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Indonesia - Law on Public Services 

Published: October, 2009

Submission: October, 2009


The quality of public services in Indonesia is expected to improve after the issuance of Law No. 25 of 2009 dated 18 July 2009 regarding Public Services (“PS Law”). The PS Law is designed to improve the quality of public services by way of: (i) setting up clear limitations and correlation of the rights, responsibilities, obligations, and authorities of all parties related to the provision of public services; (ii) setting up a system for the provision of public services appropriate to ensure good governance and good corporate governance; (iii) making sure the public services provided comply with the prevailing laws; and (iv) giving legal protection and legal certainty to the public on the provision of public services.

General Overview
The scope of public services under the PS Law includes the areas of education, teaching, work and business, residential, communications and information, the environment, health, social security, energy, banking, transportation, natural resources, tourism, and other related sectors. The public service providers (penyelenggara) are all state administrative, institutions, corporations, independent institutions established under the laws governing public service activities, and other legal entities established purely for public service activities. These institutions cover government institutions, state-owned enterprises (Badan Usaha Milik Negara or “BUMN”), regional government-owned enterprises (Badan Usaha Milik Daerah or “BUMD”).

The PS Law is also applicable to the procurement and distribution of public goods that are not financed by the state/regional budget, BUMN or BUMD, but are made available for state missions. Thus, the provision of public services by the state-owned electricity company (PT Perusahaan Listrik Negara (Persero), tax offices, police offices, Regional Drinking Water Companies (Perusahaan Daerah Air Minum) and immigration offices falls under the PS Law.

Provision of Public Services
Public services are to be provided by public services operators (pelaksana), which comprise the state apparatus, civil servants, officers and anyone working in any of the above public services providers. Public services providers are required to prepare and set services standards taking into account the ability of the provider, public needs and environmental conditions, and must involve the public and related parties.

In the delivery of public services, Article 17 of the PS Law prohibits public services operators from: (i) holding double positions as a commissioner or manager of a business organization if the operator is originally from a government institution, BUMN or BUMD, (ii) abandoning his duties and obligations without providing clear, reasonable and valid reasons under the prevailing regulations, (iii) engaging more operators without approval from the public services provider, (iv) entering into agreements with third parties without approval from the public services provider; or (v) violating the principles of public services operators. 

In the provision of public services, the public has the rights under Article18 of the PS Law, amongst other things, as follows: (i) to receive a response to any complaint filed, (ii) to get advocacy, protection, and/or fulfillment of services, (iii) to notify the operator and the head operator to rectify any services provided if they do not meet services standards, (iv) to file a report to the provider and ombudsmen against any operator who violates services standards and/or does not remedy the services; (v) to file a report to the supervisor and ombudsmen against any provider who violates the services standards and/or does not remedy the services; and (vi) to obtain qualified services in accordance with the principles and objectives of the services.

Prohibition against the Transfer of Shares in BUMN and BUMD
Interestingly, Article 27(1) of the PS Law prohibits the transfer of shares of a BUMN or BUMD which provides public services under any circumstances, either directly or indirectly through a sale, encumbrance or other means which results in the transfer of authority over the operation of those entities or causes a loss of rights by those corporations provided in the prevailing laws and regulations. Any breach of the prohibition against transferring shares or securitization of shares and/or assets of a BUMN is null and void (Article 27 of PS Law). The above provision does not provide any exceptions. The wording of the above provision is so broad that it can be argued that no BUMD or BUMD which provides public services listed in the PS Law can be privatized. In addition, the encumbrance of a BUMN/BUMD’s shares is also prohibited if it would cause the transfer of the authority to manage BUMN/BUMD.

Complaints, Lawsuits and Police Reports

The PS Law gives the public the right to file a complaint about the public services provided. The complaint can be submitted to the public service provider, ombudsmen and/or the House of Representatives (DPR), or Regional House of Representative (DPRD), if: (i) the public services provider does not fulfill its obligations and/or engages in prohibited activities; or (ii) the operator does not provide services which are up to the regulated services standards.

Three legal remedies are available to the public if the public services provided by the services providers and operators are lacking or not up to standard: first, filing a lawsuit in the State Administrative Court, if the provision of public services causes a loss in the state administration sector. Filing a lawsuit and the relevant proceedings fall under Law No. 5 of 1986 as amended by Law No. 9 of 2004 on the State Administrative Court (PTUN) (“PTUN Law”).

Second, filing a lawsuit in the District Court, in case of any tort in the operation of public services. The lawsuit may contain a claim for damages if the tort causes losses to the public. Unlike the PTUN Law, which provides a time limit for filing a lawsuit of 90 days as of receipt of the decision of the state administrative officials, the PS Law does not provide a time limit for filing against public services providers/operators in the District Court.

Third, the public may also file a police report against a provider or operator of public services alleging a crime was committed in the operation of the public services. The police report will not nullify the obligation of the operator of public services to comply with any ombudsmen’s and/or provider’s decision. The police report can be filed by any member of the public who is a victim or aware of a crime having been conducted by a public services provider.







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