Indonesia uses a civil law system inherited from the Dutch Colonial administration. There are two primary legal forms of non-governmental organisations in Indonesia: associations and foundations.
It should be noted that the term NGO is not generally used in Indonesia; instead these types of organisations are usually referred to as LSMs or LPSMs (self-reliant community associations or self-reliant community development associations). Organisations known as LSMs or LPSMs can be foundations or associations, and it is believed that a large number of these organisations exist in a quasi-legal state, and are not legally established as foundations or associations.
Other types of organisations which make up the sector include Ormas (literally ‘Mass Organisations’, although ‘Community Organisations’ is considered a more accurate translation), Social Welfare Organisations, Zakat Collection Agencies, religious organisations, health organisations, and International NGOs.
There are two main legal forms for NGOs in Indonesia: Foundations (yayasan) and Associations (perkumpulan).
Foundations are regulated by Law No. 16/2001, as amended by Law No. 28/2004.
The law defines Foundations as non-profit, non-membership legal entities established for social, religious or humanitarian purposes. The accompanying implementation regulations for this law were issued in 2008 with Government Regulation No. 63.
Associations: Incorporated Associations (Perkumpulan) are membership organisations recognised as legal entities by the Staatsblad 1870/64 on Associations with Legal Person Status. Stb. 1870/64 governs associations possessing legal entity and also recognises those without legal entity, i.e. Ordinary Associations (Perhimpunam, Ikatan and Paguyuban) which are generally membership organisations and not legal entities. They are regulated under the Indonesian Civil Code (1854), which requires an Association to explain its proposed activities and provide a list of its members, and a copy of its constitution. The law is currently under review.
In addition the following laws may apply, depending on the form that the organisation takes:
Law No. 8 /1985 applies to those organisations set up as Ormas. This is implemented in accordance with Government Regulation No. 18 of 1986. This law is currently under review.
Article 11 in the Decree of the Directorate General of the Guidance of Islamic Community and Haji Affairs on the Technical Guidelines of Zakat Management applies to Zakat Collection Organisations.
International NGOs:
Provisions in Law No. 37 Year 1999 on International Relations forms one of the legal umbrellas for International Non Government Organisations’ activities in Indonesia. In addition under Law No. 16/2001 separate regulations relating to the establishment of foundations apply where they are established by foreigners. A recent decree issued by the Ministry of Home Affairs (available in Bahasa and English) regulates the grants and/or support given by foreign parties to NGOs or CSO. The decree came into effect on 15 August 2008.
Foundations are required to register with the Public Notary and regulated by the Ministry of Law and Human Rights, the State Courts and the Public Prosecutor’s Office.
Incorporated Associations are regulated by the Ministry of Law and Human Rights, and they can only become legal entities after receiving acknowledgement from the Ministry. The Ministry can dissolve an Association for a violation against public order.
Ordinary Associations are also regulated by the Ministry of Law and Human Rights; the Ministry is able to dissolve Ordinary Associations for a violation against public order.
Ormas are regulated by the Ministry of Home Affairs.
Social Welfare NGOs are regulated by the Departemen Sosial. Following the adoption of the 2009 the Social Welfare Act, a new regulatory regime for social welfare NGOs is being developed. This is likely to have a significant impact upon the regulatory regime for NGOs in Indonesia.
Zakat Collection Organisations are overseen by the Ministry of Religious Affairs.
International Non-Government Organisations are regulated by the Department of Foreign Affairs (there are sometimes problems accessing this website.)
NGOs are also required to report to the ministry responsible for their area of work i.e. to the Ministry of Health if it is concerned with Health issues, the Ministry of Religious Affairs if it is a religious organisation etc.
Foundations are required to publicly display an abridged annual report prepared according to the Indonesian Standard of Accountancy. Those in receipt of state or overseas funding, or donations in excess of Rp500 million must public a summary in a paper. Foundations with free assets in excess of Rp200 billion or in receipt of government funds must be audited by a professional accountant.
Zakat Collection Agencies are required to prepare reports, including financial reports and submit these to government, and publish financial reports in the mass media.
Some ministries require reports from organisations, which they finance.
Accessing the database of NGOs:
The following portal:www.indonesiango.org provides the most comprehensive database of NGOs operating in Indonesia.
The Ministry of Law and Human Rights holds a public register containing 461 organisations. This is not available online.
Other ministries also hold records of the organisations which they regulate though these are not usually publicly available.
There is some evidence of self-regulatory initiatives emerging from the NGO sector in Indonesia.
Good practice examples currently come mainly from membership organisations. For example Muhammadiyah provides members with an annual report, as well as a five-year report to the Quinquennial Congress.
Examples of other self-regulatory initiatives include:
The Satsunama Foundation’s project to develop an NGO certification scheme.
The LP3ES Code of Ethics for NGOs.
The KPM (Konsorsium Pengembangan Masyarakat Madani), which is a consortium for civil society development, has developed a Code of Conduct for its members.
Accountability Survey of Non-Profit Organizations (NPO) in Indonesia:A preliminary review, 2009 by Esrom Aritonang, Fitria Yusran, Taufik, Promedia with the assistance of the International Programme of the Charity Commission.
Governance, Oranizational Effectiveness and the Non-Profit Sector, Indonesia County Report, Rustam Ibrahim, Abdi Suryaningati, Tom Malik.
Survey on Civil Society Sector and Activities of NGOs in the Fields of Environmental Issues and Education in Indonesia, Organized by KEHATI (The Indonesian Biodiversity Foundation).
Legal Environment of Third Sector Organisations In Indonesia, Trisakti University.
Preliminary Mapping of the Legal Framework Related to Social Activities in Indonesia, December 2008, The Centre for Indonesian Law and Policy Studies (PSHK).
Giving and Fundraising in Indonesia
We have worked in Indonesia since 2004. We have worked with the Ministry of Home Affairs on regional consultation, facilitated inter-departmental workshops, organised an inward study for key government officials, carried out a mapping of the NGO sector and helped develop a database and website of information on the sector.
More recently we visited Indonesia in July to train officials on how to use our NGO Sector and Regulation Review Tool. We will be implementing the tool in Indonesia in partnership with local partner, Perkumpulan Skala and the Indonesian Government over the next twelve months.
For more information about our work in Indonesia, please contact Ben Evans at ben.evans@charitycommission.gsi.gov.uk