. Active Partners

Involved in the business’ management and operations and hold an active role in the management of the partnership. Active partners have the right to engage in business transactions with other parties for the benefit of the company.

2. Silent Partners

Invest in the company’s operations and are not involved in the day-to-day operations of the company

Certain commercial activities necessitate input and support from outside sources, this privilege is critical. Active partners can use this right to leverage their business interactions with third-party sources to increase the partnership’s overall profitability and revenue. This makes it easier for the business to:

  • Obtain a loan

  • Increase the viability of any future business expansion plans

  • Give the partnership a higher level of credibility

Rights of Business Owners Who are Shareholders in Indonesia

Several firms in Indonesia allow the company’s owner to also possess stocks in the company. In this instance, the business owner is entitled to the same rights as the company’s other shareholders. Attending general meetings of shareholders (GMS) and voting when a vote is called at a GMS is one of these privileges. Another right is the right to dividend payments and any leftover assets if the firm is ever forced to dissolve.

All shareholders, including business owners, have the rights to sue their company in District Court if they believe the corporation has caused them to incur unjust damages as a result of acts taken during a GMS or by the Board of Commissioners or Directors.

Intellectual Property Rights in Indonesia

In Indonesia, all business owners have distinct intellectual property rights. The Indonesian government has placed a greater emphasis on intellectual property protection in recent years. In addition, they are regularly amending legislation pertaining to intellectual property rights so that such rights in Indonesia are consistent with regional and international standards.

Business owners in Indonesia can protect their intellectual property rights through one of four techniques:

1. Trademarks

Companies utilise trademarks to differentiate their products from those of other businesses. The Industrial Design Law is a piece of legislation in Indonesia that governs all trademarks. After it is originally issued, a registered trademark is protected for ten years.

Each renewal of this registration adds ten years to the protection period; the number of renewals is infinite. In Indonesia, all trademarks must be registered with the Directorate General of Intellectual Property Rights (DGIPR).

2. Patents

Patents are rights awarded to business owners who have developed a new product and wish to utilise it commercially or exclusively. A business owner in Indonesia may be granted either simple or standard patents.

Simple patents processed in two to three years and have a ten-year validity duration. Patents take three to five years to process, have a 20-year validity span, and provide stronger levels of intellectual property protection.

Before they can acquire a patent, applicants must specify the scope of the protection they want as well as the technical description of the innovation. Patents must be registered with the Directorate General of Intellectual Property Rights in Indonesia.

3. Industrial designs

Industrial design rights are granted to business owners who want to restrict others from exploiting their business design for commercial purposes without their permission. The Indonesian Design Act is the legislation that governs and defines all industrial designs in the country. In Indonesia, the first person to file for the right to an industrial design is the only person who is authorised to hold it.

Industrial design rights must be registered with the Directorate General of Intellectual Property Rights; however, only fresh, and unpublished industrial designs will be approved, with multiple designs being refused. Acceptance of applications usually takes two to three years, and protections are usually given for ten years.

4. Copyrights

Copyrights are ownership rights that give their owners exclusive rights to publish or reproduce specific works. Books, computer programs, pamphlets, music, art, photography, cinematographic works, translations, interpretations, and databases, among other things, are all covered by copyrights in Indonesia. As a result, business owners who produce any of these works should seek copyrights to ensure that their intellectual property rights are properly safeguarded.

Thinking of starting a business in Indonesia or engaging a corporate secretary? Reach out to us for a free consultation where we can share more about incorporation, visa, taxation, and other corporate services now.

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FAQs

Do business owners have the right to refuse service?2021-11-22T14:09:30+08:00

Under federal anti-discrimination laws, businesses can refuse service to any person for any reason, unless the business is discriminating against a protected class. At the national level, protected classes including, Race or color. National origin or citizenship status. 

Why are intellectual property rights important?2020-04-02T14:54:06+08:00

Some who have unethical intentions may seek to profit from illegal use of others’ products. Such products may have been intended to have been restricted to be used by a particular company. Thus, intellectual property rights can be used to make this restriction a reality.

How do silent and active partners differ?2020-04-02T14:53:30+08:00

Silent partners are those which invest in the operations of a partnership but are uninvolved in its management. Their profits, losses, and liabilities are limited and based on the capital which they have supplied. Active partners have direct involvement in the management of the partnership. They have complete responsibility for the company’s liabilities and assets.

What are the functions of the National Land Agency(BPN)?2020-04-02T14:52:31+08:00

The BPN is one of Indonesia’s non-departmental government institutions. It conducts government tasks related to land ownership at both the regional and national levels. It formulates and implements policies related to land disputes, land rights, land acquisition, land disputes, surveying, mapping, and land registration, among other matters.

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