RESTRICTED
WORLD TRADE G/TRIMS/N/1/IDN/1
1June1995
ORGANIZATION(95-1475)
Original: English Committee onTrade-Related Investment Measures
NOTIFICATION UNDER ARTICLE 5.1OFTHE AGREEMENT ON
TRADE-RELATED INVESTMENT MEASURES
Indonesia
Theattachedcommunication,dated23May1995,hasbeenreceivedfromthePermanentMission
ofIndonesia.1
_______________
1Copies oflawsandregulations referred tointhisnotification areavailable intheSecretariat forinspection byinterested
delegations (Intellectual Property andInvestment Division).G/TRIMS/N/1/IDN/1
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NOTIFICATION BYTHE GOVERNMENT OFTHE REPUBLIC OFINDONESIA
UNDER ARTICLE 5.1OFTHE AGREEMENT ONTRIMs
There arefouroutstanding decrees ineffect which areofrelevance totheobligations contained
intheUruguay Round Agreement onTrade-Related Investment Measures (TRIMs) andwhich the
Government ofIndonesia would liketonotify under Article 5.1ofthisAgreement. These arethe
following:
1. Presidential Decree Number 54dated 10June1993regarding theListofSectors thatareClosed
forCapital Investment. Relevant tothisnotification isNo.12inAppendix Iconcerning Motor
Vehicles; Decree oftheMinister ofIndustry Number 114/M/SK/1993 dated 9June1993
regarding theDetermination ofLocal Content Rates ofDomestically Made Motor Vehicles
orComponents; andDecree oftheMinister ofFinance Number 645/KMK.01/1993 dated
10June1993regarding theRelief ofImport DutyonImport ofCertain Parts andAccessories
ofMotor Vehicles forthePurpose ofAssembling and/or Manufacture ofMotor Vehicles.
2. Presidential Decree Number 54dated 10June1993regarding theListofSectors thatareClosed
forCapital Investment. Relevant tothisnotification isNo.11inAppendix Iconcerning Utility
Boiler.
3. Decree oftheMinister ofTrade Number 126/KP/VI/1994 dated 27June1994 regarding the
Ratio between Imported Soyabean Cake andAbsorption ofDomestically Produced Soyabean
Cake.
4. Decree oftheMinister ofTrade Number 58/KP/IV/1995 dated 10April 1995 regarding the
Ratio between Imported Fresh Milk andAbsorption ofDomestically Produced Fresh Milk.
ThisDecree covers thefirstsemester of1995.
Description oftheMeasure andofitsMain Features
Motor Vehicles
Thereason fortheissue oftheMinister ofIndustry Decree No.114/M/SK/1993 dated
9June1993concerningtheDeterminationofLocalContentRatesofDomesticallyMadeMotorVehicles
orComponent, e.i.istosupport andencourage thedevelopment oftheautomotive industry inIndonesia
byregulating thelocalcontent ratesofdomestic motor vehicles orcomponents withtheincentive of
differentiated import dutyrates. Theabove Decree isalsodesigned tostrengthen domestic industrial
development byfostering technological advancement aswellastheenhancement ofindustrial design
andengineering ability inthissector.
Theother regulations relevant totheabove Decree are:
(1) Presidential Decree No.54dated 10June1993concerning theListofSectors thatare
Closed forCapital Investment, which requires thatallnewinvestments intheMotor
Vehicles Sector comply withthelocalcontent ratesineffect asimplemented byexisting
manufacturing.
(2) Minister ofFinance Decree No.645/KMK.01/1993 dated 10June1993regarding the
Relief ofImport Duty onCertain Parts andAccessories ofMotor Vehicles which for
thePurpose ofAssembling and/or Manufacture ofMotor Vehicles isdesignated toG/TRIMS/N/1/IDN/1
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increase efficiency oftheMotor Vehicle assembling industry andsaveforeign exchange
aswellasincrease thedomestic production.
Utility Boiler
Presidential Decree No.54dated 10June1993concerning theListofSectors thatareClosed
forCapital Investment, states thattheinvestment intheUtility Boiler sector isclosed, except to
investmentwhichcomplieswiththelocalcontentrequirementsasimplementedbyexistingmanufacturing.
Soyabean Cake
Intheframework ofassuring thesupply ofthesoyabean cakeforcattle feedindustries in
Indonesia andtheabsorption ofdomestically produced soyabean cake, theIndonesian Government
hasstipulated theratiobetween imported soyabean cakeandtheabsorption ofsoyabean cakeofdomestic
production. Theratiobetween theuseofdomestically produced soyabean cakeandimported soyabean
cakeissetat3(three) weight units to7(seven) weight units.
