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A Due Diligence Policy guides how organizations investigate and evaluate potential business partners, investments, or transactions in Indonesia. It outlines specific steps companies must take to verify information, assess risks, and ensure compliance with local regulations like the Investment Law No. 25/2007 and anti-corruption standards.

This policy helps businesses avoid legal troubles and make informed decisions by setting clear procedures for background checks, financial reviews, and regulatory compliance verification. It's particularly important for foreign investors, mergers and acquisitions, and companies working with Indonesian state-owned enterprises, as it creates a systematic approach to risk management and partner evaluation.

Use a Due Diligence Policy before entering major business relationships in Indonesia, especially when acquiring companies, forming partnerships, or investing in local ventures. It's essential when dealing with unfamiliar market segments, working with state-owned enterprises, or engaging in high-value transactions that require careful risk assessment.

The policy becomes particularly crucial during mergers and acquisitions, joint ventures, or when expanding into regulated sectors like mining, banking, or telecommunications. Indonesian law requires thorough verification of business partners' compliance with regulations like OJK guidelines and anti-money laundering rules, making this policy a vital tool for protecting your organization from legal and financial risks.

• Legal Due Diligence: Focuses on verifying legal compliance, ownership structures, and regulatory permits under Indonesian law
• Financial Due Diligence: Examines financial statements, tax compliance, and market position of target companies
• Technical Due Diligence: Evaluates operational assets, IT systems, and infrastructure, especially important in manufacturing and technology sectors
• Environmental Due Diligence: Assesses environmental compliance and risks, crucial for mining, agriculture, and industrial projects
• Anti-corruption Due Diligence: Screens for compliance with Indonesian anti-bribery laws and international standards like FCPA

• Corporate Legal Teams: Create and maintain Due Diligence Policies, ensure compliance with Indonesian regulations, and oversee implementation
• Investment Managers: Apply these policies when evaluating potential acquisitions or partnerships in Indonesian markets
• Compliance Officers: Monitor adherence to policy requirements and coordinate with regulatory bodies like OJK
• Board Members: Review and approve policies, ensuring alignment with corporate strategy and risk tolerance
• External Consultants: Provide specialized expertise for specific aspects like environmental compliance or financial verification

• Industry Research: Review sector-specific regulations and compliance requirements in Indonesia's business landscape
• Risk Assessment: Map potential legal, financial, and operational risks specific to your business activities
• Scope Definition: Outline which transactions or partnerships require due diligence review under Indonesian law
• Process Mapping: Detail step-by-step procedures for conducting investigations and documenting findings
• Stakeholder Input: Gather feedback from legal, finance, and operations teams on practical implementation needs
• Compliance Framework: Align policy with OJK guidelines and anti-money laundering regulations

• Policy Scope: Clear definition of transactions requiring due diligence and applicable thresholds
• Investigation Steps: Detailed procedures for legal, financial, and operational verification under Indonesian law
• Documentation Requirements: Specific records needed to prove compliance with OJK regulations
• Risk Assessment Criteria: Standardized metrics for evaluating potential partners and investments
• Reporting Protocols: Templates and procedures for documenting findings and recommendations
• Confidentiality Provisions: Rules for handling sensitive information under Indonesian data protection laws
• Review Mechanisms: Procedures for regular policy updates and compliance monitoring

A Due Diligence Policy differs significantly from a Due Diligence Checklist in both scope and function. While both support thorough business investigations, they serve distinct purposes in Indonesia's legal framework.

• Framework vs. Tool: A Due Diligence Policy provides the overarching framework and principles for conducting investigations, while a Checklist is a practical tool listing specific items to verify
• Governance Level: The Policy establishes authority, responsibilities, and compliance requirements at an organizational level, whereas the Checklist operates as a tactical implementation guide
• Permanence: Policies remain relatively stable and require formal approval for changes, while Checklists can be modified more easily to address specific transaction needs
• Legal Standing: The Policy serves as a binding corporate document that demonstrates compliance with Indonesian regulations, while Checklists function as supporting documentation