RESTRICTED  
  
WT/TPR/S/401  
4 November 2020  
(20-7797) Page: 1/249 
Trade Policy Review Body   
 
 
TRADE POLICY REVIEW  
REPORT BY THE SECRETARIAT  
INDONESIA  
This report, prepared for the Seventh Trade Policy Review of Indonesia, has been drawn up by the 
WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing 
the World Trade Organization), sought clarification from Indonesia on its trade policies and practices.  
 
Any technical questions arising from this rep ort may be addressed to Sergios Stamnas  
(Tel: 022 739 5382); Katie Waters (Tel: 022 739 5067); and Fatima Chaudhri (Tel: 022 739 6384).  
 
Document WT/TPR/G/ 401 contains the policy statement submitted by Indonesia.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Indonesia. This report was drafted 
in English.  
  WT/TPR/S/401 • Indonesia  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ ........................  9 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  18 
1.1   Main Features of the Economy  ................................ ................................ ..................... 18 
1.2   Recent Economic Developments  ................................ ................................ ................... 21 
1.2.1    Growth, income, and employment  ................................ ................................ ............. 21 
1.2.2    Prices  ................................ ................................ ................................ ..................... 24 
1.2.3    Main macroeconomic policy developments  ................................ ................................ ..25 
1.2.3.1    Monetary and exchange rate policy  ................................ ................................ ......... 25 
1.2.3.2    Fiscal policy  ................................ ................................ ................................ .......... 26 
1.2.4    Structural policies  ................................ ................................ ................................ ....26 
1.2.4.1    Tax reform  ................................ ................................ ................................ ........... 27 
1.2.4.2    Privatization  ................................ ................................ ................................ ......... 27 
1.2.4.3    Competition policy and corporate governance  ................................ ........................... 28 
1.2.4.4    Labour market policies  ................................ ................................ ........................... 28 
1.2.4.5    Other  ................................ ................................ ................................ .................. 29 
1.2.5    Balance of payments  ................................ ................................ ................................ 29 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 31 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ................ 31 
1.3.2    Trends and patterns in foreign direct investment  ................................ ......................... 35 
2   TRADE AND INVESTMENT REGIMES ................................ ................................ ...........  37 
2.1   General Framework  ................................ ................................ ................................ ....37 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ........ 38 
2.2.1    Trade policy formulation  ................................ ................................ ........................... 38 
2.2.1.1    Executive branches of government  ................................ ................................ .......... 38 
2.2.1.2    Advisory bodies  ................................ ................................ ................................ ....39 
2.2.2    Trade and related policy objectives  ................................ ................................ ............ 40 
2.2.3    Trade laws and regulations  ................................ ................................ ....................... 43 
2.2.4    Transparency  ................................ ................................ ................................ .......... 43 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 45 
2.3.1    WTO ................................ ................................ ................................ ...................... 45 
2.3.1.1    Features  ................................ ................................ ................................ .............. 45 
2.3.1.2    Trade -related technical assistance  ................................ ................................ ........... 47 
2.3.1.3    Notifications  ................................ ................................ ................................ ......... 48 
2.3.2    Regional and preferential agreements  ................................ ................................ ........ 48 
2.3.3    Other agreements and arrangements  ................................ ................................ ......... 52 
2.4   Investment Regime  ................................ ................................ ................................ ....52 
2.4.1    Regulatory framework  ................................ ................................ .............................. 53 
2.4.2    Restricted activities  ................................ ................................ ................................ ..54 
2.4.3   Registration and approval  ................................ ................................ ......................... 58 WT/TPR/S/401 • Indonesia  
 
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  2.4.4    Investment promotion  ................................ ................................ .............................. 59 
2.4.5    Dispute settlement  ................................ ................................ ................................ ...60 
2.4.6    Investment treaty developments  ................................ ................................ ............... 61 
3   TRADE POLICIES AND PRACTICES BY MEASURE  ................................ ........................  62 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 63 
3.1.1    Customs procedures, valuation, and requirements  ................................ ....................... 63 
3.1.1.1    Customs procedures  ................................ ................................ .............................. 63 
3.1.1.2    Customs valuation  ................................ ................................ ................................ 71 
3.1.2    Rules of origin  ................................ ................................ ................................ ......... 73 
3.1.3    Tariffs  ................................ ................................ ................................ .................... 73 
3.1.3.1    General features  ................................ ................................ ................................ ...73 
3.1.3.2    Applied MFN tariffs  ................................ ................................ ................................ 74 
3.1.3.3    MFN tariff dispersion and escalation  ................................ ................................ ........ 77 
3.1.3.4    MFN tariff bindings  ................................ ................................ ................................ 78 
3.1.3.5    Tariff preferences  ................................ ................................ ................................ ..78 
3.1.3.6    Duty concessions/exemptions  ................................ ................................ ................. 79 
3.1.4    Other charges affecting imports  ................................ ................................ ................. 83 
3.1.5    Import prohibitions, restrictions, and licensing  ................................ ............................ 83 
3.1.5.1    Import prohibitions and quantitative restrictions  ................................ ....................... 84 
3.1.5.2    Import licensing  ................................ ................................ ................................ ....84 
3.1.6    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 85 
3.1.6.1    Anti-dumping and countervailing  ................................ ................................ ............. 86 
3.1.6.2    Safeguards  ................................ ................................ ................................ ........... 86 
3.1.7    Other measures affecting imports  ................................ ................................ .............. 88 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 89 
3.2.1    Customs procedures and requirements  ................................ ................................ .......89 
3.2.2    Taxes, charges, and levies  ................................ ................................ ........................ 90 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 91 
3.2.3.1    Export prohibitions  ................................ ................................ ................................ 91 
3.2.3.2   Export restrictions and licensing  ................................ ................................ ............. 93 
3.2.4    Export support and promotion  ................................ ................................ ................... 96 
3.2.4.1    Duty and tax concessions  ................................ ................................ ....................... 96 
3.2.4.2    Export zones  ................................ ................................ ................................ ........ 96 
3.2.4.2.1    Free trade zones  (FTZs)  ................................ ................................ ...................... 97 
3.2.4.2.2    Bonded zones  ................................ ................................ ................................ ....97 
3.2.4.2.3    Special economic zones (SEZs)  ................................ ................................ ............ 98 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................ ..99 
3.3   Measures Affecting Production and Trade  ................................ ................................ ..... 102 
3.3.1    Incentives  ................................ ................................ ................................ .............  102 
3.3.1.1    Taxation  ................................ ................................ ................................ ............  102 WT/TPR/S/401 • Indonesia  
 
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  3.3.1.1.1    Central government taxes and related tax incentives  ................................ ............  102 
3.3.1.1.1.1    Corporate and personal income tax ................................ ................................ .. 103 
3.3.1.1.1.2    Value Added Tax (VAT)  ................................ ................................ ..................  105 
3.3.1.1.1.3    Luxury Goods Sales Tax (LGST)  ................................ ................................ ...... 107 
3.3.1.1.1.4    Excise taxes ................................ ................................ ................................ .. 108 
3.3.1.1.1.5    Other fiscal incentives  ................................ ................................ ....................  109 
3.3.1.1.2    Regional taxes and tax incentives  ................................ ................................ ....... 109 
3.3.1.2    Non-fiscal incentives  ................................ ................................ ...........................  110 
3.3.2    Standards and other technical requirements  ................................ .............................  111 
3.3.2.1    Legal, institutional and policy framework  ................................ ...............................  111 
3.3.2.2    Standards  ................................ ................................ ................................ ..........  111 
3.3.2.3    Technical regulations  ................................ ................................ ...........................  113 
3.3.2.4    Conformity assessment and market surveillance  ................................ .....................  115 
3.3.2.5    Labelling  ................................ ................................ ................................ ............  116 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ .. 117 
3.3.3.1    Institutional and legislative framework  ................................ ................................ .. 117 
3.3.3.2    SPS measures  ................................ ................................ ................................ .... 118 
3.3.3.2.1    Food safety  ................................ ................................ ................................ ..... 119 
3.3.3.2.2    Processed food ................................ ................................ ................................ . 120 
3.3.3.2.3    Horticulture  ................................ ................................ ................................ ..... 120 
3.3.3.2.4    Live animals , meat and dairy products  ................................ ................................  121 
3.3.3.2.5    Fisheries  ................................ ................................ ................................ .........  122 
3.3.3.2.6    Halal requirements  ................................ ................................ ...........................  122 
3.3.3.2.7    Genetically  modified organisms (GMOs)  ................................ ..............................  123 
3.3.4    Competition policy and price controls  ................................ ................................ ....... 123 
3.3.4.1    Competition policy  ................................ ................................ ..............................  123 
3.3.4.2    Price controls ................................ ................................ ................................ ...... 127 
3.3.5    State trading, SOEs, and privatization  ................................ ................................ ...... 127 
3.3.5.1    State trading  ................................ ................................ ................................ ...... 127 
3.3.5.2    SOEs and privatization  ................................ ................................ .........................  128 
3.3.6    Government procurement  ................................ ................................ .......................  130 
3.3.6.1    Features  ................................ ................................ ................................ ............  130 
3.3.6.2    Institutional and regulatory framework  ................................ ................................ .. 132 
3.3.6.3    Procurement methods  ................................ ................................ .........................  134 
3.3.6.4    Contract -related dispute settlement and bid -rigging cases  ................................ ....... 135 
3.3.6.5    RTA procurement provisions  ................................ ................................ .................  136 
3.3.7    Intellectual property rights  ................................ ................................ ......................  136 
3.3.7.1    Industrial property  ................................ ................................ ..............................  137 
3.3.7.1.1    Patents  ................................ ................................ ................................ ...........  137 
3.3.7.1.2    Industrial designs and layout designs of integrated circuits  ................................ .... 140 WT/TPR/S/401 • Indonesia  
 
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  3.3.7.1.3    Trademarks and geographical indications  ................................ ............................  141 
3.3.7.1.4    Plant varieties  ................................ ................................ ................................ .. 142 
3.3.7.1.5    Trade secrets  ................................ ................................ ................................ ... 143 
3.3.7.2    Copyright  ................................ ................................ ................................ ...........  143 
3.3.7.3    Enforcement  ................................ ................................ ................................ ....... 144 
4   TRADE POLICIES BY SECTOR  ................................ ................................ ...................  147  
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ .............  148 
4.1.1    Features  ................................ ................................ ................................ ...............  148 
4.1.2    Policy, regulatory and institutional developments  ................................ .......................  149 
4.1.3    Border measures  ................................ ................................ ................................ ... 153 
4.1.4    Domestic support measures  ................................ ................................ ....................  153 
4.1.5    Rice ................................ ................................ ................................ .....................  156 
4.1.6    Fisheries  ................................ ................................ ................................ ...............  159 
4.1.7    Forestry  ................................ ................................ ................................ ................  166 
4.2   Mining and Energy  ................................ ................................ ................................ .... 171 
4.2.1    Mining  ................................ ................................ ................................ ..................  171 
4.2.2    Energy  ................................ ................................ ................................ .................  176 
4.2.2.1    Hydrocarbons  ................................ ................................ ................................ ..... 177 
4.2.2.1.1    Upstream  ................................ ................................ ................................ ........  177 
4.2.2.1.2    Downstream  ................................ ................................ ................................ .... 181 
4.2.2.2    Electricity  ................................ ................................ ................................ ...........  184 
4.2.2.3    Renewable energy  ................................ ................................ ...............................  188 
4.3   Manufacturing  ................................ ................................ ................................ ..........  192 
4.3.1    Features  ................................ ................................ ................................ ...............  192 
4.3.2    Policy, institutional and regulatory framework  ................................ ...........................  193 
4.3.3    Border measures  ................................ ................................ ................................ ... 193 
4.3.4    Domestic support measures  ................................ ................................ ....................  194 
4.3.5    Garments, textiles and footwear  ................................ ................................ ..............  195 
4.3.6    Automotive  ................................ ................................ ................................ ...........  196 
4.4   Services  ................................ ................................ ................................ ..................  197 
4.4.1    Features  ................................ ................................ ................................ ...............  197 
4.4.2    Overall commitments under the General Agreement on Trade in Services (GATS)  
and RTAs  ................................ ................................ ................................ ........................  198 
4.4.3    Financial services  ................................ ................................ ................................ ... 198 
4.4.3.1    Banking  ................................ ................................ ................................ .............  201 
4.4.3.2    Fintech  ................................ ................................ ................................ ..............  205 
4.4.3.3    Insurance  ................................ ................................ ................................ ..........  205 
4.4.3.4    Securities  ................................ ................................ ................................ ...........  207 
4.4.4    Telecommunications  ................................ ................................ ...............................  208 
4.4.5    Transport  ................................ ................................ ................................ ..............  212 
4.4.5.1    Maritime transport  ................................ ................................ ..............................  214 WT/TPR/S/401 • Indonesia  
 
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  4.4.5.2    Air transport  ................................ ................................ ................................ ....... 216 
4.4.6    Tourism  ................................ ................................ ................................ ................  218 
4.4.7    Distribution services with a specific focus on e -commerce  ................................ ...........  220 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 223  
 
CHARTS  
 
Chart 1.1 Product composition of merchandise trade, 2012 and 2019  ................................ ..... 32 
Chart 1.2 Direction of merchandise trade, 2012 and 2019  ................................ .....................  33 
Chart 3.1 Average applied MFN and bound tariff rates, by HS section, 2012 and 2020  ..............  76 
Chart 3.2 Distribution of MFN tariff rates, 2012 and 2020  ................................ .....................  76 
Chart 3.3 Tariff escalation by 2 -digit ISI C industry, 2012 and 2020  ................................ ........  77 
Chart 3.4 Main elements contained in SPS measures notified by Indonesia,  
January 2013 to mid -April 2020  ................................ ................................ .......................  119 
Chart 3.5 SOEs based on sectors, 2019  ................................ ................................ ............  129 
Chart 3.6 IP revenue, 2014 -19 ................................ ................................ ........................  136 
Chart 3.7 Patent applications and grants, 2013 -19 ................................ .............................  140 
Chart 3.8 Industrial design applications and registrations, 2013 -19 ................................ ...... 141 
Chart 3.9 Number of classes specified in trademark applications and registrations,  
2013-18 ................................ ................................ ................................ .......................  143 
Chart 4.1 Interest rate spread (%), January 2013 to January 2020  ................................ ...... 204 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2013 -19 ................................ ........................  18 
Table 1.2 Basic economic indicators, 2013 -19 ................................ ................................ ...... 23 
Table 1.3 Balance of payments, 2013 -19 ................................ ................................ ............  30 
Table 1.4 Trade in services, 2013 -19 ................................ ................................ ..................  34 
Table 1.5 FDI inflows by sector and origin, 2013 -19 ................................ .............................  35 
Table 2.1 Main institutions involved in trade and investment policymaking, 2020  .....................  39 
Table 2.2 Economic Policy Package phases  ................................ ................................ ..........  41 
Table 2.3 Economic Policy Package working groups  ................................ ..............................  42 
Table 2.4 Involvement in WTO dispute settlement: January 2013 to July 20 20 ........................  46 
Table 2.5 RTAs in force: main features, 2020  ................................ ................................ ...... 49 
Table 2.6 Negative investment list 2016, foreign equity ceilings  ................................ .............  55 
Table 3.1 Risk management system: customs clearance channels  ................................ ..........  68 
Table 3.2 Structure of the tariff schedule, 2012 and 2020  ................................ .....................  74 
Table 3.3 Summary analysis of preferential t ariffs, 2020  ................................ .......................  79 
Table 3.4 Import duty waivers coverage/ceilings, FY2012 and 2020  ................................ ....... 81 
Table 3.5 Safeguard actions, 2013 -20 (February)  ................................ ................................  87 
Table 3.6 Export taxes, 2020  ................................ ................................ .............................  91 
Table 3.7 Export prohibitions, 2012 and 2020  ................................ ................................ ...... 92 WT/TPR/S/401 • Indonesia  
 
