Indonesia has enacted the Law Number 17 of 2023 on Health, furtherly implemented by the Government Regulation of the Republic Indonesia Number 28 of 2024 on the Implementing Regulations For Law Number 17 of 2023 Concerning Health. The latest Indonesian Health Law provides advantages for health-related stakeholders, including the business actors of pharmaceutical manufacturers or distributors of Health Supplies, Preparations and Medical Devices. It brings positive impact through both fiscal and non-fiscal incentives in supporting Indonesia’s realization of the national pharmaceutical industry independence, targetingpharmaceutical sustainability.

For the record, the implementing regulations of the previous Indonesian Health Law (Law No. 36 of 2009 on Health) shall remain valid as long as it does not conflict with the provisions of this Law. However, The Law Number 36 of 2009 on Health shall be repealed and declared invalid. It is crucial to note that this latest law has repealed 11 existing Laws of:

1. Law Number 419 of 1949 on Hard Drug Ordinance (Staatsblad 1949 Number 419);

2. Law Number 4 of 1984 on Outbreak of Infectious Diseases;

3. Law Number 29 of 2004 on Medical Practice;

4. Law Number 36 of 2009 on Health;

5. Law Number 44 of 2009 on Hospitals;

6. Law Number 18 of 2014 on Mental Health;

7. Law Number 36 of 2014 on Health Workers;

8. Law Number 38 of 2014 on Nursing;

9. Law Number 6 of 2018 on Health Quarantine;

10. Law Number 20 of 2013 on Medical Education;

11. Law Number 4 of 2019 on Midwifery.

While, for the the Government Regulation of the Republic Indonesia Number 28 of 2024 on the Implementing Regulations For Law Number 17 of 2023 Concerning Health, enacted on 26 July 2024 has repealed 31 health regulations to be accommodated cumulatively under this Government Regulation. The affected regulations by this ruling shall be updated and complied according to the given transitional provision.

The Indonesian government aims to reduce significant import on pharmaceutical and medical devices and to improve health system resilience. According to the Minister of Health Regulation of the Republic Indonesia (MHRRI) No. 13 of 2022 on Amendments to MHRRI No. 21 of 2020 on the Strategic Plan of the Ministry of Health for 2020-2024, the stance of Indonesia’s pharmaceutical and medical devices is significantly dependent on imports. The figure stated of more than 90% of medicinal raw materials (active pharmaceutical ingredients - API) are imported products, this import value reaches 30-35% of the total value of the national pharmaceutical business, whilst medical device transactions via public procurement (e-catalogue) during 2019-2020 were still dominated by imported products (88%) and only 12% were local production.

The realization to achieve health system resilience is regulated under the latest Indonesian Health Law (Article 326 of Chapter IX on Pharmaceutical and Medical Equipments Resilience). The priority will be given for the business actors who use and produce pharmaceutical supplies and medical equipment domestically. The business actors could expect the incentives provided by the government (both central and regional) under these categories:

Fiscal Incentives

• Tax reductions; and

• Import duty exemptions.

Non-Fiscal Incentives

• Ease of business licensing;

• Prioritize in government procurement; and

• Facilitate trade management.

The incentives is applicable for the business actors who utilise domestic raw materials for its production process for pharmaceutical supplies and medical devices. The investor who wishes to invest in the sector could utilise the upcoming policies which would shape the Indonesian health market. The central government, regional governments, communities, and health service facilities is advised to prioritise the usage of domestic pharmaceutical supplies, raw materials and medical equipment. Moreover, the business actors shall consider the latest Indonesian Health Law as the new guidance to foresee the risk and business strategy, especially for the pharmaceutical manufacturers who import the raw materials, and/or using imported products of medical devices. By that provision, the manufacturer shall compare the profit potential between using imported raw materials than producing those materials domestically after the enactment of this latest Indonesian Health Law. It is crucial to keep updated to the Implementing Regulations affecting stakeholders to maximise the potential benefits of the latest Indonesian Health Law.

In conclusion, the Law No. 17 of 2023 on Health, supported by the Government Regulation of the Republic Indonesia Number 28 of 2024 on the Implementing Regulations For Law Number 17 of 2023 Concerning Health aims to reduce significant import on pharmaceutical and medical devices and to improve health system resilience. The fiscal and non-fiscal incentive policies are applicable for business actors who support Indonesia’s realization of the national pharmaceutical industry independence. The Indonesian Health Market is also to be shaped as governments, communities, and health service facilities is advised to prioritise the usage of domestic pharmaceutical supplies and medical devices. The business actors shall keep updated to the Implementing Regulations which may affect the pharmaceutical business and spot its potential benefits since the enactment of the latest Indonesian Health Law.

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