Theabove-mentioned ratioisapplied toallcattle feedprocessing industries recognized asIP
(Importer Producers) whoareallowed toimport andproduce soyabean cake.
Fresh Milk
Inorder toensure theavailability ofrawmaterial supply forthemilkprocessing industries
inIndonesia andtoensure theabsorption ofthedomestic fresh milk production, theIndonesian
Government hasapplied mixing ratiobetween imported rawmaterial ofmilkandtheproduction of
domestic fresh milk.
Theabsorption ratioofdomestic fresh milkproduction andimported rawmaterial ofmilkis
1:2.25 whereby theproducers whopurchase of1tonofdomestic production offresh milkwillbe
permitted toimport 2.25tonsofrawmaterial milkfrom abroad.
Theabove-mentioned ratio isapplied fortheprocessing milkindustries andState-trading
companies appointed toimport rawmaterial ofmilk.
Answers toQuestions setintheFormat forNotifications under Article 5.1oftheAgreement on
TRIMs2
1. Allfourofthemeasures listed above fallunder category 1(a)oftheIllustrative Listofthe
Agreement onTRIMs.
2. Allfourmeasures listed above areapplied under mandatory legislation. Thereference ofthese
decrees hasbeenstated andcopies ofthedecrees inquestion areattached tothisnotification.
3. Allofthefourmeasures aregeneral innature andapply toalloftheenterprises producing
theproduct inquestion.
4. Thedecreeswhichcoverthefourlocalcontentmeasureslistedaboveapplytoexistingenterprises
andnewenterprises inIndonesia aswellasnewinvestments ofexisting enterprises.
2Seedocument G/TRIMS/1.G/TRIMS/N/1/IDN/1
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5. Compliance withthemeasures inquestion ismandatory forallenterprises andenforceable
under domestic law.
Inthecaseofthelocalcontentrequirementfordomesticallymademotorvehiclesorcomponents,
these enterprises areallowed toenjoy certain incentives intheformoflower import dutyrates
forpartsand/or components ofmotor vehicles, depending uponthepercentage oflocalcontent
contained intheproduct inquestion. Theincentive structure setting outtherelationship between
thepercentage oflocalcontent andtheimport dutyapplied issetoutinArticle 2ofDecree
Number 645/KMK.01/1993 oftheMinister ofFinance regarding theRelief ofImport Duty
onImport ofCertain partsandAccessories ofMotor Vehicles forthePurpose ofAssembling
and/or Manufacture ofMotor Vehicles.
6. Thespecific products affected bythelocalcontent measures arethefollowing:
Fresh milkandcream HS0402.10.100, HS0402.21.190, HS0402.29.190,
HS0403.90.100 andHS0405.00.100
Soyabean cake HS2304.00.000
Motor vehicles andcomponent HS8702, HS8703, HS8704, HS8708 andHS8711
Utility boiler HS8402.11.000 andHS8402.19.900
7. Thedateofimplementation oftherelevant decrees inforce atpresent isasfollows:
Fresh milk Most recent decree indateof10April 1995
Soyabean cake Most recent decree indateof27June1994
Motor vehicles and Most recent decrees indateof9and10June1993
Components
Utility boiler Most recent decree indateof10June1993
TheDecree setting outthelocalcontent requirement forDairy Milkwasmodified inApril 1995
assetoutabove.
8. There isnoprovision forphase-down atpresent contained inthedecrees relating tomotor
vehicles andcomponents, utility boilers, soyabean cakeanddairy milk. Consistent with
Article 5.2oftheAgreement onTRIMs, itistheintention oftheGovernment ofIndonesia
toprogressively phase down thelocalcontent requirement inmotor vehicles andcomponent,
utility boiler, soyabean cakeandfresh milkinfiveyears.
9. Copies ofthemost recent Government Decrees forthefourmeasures concerned bythis
notification arealsoattached.
10. Thefourlocalcontent measures above areapplied atthelevelofnational government. The
implementing agency forthedecrees onmotor vehicles andcomponents andutility boilers
istheMinistry ofIndustry, andtheimplementing agency forthedecrees onfresh milkand
soyabean cakeistheMinistry ofTrade.G/TRIMS/N/1/IDN/1
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General Information ontheProgramme inQuestion
Thisinformation hasbeencovered intheanswers provided above.