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  Table 3.8 Export restrictions and licensing, 2012 and 2020  ................................ ...................  94 
Table 3.9 Indonesia Eximbank services, 2019  ................................ ................................ .... 100 
Table 3.10 Central government tax revenues, 2013 -19 ................................ .......................  103 
Table 3.11 Corporate tax holiday thresholds and amounts  ................................ ...................  104 
Table 3.12 Super -deduction tax incentives  ................................ ................................ ........  105 
Table 3.13 VAT rates, 2020  ................................ ................................ .............................  106 
Table 3.14 LGST rates, 2013 and 2020  ................................ ................................ .............  107 
Table 3.15 LGST incentives  ................................ ................................ .............................  108 
Table 3.16 Excise taxes on imports and domestic production of tobacco, 2020  ......................  108 
Table 3.17 Excise Tax rates, 2020  ................................ ................................ ....................  109 
Table 3.18 SNIs by sector, May 2020  ................................ ................................ ...............  112 
Table 3.19 Standards development activity, 2013 -19 ................................ .........................  112 
Table 3.20 Mandatory SNIs, February 2020  ................................ ................................ ....... 113 
Table 3.21 TBT -related STCs raised against Indonesia, January 2013 -March 2020  .................  114 
Table 3.22 SPS -related laws, 2020  ................................ ................................ ...................  118 
Table 3.23 KPPU policy recommendations to the Government, 2013 -19 ................................  126 
Table 3.24 Market monitoring activities, 2013 -19 ................................ ...............................  126 
Table 3.25 Major SOEs, 2012 and 2020  ................................ ................................ ............  130 
Table 3.26 Procurement methods  ................................ ................................ .....................  134 
Table 3.27 IP Penalties, 2020  ................................ ................................ ..........................  145 
Table 4.1 Agricultural production by main item, 2013 -18 ................................ ....................  149 
Table 4.2 Rice price data, 2013 -19 ................................ ................................ ...................  158 
Table 4.3 Exports of fish and fish products (WTO definition)a, 2012 -18 ................................ . 160 
Table 4.4 Average cost, average tariff, and subsidies, 2012 -19 ................................ ............  188 
Table 4.5 Structure of the financial sector, December 2019  ................................ .................  198 
Table 4.6 Limitations on foreign partici pation in financial services, 2020  ...............................  200 
Table 4.7 Share of commercial bank ownership (both conventional and sharia),  
December 2019  ................................ ................................ ................................ .............  203 
Table 4.8 Leading commercial banks (both conventional and sharia), ranked by assets, 
December 2019  ................................ ................................ ................................ .............  203 
Table 4.9 Fintech regulations, May 2020  ................................ ................................ ...........  205 
Table 4.10 Insurance sector market structure and market share, 2019  ................................ . 206 
Table 4.11 Indonesia  Stock Exchange (IDX) listed entities, May 2020  ................................ ... 208 
Table 4.12 Telecommunications indicators, 2013 -19 ................................ ...........................  209 
Table 4.13 Market share of cellular operators, 2013 -19 ................................ ......................  209 
Table 4.14 Market share of fixed -line operators, 2016 -19................................ ....................  209 
Table 4.15 Limitations on foreign participation in telecom and Internet services, 2020 ............  211 
Table 4.16 Interna tional visitor arrivals to Indonesia, by port of entry, 2014 -19 ....................  212 
Table 4.17 Transport -related activities open to investment, with  conditions, 2020  ..................  213 
Table 4.18 Median time spent by vessels in Indonesia's ports, by market segment, 2018  ........  216 
Table 4.19 Indonesian airline routes, service and ownership, July 2020  ................................  216 WT/TPR/S/401 • Indonesia  
 
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  Table 4.20 Inbound tourism, 2013 -April 2020  ................................ ................................ .... 218 
Table 4.21 Inv estment conditions applied to tourism services  ................................ ..............  220 
Table 4.22 Investment conditions applied to distribution services  ................................ .........  221 
 
BOXES  
 
Box 1.1 Indonesia's response to the COVID -19 challenge  ................................ ......................  20 
 
APPENDIX TABLES  
 
Table A1.1 Government Fiscal Stimulus Package I, 24 February 2020  ................................ ... 223 
Table A1.2 Fiscal Stimulus Package II, 13 March 2020  ................................ ........................  224 
Table A1.3 Merchandise exports by group of products, 2012 -19 ................................ ...........  225 
Table A1.4 Merchandise imports by group of products, 2012 -19 ................................ ..........  227 
Table A1.5 Merchandise exports by destin ation, 2012 -19 ................................ ....................  229 
Table A1.6 Merchandise imports by origin, 2012 -19 ................................ ...........................  230 
 
Table A2.1 Notifications to the WTO, January 2013 -August 2020  ................................ .........  231 
 
Table A3.1 MFN applied tariff summary, 2020  ................................ ................................ .... 234 
Table A3.2 Non -ad valorem  (specific) MFN applied tariffs and AVEs, 2020  .............................  236 
Table A3.3 Tariff lines where the MFN applied rate exceeds the bound rate, 2020  ..................  237 
Table A3 .4 Products subject to import licensing requirements, 2020  ................................ ..... 239 
Table A3.5 KPPU competition assessment on industries and policies, 2013 -19 .......................  245 
 
Table A4.1 Total allowable catch, 2017  ................................ ................................ .............  246 
Table A4.2 Air transport agreements  ................................ ................................ ................  248 
 
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  SUMMARY  
1. Since its previous Trade Policy Review in 201 3 and prior to the COVID -19 pandemic , despite 
global challenges , Indonesia 's relatively strong fundamentals  and sound macroeconomic p olicy 
ensured solid growth and the resilience of its economy. During the review period, the annual average 
GDP growth rate stood at 5.1% (2013 -19), a minor slowdown compared to  previous performance , 
and continued to be driven by domestic demand ; it was underpinned by an accommodative monetary 
policy mix , adapted to changing external conditions  as well as fiscal stimulus measures. To address 
COVID -19 challenges, several additional support initiatives, including three temporary fiscal stimulus 
packages, involving trade -related measures and monetary policy  action , were undertaken without 
delay to minimize the economic impact and shore up growth. During the review period, overall total 
factor productivity appears to have dropp ed slightly , whereas labour productivity r ose somewhat . 
Developments in Indonesia's global competitiveness posi tion reflect ed strengths, inter alia , related 
to its market size , macroeconomic stability  and high rate of technology adoption , but also 
weaknesses, including relatively low innovation capacity  and a relatively unskilled labour force. 
Inflation dropped significantly to 3% in 2019 (less than half of the 2013 level) and remained within 
target; during the same period, the unemployment rate  also registered a relatively signifi cant 
decline , to 5% in 2019.  
2. During the review period , trade and trade -related structural reforms (e.g.  to the regulatory 
and investment framework, taxation, corporate governance, labour market, micro, small and 
medium -sized enterprises  (MSMEs)  and sharia economy)  were under way. They  focused , inter alia , 
on raising productivity and competitiveness by improving the investment climate, accelerating 
infrastructure development , and promoting economic diversification . The monetary policy mix 
includ ed lowering the monetary policy rate, reducing the statutory reserve requirement , and foreign 
exchange intervention . The fiscal deficit remained manageable and well below its legal limit ; public 
expenditures  were refocused from inefficient energy subsidies toward s productive infrastructure 
investments . 
3. Exchange rate flexibility remain ed critical to the economy 's resilience to external shocks. The 
nominal exchange rate depreciated by an overall 3 6.1% between 2013 and 2018, followed by a 
0.6% appreciation in 2019 . The current account deficit narrowed from 3.2% of GDP (2013) to 1.6% 
(2017) , and then widened  to 2.9% (2018) and 2.7% (2019) , reflecting,  inter alia , developments in 
commodity prices, withholding tax rates, exports or imports of primary raw materials, fuels, capital 
or consumer goods, exchange rate movements , and foreign capital inflows . Foreign exchange 
reserves rose overall by about 30% (2013 -19); in 2019, they were equivalent to 11.5% of GDP and 
7.6 months of imports of goods and services, well above the international adequacy standard of 
3 months, or 7.3 months of imports and servicing government external debt.  Gross external debt, 
which remains lar gely long -term, rose by 51.9% in the period 2013 -19, reflecting an increase in 
external debt of the non -bank private sector . 
4. The moderate exposure of  the Indonesia n economy to international trade, its degree of 
openness , and its relatively weak integration  into global value chains continued to be reflected by 
the significantly lower ratio of its trade (exports plus imports) in goods and services to GDP , that 
stood at 37.3% in 2019  compared to 48.6% in 2013. International trade and foreign direct 
investment (FDI) trends reflect the continu ed importance of Asia as Indonesia's  main regional 
market and supplier . Its main individual trading partners remain China, Japan, the European Union , 
and the United States; Japan and Singapore are  its major FDI partners . Though the share of imports 
from regional trade agreement (RTA) partners dropped, that of exports rose.  
5. During the review period , Indonesia undertook efforts to liberalize and streamline its FDI 
regime in several areas, e.g. the regulatory framework, the negative investment list, and the 
business/investment licensing system. It made efforts to encourage FDI, despite several activities 
being reserved for Indonesian nationals and public entities as well as ASEAN country investors who, 
in certain cases, also ben efit from higher shareholding ratios than others. The 2016 negative 
investment list lifted or eased foreign equity restrictions in key sectors , and brought Indonesia's FDI 
regime closer to international and regional levels of openness. More specifically, i t included , 
inter alia, the opening of 45 business lines to full foreign ownership (maritime and fishery, energy 
and mineral resources, industry, public works, trade , tourism and creative economy, transportation , 
communication and informatics, and health). In addition, the list increased foreign shareholding 
ceilings in 39 business lines , and allowed foreign participation in another 26  lines that had been 
closed off entirely in the 2014 list. Furthermore, it removed the need for specific recommendation WT/TPR/S/401 • Indonesia  
 
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  requirements from the relev ant ministries for 83 business lines. However, there are business lines 
which remain specifically closed, had minimum project value requirements increased, or had the 
permitted foreign investment share reduced. Indonesia maintains a broad network of intern ational 
investment agreements. However, between 2013 and 2015 , more than 20  of its bilateral investment 
treaties were discontinued , to allow the authorities to align their provisions with latest domestic 
policies, legislation and international best practic es before renewal.  
6. Since 2013, Indonesia has undertaken the update of its trade -related and investment policies , 
as well as institutional and regulatory reform initiatives , in areas including transparency, 
anti-corruption, investment promotion, and econom ic dispute resolution. Good regulatory practice 
policies , including regulatory impact assessment policies , were also adopted. Trade and trade -related 
policy objectives have been shaped by wide -ranging strategies and policies, each with a different 
bearing on trade and , inter alia , aimed at the enhancement of productivity and competitiveness, the 
integration of local industry into global supply chains , and the increase of industrial investment 
cooperation. Between 2015 and 2018 , 16 Economic Policy Packages ( EPP), focused , inter alia , on 
improving the investment climate and accelerating related infrastructure developments , supported 
the implementation of these objectives.  
7. Indonesia remains committed to the multilateral trading system. During the review period , it 
improved its WTO commitments by ratifying the Trade Facilitation Agreement (TFA) on 
5 December  2017. At the same time, it continued to focus on strengthening regional economic 
integration ties , through the implementation , and/or participation in the n egotiation , of several 
ASEAN agreements, including the Regional Comprehensive Economic Partnership (RCEP). In 
addition, it undertook bilateral RTA negotiating initiatives , leading to the signing of three agreements 
(with Australia, the European Free Trade Association (EFTA) States , and Mozambique) , which are 
not yet in force ; others are underway or under consideration. Indonesia remains a beneficiary of the 
Generalized System of Preferences schemes of a number of  countries. Furthermore, it continued to 
receive Aid -for-Trade support for reaching its policy objectives. During the review period, it 
submitted several notifications  to the WTO  (e.g. agriculture, subsidies and countervailing measures, 
sanitary and phytos anitary measures, technical barriers to trade, and import licensing procedures). 
Indonesia remained active in dispute settlement cases in the WTO. As at January  2020, its 
involvement in new cases comprised: 6 complaints by Indonesia (1 case in consultation ); 
10 complaints against Indonesia (4  cases in consultation); and participation as a third party in 
39 cases.  
8. During the review period , the general thrust of Indonesia's trade policy was revised in several 
areas , including: tariffs; customs procedures; imp ort and export prohibitions ; restrictions and 
licensing ; export taxes; and export finance, guarantees and insurance.  
9. The tariff remains one of the main trade policy instruments , albeit a slightly declining source 
of tax revenue (2.6% of total tax revenue in 2018). Although 99.8% of tariff lines are ad valorem , 
and therefore transparent, the tariff involves a multiplicity of rates (17 ad valorem  duties and 
5 specific duties), four more than in 2012 . The tariff line coverage of specific duties was  halved,  as 
most specific rates on alcoholic beverages were converted to ad valorem  duties. As a result of an 
increase in duty rates on a number of products and the splitting of tariff lines related to the 2017 
tariff nomenclature change, the simple average applied M FN tariff rate rose from 7.8% in 2012  to 
10.1% in 2020; at the same time, tariff dispersion increased , and positive tariff escalation became 
more pronounced for virtually all industries. Tariff protection continues to vary across and within 
sectors , averag ing 11.2% for agricultural products and 9.9% for non -agricultural goods in 2020 
(WTO definitions). Peak tariff rates continue to apply to agriculture and related items, and are up to 
150% (alcoholic beverages, and odoriferous substances used in the food or  drink industries); fewer  
tariff lines are subject to rates of 10% or below (77.3%  of all tariff lines  in 2020 compared to 86.1% 
in 2012). At present rates, at 89.5% of all lines in Indonesia's tariff schedule are bound; as a result 
of the tariff level inc reases , the overall gap between the bound rates and the simple average MFN 
applied rates decreased from 29.6 to 27.8 percentage points , which suggest s a persistent high 
unpredictability in the tariff. The applied MFN rates on 99 HS17 eight -digit tariff lin es (e.g. chemical 
elements, worn clothing, machines for manufacture/parts/accessories for the manufacture of 
semiconductors,  and several types of measuring instruments and apparatus) appear to exceed their 
corresponding bound rate by 5 percentage points.  WT/TPR/S/401 • Indonesia  
 
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  10. To accelerate the development of certain activities and promote the competitiveness of certain 
industries in strategic sectors, industrial machinery and inputs for the production of certain goods 
continue to benefit from tariff reduction s or exemption s. An import duty exemption scheme for 
companies engaged in either the establishment or moderni zation of a factory, including an extended 
duty exemption period conditional upon certain local content requirements  (LCRs) , remains in place. 
The de minimis  value fo r import duty exemption s for consignment and e -commerce -traded goods 
on a B2C basis , in place since 2016 , was reduced drastically; since September 2016 , a flat customs 
duty charge of 7.5% on "consignment goods " has been levied , except on certain commoditie s in 
high demand (bags, shoes , and textile products) that have been subject to normal high applied MFN 
tariff rates. The simple average preferential tariff rate on imports from RTAs/FTAs rose by one 
percentage point, due to the entry in force of two new ag reements and the rise of MFN applied rates.  
11. During the review period, Indonesia's main trade facilitation developments included : the 
acceptance of the WTO TFA in 2017 ; the launching of the Authorized Economic Operator (AEO) 
programme and of a Post -Border I mport Supervision Policy ; the participation in the ASEAN Single 
Window (ASW) ; and the integration of the Indonesia Single Risk Management  (ISRM) system within 
the Indonesia National Single Window (INSW) platform. Furthermore, the regulatory framework of 
its Customs Main/Prominent Partners programme was updated in 2017 , and the product coverage 
of its import verification program me requirements was expanded to 29 (19 in 2013) product 
categories ( 338 items in 2020). The customs valuation regime and its main me thod used, the 
transaction value, remained unchanged; to combat under -invoicing and mis -invoicing , Indonesia 
continues to maintain two databases of market prices for customs valuation purposes , and the 
declared customs value is assessed based on a Fairness  Test as reasonable or unfair. In addition to 
customs duties, import -related charges and internal direct taxes, imports also remain subject to a 
withholding tax , whose rates were raised in 2018; in 2016 , harbour dues for international routes 
were seemingly  much higher than for domestic routes.  
12. Import prohibitions, restrictions and licensing remain in place, inter alia , to protect national 
interest s relating to public morals, human life or health, natural resources, environment, use of 
locally  produced good s, protection and development of domestic industries , and to enforce 
obligations under international agreements. The scope of import bans changed , from 143 ten -digit 
HS items (2013) to 124 eight -digit HS items (February  2020) . These were mostly industrial products . 
The coverage of import licensing authorizations changed  from 30 to 4 0 product categories , or from 
2,060 eight -digit tariff lines (2012) to 3,308  ten-digit HS lines (July 2020) . In certain cases, import 
authorization s for some products remain quantitatively restricted by considerations such as 
use-related (e.g. of carcass meat and horticulture), domestic produce purchase (e.g. milk and salt), 
self-sufficiency (e.g . rice, sugar and horticulture) and state trading (e.g. feed corn and ferti lizer).  
13. During the review period, the main legislative framework governing anti -dumping, 
countervailing, and safeguard measures remained virtually unchanged. Although recourse to 
anti-dumping action s dropped slightly , measures in force were on the rise , mainly on steel products 
such as hot -rolled coil and hot -rolled plate , tinplate , and  coil/sheet , originating mostly in Asia. 
Indonesia initiated 40 anti -dumping investigations (2013  to end-June 2019) , and 27 anti -dumping 
measures were in effect as at end -June 2019. No countervailing measures have been taken so far. 
Recourse to safeguard action dropped but Indonesia remains one of WTO's most frequent initiators 
of investigations and resulting actions; between 2013 and 2019 (end -June), it initiated 11  safeguard  
investigations  and imposed 9 measures , mainly on steel products. No special safeguards (SSGs) 
action was taken against imports of agricultural products in the review period. Indonesia continue s 
to use LCRs in certain areas (e.g. import duty exemption s, and government procurement) , to protect 
and/or develop domestic industries (e.g. factory establishment or moderni zation, salt, dairy, 
pharmaceuticals, telecom equipment, energy, broadcasting, franchising , and modern retail trade).  
14. Export taxes remain a polic y tool for , inter alia , tax revenue collection (albeit significantly 
declining, 0.4% of total tax revenue in 2018), fostering the development of downstream processing 
facilities, ensuring domestic supply of intermediate inputs at below world market prices, raising 
domestic value -added , and reducing the rate of depletion of non -renewable mining resources. Their 
product coverage, encompassing palm oil, crude palm oil and its derivative products, leather and 
wood, raw cocoa , and mineral ore products, remained relatively unchanged bu t rates were revised , 
including the replacement of an ad valorem  duty with a specific  one (palm oil) . Rates range  from 
zero to USD 262/ton ne (palm oil) or 60% (ores of copper, ilmenite, iron ore, lead, manganese, 
titanium , and zinc) , depending on the produ ct or facility development stage levels. Exports of certain WT/TPR/S/401 • Indonesia  
 
