Gift giving promotes the spirit of maintaining relationships in Indonesia. Often, it extends to both domestic and international travels: Indonesians who are returning from their travels will bring back oleh-oleh, which are gifts acquired from the destination for their families, friends, and colleagues. These gifts represent a token of friendship and care – however, gift exchange to an Indonesian public officer or civil servant may constitute itself as Gratification.
The Indonesian law define Gratification as the act of giving money, goods, discounts, commissions, loans without interest, travel tickets, accommodations, treatment, and other facilities. These ‘gifts’ are considered Gratification regardless of whether they are given or received on Indonesian territory. Although this is not an exhaustive list of ‘gifts’ that may be considered as Gratification, we at Schinder Law Firm can advise you on anti-bribery and corruption compliance for your business activities.
For example, there are certain exemptions for ‘gifts’ that do not fall under Gratification. Government officials may accept souvenirs from meetings, workshops, seminars, conferences, or training activities.
How then, may your business provide fees, cover travel expenditures, and other finances for government officials legally?
To legally present Government officials with these ‘gifts,’ your must ensure that your business fulfills three criteria:
- The recipient has no conflict of interest with the business.
- The Gratification does not encourage a violation of civil duties.
- The value of the gift does not exceed the amount stipulated by the internal standards of the recipient’s institution.
Violating any of the three criteria could lead to grave consequences: Gratifications that constitute as bribery is punishable with a minimum of 4 (four years) to lifetime imprisonment and a fine of at least Rp 200.000.000,00 (two hundred million Rupiah) to Rp 1.000.000.000,00 (one billion Rupiah). 1
In criminal charges where the value of Gratification exceeds Rp 10,000,000 (ten million Rupiah), the burden of proof is reversed: the defendant must prove that the Gratification is not a bribe.
Therefore, it is imperative that your business and government officials understand how to safeguard against the corruption charges, which can be achieved by reporting the Gratification to the Corruption Eradication Commission (Komisi Pemberantasan Korupsi or “KPK”). The report must be submitted with a form that contains the following information: 2
- Full name and address of the recipient and giver;
- Position of the public officer or civil servant;
- Location and time of receiving gratification;
- Descriptions of the items received; and
- Amount of gratification.
KPK will then determine ownership status of that gratification at the latest 30 (thirty) working days attached with consideration.
Schinder Law Firm’s will be delighted to assist you in a practical and commercially viable manner through our legal knowledge and deep understanding of local cultural context.
1Article 12B Law Number 20 Year 2001 regarding amendment of Law Number 31 Year 1999 regarding eradication of corruption.
2Article 16 Law Number 30 Year 2002 regarding Corruption Eradication Commission.
About the author:
Wisnu earned his bachelor degree in law (Sarjana Hukum) from Universitas Padjajaran in 2016 and joined Schinder Law Firm as a junior associate. While in law school, he was actively involved in a variety of student activities and organizations such as Asian Law Student Association (ALSA).