Indonesia bows to UK Law Society pressure to open up to foreign firms

After more than two years of lobbying by the Asia Pacific desk of the Law Society, Indonesia has taken tentative steps to open up its legal market to foreign law firms.

The reforms, which have been presented to the World Trade Organisation, will permit foreign law firms to have a presence in Indonesia through a joint venture and/or a representative office.

At present no foreign law firm is permitted to open an independent office in Indonesia. The rules were tightened in April 2003 and it is now a criminal offence for a foreign lawyer to advise on local law matters without a licence from the Ministry of Justice.

A joint venture must be in the form of a limited-liability enterprise, with the foreign partner holding a maximum stake of 49 per cent in the joint entity. It is understood that, under the new rules, an expatriate employed by the joint venture or representative office will need to have a valid work permit.

Some foreign law firms, such as Herbert Smith and Norton Rose, have therefore opted to establish associations with local firms.

The draft legislation introducing these changes is expected to be produced later this year.