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  coal, metal mineral , and non -metal mineral mining commodities have also been subject to a 1.5% 
withholding tax since 2015.  
15. Export prohibitions, restrictions and licensing continue to be used in th e pursuit  of similar 
policy objectives as those of export taxes and other border measures. The scope of export 
prohibitions has expanded , with the main addition being the export ban on nickel ore in 2014. Export 
licensing product coverage was also expanded , and some new requirements were added; the main 
additions includ ed coffee, rice, palm oil, coal and coal -based products, domestic marketing 
requirements for crude oil, and mineral ore domestic processing requirements.  
16. Exports of goods and import s of mater ials, intermediate products and machinery used in their 
manufacturing remain exempt from customs duty and value -added tax (VAT) and sales tax on luxury 
products are zero-rated. During the review period , Indonesia continued to support exports through 
tax an d non -tax incentives available via its free-trade zone (FTZ), bonded zone, and special 
economic zone (SEZs) schemes; corporate tax holidays remain available to operators in bonded 
zones and SEZs. Export finance, guarantees and credit insurance by the state -owned  Indonesia 
Eximbank  and Asuransi Ekspor Indonesia have been increasingly focus ed on a number of 
government -designated leading export commodities (e.g. leather and jewellery) ; penetration to 
non-traditional export markets (e.g. Africa, South Asia, the  Middle East , and Eastern Europe) ; 
encouraging growth of export -oriented MSMEs ; and the implementation of special -assignment 
export projects in synergy with a number of other state-owned enterprises ( SOEs). The Eximbank's 
National Interest Account to Promo te Exports to Nations within the African Region is subject to 
"domestic contribution" requirements , and foreign companies whose majority shareholders are 
foreign legal entities or foreign nationals are not eligible.  
17. Indonesia continues to offer various fis cal incentives; VAT and luxury goods sales tax facilities , 
taken together , account for the bulk of revenue foregone from incentives granted. Corporate income 
tax holidays and tax allowances to support businesses remain in place , and efforts were made to 
simplify procedures and expand eligible beneficiaries. New incentive schemes introduced over the 
review period, are  aimed at, inter alia, supporting: labour -intensive, vocational and research and 
development activities; incubators; and the geother mal sector. The excise tax structure for certain 
tobacco products supports small -scale domestic cigarette firms. Non -fiscal incentives , in the form of 
loans and interest rate subsidies , continue to be available, mainly to MSMEs. In the wake of the 
COVID -19 outbreak, corporate income tax was cut from 25% to 22% , and measures were taken 
allowing companies to defer corporation tax and waive personal income tax for a set period.  
18. In 2014, standardization and conformity assessment legislation was enacted to cover  
metrology. As at May 2020, Indonesia had 10,858 national standards ( SNIs), nearly 18% of which 
were harmonized with international standards. As at February 2020, it had 205 technical regulations 
in force, most of which were issued by the Ministry of Indus try. Specific trade concerns involving 
conformity assessment have been raised by several Members regarding measures on various 
processed and unprocessed foods (particularly with respect to halal requirements); toys; ceramics; 
cell phones and computers; bro adband equipment; and alcoholic beverages. Various new labelling 
requirements were introduced on food products, halal products, tobacco, electric motor devices, air 
conditioners, refrigerators , and fluorescent lamps. Labelling requirements were also made l ess 
onerous for certain imported goods.  
19. Key SPS developments included the entry into force of new laws on animal, fish and plant 
quarantine; livestock services and animal health; halal product assurance ; the protection and 
empowerment of farmers ; and amendments to the Law concerning State Crops. SPS measures on 
beef, chicken meat and chicken products , and animal and plant/horticultural products have been the 
subject of WTO Members' concerns in the SPS Com mittee and/or in dispute settlement proceedings. 
Among the numerous developments over the review period, quarantine services were made more 
efficient , through the launch of the Indonesian Quarantine Full Automation System (IQFAST); 
processed food registrat ion requirements were eased slightly; inspection fees were levied on all 
animal product establishments seeking to import  into Indonesia; requirements for dairy processers 
and importers to establish partnerships with local dairy farmers in order to obtain a n import permit 
were removed; the list of live aquatic species banned from import was expanded; and, by 2026 , all 
halal products sold on the Indonesian market will require  certificates from the newly established 
Halal Certification Agency; currently , these  certification requirements apply to food and beverages.  WT/TPR/S/401 • Indonesia  
 
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  20. There were no changes to the main legal framework for competition policy over the review 
period. Key new regulations were issued to: deal more quickly and effectively with partnership 
infringements b etween MSMEs , and between MSMEs and large enterprises, including through the 
introduction of a behavioural changes provision; make improvements to the competition agency 
(KPPU's ) case handling procedures; and provide for clearer and faster procedures for p ost-merger 
notification and review. Over the review period, the KPPU was active in undertaking market 
monitoring, competition impact assessments , and issuing policy recommendations. The Government 
continues to stabilize the price of rice through a state -trading enterprise's (Perum BULOG's) 
guaranteed purchase of rice from domestic producers at a set procurement price , as well as through 
import acti vities. Additionally, the Ministr y of Trade monitors prices and , if necessary, undertakes 
some mark -up operations regarding the  availability and price stability of necessities /basic goods . 
Maximum prices are set for medicines and medical devices used in th e National Health Insurance 
programme. The sales price for coal purchased by the state electricity company to generate 
electricity for public purposes has been regulated since 2018.  
21. SOEs continue to operate in a wide range of economic activities and , in numerical terms , are 
most active in manufacturing , financial services , and transport/warehousing. Over the review period, 
there was privatization activity in the areas of mining, construction/engineering; development, 
maintenance and management of toll roads ; steel; airlines; and cement. As at 2019, Indonesia had 
112 SOEs under the Ministry of State -Owned Enterprises , 4 SOEs under the Ministry of Finance , 
341 SOE subsidiaries , and 317 SOE -affiliated companies, most of which operat e at a profit , according 
to the authorities . It is estimated that there are also 782 regional SOEs operating in the country. 
One state -trading entity (Perum BULOG) continues to import rice as well as other staple goods when 
instructed by the Government.  
22. Government procurement in Indon esia remains centralized in terms of regulations and 
systems but decentralized for procurement execution. Overall procurement spending in FY2019 by 
local and sub -central governments was IDR 2,173 trillion. The regulatory framework for government 
procuremen t was revised in 2018 , with the stated objective of achieving value for money, 
contributing to the increased use of domestic products, increas ing MSMEs ' participation , and 
sustainable development. This, inter alia , has significantly expanded procurement pr ice preferences 
for goods and services incorporating at least 25% local content for all bids over a certain threshold , 
as well as thresholds for international tenders. It also established, under the  National Public 
Procurement Agency  (NPPA), a new contract  dispute resolution facility as one of the methods to 
settle contract -related disputes , and made  the e-catalogue system a formal part of the procurement 
process. As before, the use of domestic products is mandated if there are providers offering the 
goods or services with a local content plus corporate contribution value exceeding 40% ; procurement 
packages for goods, construction services and other services up to a value of IDR  2.5 billion are 
reserved for small businesses. Bid -rigging continues to account for the vast majority of the KPPU's 
case load.  
23. During the review period, there were several changes to intellectual property ( IP) laws and 
regulations . Indonesia acceded to the Beijing Treaty on Audio -visual Performances, the Marrakesh 
Treaty to Facilitate  Access to Published Works for Persons Who Are Blind, Visually Impaired or 
Otherwise Print Disabled , the Protocol Relating to the Madrid Agreement Concerning the 
International Registration of Marks , and the Nagoya Protocol on Access to Genetic Resources. The 
new 2016 Patent Act introduced various new provisions , including: online filing; stronger protection 
of genetic resources and traditional knowledge; an extension to the scope of simple patents; a nd 
various provisions to facilitate public access to affordable medicine, namely, amended provisions on 
compulsory licensing and an extension of the Bolar provision from two to five years (allowing 
patented pharmaceutical products to be produced by another  party five years before the expiry of 
patent protection for the purpose of its licensing and marketing upon patent protection expiry). The 
2016 Law on Marks and Geographical Indications, inter alia,  regulate s international trademark 
registration based on the Madrid Protocol, extend s protection to non -traditional trademarks, 
streamlined application procedures and facilitate s their renewal, and impose s more severe criminal 
sanctions. Furthermore, the 2014 Copyright Law, inter alia,  extend s copyright protecti on from 50 to 
70 years after the author's death, contains provisions on the establishment of collective management 
organizations , and increased criminal sanctions. With respect to enforcement, positive developments 
included the issuing of regulations to bl ock websites infringing IP, and the launch of an online facility 
for reporting IP infringements. Reportedly, a notable trend over the review period was a big increase 
in IP applications through the Directorate -General of Intellectual Property's online syst em. WT/TPR/S/401 • Indonesia  
 
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  24. Agriculture continues to play an important role in the economy (13.3% of GDP in 2019 ), with 
rice, palm oil, oil palm fruit and palm kernels account ing for nearly two  thirds of the total value of 
production ; palm oil  remains  the main agricultural export . Policy objectives include self -sufficiency 
in staple foods , and targets for rice, maize, soybeans, sugar and beef  were set. T he regulatory 
framework was updated in several areas , including financial assistance , agrarian reform and food 
security. T ariff p rotection for agricultural products rose , and remains above  the overall applied MFN 
average and the average for manufacturing . Restrictive import licensing requirements for several 
products, aimed at promoting domestic production to fulfil local demand  requirements,  remain in 
place. Export taxes , prohibitions , and licensing requirements continue to affect certain products. As 
at 201 9, seven  SOEs were involved in agricultural , forestry and fishing  activities , including trading . 
Tax and non -tax policy instruments , in the form of land concessions, subsidized fertilizers, irrigation 
infrastructure improvements, concessional loans and market price support for rice , continue to be 
used for  raising agricultural output, productivity and competitiveness.  
25. Fisheries' contribution to GDP increased slightly (2.8% in 2019 ), with aquaculture 's 
importance and fish stocks on the rise. Policy priorities included the improvement of fishery -related 
infrastructure , the optimization of aquaculture , the develop ment of the marine and fisheries industry , 
and the strengthen ing of monitoring, surveillance and enforcement systems . An ecosystem approach 
to fisheries management was followed. Regulatory developments included areas such as the 
management of coastal area and islands, large fishing vessel  licences, and the ban of fishing trawl 
and seine nets . Since 2016, FDI has been allowed for cold storage of fish and fish processing. Wild 
capture remains reserved for domestic capital . Tariff protection for fisheries increased slightly . 
Non-tax incentives are mostly focused on small fishers , and virtually all involve grants; subsidized 
diesel is  limited to boats of less than 30 GT . Considerable action was taken to address illegal, 
unreported and unregulated (IUU) fishing activities.  
26. Regarding forestry, a ction was taken to , inter alia , address deforestation driven by expanding 
plantations for palm oil , through a moratorium prohibit ing the conversion of primary natural forests 
and peatlands to palm oil, pulpwood and logging concessions ; in addition, a social forestry 
programme is underway . The exploitation of timber forest products of natural forest s is entirely 
reserved for domestic ca pital. Export of roundwood and rough sawn timber for all species remain s 
banned , to protect domestic wood -processing industries . Procedures for smallholders and small -and-
medium enterprises  (SMEs)  to obtain timber legality verification certification  were e ased; since 
2016, Forest Law Enforcement, Governance and Trade (FLEGT) timber export licences  have been 
issued. F orest law enforcement was strengthened, and  Indonesia committed to reducing its 
emissions from deforestation and forest degradation  through the  REDD+ mechanism .   
27. Mining and energy continue to make significant contributions to the economy. The main policy 
and legislative framework for mining remained virtually unchanged; 100% foreign investment in the 
mining sector is allowed , subject to the fore ign share ownership divestment rules on the transition 
from the pre -2009 licensing regime to the current one . Export taxes and restrictions on minerals, to 
support the development of domestic processing facilities , were continued.  A 2014 ban on exports 
of unprocessed (or not -sufficiently processed) minerals was relaxed in January 2017 , subject to 
certain conditions, including the fulfilment of  domestic market obligation (DMO)  requirements.  
Mineral and coal sales benchmark prices, and the floor price for the  royalty calculation , remain in 
place. C oal is subject to special pricing, DMO and transport/insurance (implementation pending)  
requirements , to support the state -owned electricity company and national shipping and insurance 
industries . 
28. Indonesia remain s dependent on imports of hydrocarbons and electricity to cover its energy 
consumption needs.  Policy objectives include achieving security in the domestic energy supply by 
reducing gasoline dependency and increasing the use of renewable energy  sources . Most oil and gas 
production is carried out by international contractors under production -sharing contracts  (PSCs); in 
2017, a new form of PSC , based on the gross production split , replac ed the  cost-recovery scheme 
in place since 2008 . The state -owned limited liability oil and gas company expanded its scope to 
include gas, renewables and upstream operations , both within Indonesia and abroad . FDI 
participation in oil and gas upstream activities is subject to limitations. Quantitative export 
restrictions based on DMO requirements for oil and gas continue to apply . LCRs  on procurement for 
oil and gas projects were raised . Significant changes to the fuel s ubsidy policy , allowing for 
considerable  reduction in the entire energy subsidy bill , were made ; at present, subsidies ke ep retail 
prices for three fuel s below world market level: gasoline (distribution costs compensation); diesel 
(fixed subsidy); and kero sene (fixed price) .  WT/TPR/S/401 • Indonesia  
 
