Introduction

Effective January 2026, Indonesia will fully implement its reformed criminal law framework through the simultaneous operation of the new Criminal Code (KUHP – Law No. 1 of 2023) and the new Criminal Procedure Code (KUHAP – Law No. 20 of 2025). These two instruments are designed to work hand in hand. While the KUHP defines criminal acts and sanctions, the KUHAP governs how those crimes are investigated, prosecuted, and resolved.

For corporations and business actors, this reform represents more than a technical update. It marks a structural shift in how corporate conduct is criminalized, how liability is enforced, and how disputes may be resolved outside traditional trials.

The Interplay Between KUHP and KUHAP

The new KUHP and KUHAP must be read together. The KUHP sets out substantive criminal law, including expanded categories of offenses and recognition of corporations as criminal subjects. The KUHAP provides the procedural architecture that determines how these offenses are pursued, including investigative powers, admissibility of evidence, and alternative resolution mechanisms.

Together, they modernize Indonesia’s criminal justice system by incorporating concepts such as corporate criminal liability, digital evidence, restorative justice, and Deferred Prosecution Agreements (DPAs), aligning Indonesia more closely with global enforcement trends.

Key Provisions Relevant to Corporations

Corporate Criminal Liability Under the KUHP

One of the most significant developments under the new KUHP is the formal recognition of corporations as subjects of criminal law. Corporations may now be held criminally liable for a broad range of offenses, including corruption, environmental crimes, fraud, data protection and cybersecurity violations, employment-related offenses, and market manipulation.

This expansion reflects a shift away from viewing corporate misconduct solely through administrative or civil lenses, toward direct criminal accountability.

Deferred Prosecution Agreements Under the KUHAP

Complementing this expanded liability, the KUHAP introduces Deferred Prosecution Agreements as a procedural mechanism. Prosecutors may suspend prosecution if a corporation agrees to fulfill specific obligations, such as paying restitution or compensation, reforming internal compliance systems, and cooperating with ongoing investigations.

Importantly, DPAs are not private settlements. Court approval is mandatory, ensuring judicial oversight, transparency, and proportionality. For corporations, DPAs offer a potential alternative to lengthy trials, but they come with strict conditions and ongoing monitoring.

Digital Evidence and Modern Investigations

The KUHAP explicitly recognizes electronic records, emails, and digital files as admissible evidence in criminal proceedings. This procedural recognition aligns with the KUHP’s expanded treatment of cybercrime and technology-related offenses.

As a result, corporate data governance, record retention, and cybersecurity practices will play a central role in criminal investigations and enforcement.

Restorative Justice Across Substantive and Procedural Law

Both the KUHP and KUHAP embrace restorative justice principles. While the KUHP emphasizes reconciliation and rehabilitation as part of sentencing philosophy, the KUHAP provides concrete procedural mechanisms, including mediation and settlement processes.

For certain categories of offenses, this approach opens space for resolution that prioritizes remediation and accountability over purely punitive outcomes, subject to judicial control.

Expanded Investigative and Detention Powers

The KUHAP also expands investigative powers, including broader grounds for detention and reduced judicial oversight at certain stages. While intended to strengthen law enforcement effectiveness, these provisions increase compliance and personal risk for corporate executives, management, and employees involved in criminal investigations.

Practical Implications for Business

The combined effect of the new KUHP and KUHAP significantly raises the compliance burden for corporations. Businesses are expected to strengthen internal controls, compliance programs, and documentation practices to mitigate expanded criminal exposure.

At the same time, the introduction of DPAs creates a strategic opportunity. Corporations facing criminal allegations may avoid full prosecution if they are prepared to engage transparently, remediate harm, and commit to compliance reforms. However, this option requires careful legal and reputational risk management.

From a global perspective, Indonesia’s reforms bring its corporate crime enforcement framework closer to those of jurisdictions such as the United States, the United Kingdom, and Singapore.

Risks and Key Considerations

Despite these advancements, several risks remain. Expanded state powers may raise concerns related to civil liberties, corporate governance, and employee rights. The use of DPAs, if not carefully managed, may also attract public scrutiny and reputational risk if perceived as allowing corporations to “buy out” criminal responsibility.

In addition, practical implementation will depend heavily on derivative regulations, prosecutorial discretion, and judicial interpretation, creating a degree of legal uncertainty during the transition period.

Quick Readiness Check for Business Owners

Businesses should assess whether:

• Anti-corruption and fraud policies are up to date;
• Environmental practices meet heightened legal standards;
• Employment and labor compliance frameworks adequately protect workers;
• Data protection and cybersecurity systems are robust; and
• A clear compliance and response plan exists for investigations or potential DPAs.

Key Takeaway

The new KUHP and KUHAP are inseparable. The KUHP defines what conduct is criminal, while the KUHAP determines how criminal responsibility is enforced and resolved. For corporations, this integrated framework means broader criminal liability, stricter compliance expectations, and the availability of new procedural tools such as Deferred Prosecution Agreements.