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  29. During the review period, o n-grid installed power plant capacity  and national electrification 
increased . The state -owned electricity company  remains responsible for the majority of power 
generation , with de facto  exclusive powers over the transmission, distribution and supply of 
electricity to the public;  in light of the importance of coal -powered plants to the fuel mix, the DMO 
requirements for coal seem to have significantly eased the burden of  the company. FDI participation 
in power plants is subject to limitations. Since  2017, the scope of the electricity subsidy has been 
reduced, thus lowering the subsidy amount disbursed; however, the average electricity tariff 
remained below the average production cost. E lectricity tariffs continue to differ, depending on the 
end-user's purchasing power and installed power capacity, thus involving a cross -subsidization 
element . Domestic support to new and renewable energy sources was prioritized , to achieve the 
targeted energ y mix . Action was taken to address issues  relating to the regulatory framework on  
electricity  tariffs and pricing from renewable energy sources. T he 2008 mandatory policy of a 
biodiesel mixture of fatty acid methyl ester (FAME) from palm oil into fuel oil intensified , to, inter alia, 
meet renewable energy targets  and reduce diesel consumption . 
30. Manufacturing remains an important activity in terms of its contribution to the economy  
(20.5% of GDP in 2019 ) and exports  (45.8 % in 201 9). Although th e bulk of manuf acturing firms 
continue to be micro and small firms , large firms and joint ventures appear to be the most 
productive , and foreign -owned manufacturing plants seem to produce about half of manufacturing 
exports . A concentration of SOEs  remains  in relatively capital -intensive activities . The 2018 Making 
Indonesia 4.0 policy seeks to achieve global competitiveness in five target industries: food and 
beverages, textiles and garments, automotive, electronics, and chemicals.  Tariff protection for 
manufacturing increased considerably; peak rates continue to be applied on transport equipment , 
and certain chemicals and photographic supplies. Several non -tariff measures continue to protect 
domestic producers , ensure supplies for domestic processing  (e.g. import licensing, contingency 
measures, LCRs, government procurement preferences, export taxes , and restrictions) , and promote 
their exports (e.g. zone -designated schemes and concessional export credit to SMEs). Tax and 
non-tax incentives , including  tax allowances, tax holidays (involving corporate income tax) and 
subsidized credit , remain in place . The garment, textiles and footwear industry benefited from 
increased tariff protection and a n additional  export performance -linked tax incentive. Similar ly, tariff 
protection to the automotive sector was considerably raised , and certain incentives were introduced 
to facilitate consumers' shift to alternative -fuel vehicles (i.e. reduced luxury goods sales tax, 
concessional credit , and discount s for electric ity upgrade of vehicle s) and the establishment of an 
electric vehicle (EV) industry (i.e . fiscal and non -fiscal incentives tied to LCRs).  
31. The contribution of services to GDP rose gradually over the review period, from 42.6% in 2013 
to 46.1% in 2019 . In 20 18, Indonesia was ranked the 41st largest exporter and the 34th largest 
importer of commercial services in the world.  
32. Indonesia maintained financial sector stability throughout the review period, including in the 
wake of the COVID -19 pandemic. To mitigate  the effects of the pandemic, the Government put in 
place a supportive regulatory framework , and channelled funding through domestic banks to enable 
them to restructure existing, and disburse new, loans to businesses. The banking sector continues 
to be dom inated by majority -state-owned banks. The insurance sector is fragmented , and there 
were several bankruptcies and mergers over the review period. Insurance penetration remains low, 
at under 3% in 2019. Sharia financial services increased over the review pe riod, albeit from a low 
base. Indonesia's capital market, although still relatively small, grew steadily in terms of listed 
entities, numbers of investors and value of trades. The 2014 Insurance Law and its implementing 
regulations tightened restrictions o n foreign ownership , and introduce d a single presence policy. 
Regulatory changes in the financial services sector  included, inter alia : the launch of an integrated 
electronic payment system network, the National Payment Gateway; the implementation of a 
financial information services system; increased bank transparency provisions relating to Indonesia's 
pledge to join the OECD -led Automatic Exchange of Information Initiative; and various measures to 
encourage the growth of the fintech sector. The latter includes  the implementation of a regulatory 
sandbox approach , and measures to support the growth of fintech peer -to-peer lending platforms. 
The proportion of Indonesian citizens with bank accounts increased substantially over the review 
period, from  36% in 2014 to over 76% in 2019.  
33. The telecommunications sector saw a steep decline in fixed -line subscriptions over the review 
period , and an increase in mobile cellular subscriptions up until 2018, when there was a significant 
drop. The latter may have b een due to a government requirement for holders of certain sim cards 
to re-register them . Internet usage by individuals and fixed broadband subscriptions more than  WT/TPR/S/401 • Indonesia  
 
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  doubled, albeit from a low base with respect to the latter. Fixed -line services are dominate d by a 
single operator and , while there is more competition in the mobile cellular segment, one operator 
has a 50% market share. Nevertheless, there appears to be strong price competition among mobile 
operators , which led to particularly affordable mobile data prices. In 2019, the construction of a 
high-speed, fib re-optic nationwide Internet network  was completed . FDI restrictions were eased in 
the areas of telecommunication equipment certification; fixed and mobile telecommunication 
networks and telecommun ication networks integrated with telecommunication services; and 
telecommunications services (e.g. Internet service providers).  
34. Several support measures are in place to support the transport sector: new VAT facilities were 
extended to assist the shipping,  railway and air transport industries; and import tax reductions were 
granted  on goods related to aircraft maintenance. Subsidies continue to be provided to support 
"pioneer" shipping companies who provide transport to remote regions; and various support 
measures were extended to the airline sector in 2020 to mitigate the impact of the COVID -19 
pandemic. It appears that higher port tariffs on international routes subsidize much lower tariffs on 
domestic shipping routes. Other developments over the review pe riod include: efforts to reform and 
simplify transport -related licensing and permit requirements; the ratification of various ASEAN air 
transport instruments; new and ongoing infrastructure projects; and the signature of the 
Government's first contract wit h a foreign company to develop and operate an airport within 
Indonesia. FDI restrictions were eased in various areas, namely: passenger land transportation and 
non-scheduled land transportation; supporting services for transport terminals; air transport 
supporting services (computer reservation system s, ground handling , and aircraft leasing); services 
activities related to airports; freight -forwarding services; air cargo expedition services; general sales 
agencies for foreign airlines; and maritime cargo ha ndling services.  
35. Tourism is a key generator of employment and one of Indonesia's main sources of 
foreign -currency earnings. Over the period 2013 -19, there was year -on-year growth in both visitor 
numbers and revenue from tourism , and the number of hotel roo ms also significantly increased. 
New developments over the review period include: efforts to develop the international medical 
tourism segment; a major expansion in the number of countries eligible for visa -free travel to 
Indonesia; measures to encourage c ruise liner visits; and measures to increase the sustainability 
and quality of tourism businesses. FDI restrictions were eased in the areas of bars; cafes; the 
operation of sports facilities; restaurants; golf courses; travel bureau x; motels; private museu ms; 
and meetings, incentives, conferences, and exhibitions (MICE) operations. The COVID -19 pandemic 
has had a serious impact on the sector; as at end -June 2020, more than 2,000 hotels were closed , 
and almost all tourism destinations, amenities and faciliti es had been stopped. Indonesia saw a 45% 
drop in visitor arrivals over the period from January  to April 2020, compared with the same period 
in 2019.  
36. Distribution services are a major generator of employment and contributor to economic 
activity in Indonesi a. In 2014, Law No . 7 of 2014 on Trade was enacted to, inter alia , govern 
distribution services; it contains general rules regarding e -commerce. FDI restrictions were eased 
with respect to distribution affiliated with production; direct selling through mar keting networks; 
department stores; distribution not affiliated with production; warehousing; and retail trading via 
mail or Internet order. Additionally, new FDI limits were set for certain e -commerce activities; 100% 
FDI is permitted in certain e-commerce activities involving investments of more than IDR 100 billion , 
and for th ose activities under the IDR 100 billion threshold, FDI is capped at 49%. The r etail 
e-commerce segment grew rapidly over the review period , and a new regulation was issued  in 2019 
to govern the e -commerce marketplace and e -retail practices. In line with the Government's 
E-Commerce Roadmap for the period 2017 -19, government measures to support SME e -commerce 
activities were initiated.  
37. In light of the COVID -19 pandemic, Indon esia's economic growth in 2020 is expected  to either 
range from 4.2%  to 4.6% or contract by 0.4%  and recover to 5.2 %-5.6% in 2021 . Prior to the 
outbreak, risks to the growth outlook were skewed to the downside , and appeared to be mainly 
exogenous , inter al ia, involv ing trade tensions posing additional risks to commodity prices, 
international trade flows, global business sentiment and investment growth, and 
weaker -than-expected growth in China.  Despite the COVID -19-related stimuli, the pandemic may 
have put at risk domestic demand, the main driver of growth in Indonesia, as well as expected 
benefits from progress in raising productivity via the structural reforms underway . Future prosperity 
and sustainable growth depend on the Government implementing total fa ctor productivity -enhancing 
structural reforms,  as well as addressing issues relating to regulatory uncertainty, investment WT/TPR/S/401 • Indonesia  
 
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  climate, border protection, domestic support measures, LCRs, and state involvement in the 
economy. These and related reforms, includ ing a reduction of labour market rigidities and more 
competition in the domestic market, would increase the  resilience  of the economy and its ability to 
cope with external competition, thus enabling it to continue meeting its economic and welfare 
objective s. 
 WT/TPR/S/401 • Indonesia  
 
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  Indonesia, the world 's fourth most populous nation (264 million inhabitants in 2017), the 
world 's 10th largest economy in terms of purchasing power parity, an emerging lower middle -income 
country and a member of the G20, is the largest economy in Southeast Asia (about 35% of the 
region's GDP) and the Association of Southeast Asian Nations (ASEAN) (Section 2.3.2).1 It is a 
diverse archipelago nation , rich in natural resources (Section s 4.1 and 4.2) , that is urbani zing and 
moderni zing rapidly. Around half of the population is under 30 years old, and the working -age 
population ratio is set to rise during the next decade. As a result of steady economic expansion , 
accompanied by lower unemployment , controlled inflation, and helpful government policies, poverty 
rates and inequality have been falling, and access to public services is broadening.2 Despite global 
challenges , including volatility in commodity prices and financial market uncertainty, during the 
review period and prior to the COVID -19 pandemic , the economy performed well, underpinned by a 
sound and accommodative macroeconomic policy aimed at maintainin g stability while also promoting 
higher potential growth (Table 1.1).3 According to the authorities, the resilience of the economy 
amid deteriorating global economic conditions was partly the result of policy synergy among the 
Government, Bank Indonesia ( the central bank, BI) and related authorities (Sections 1.2.3 
and 1.2.4); in light of the COVID -19 outbreak, this synergy is being strengthened further to 
accelerate the transformation of the economy by reinforcing leading sectors (e.g. manufacturing and 
tourism), developing the sharia economy , and fostering digital economic and financial innovation 
(Sections  1.2.4.5, 3.3.3 .2, 3.3.3 and 4.4).4 To address the impact of the COVID -19 outbreak, t hree 
stimuli packages were adopted (Box 1.1) a nd growth forecasts for 2020 were revised downwards 
with a rebound in 2021; the economy is expected to gather strength in the medium term , to become 
an advanced high -income country in 2045 (Section 1.2.1).  
Table 1.1 Selected macroeconomic indicators, 2013 -19 
  2013  2014  2015  2016  2017  2018  2019a 
National accounts (% change, unless 
otherwise indicated)         
GDP real growth rate  5.6 5.0 4.9 5.0 5.1 5.2 5.0 
Consumption  5.7 4.7 4.9 4.3 4.6 5.1 4.9 
Private consumption  5.5 5.3 4.8 5.0 5.0 5.1 5.2 
Household consumption  5.4 5.1 5.0 5.0 4.9 5.1 5.0 
NPISH consumption  8.2 12.2 -0.6 6.6 6.9 9.1 10.6 
Government consumption  6.7 1.2 5.3 -0.1 2.1 4.8 3.2 
Gross fixed capital formation  5.0 4.4 5.0 4.5 6.2 6.6 4.4 
Exports of goods and services  4.2 1.1 -2.1 -1.7 8.9 6.5 -0.9 
Imports of goods and services  1.9 2.1 -6.2 -2.4 8.1 11.9 -7.7 
 
1 World Bank. Viewed at: https://www.worldbank.org/en/country/indonesia/overview ; European 
Commission, Countries and Regions – Indonesia.  Viewed at: https://ec.europa.eu/trade/policy/countries -and-
regions/countries/indonesia/ ; and OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, 
Paris. Viewed at: https://doi.org/10.1787/eco_surveys -idn-2018-en. 
2 Indonesia achieved a sustained decline in poverty rates, from 19.1 % of the population in 2000 to 
9.4% in 2019 . However, i ncome or economi c inequality, as measured by the Gini coefficient, rose from its 
lowest value of 30 points in 2000 to 41 points in 2014, declining to 38 in September 2019, indicating less 
inequality from 2014 onwards . Bank Indonesia (BI) (2019), 2018 Economic Report on In donesia , 28 May. 
Viewed at: https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx ; BI (2020), 2019 
Economic Report on Indonesia , 22 May. Viewe d at: https://www.bi.go.id/en/publikasi/laporan -
tahunan/perekonomian/Pages/LPI_2019.aspx ; World Bank (2019), Indonesia Economic Quarterly: Investing in 
People - December  2019, 3 December. Viewed at: 
https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1&isAllowed=y ; and OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD 
Publishing, Paris . Viewed at: https://doi.org/10.1787/eco_surveys -idn-2018-en. 
3 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Ind onesia , 31 July. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indon esia-2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 ; and BI  (2020), 2019 Economic Report on Indonesia , 
22 May. Viewed at:  https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
4 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . WT/TPR/S/401 • Indonesia  
 
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    2013  2014  2015  2016  2017  2018  2019a 
XGS/GDP (%) (at current market 
price)  23.9 23.7 21.2 19.1 20.2 21.0 18.4 
MGS/GDP (%) (at current market 
price)  24.7 24.4 20.8 18.3 19.2 22.0 18.9 
Unemployment rateb (%) 6.2 5.9 6.2 5.6 5.5 5.3 5.3 
Total factor productivity (2010 = 1.0)  1.0 1.0 0.9 0.9 0.9 .. .. 
Labour productivity (based on hours 
worked) (2010 = 1.0)  1.2 1.2 1.3 1.3 1.3 .. .. 
Labour productivity (based on number of 
employment) (2010 = 1.0)  1.1 1.2 1.2 1.2 1.3 .. .. 
Prices and interest rates (%, unless 
otherwise indicated)         
Consumer price index (CPI) (average, 
% change)  7.0 6.4 6.4 3.5 3.8 3.2 3.0 
Time depositc, IDR 7.49 9.30 8.54 7.11 6.60 7.06 6.81 
Time depositc, USD  2.10 2.23 1.38 1.18 1.71 2.29 2.35 
Exchange rates         
IDR/USD (annual average)  10,461.2  11,865.2  13,389.4  13,308.3  13,380.8  14,236.9  14,147.7  
Real effective exchange rate (% change)  .. .. .. .. .. .. .. 
Nominal effective exchange rate (% 
change)  .. .. .. .. .. .. .. 
Money and credit (% change, end -
period)         
Broad money (M2)  12.8 11.9 9.0 10.0 8.3 6.3 6.5 
Domestic credit to private sector  20.0 12.6 9.6 7.7 7.2 10.3 5.8 
General government (% of current 
GDP)         
Revenue including grants  15.1 14.7 13.1 12.5 12.3 13.1 .. 
Revenue excluding grants  15.0 14.6 13.0 12.5 12.2 13.0 .. 
Tax revenue  11.3 10.9 10.8 10.4 9.9 10.2 .. 
Grants  0.1 0.0 0.1 0.1 0.1 0.1 .. 
Expenditure  17.3 16.8 15.7 15.0 14.8 14.9 .. 
Fiscal balance  -2.2 -2.1 -2.6 -2.5 -2.5 -1.8 .. 
General government debt, gross  24.8 24.7 27.0 28.0 29.4 30.1 30.2 
Saving s and investment (% of 
current GDP)         
National savings (gross)  30.7 31.5 32.0 32.0 32.1 31.4 .. 
National investment  33.8 34.6 34.1 33.9 33.7 34.5 .. 
Savings -investment gap  -3.2 -3.1 -2.0 -1.8 -1.6 -3.0 .. 
External data (% of current GDP, 
unless otherwise indicated)         
Current account  -3.2 -3.1 -2.0 -1.8 -1.6 -2.9 -2.7 
Merchandise trade balance  0.6 0.8 1.6 1.6 1.9 0.0 0.3 
Exports  20.0 19.7 17.3 15.5 16.6 17.3 15.1 
Imports  19.3 18.9 15.7 13.9 14.8 17.4 14.7 
Services balance  -1.3 -1.1 -1.0 -0.8 -0.7 -0.6 -0.7 
Exports  2.5 2.6 2.6 2.5 2.5 3.0 2.8 
Imports  3.8 3.8 3.6 3.3 3.2 3.6 3.5 
Capital account  0.0 0.0 0.0 0.0 0.0 0.0 0.0 
Financial account (incl. reserve assets)  -3.2 -3.3 -2.1 -1.8 -1.7 -3.1 -2.8 
Direct investment  -1.3 -1.7 -1.2 -1.7 -1.8 -1.2 -1.8 
Balance of payments  -0.8 1.7 -0.1 1.3 1.1 -0.7 0.4 
Merchandise exports (% change in USD)  -2.8 -3.7 -14.9 -3.1 16.9 7.0 -6.8 
Merchandise imports (% change in USD)  -1.3 -4.5 -19.7 -4.4 16.2 20.6 -8.8 
Service exports (% change in USD)  -3.0 2.6 -5.6 5.0 8.6 23.2 1.3 
Service imports (% change in USD)  2.3 -4.2 -7.8 -1.7 7.6 15.2 4.5 
International reserves (USD billion, 
end-period)  99.4 111.9  105.9  116.4  130.2  120.7  129.2  
% of GDP  10.9 12.6 12.3 12.5 12.8 11.6 11.5 
in months of prospective imports of 
goods and services  5.9 8.1 8.0 7.6 7.2 6.4 7.6 WT/TPR/S/401 • Indonesia  
 
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    2013  2014  2015  2016  2017  2018  2019a 
External debt (USD billion, end -period)  266.1  293.3  310.7  320.0  352.5  375.4  404.3  
Debt service ratiod 19.9 29.9 34.6 37.5 29.4 26.0 .. 
.. Not available.  
a Estimates . 
b As at August.  
c Six-months ' time deposit s at commercial banks, weighted average at end -period.  
d Per cent of exports of goods, services and primary income.  
Source:  Statistics Indonesia; BI; IMF; Asian Development Bank ( ADB); Asian Productivity Organization,  
Productivity Measurement . Viewed at: https://www.apo -tokyo.org/wedo/productivity -
measurement/ ; and data provided by the authorities.  
Box 1.1 Indonesia's response to the COVID -19 challenge  
To address COVID -19 challenges, several support initiatives, including three temporary fiscal 
stimulus packages and monetary policy measures, were undertaken without delay to minimize the 
economic impact and shore up growth.  
 
Fiscal and non -fiscal measures have been focused on: bolstering the resilience of sectors affected 
by the pandemic; maintaining public purchasing power; and ensuring business continuity. Such 
policies allow for the acceleration of public spending, particularly during the first quarter of 2020, 
and for the  reallocat ion of  budget resources, initially concentrating on healthcare and social 
assistance rather than non -emergency materials and capital spending.  
 
A first IDR  10.4 trillion , or 0.06 % of GDP , stimulus package, seemingly consisting mainly of 
reclassification and front -loading of previous spending commitments, was announced the week of 
24 February 2020 to support consumer spending and tourism (Table A1.1). It includes an aviation 
turbin e fuel subsidy, flight ticket incentives to ten tourism destinations , and tax incentives for 
hotels and restaurants.  
 
A second package amounting to IDR 22.9 trillion or 0.19% of GDP was announced on 
13 March  2020 to stimulate spending and trade , and to mai ntain purchasing power and safeguard 
food supply through fiscal, non -fiscal, financial sector and food policy measures (Table  A1.2).  
 
A third package amounting to IDR 405.1 trillion was announced on 31 March 2020. Under it, 
corporate income tax would be r educed by 3 percentage points to 22% over 2020 -21 and to 20% 
as from 2022. In addition, IDR 70 trillion would be used for tax incentives and SMEs support. 
Furthermore, the package includes IDR 110 trillion for social protection (including food assistance 
and electricity discounts and waivers for 10  million  households).  
 
Under Government Regulation (PP) No. 23/2020 on the national economic recovery program me 
(PEN), which took effect on 11 May 2020, the authorities aim to, inter alia,  provid e support to 
ailing state -owned enterprises (SOEs) and small businesses through state capital injections (PMN), 
fund placements at certain banks, government investment , and state guarantees. The PMN for 
SOEs aims to  strengthen the capital structure of companies or their su bsidiaries affected by the 
outbreak , and increase the ir capacity to carry out economic recovery programmes mandated by 
the Government. The programme was allocated IDR  318.09  trillion (USD 21.28 billion) , of which 
more than IDR  152 trillion is destined to S OEs, including the national flag carrier Garuda Indonesia 
(IDR 8.5 trillion working capital) , the steelmaker PT Krakatau Steel (IDR  3 trillion  working capital ), 
the State Logistics Agency (BULOG, working capital IDR  13 trillion), the state -owned oil and gas 
company Pertamina (IDR 48.25 trillion accelerated compensation payments) , and the electricity 
company PLN (IDR 45.42 trillion accelerated compensation payment s) (Sections  3.3.5, 4.1, 4.2 
and 4.3). Furthermore, the Government may place funds at an interest rate equivalent to the 
lowest interest rate of government bonds ( SBNs) purchased by the BI at domestic banks ; these 
banks are called participant banks, are at least 51% owned by Indonesian individuals or entities, 
are categorized as healthy banks according to the Financial Services Authority , and are the 
country's 15 largest banks in assets value. Participant banks are to  support the provision of 
liquidity for other banks, including secondary banks, that had also provided loan restructuring and 
disbursed additional loans to businesses. Moreover, under the PEN, IDR 6 trillion was set aside for 
micro, small and medium enterprises (MSMEs) new loan guarantees , and IDR 34.15 trillion in the 
form of loan interest subsidies for ultra -micro enterprises, MSMEs and cooperatives.  WT/TPR/S/401 • Indonesia  
 
- 21 - 
 
  Several monetary policy measures were also adopted. On 9 March 2020, the BI announced 
measures to stabilize the rupiah , including: cutting the US  dollar reserve requirement ratio (RRR) 
from 8% to 4% , and the rupiah RRR by 50 basis points, starting from 1 April 2020 (only for banks 
with clients engaged in import  and export  activities). Furthermore, it stepped up interventions to 
stabilize the rupiah in the domestic non -deliverable forward (DNDF) and spot markets; to purchase 
SBNs on the secondary market ; and to increase the frequency of FX swap auctions for 1 -, 3-, 
6- and 12 -month tenors from three times per week to daily auctions in order to ensure a dequate 
liquidity, effective 19  March 2020. On 19 March 2020, the BI decreased the policy rate by 25 basis 
points. On 31 March 2020, it bought IDR 166 trillion (USD 10 billion) of bonds. On 14 April 2020, 
it cut the RRR by 200 basis points for conventional  banks and 50 basis points for Islamic banks 
(effective 1 May 2020). It also raised the macroprudential liquidity buffer ratio by the same. This 
must be fulfilled only via government bonds purchased in the primary market.  
 
Presidential Instruction Number 4/2020 on Refocusing of Activities, Budget Reallocation, and Public 
Procurement in Response to Handle COVID -19 in Indonesia , issued on 23 March 2020 , provides 
for reallocation representing IDR 62 trillion of the state budget and IDR 72 trillion of village funds.  
Source:  BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx ; OECD, 
Tackling coronavirus (COVID -19). Viewed at: https://www.oecd.org/coronavirus/en/ ; and The 
Jakarta Post, Government issues regulation on economic recovery program, focuses on SOEs, 
MSMEs.  Viewed at:  https://www.thejakartapost.com/news/2020/05/12/government -issues -
regulation -on-economic -recovery -program -focuses -on-soes-msmes.html ). 
1.2.  Prior to the COVID -19 outbreak, risks to the 201 9 and 2020 growth outlook were skewed to 
the downside. They appeared to be mainly exogenous , involv ing, inter alia , trade tensions posing 
additional risks to commodity prices (i.e. large swings, especially higher oil prices), international 
trade flows, global business sentiment and investment growth, and weaker -than-expected growth 
in China.5  
1.2  Recent Economic Developm ents 
1.2.1   Growth, income, and employment  
1.3.  During  the review period, the annual average GDP growth rate stood at 5.1%, a minor 
slowdown compared to the average of 5.9% over the period 2007 -12 (Table 1.1) . It was driven by 
solid domestic demand which , in 2018 , offset a decline in net exports, supported by an 
accommodative policy mix instituted by the BI, fiscal stimuli and much -needed infrastructure 
investment (Section 1.2.3.2, 1.2.4 and 3.3.1).6 In early 2019, the BI predicted economic growth in 
the range of 5.1% -5.5% for 2020, a forecast scaled back to 5 .0%-5.5% in February  2020 due to 
possible losses related to China 's sizable role in the economy (especially in tourism, exports and 
investments) . After the COVID -19 outbreak, the authorities modified the 2020 outl ook, envisaging 
that the economy either moderately grow by 4.2% or 2.3% (severe scenario), or contract by 0.4%  
(most severe scenario); in light of the fiscal, monetary and credit restructuring policy  measures put 
in place, the economy was foreseen to grow under the severe scenario.7 The economy was projected 
 
5 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed at: 
https:/ /www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 ; and World Bank (2019), Indonesia Economic Quarterly: 
Investing in People - December  2019, 3 December. Viewed at:  
https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1&isAllowed=y . 
6 WTO document  WT/TPR/S/278/Rev.1, 16 July 2013; OECD (2018), OECD Economic Surveys 
Indonesia , October; BI  (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx ; and IMF (2019), 
Indonesia: 2019 Article IV Consultation -Press Release; Staf f Report; and Statement by the Executive Director 
for Indonesia , 31 July. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -
2019-Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-the-48535 . 
7 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx ; Jakarta Post, 
Government issues regulation on economic recovery program, focuses on SOESs, MSMEs.  Viewed at: 
https://www.thejakartapost.com/news/2020/05/12/government -issues -regulation -on-economic -recovery -
program -focuses -on-soes-msmes.html . WT/TPR/S/401 • Indonesia  
 
- 22 - 
 
  to regain upward momentum in 2021 in line with the post -COVID -19 global economic recovery; on 
this basis, it would recover to 5.2 %-5.6% in 2021.8 For the medium term, the BI forecast s growth 
at 5.5% -6.1% based on a world economic recovery boosting global commodity prices, and increased 
domestic productivity resulting from the structural reforms underway (Section 1.2.4).   
1.4.  Since 2013, the overall sectoral pattern of Indonesia's GDP and e mployment has changed  
slightly (Table 1.2) but services remain the leading activity and a key driver of economic expansion 
(Section 4.4).9 The GDP contribution of services and construction rose, whereas that of mining and 
energy and manufacturing dropped,  and that of agriculture, livestock, forestry and fishing remain ed 
subject to relatively minor variations. The employment share of services and manufacturing rose , 
whereas that of agriculture, livestock, forestry and fishing, the second main employer, drop ped. 
During the review period , raising productivity and competitiveness was a major policy priority 
(Section s 2.2.2, 2.2.3, 2.3.3, 2.4.2, 4.1, 4.2 and 4.3); between 2013 and 2017 , overall total factor 
productivity appears to have slightly dropped , whereas labour productivity rose somewhat 
(Table  1.1).10 The economy remains characteri zed by a combination of MSMEs and large SOEs 
(Sections 1.2.4.2, 1.2.4.5, 3.3.5, 4.1, 4.2 and 4.3) , seemingly suffering from low productivity and 
limited integration into regiona l and global value chains (GVCs).11 According to UNCTAD estimates, 
in 2017 , Indonesia ranked 13th (15th in 2010) among the world's 25 top exporting developing 
economies by GVC participation rate; its GVC participation in exports (50%, mostly downstream) 
stood below the average of both the developed (60%) and developing (56%) exporting economies.12 
1.5.  Solid economic growth contributed to a relatively significant decline of the unemployment rate , 
to 5.3% in 2019 and to 4.99% in February 2020 (Table 1.1).13 The unemployment data have yet to 
reflect the overall impact of the COVID -19 pandemic; in May 2020, the authorities predicted that 
2.9 million to 5.2 million workers could lose their jobs during the outbreak, which would erase last 
 
8 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
9 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . 
10 According to the World Economic Forum's Global Competitiveness I ndex, in 2019 , Indonesia ranked 
50th out of 141 countries (50th out of 144 in 2012 -13), down five places from 2018. It ranked 4th within ASEAN, 
behind Singapore (1st), Malaysia (27th) and Thailand (40th). Indonesia 's main strengths are its market size and 
macroeconomic stability. It has a high rate of technology adoption considering the country 's stage of 
development , and the quality of access remains relatively low . Innovation capacity remains limited but is 
increasing. Reportedly, the relatively low quali ty of labour, particularly high -skilled labour (professionals and 
managers), is another key constraint on the competitiveness of Indonesian firms. The increased automation 
and sophistication of production technology has raised the importance of skills qual ity for firms. World Bank 
Group (2018), Indonesia Economic Quarterly - Strengthening competitiveness , December. World Economic 
Forum (2013), The Global Competitiveness Report 2012 –2013; and World Economic Forum (2019), The Global 
Competitiveness Report 201 9. 
11 SOEs receive public subsidies , and operate as monopolists or dominant players in key sectors  
(Section  4.2); at the same time , the private sector is responsible for over 90 % of all jobs. Indonesian firms 
typically export relatively unsophisticated products, and this pattern has changed little over the past decades.  
According to the World Bank, four related gaps that inhibit productivity growth and weaken firm -level 
incentives  to innovate are to be addressed; they involve competition  (trade and investment restrictions , weak 
competition framework , and an unpredictable regulatory environment ), infrastructure  (e.g. energy and 
transport) , human capital  (low levels) , and finance  (access to credit) . According to the BI, p roductivity is 
expected to increase, consistent with improvement s in the investment climate and the positive impact of better 
domestic infrastructure  (including to power plants, toll roads, ports and airports ); as at 2019, t otal factor 
productivity was forecast to grow at around 1% per year . BI (2019), 2018 Economic Report on Indonesia , 
28 May. Viewed at: https://www.bi.go.id/en /publikasi/laporan -tahunan/perekonomian/Default.aspx ; World 
Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the Dynamism of 
the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  
12 According t o the IMF, forward GVC participation (the exported domestic value added that is 
re-exported by the importer) has recently been more than twice the size of backward participation (imported 
foreign value added that is re -exported), thus suggesting that Indon esia is relatively higher up in GVCs and is 
particularly vulnerable to spillovers from further downstream. IMF (2019), Indonesia: 2019 Article IV 
Consultation -Press Release; Staff Report; and Statement by the Executive Director for Indonesia , 31 July. 
Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-
Consultation -Press -Release -Staff-Report -and-Statement -by-the-48535 ; and UNCTAD  (2018), World 
Investment Report 2018 – Investment and New Industrial Policies , Geneva. Viewed at: 
https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf . 
13 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publik asi/laporan -tahunan/perekonomian/Default.aspx . WT/TPR/S/401 • Indonesia  
 
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  year's gains of 2.5 mil lion new jobs.14 Informality seems to remain pervasive, with around 70% of 
workers employed informally, and is highest in the agriculture (Section 4.1), construction , and 
transport and storage sectors; the rate of informality , excluding  agriculture , is est imated to be 
around 60%.15  
Table 1.2 Basic economic indicators, 2013 -19  
   2013  2014  2015  2016  2017  2018  2019  
Real GDP (IDR trillion, 2010 prices)  8,156.5  8,564.9  8,982.5  9,434.6  9,912.9  10,425.4  10,949.2  
Current GDP (IDR trillion)  9,546.1  10,569.7  11,526.3  12,401.7  13,589.8  14,838.3  15,833.9  
Current GDP (USD billion)  912.5  890.8  860.9  931.9  1,015.6  1,042.2  1,119.2  
GDP per capita at current market 
price (USD)  3,667.4  3,532.7  3,368.1  3,605.0  3,886.0  3,945.5  4,193.1  
GDP by economic activit y, 
constant 2010 prices (%  change)         
Agriculture, livestock, forestry, and 
fishing  4.2 4.2 3.8 3.4 3.9 3.9 3.6 
Food crops  2.0 0.1 4.3 2.6 2.3 1.5 -1.7 
Horticultural crops  0.7 5.2 2.3 2.9 3.7 7.0 5.5 
Plantation crops  6.1 5.9 2.0 3.5 4.5 3.8 4.6 
Livestock  5.1 5.5 3.6 4.5 4.0 4.6 7.8 
Fishing  7.2 7.3 7.9 5.2 5.7 5.2 5.8 
Mining and quarrying  2.5 0.4 -3.4 0.9 0.7 2.2 1.2 
Oil, gas and geothermal 
extraction  -3.2 -2.0 0.1 2.1 -3.5 -1.4 -2.8 
Manufacturing  4.4 4.6 4.3 4.3 4.3 4.3 3.8 
Food products and beverages  4.1 9.5 7.5 8.3 9.2 7.9 7.8 
Oil and gas manufacturing 
industries  -2.6 -2.1 -1.1 2.8 -0.2 0.0 -1.1 
Chemicals  5.1 4.0 7.6 5.8 4.5 -1.4 8.5 
Transport equipment  14.9 4.0 2.4 4.5 3.7 4.2 -3.4 
Construction  6.1 7.0 6.4 5.2 6.8 6.1 5.8 
Electricity, gas and water supply; 
waste management  5.1 5.9 1.3 5.3 1.8 5.5 4.2 
Services  6.4 6.0 5.5 5.7 5.7 5.8 6.4 
Wholesale and retail trade; car 
and motorcycle reparations  4.8 5.2 2.5 4.0 4.5 5.0 4.6 
Transport and storage  7.0 7.4 6.7 7.4 8.5 7.1 6.4 
Accommodation; food and 
beverage service activities  6.8 5.8 4.3 5.2 5.4 5.7 5.8 
Information and communication  10.4 10.1 9.7 8.9 9.6 7.0 9.4 
Finance and insurance  8.8 4.7 8.6 8.9 5.5 4.2 6.6 
Real estate  6.5 5.0 4.1 4.7 3.6 3.5 5.7 
Business services  7.9 9.8 7.7 7.4 8.4 8.6 10.3 
Public administration and defence  2.6 2.4 4.6 3.2 2.0 7.0 4.7 
Education  7.4 5.5 7.3 3.8 3.7 5.4 6.3 
Health and social work activities  8.0 8.0 6.7 5.2 6.8 7.1 8.7 
Other service activities  6.4 8.9 8.1 8.0 8.7 9.0 10.6 
Share of economic activities in 
current GDP, at factor cost (%)         
Agriculture, livestock, forestry, and 
fishing  13.7 13.7 13.9 14.0 13.7 13.4 13.3 
Food crops  3.6 3.3 3.6 3.6 3.4 3.2 2.9 
Horticultural crops  1.5 1.6 1.6 1.6 1.5 1.5 1.6 
Plantation crops  3.8 3.9 3.6 3.6 3.6 3.4 3.4 
Livestock  1.6 1.6 1.6 1.7 1.6 1.6 1.7 
Fishing  2.3 2.4 2.6 2.7 2.7 2.7 2.8 
 
14 The Jakarta Post, Indonesia's unemployment numbers rise to 6.88 million in February. Viewed at: 
https://www.thejakartapost.com/news/2020/05/05/indonesias -unemployment -numbers -rise-to-6-88-million -
in-february.html . 
15 OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/eco_surveys -idn-2018-en. WT/TPR/S/401 • Indonesia  
 
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     2013  2014  2015  2016  2017  2018  2019  
Mining and quarrying  11.3 10.1 7.9 7.4 7.9 8.4 7.6 
Oil, gas and geothermal 
extraction  5.6 4.9 3.4 3.1 3.0 3.2 2.9 
Manufacturing  21.6 21.6 21.7 21.3 21.0 20.7 20.5 
Food products and beverages  5.3 5.5 5.8 6.2 6.4 6.5 6.7 
Oil and gas manufacturing 
industries  3.4 3.3 2.9 2.4 2.4 2.3 2.2 
Chemicals  1.7 1.7 1.9 1.9 1.8 1.7 1.8 
Transport equipment  2.1 2.0 2.0 2.0 1.9 1.8 1.7 
Construction  9.7 10.1 10.5 10.8 10.8 11.0 11.2 
Electricity, gas and water supply; 
waste management  1.1 1.2 1.2 1.3 1.3 1.3 1.3 
Services  42.6 43.3 44.7 45.3 45.4 45.2 46.1 
Wholesale and retail trade; car 
and motorcycle reparations  13.5 13.8 13.7 13.7 13.5 13.6 13.6 
Transport and storage  4.0 4.5 5.2 5.4 5.6 5.6 5.8 
Accommodation; food and 
beverage service activities  3.1 3.1 3.1 3.0 3.0 2.9 2.9 
Information and communication  3.7 3.6 3.6 3.8 3.9 3.9 4.1 
Finance and insurance  4.0 4.0 4.2 4.3 4.4 4.3 4.4 
Real estate  2.8 2.9 2.9 2.9 2.9 2.9 2.9 
Business services  1.6 1.6 1.7 1.8 1.8 1.9 2.0 
Public administration and defence  4.0 3.9 4.0 4.0 3.8 3.8 3.8 
Education  3.3 3.3 3.5 3.5 3.4 3.4 3.4 
Health and social work activities  1.0 1.1 1.1 1.1 1.1 1.1 1.2 
Other service activities  1.5 1.6 1.7 1.8 1.8 1.9 2.0 
Share of employment by 
economic activit y (%)        
Agriculture, forestry, and fishing  34.8 34.0 32.9 31.9 29.7 28.8 27.3 
Mining and quarrying  1.3 1.3 1.1 1.2 1.1 1.2 1.1 
Manufacturing  13.8 13.6 13.5 13.4 14.5 14.7 15.0 
Construction  5.6 6.4 7.1 6.7 6.7 6.7 6.7 
Electricity, gas and water supply; 
waste management  0.3 0.4 0.4 0.4 0.6 0.7 0.7 
Service  44.2 44.4 44.9 46.3 47.3 48.0 49.2 
Wholesale and retail trade; car 
and motorcycle reparations  18.6 18.3 18.6 18.2 18.6 18.6 18.8 
Transport and storage  4.1 4.0 4.0 4.2 4.2 4.4 4.4 
Accommodation; food and 
beverage service activities  3.8 4.2 4.6 5.3 5.7 6.2 6.7 
Information and communication  0.5 0.5 0.5 0.6 0.7 0.7 0.7 
Finance and insurance  1.3 1.3 1.5 1.5 1.4 1.4 1.7 
Real estate  0.2 0.2 0.3 0.3 0.3 0.3 0.3 
Business services  1.1 1.1 1.2 1.2 1.4 1.3 1.5 
Public administration and defence  3.2 3.2 3.5 4.2 3.8 3.8 3.8 
Education  4.5 4.7 4.9 5.1 4.9 4.9 5.0 
Health and social work activities  1.1 1.2 1.3 1.5 1.5 1.5 1.5 
Other service activities  5.8 5.7 4.7 4.2 5.0 4.8 5.0 
Source:  Statistics Indonesia. Viewed at: https://www.bps.go.id/ . 
1.2.2   Prices  
1.6.  During the review period, consumer price index (CPI) inflation dropped considerably to enter 
within the 2018 and 2019 BI target range in 2016, exceed ing it slightly in 2017 , and then remai ning 
within the band until 2019 (Table 1.1, and Section 1.2.3.1). This  reflected , inter alia , prudent 
management of cyclical factors in domestic demand, appreciation in the exchange rate 
(Section  1.2.3.1), low administered price inflation (energy) , and the  response to structural 
improvements, such as the growing role of inflationary expectations in shaping and anchoring 
inflation, the declining impact of the exchange rate on inflation , and the positive effect of synergy WT/TPR/S/401 • Indonesia  
 
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  between the Government and the BI in controlling volatile food inflation.16 In January 2020 , the 
BI remained committed to maintain ing price stability , and forecast that  CPI inflation in 2020  would 
remain  within the new target corridor for the years 2020 and 2021.17  
1.2.3   Main macroeconomic policy developments  
1.2.3.1   Monetary and exchange rate policy  
1.7.  The BI, the independent central bank, has continued to carry out exchange rate and monetary 
policies to achieve a price stability target range set at 4.5%±1% (for 2013, 2014), 4.0%±1% (2015, 
2016, 2017), 3.5±1% (2018, 2019) and 3.0%±1% (2020, 2021).18 During the review period , an 
accommodative monetary policy mix , adapted to changing external conditions , focused on 
maintaining macroeconomic stability and sustaining economic growth momentum amid heightened 
global uncertainty . Various instruments were used, including lowering the monetary policy rate, 
reducing the statutory reserve requirement, exchange rat e flexibility, and foreign exchange 
intervention (see below).19 During the review period, policy rates were changed several times, and 
ranged from 4.25% (6/2020) to 7.75% (1/2014). Interest rate policy sought to create adequate 
interest rate differentials and bolster the attractiveness of foreign capital investment in domestic 
financial market assets.20  
1.8.  Since 14 August 1997 , the rupiah has had a de jure  free floating exchange arrangement, and 
the de facto  arrangement remains floating.21 Indonesia maintains  an exchange rate system free of 
restrictions on payments and transfers for current international transactions. According to the IMF, 
exchange rate flexibility remains critical to the economy 's resilience to external shocks. During the 
review period, excha nge rate policy was focused on maintaining exchange rate stability at about the 
level of fundamentals, so as to serve as a tool for mitigating shocks from external factors. The rupiah 
stabilization policy was implemented in a twofold strategy: a strategy f or optimizing dual 
interventions by the BI on the forex market and the government bonds market; and a strategy for 
the management of forex liquidity.22 The latter was supported by measures to deepen the forex 
 
16 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
17 BI (2020), Monetary Policy Review January 2020 , 24 January. Viewed at: 
https://www.bi.go.id/en/publikasi/kebijakan -moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -
2020.aspx . 
18 Under Central Bank Act UU No. 23/1999 on Bank Indonesia, enacted on 17 May 1999 and amended  
with UU No.  3/2004 on 15 January 2004 , the BI is an independent state institution, free from interference by 
the Government or any other external party. Consequently, the BI is fully autonomous in formulating and 
implementing each of its tasks and powers.  External parties are strictly prohibited from interfering with the BI's 
tasks, and the BI has the duty to refuse or disregard any attempt of interference in any form by any party. BI, 
Bank Indonesia Functions . Viewed at:  https://www.bi.go.id/en/tentang -bi/fungsi -
bi/status/Contents/Default.aspx . BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx ; and OECD (2018), OECD 
Economic Surveys: Indonesia 2018 , OECD Publishing, Paris.  Viewed at: https://doi.org/10.1787/eco_surveys -
idn-2018-en. 
19 For example, in June 2019, the BI lowered the rupiah statutory reserve requirement by 50 bps to 
6.0%, thus providing IDR  25.3 trillion in direct, additional liquidit y to the banking system ; in November 2019, 
it was lowered by a further 50 bps to 5.5%, with effect from 2 January 2020 . Furthermore, in July 2019, the BI 
7-day (Reverse) Repo Rate  (BI7DRR) was reduced by 25 bps to 5.75%, and there were further cuts of 25 b ps 
in August, September and October; thus, in December 2019, the rate was 5.0%. BI  (2020), 2019 Economic 
Report on Indonesia , 22 May. Viewed at:  https://www.bi.go.id/en/publikasi/laporan -
tahunan/perekonomian/Pages/LPI_2019.aspx ; IMF (2019), Indonesia : 2019 Article IV Consultation -Press 
Release; Staff R eport; and Statement by the Executive Director for Indonesia , 31 July. Viewed at: 
https:// www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 ; and BI (2020), Monetary Policy Review January 2020 , 
24 January. Viewed at: https://www.bi.go.id/en/publikasi/kebijakan -moneter/tinjauan/Pages/Tinjauan -
Kebijakan -Moneter -Januari -2020.aspx . 
20 BI (2019), 2018 Economic Report on Indonesia , 28 Ma y. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . 
21 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staf f Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
22 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . WT/TPR/S/401 • Indonesia  
 
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  market , including hedging instruments such as o vernight index swaps, interest rate swaps , and 
domestic non -deliverable forwards (as from 1 November 2018, DNDF).  
1.9.  Between 2013 and 2018 , the nominal IDR/USD exchange rate (annual average) depreciated 
by an overall 3 6.1% (Table 1.1) , driven , inter alia , by a decline in net exports in 2018 and escalating 
trade tensions between the United States and China, which prompted higher risk premiums in 
emerging markets. This was followed by a 0.6% appreciation in 2019 due to: strong external sector 
performance involvi ng foreign currency supply from exporters and foreign capital inflows maintained 
in line with the outlook of the Indonesian economy; highly attractive domestic financial markets; 
and less financial market uncertainty globally.23  
1.2.3.2   Fiscal policy  
1.10.   Indonesia 's fiscal stance remained prudent; the 2003 Fiscal Law caps the deficit at 3% of GDP 
and debt at 60% of GDP.24 The fiscal deficit peaked at 2.6% of GDP in 2015 and bottomed at 1.8% 
in 2018 (Table 1.1), supported by strong growth in both oil/gas revenues and non -oil/gas revenues; 
in 2019 , it returned to its 2013 level due to lower commodity prices, a contraction in  imports affecting 
total revenue collection, and an acceleration of public expenditure.25 Fiscal policy has been , inter alia, 
aimed at stimulating economic growth and maintaining fiscal sustainability . Three strategies 
contributed to the latter : mobilizati on of revenues while supporting improvement in the investment 
climate; improving the quality of expenditures for greater effectiveness and productivity in support 
of priority program mes; and promoting efficiency and innovation for creative financing. The 
Government steadily refocused public expenditures from inefficient energy subsidies toward 
productive investments in infrastructure (Sections 4.2.2.1.2 and 4.2.2.2); however, in 2018 , as 
electricity and some fuel prices were frozen, energy subsidies seeming ly increased (50% on a 
year-on-year basis) , although they were partially offset by restraints of other expenditures (capital 
expenditure in particular).26 According to the IMF, in 2019, revenues remained below peer countries , 
and insufficient to finance de velopment goals.27 Gross government debt rose from 24.8% of GDP in 
2013 to 30.1% in 2018 (Table  1.1) and 30.2% in 2019, thus remaining under the official cap.  
1.2.4   Structural policies  
1.11.   Trade and domestic reform are considered intrinsically linked. Despite the 1 6 economic polic y 
packages  introduced between 2015 and 2018 , focusing on improving the investment climate, 
increasing competitiveness , and accelerating infrastructure development (Sections 2.2.2 and 2.4), 
it appears that substantial growth -constraining structural bottlenecks , including low tax revenues, 
shallow financial markets, complex local government regulations, investment restricti ons, strong 
presence of SOEs , and labo ur and product market rigidities, remain in place; action to address them 
 
23 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx ; and BI (2020), Monetary 
Policy Review January 2020 , 24 January. Viewed at: https://www.bi.go.id/en/publikasi/kebijakan -
moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -2020.aspx . 
24 OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/eco_surveys -idn-2018-en. 
25 World Bank (2019), Indonesia Economic Quarterly: Investing in People - December 2 019, 
3 December. Viewed at: https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1& isAllowed=y ; and BI  (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
26 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed at: 
https:/ /www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 ; World Bank/International Finance Corporation (2019), 
Creating Markets in Indonesia - Unlocking the Dynamism of t he Indonesian Private Sector: A Country Private 
Sector Diagnostic , October.  
27 Indonesia 's general government revenue to GDP ratio dropped from 15.1% (2013) to 13.1% (2018) 
(Table 1.1) . Particularly low , relative to other countries at a similar income level , fiscal revenues (10.2% of 
GDP, 2018) also resulted in reliance on SOEs and public –private partnership  (PPP) to channel recent increases 
in infrastructure spending, increasing fiscal risks from contingent liabilities.  IMF (2019), Indonesia: 2019 Article 
IV Consultation -Press Release; Staff Report; and Statement by the Executive Director for Indonesia , 31 July. 
Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-
Consultation -Press -Release -Staff-Report -and-Statement -by-the-48535 ; and OECD (2018), OECD Economic 
Surveys: Indonesia 2018 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/eco_surveys -idn-2018-
en. WT/TPR/S/401 • Indonesia  
 
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  is ongoing (see below and Sections 3.3.5 and 4.4).28 The authorities recognize the need for 
continuous improvement in competitiveness and produc tivity as well as the imperative to move away 
from dependence on exports of primary commodities and further support the downstream industry 
and tourism development (Sections 2.2.2, 4.1, 4.2 and 4.4).29  
1.2.4.1   Tax reform  
1.12.   During the review period , Indonesia undert ook tax reforms. On the revenue side, the main 
reforms in 2018 included: the introduction of three joint inspection agencies responsible for 
assessing the efficiency and accuracy of the value of the profit -sharing obligation and income tax of 
oil and gas c ontractor partnership contracts (Section 4.2.2.1.1); and the adjustment of the 
withholding tax rates on the import of 1,147 types of goods (Section 3.1.4).30 Furthermore, the 
authorities  aimed , inter alia , to increase tax revenues by using an updated tax database and 
improving tax compliance , including through strengthening the tax administration and simplifying 
tax design.31 Important steps were taken to improve tax administration , such as risk -based audit s, 
lifting bank secrecy (Section 4.4), and ongoing development of IT systems, which supported the 
positive revenue performance in 2018.32  
1.13.   Tax expenditure  in the form of tax holidays and tax allowances has been significant , and the 
first appraisal reports covering the years 2016 (1. 6% of GDP) and 2017 (1. 5% of GDP) were issued 
in 2018 and their ratios updated in 2019 (Sections 3.3.1.1.1) ; in 2018, the ratio stood at 1.5% of 
GDP.33 In April 2018, the procedures and criteria t o obtain tax holidays were changed and, in 
November 2018 , the terms and procedures for granting corporate income tax reduction to companies 
in 18 types of pioneer industries were relaxed (Section 3.3.1.1.1.1). Fiscal incentives were provided 
to improve the  investment climate and competitiveness, including expediting tax refunds; providing 
super d eductions for specific labour -intensive businesses and industries; tax holidays for export -
based service industries; and fiscal incentives to accelerate the electri c vehicle program me 
(Section  4.3.6).34 To minimize the economic impact of COVID -19, temporary (six -month) fiscal 
incentives were provided for specific taxpayers such as: SMEs , medical equipment compan ies, and 
compan ies listed on the Indonesian Stock Exchan ge (Box 1.1) .  
1.2.4.2   Privatization  
1.14.   During the review period, there was limited privatization action.  State involvement in the 
economy remained important, relatively unchanged , and spread over several activities (e.g. 
agriculture, mining, energy, manufacturing, f inance and insurance, and transportation and storage), 
thus seemingly crowding out private investors to some extent in some sectors (Sections 3.3.5, 4.1, 
4.2, 4.3 and 4.4).35 SOEs, largely concentrated in relatively capital -intensive sectors such as 
 
28 World Bank (2019), Indonesia Economic Quarterly: Investing in People - December  2019, 
3 December. Viewed  at: https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1&isAllowed=y ; and IMF (2 019), Indonesia: 2019 Article IV Consultation -Press Release; 
Staff Report; and Statement by the Executive Director for Indonesia , 31 July. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
29 BI (2019), 2018 Economic Report on Indonesi a, 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . 
30 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . 
31 Over the period 2012-16, the number of registered taxpayers rose  by almost 12 million, but  
seemingly  registration levels remain low by international standards . OECD (2018), OECD Economic Surveys: 
Indonesia 2018 , OECD Publishing, Paris. Viewed at: https://d oi.org/10.1787/eco_surveys -idn-2018-en; and BI  
(2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: https://www.bi.go.id/en/publikasi/laporan -
tahunan/perek onomian/Default.aspx . 
32 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
33 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx . 
34 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.b i.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
35 Reportedly, SOEs are more pervasive across the economy than in any country in the OECD's Product 
Market Regulation database except China. OECD (2018), OECD Economic Surveys: Indonesia  2018, OECD 
Publishing, Paris.  Viewed at: https://doi.org/10.1787/eco_surveys -idn-2018-en. WT/TPR/S/401 • Indonesia  
 
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  manufacturing, finance and insurance, and transportation and storage, remain a key element in the 
Government 's infrastructure and development strategy.36 They continue to receive s ubsidies , and 
hold de jure  or de facto  monopoly or quasi -monopoly positions in activities where competition would 
be seemingly viable, such as energy generation and distribution, seaports, toll roads, and imports 
of agricultural inputs and cereal grains.37 Efforts to increase the use of PPPs were apparently 
undertaken  in the transportation , toll roads and bridges , water supply and sanitation , 
telecommunication s, power , and oil and gas sectors ; between 2013 and 2019, 68 projects were 
tendered .38  
1.2.4.3   Competition  policy and corporate governance  
1.15.   Lack of competition in an economy harms productivity growth by reducing the firms ' 
incentives for product and process innovation.39 Since its last Review, Indonesia made some changes 
to its competition policy framework (Se ction 3.3.4) ; effort s were focused on, inter alia , improv ing 
the implementation by updating certain  regulation s. Corporate governance, particularly for those 
businesses not covered by specific corporate governance regulations, remains under development; 
during the review period , good governance -related regulations were , inter alia , passed on publicly 
listed companies, insurance companies , and financing companies.40   
1.2.4.4   Labour market policies  
1.16.   During the review period , reforms in several areas w ere undertaken; nevertheless, Indonesia 
seems to be one of the lower -middle -income economies in East Asia and the Pacific with the most 
rigid employment regulations, particularly on hiring.41 The legislation makes it difficult for employers 
to discharge wo rkers who have been employed continuously for at least three months.42 The practice 
of outsourcing is restricted.43 In 2015,  a new and uniform method for setting the minimum wage 
was established.44 Since  2017, employers are required to formulate a pay scal e or salary structure , 
detailing how salaries are determined for a particular company, taking into account employees ' work 
experience, education, position, job description , and other factors.45 Employment of foreigners 
continues to be allowed only in posit ions that locals cannot fill , and only if regular and systematic 
training is provided so that Indonesians can eventually replace them; the need for approval of the 
foreign manpower utili zation plan ( rencana penggunaan tenega kerja sing  — RPTKA) and stringent 
 
36 For instance, the 2016 plan to accelerate 245 national strategic projects assumed that 30% would be 
financed by SOE investment. OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, Paris.  
Viewed at: https://doi.org/10.1787/eco_surveys -idn-2018-en; and World Bank/International Finance 
Corporation (2019), Creating Markets in Indonesia - Unlocking the Dynamism of the Indonesian Private Sector: 
A Country Private Sector Diagnostic , October.  
37 World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  
38 BAPPENAS , PPP Book . Viewed at: https://www.bappenas.go.id/id/profil -bappenas/unit -kerja/deputi -
bidang -sarana -dan-prasarana/direktorat -pengembangan -kerjasama -pemerintah -dan-swasta/contents -
direktorat -pengembangan -kerjasama -pemerintah -dan-swasta/ppp -public -private -partnerships -book/. 
39 World Bank Group (2018), Indonesia Economic Quarterly - Strengthening competitiveness , 
December  2018.  
40 Online information ( https://practiceguide s.chambers.com/practice -guides/corporate -governance -
2019/indonesia ). 
41 World Bank (2019), Doing Business 2020 - Comparing Business Regulation in 190 Economies , 
24 October . Viewed at: https://www.doingbusiness.org/en/reports/global -reports/doing -business -2020. 
42 Reportedly, the difficulty of firing employees reduces turnover and new hiring; consequently, 
companies cope by outsourcing or transferring employees to new p ositions before firing them. EIU (2019), 
Country Commerce – Indonesia , January.  
43 Ministry of Manpower  Regulation No. 19/2012 identifies five service categories where outsourcing is 
expressly allowed: cleaning, catering, security, support services in the m ining and oil  and gas sectors, and staff 
transportation. However, companies can outsource beyond these categories if they can prove the outsourced 
work is separate from their core operations.  EIU (2019), Country Commerce – Indonesia , January.  
44 The governors of each province calculate the annual increase by multiplying the current minimum 
wage by the inflation rate and the annual GDP growth rate. The scheme does not apply to the eight provinces 
where minimum wages are still below a government -determined basic cost of living. Reportedly,  the 
introduction of a minimum wage resulted in a reduction in both hours of work and employment. World Bank 
(2019), Doing Business 2020 - Comparing Business Regulation in 190 Economies , 24 October . Viewed at: 
https://www.doingbusiness.org/en/reports/global -reports/doing -business -2020; and Government Regulation 
(GR) No. 78/2015 cited at EIU (2019), Country Commerce – Indonesi a, January.  
45 Ministry of Manpower Regulation No. 1/2017 cited at EIU (2019), Country Commerce – Indonesia , 
January.  WT/TPR/S/401 • Indonesia  
 
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  foreign -to-domestic worker  ratios remain in place.46 In 2018 , procedures for the employment of 
foreigners were simplified ; these were implemented on 11 July 2018 (Minister of Manpower 
Regulation No. 10/2018 ). The Government aim s to integrate the foreign employment permit process, 
including approval by the RPTKA, into an online single submission system  (Section  2.4) in the near 
future. Furthermore,  the regulatory framework regarding certain positions that may be occupied by 
foreign workers in several sectors  was revised; previous rel evant Decrees of the Minister of 
Manpower were revoked, and a list of positions in various business fields where  foreign employees 
can be employed , to be evaluated every two years or when needed , was put in place.47  
1.17.   Indonesia continued to integrate gender  perspectives into its economic policies , including 
through the Ministerial Strategic Plan 2015 -19 on gender equality and women empowerment. In 
response to a moratorium policy on sending Indonesian migrant workers abroad (of which almost 
70% were women) un der Ministerial Regulation No. 2/2016 on General Guidance of Home -Based 
Industry for Improving Family Welfare, emphasis was placed on economically empower ing women, 
and also on strengthen ing family resilience.48  
1.2.4.5   Other  
1.18.   Action at both central and regional levels was taken to develop MSMEs by corporatizing them 
in the form of clusters , enabling the formation of networks of similar businesses, thus creating larger 
economies of scale and facilitating more effective capacity building (Sections 3.2.4, 3 .2.5 and 
3.3.1.2).49 Various incentive schemes target MSMEs (Section 3.3.1.2). Under the National Strategy 
of Cooperatives and MSMEs Development 2020-24, the BI MSME cluster development programme  
is aimed at reducing the current account deficit, furthering  inclusive growth , and reducing 
inflationary pressures.50 It focuse s on three main activities: agriculture ; fisheries and animal 
husbandry ; and creative economy. The BI encourages the development of export -orientated MSMEs, 
focusing on the main commodities  in regions with high export potential , as well as tourism -related 
products , such as fabrics, crafts and coffee.  
1.19.   Strengthening the sharia economy and finance to ensure financial transactions based on real 
assets or projects remained another priority (Sect ions 3.2.5 and 4.4).51 Development of the sharia 
economy is to be implemented by building halal value chains, including the application of business 
models based on varied partnership schemes ranging from MSMEs to large corporations.  
1.2.5   Balance of payments  
1.20.   The economy 's reliance on commodity production continued to expose the country to balance -
of-payments risks.52 The trade balance improved , considerably shifting to a surplus in 2015 -17, 
supported by a rising goods trade surplus, and moving back to deficit in 2018 and 2019 (Table 1.3). 
 
46 Ministry of Manpower Regulation N o. 10 of 2018 on Procedures for the Utilization of Foreign Workers, 
which implements Government Regulati on No. 20 of 2018 on the Utilization of Foreign Workers , SSEK, Legal 
Updates . Viewed at: https://www.ssek.com/blog/new -indonesian -manpower -regula tion-changes -rules-for-
foreign -workers . Presidential Regulation on workers ' permits (No. 28/2018)  cited at World Bank Group (2018), 
Indonesia Economic Quarterly - Strengthening competitiveness , December 2018.  
47 Minister of Manpower Decree No. 228 of 2019 concerning Certain Positions Allowed to be Occupied by 
Foreign Workers regulates certain positions that may be occupied by foreign workers in several sectors . It 
came into effect on 27 August 2019 , replac ing Minister of Manpower Decree No. 16 of 2015.  
48 According to the authorities, micro -scale business es are mostly home -based industries (73% run by 
women with a  low level of education ). More than 55% are located in rural areas, and m ore than 70% relate to 
food production . They have limited access to ec onomic resources, and about 60 %-70% of them  are run by 
women.  
49 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publ ikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
50 In the period 2020 -24, the Ministry of Cooperatives and SMEs ' National Strategy of Cooperatives and 
MSMEs Development  encourages them to , inter alia , turn into potential export ers, promote import substitution, 
and contribute to the  GVC process.  
51 The contribution of the sharia economy in Indonesia has steadily expanded its global reach. In 2018, 
Indonesia's market accounted for approximately 11% of the global sharia market, with co ntributions from the 
halal foods industry (13%), fashion (7%), and Muslim -friendly tourism (4%). BI  (2020), 2019 Economic Report 
on Indonesia , 22 May. Viewed at:  https://www.bi.go.id/en/publikasi/laporan -
tahunan/perekonomian/Pages/LPI_2019.aspx . 
52 World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector: A Country Private Secto r Diagnostic , October.  WT/TPR/S/401 • Indonesia  
 
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  The current account deficit narrowed from 3.2% of GDP (2013) to 1.6% (2017) after widening to 
2.9% (2018) and 2.7% (2019) (Tables 1.1 and 1.3).  Moreover, the authorities indicated that the 
current account deficit narrowed to less than 1.5% of GDP in the first  quarter of 2020  compared to  
2.8% of GDP in the fourth quarter of 2019. These changes have , inter alia , been influenced by 
developments in commodity (i ncluding oil and gas) prices, withholding tax rates (Section 3.1.4), 
exports or imports of primary raw materials, fuels, (mostly infrastructure -related) capital or 
consumer goods, exchange rate movements or foreign capital inflows.53 The import decline has  been 
also linked to policies instituted to manage the current account deficit, including import substitution 
through expanding B20 biofuel domestic capacity (Section  4.2.2.3) as well as diverting crude oil 
exports to domestic purposes, which have effectiv ely reduced oil and gas imports.54 As at end April , 
the authorities projected the current account deficit to remain manageable in 2020 at less than 2% 
of GDP.55  
Table 1.3 Balance of payments, 2013 -19 
(USD mil lion) 
  2013  2014  2015  2016  2017  2018  2019  
Current account  -29,109  -27,510  -17,519  -16,952  -16,196  -30,633  -30,387  
Goods and services balance  -6,237  -3,027  5,352  8,234  11,435  -6,713  -4,243  
Goods balance  5,833  6,983  14,049  15,318  18,814  -228  3,511  
Exports  182,089  175,293  149,124  144,470  168,883  180,725  168,455  
Imports  176,256  168,310  135,076  129,152  150,069  180,953  164,945  
Services balance  -12,070  -10,010  -8,697  -7,084  -7,379  -6,485  -7,754  
Receipts  22,944  23,531  22,221  23,324  25,328  31,207  31,645  
Payments  35,014  33,541  30,918  30,407  32,707  37,692  39,398  
Primary income  -27,050  -29,703  -28,379  -29,647  -32,131  -30,815  -33,773  
Credit  2,602  2,130  2,822  4,048  5,575  9,302  7,373  
Compensation of 
employees  200  206  213  219  228  241  231  
Investment income  2,402  1,924  2,609  3,829  5,347  9,061  7,141  
Debit  29,652  31,832  31,201  33,695  37,706  40,117  41,145  
Compensation of 
employees  1,338  1,406  1,574  1,772  1,735  1,744  1,711  
Investment income  28,314  30,426  29,627  31,923  35,970  38,373  39,434  
Secondary income  4,178  5,220  5,508  4,460  4,500  6,895  7,629  
Credit  8,508  9,374  10,362  9,832  9,967  12,220  12,677  
Personal transfers  7,415  8,345  9,447  8,687  8,761  10,974  11,435  
Debit  4,330  4,154  4,853  5,371  5,467  5,325  5,048  
Capital account  45  27  17  41  46  97  39  
Balance on current and capital 
account  -29,064  -27,483  -17,502  -16,912  -16,149  -30,536  -30,348  
Financial account  21,926  44,916  16,843  29,306  28,686  25,122  36,651  
Direct investment  12,170  14,733  10,704  16,136  18,502  12,511  20,145  
Indonesia's direct 
investment abroad  -6,647  -7,077  -5,937  12,215  -2,077  -8,053  -3,411  
Direct investment in to 
Indonesia  18,817  21,811  16,641  3,921  20,579  20,563  23,556  
 
53 BI (2020), Monetary Policy Review January 2020 , 24 January. Viewed at: 
https://www.bi.go.id/en/publikas i/kebijakan -moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -
2020.aspx ; OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, Paris.  Viewed at: 
https://doi.org/10.1787/ eco_surveys -idn-2018-en; and World Bank (2019), Indonesia Economic Quarterly: 
Investing in People - December  2019, 3 December. Viewed at : 
https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1&isAllowed=y . 
54 BI (2020), Mone tary Policy Review January 2020 , 24 January. Viewed at: 
https://www.bi.go.id/en/publikasi/kebijakan -moneter/tinjauan/Pages/Tinja uan-Kebijakan -Moneter -Januari -
2020.aspx . 
55 BI (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan /perekonomian/Pages/LPI_2019.aspx ; and BI (2020), 
Monetary Policy Review January 2020 , 24 January. Viewed at: https://www.bi.go. id/en/publikasi/kebijakan -
moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -2020.aspx . WT/TPR/S/401 • Indonesia  
 
- 31 - 
 
    2013  2014  2015  2016  2017  2018  2019  
Portfolio investment  10,873  26,067  16,183  18,996  21,059  9,312  21,685  
Financial derivatives  -334  -156  20  -9  -128  34  179  
Other investment  -783  4,272  -10,064  -5,817  -10,747  3,266  -5,358  
Reserve assetsa 7,325  -15,248  1,098  -12,089  -11,585  7,131  -4,676  
Net errors and omissions  -186  -2,184  -439  -305  -950  -1,717  -1,627  
a  Negative represents surplus and positive represents deficit.  
Source:  BI, Indonesian Financial Statistics . Viewed at: 
https://www.bi.go.id/en/statistik/seki/terkini/eksternal/Contents/Default.aspx . 
1.21.   Indonesia's gross external debt, which remains largely long -term (86.3% in 2018), rose 
steadily over the review period , reflecting an increase in external debt of the non -bank private sector 
(Table 1.1); it grew by 51.9% in the period 2013 -19.56 As a result, the debt service ratio peaked at 
37.5% of GDP (2016) and dropped to 26 .0% in 201 8, much higher than the 2013 level. The current  
account deficit  has increasingly been financed by volatile short -term capital flows, creating external 
vulnerabilities that have seemingly intensified since 2018.57 According to the IMF, general 
government ex ternal debt has been stable, including internationally issued bonds, holdings of 
domestic bonds by non -residents, and SOEs ' external loans and debt securities.58 According to the 
OECD, in 2018, external debt was low (moderate, according to the IMF) relativ e to the past and to 
other countries.59  
1.22.   Foreign exchange reserves peaked in 2017 and then declined slightly, registering an overall 
rise of about 30% (2013 -19) to USD 129.2 billion (Table 1.1) . This was mainly due to oil and gas 
foreign exchange receipts,  government foreign loan withdrawal s, government issuances of global 
bonds , and other foreign exchange receipts . At end -December 2019, t hey were equivalent to 11.5% 
of GDP and 7.6  months of imports of goods and services, well above the international adequa cy 
standard of 3.0 months  of imports of goods and services , or 7.3 months of imports and servicing 
government external debt, compared to 10.9% of GDP and 5.9 months in 2013, and almost 32% of 
the external debt.60 They peaked again at  USD 1 30.5 billion  in May 2020.  
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.23.   The moderate exposure of Indonesia's economy to international trade, its degree of openness , 
and relatively weak integration into GVCs  continued to be reflected by the ratio of its trade (exports 
plus imports) in goods and services to GDP; this ratio dropped considerably from 48.6% in 2013 to 
 
56 BI (2019), 2018 Economic Report on Indonesia , 28 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Default.aspx ; and IMF (2019), Indonesia: 
2019 Article IV Consultation -Press Release; Staff Report; and Statement by the Executive Director for 
Indonesia , 31 July. Viewed at: https://www.imf.org /en/Publications/CR/Issues/2019/07/30/Indonesia -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-the-48535 . 
57 In 2018, n on-resident investors h eld about 40 % of rupiah -denominated government bonds and a 
third of corporate debt financ ing, leaving the country vulnerable to capital flow reversals.  IMF (2019), 
Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by the Executive Director 
for Indonesia , 31 July. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -
2019-Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-the-48535 ; and World 
Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the Dynamism of 
the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  
58 IMF (2019), Indonesia: 2019 Article IV  Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
59 OECD (2018), OECD Economic Surveys: Indonesia 2018 , OECD Publishing, Paris.  Viewed at: 
https://doi.org/10.1787/eco_surveys -idn-2018-en. 
60 BI (2020), Monetary Policy Review January 2020 , 24 January. Viewed at: 
https://www.bi.go.id/en/publikasi/kebijakan -moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -
2020.aspx ; and BI (2020), Indonesia's International Investment Position Report - Quarter IV/2019 , 30 April. 
Viewed at: https://www.bi.go.id/en/publikasi/neraca -pembayaran/Pages/PIII -Tw4-2019. aspx. WT/TPR/S/401 • Indonesia  
 
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  37.3% in 2019 (Table 1.1). This situation appears to h ave slowed the growth of the non -commodity 
tradable sectors.61 
1.24.   Since its previous Review, Indonesia's merchandise trade (both for imports and exports) has 
remained dependent on manufactures (Chart 1.1, Tables A1.3 and A1.4). The share of palm oil and 
its fractions, fuels, machinery , other semi -manufactures , and other mining  in total exports dropped, 
whereas the share of all other products rose. The share of fuels and transport equipment in total 
imports declined , whereas the share of all other products has risen.  
Chart 1.1 Product composition of merchandise trade, 2012 and 2019  
 
Source:  UNSD, Comtrade database (SITC Rev.3).  
 
61 World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  
Chart 1.[IDN]  Product composition of merchandise trade, 2012 and 2019
20122019
Exports (f.o.b.)
Other semi -
manufactures
7.0%Manufactures
35.6%
Total: USD 190.0 billion Total: USD 167.0 billion
Imports (c.i.f.)
Chemicals
12.3%Transport  equipment
9.8%
Manufactures
62.3%Electrical 
machines  
10.6%
Non-electrical 
machinery  
12.7%Iron & steel
6.4%Electrical
machines
12.2%Machinery
7.5%
Other semi -
manufactures
5.3%Chemicals
14.0%Manufactures
67.6%
Total: USD 191.7 billion Total: USD 170.7 billionOther mining
5.5%Gold
2.1%
Textiles & clothing
6.3%
Other consumer 
goods  5.1%Other consumer 
goods 2.9%Machinery
8.5%Transport equip.
3.5%
Manufactures
45.8%
Other semi -
manufactures
6.8%Textiles & clothing
7.4%
Other mining
6.3%
Source:  UNSD, Comtrade database (SITC Rev.3) .Textiles & clothing
3.2%Other consumer 
goods  7.4 %
Other mining
3.2%
Other semi -
manufactures
4.5%Gold
1.1%
Agriculture
13.4%Agriculture
10.9%
Transport equipment
6.1%Chemicals
5.6%
Chemicals
6.2%Other agriculture
17.0%Other consumer
goods 4.7%
Fuels
13.8%
Fuels
22.3%Textiles & clothing
4.5%
Iron & steel
6.2%Non-electrical 
machinery
14.0%Transport 
equipment
5.9%Other agriculture
14.4%
Other mining
3.6%Iron & steel
4.7%Fuels
20.8%Fuels
33.3%
Other 
1.7%Other 
1.3%Palm oil & its 
fractions
9.3%Palm oil & its 
fractions
8.8%WT/TPR/S/401 • Indonesia  
 
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  1.25.   In the same period , while the share of Indonesia's merchandise exports to economies in the 
region slightly declined, their share in Indonesia's imports rose (Chart 1.2, Tables A1.5 and A1.6); 
however , regarding ASEAN , the opposite occurred. Notwithstanding some minor fluctuations in trade 
share s, Indonesia's main trading partners remain China, Japan, the European Union and the 
United  States. The share of Indonesia's merchandise trade with China rose steadily. Japan's, 
Singapore's and the Republic of Korea's shares of both  imports and exports dec reased; the same 
applied regarding exports to the United States , while the opposite occurred  regarding imports . 
Chart 1.2 Direction of merchandise trade, 2012 and 2019  
 
Source:  WTO Secretariat calculations, b ased on UNSD, Comtrade database.  
1.26.   According to the authorities, export gains stemmed from the diversification of products and 
markets, as well as several domestic policies.62 Iron and steel, automotive, pulp and wastepaper, 
gold, and textile exports perform ed well in 2019 as a result of improved competitiveness. Indonesia 
also successfully diversified its export markets for several commodities, such as iron and steel, by 
exporting more to ASEAN countries and Saudi Arabia.  
 
62 BI (2020), 2019 Economic Report on Indonesia , 22 May. Vie wed at:  
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
Chart 1.[IDN] Direction of merchandise trade, 2012 and 2019
2012 2019
Exports (f.o.b.)
Source:  WTO Secretariat calculations, based on UNSD, Comtrade database.Other Asia
9.3%
Other Asia
6.4%
Australia
2.8%Imports (c.i.f.)
Kore, Rep. of
6.2%
Japan
11.9%Total: USD 190.0 billion Total: USD 167.0 billion
Total:  USD 191.7 billion Total: USD 170.7 billionOther
9.6%
Other
8.3%ASEAN
24.9%
China
16.7%Other ASEAN 
3.6%
ASEAN
23.2%ASEAN
28.1%
Other ASEAN
3.0%EU-28
9.5%Other Asia
8.4%
Malaysia
6.4%Japan
9.2%EU-28
7.4%ASEAN
22.0%
China
26.3%Korea, Rep. of
4.9%EU-28
7.3%Korea, Rep. of
7.9%
Japan
15.9%
Thailand 3.5%
Other  
9.6%
China
15.3%Other Asia
7.5%Other 
9.8%
Other ASEAN
4.0%Japan
9.5%EU-28
8.6%
Philippines  4.0%
China
11.4%Singapore
9.0%India
6.6%United States
7.8%
Malaysia 5.9%Singapore
7.7%
Malaysia 5.4%United States
10.6%
Korea, Rep. of
4.3%
Malaysia
4.5%
Thailand
6.0%Other ASEAN
2.1%Thailand
5.5%Singapore
10.1%Singapore
13.6%India
7.1%
United States
6.1%United States
5.5%Thailand 3.7%
Australia
3.2% Middle East
6.3% Middle East
4.6%WT/TPR/S/401 • Indonesia  
 
- 34 - 
 
  1.27.   During the review period, Indonesia remained a net importer of services, running a declining 
deficit in the services account amounting to 0.7% of GDP in 2019 compared to 1.3% in 2013 
(Section  1.2.5, and Tables 1.1 and 1.4) ; the authorities indicated that this drop was due to the 
significant improvement in the performance of travel services sector  as well as other services 
sectors , including the reduction of trade deficits in insurance . Travel, transportation and other 
business services remain the major traded services.  
Table 1.4 Trade in services, 2013 -19  
  2013  2014  2015  2016  2017  2018  2019  
Total credit (USD billion)  22.9 23.5 22.2 23.3 25.3 31.2 31.6  
(% of total credit)  
Manufacturing services on physical 
inputs owned by others  1.9 1.8 1.6 1.5 1.4 1.2 1.2 
Maintenance and repair  0.6 0.4 1.3 1.8 0.7 0.8 1.0 
Transportation  15.7 16.1 15.6 15.3 13.7 11.5 12.4 
Passenger  5.2 5.5 5.8 5.8 6.1 4.8 4.7 
Freight  7.5 7.4 6.3 7.2 5.1 4.9 5.6 
Other  3.1 3.1 3.4 2.3 2.5 1.8 2.1 
Travel  39.7 43.6 48.4 48.0 51.9 52.6 53.5 
Business  13.2 14.5 16.3 16.1 16.1 17.0 17.0 
Personal  26.6 29.1 32.2 31.9 35.8 35.6 36.5 
Construction  3.7 3.0 1.7 1.0 1.5 1.3 1.5 
Insurance and pension s 0.1 0.1 0.2 0.3 0.3 0.5 0.5 
Financial services  1.1 0.9 1.1 1.4 2.5 2.1 1.3 
Charges for intellectual property  0.2 0.3 0.2 0.2 0.2 0.2 0.6 
Telecommunication s, computer and 
information  services  4.5 4.8 4.4 4.2 3.9 3.9 4.1 
Other business services  28.9 25.6 22.1 23.0 20.8 22.3 20.8 
Personal, cultural and recreational 
services  0.8 0.6 0.5 0.4 0.5 1.2 0.7 
Government goods and services 
n.i.e. 2.7 2.6 2.8 2.9 2.6 2.3 2.3 
Total debit (USD billion)  35.0 33.5 30.9 30.4 32.7 37.7 39.4  
(% of total debit)  
Maintenance and repair  1.1 1.4 2.0 2.5 1.1 1.2 1.3 
Transportation  35.8 35.7 31.1 30.0 31.6 33.0 29.5 
Passenger  7.4 7.7 8.1 7.8 8.1 7.6 8.0 
Freight  25.8 25.2 21.4 19.9 21.0 22.4 19.6 
Other  2.6 2.8 1.6 2.3 2.5 3.0 1.9 
Travel  21.9 22.9 23.6 24.9 25.3 27.4 28.7 
Business  6.4 6.7 6.9 7.1 7.1 6.3 6.6 
Personal  15.5 16.2 16.7 17.7 18.2 21.1 22.1 
Construction  2.4 2.0 1.5 0.4 0.6 0.4 1.2 
Insurance and pension s 3.0 2.9 3.0 2.4 2.0 1.9 2.2 
Financial services  2.0 1.9 2.4 3.0 3.3 3.0 2.2 
Charges for intellectual property  5.0 5.6 5.3 5.7 5.8 3.9 4.6 
Telecommunication, computer and 
information  services  4.4 4.8 5.8 7.1 7.7 7.6 8.0 
Other business services  21.9 20.8 24.5 23.7 22.0 21.3 21.9 
Personal, cultural and recreational 
services  0.8 0.7 0.2 0.2 0.2 0.2 0.2 
Government goods and services 
n.i.e. 1.7 1.4 0.5 0.2 0.4 0.1 0.2 
Source:  IMF e -library data. Viewed at: http://data.imf.org/?sk=7A51304B -6426-40C0-83DD -
CA473CA 1FD52&sId=1542633711584 ; and BI, Indonesia's Balance of Payments and International 
Investment Position . WT/TPR/S/401 • Indonesia  
 
- 35 - 
 
  1.3.2   Trends and patterns in foreign direct investment  
1.28.   Foreign direct investment (FDI) is not only an additional source of capital. It is also considered 
to bring with it entrepreneurship, management skills and , especially , new technology, which 
contribute to improved multi -factor productivity. According to UNCTAD estimates, in 2018 , Indonesia 
ranked 16th (47th in 2016) among the world's top 20 FDI inflow host economies . This rise  reflected , 
inter alia , investment -related policy developments (Sections 2.4, 4.2 and 4.3).63 During the review 
period, FDI inflows were relatively irregular, due to policy developments; they bottomed in 2016  at 
USD 3.9 billion,  and peaked in 2019 at USD 23.4 billion (Table 1.5) , due to  both external and internal 
factors , such as i mproved e ase of doing business, decreasing tension in globa l trade war s, and 
Indonesia 's presidential election  outcome .64 FDI inflows were mainly concentrated in manufacturing, 
financial intermediation , and trade and repair activities; in 2019 , they originated mainly in Japan 
and Singapore. In January 2020, the BI expected investment to continue increasing due to 
infrastructure development and surging business confidence as a result of expanding exports and 
improvements in the ease of doing business , in line with current government policy, including the 
implementat ion of the Omnibus Law on Job Creation (Section 2.2.3).65  
Table 1.5 FDI inflows by sector and origin, 2013 -19 
(USD million)  
   2013  2014  2015  2016  2017  2018  2019a 
Total  18,817  21,810  16,642  3,921  20,579  20,563  23,429  
By sector:         
Agriculture, hunting and forestry  1,895  4,021  4,049  2,768  3,614  3,116  1,860  
Fishing  73 137 884 -422 18 25 24 
Mining and quarrying  2,486  2,511  3,074  772 -1,294  -5,883  1,730  
Manufacturing  8,521  7,513  3,714  7,279  9,615  11,338  10,242  
Electricity, gas, and water supply  357 252 -251 438 1,015  83 1,470  
Construction  341 141 43 412 184 173 1,119  
Services  5,146  7,235  5,132  -7,328  7,427  10,484  5,991  
Trade and repair  987 1,926  1,091  2,006  4,555  5,262  2,837  
Hotels and restaurants  1 -7 0 5 -1 137 3 
Transportation, storage, and 
communication  1,952  1,921  1,637  2,060  527 2,991  -1,321  
Financial intermediation  516 1,528  1,110  -13,156  34 1,310  3,238  
Real estate, and business 
activities  865 1,368  366 870 1,704  243 271 
Other  825 499 928 887 608 541 963 
By origin:         
Japan  5,836  5,793  4,010  2,499  3,913  5,679  8,263  
Singapore  10,723  12,090  8,847  8,407  9,413  10,334  6,309  
EU-28 -1,730  345 -2 1,554  5,349  540 2,644  
Thailand  131 231 47 613 -232 164 1,089  
Korea, Rep. of  866 953 228 199 16 109 1,039  
Canada  152 106 81 -3 -27 -25 895 
United States  741 -1,098  603 -335 -2,458  -3,936  816 
China  67 1,068  324 355 1,994  3,398  741 
 
63 UNCTAD  (2018), World Investment Report 2018 – Investment and Ne w Industrial Policies , Geneva. 
Viewed at: https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf ; and UNCTAD (2019), World Investment 
Report 2019 – Special Economic Zones , 12 June, Geneva. Viewed at: 
https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2460 . 
64 According to the World Bank, m ost of the FDI is driven by the desire to extract and/or process natural 
resources or to serve the large domestic market. Foreign -equity limits, sectoral reservations for MSMEs, local 
content requirements, and local government regulations have raised the cost of investing i n Indonesia 
(Sections 2.4.2, 3.1.7, 3.3.6 and 4.2 ). World Bank/International Finance Corporation (2019), Creating Markets 
in Indonesia - Unlocking the Dynamism of the Indonesian Private Sector: A Country Private Sector Diagnostic , 
October; and World Bank G roup (2018), Indonesia Economic Quarterly - Strengthening competitiveness , 
December  2018.  
65 BI (2020), Monetary Policy Review January 2020 , 24 January. Viewed at: 
https://www.bi.go.id/en/publikasi/kebijakan -moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -Januari -
2020.aspx . WT/TPR/S/401 • Indonesia  
 
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     2013  2014  2015  2016  2017  2018  2019a 
Hong Kong, China  416 290 1,239  1,564  548 1,161  498 
Cayman Island  30 53 34 5 -141 84 232 
Chinese Taipei  100 87 21 23 -1 31 121 
India 9 3 37 54 40 85 58 
Turkey  17 12 8 4 2 20 41 
Viet Nam  5 9 6 11 20 21 23 
Philippines  8 1 2 10 14 17 13 
Brazil  3 -1 23 17 15 17 10 
a Estimates.  
Source:  BI, Indonesian Financial Statistics . Viewed at: 
https://www.bi.go.id/en/statistik/seki/terkini/eksternal/Contents/Default.aspx . 
 
 
 WT/TPR/S/401 • Indonesia  
 
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  2  TRADE AND INVESTMENT REGIMES  
2.1.  Since its previous TPR in 2013, Indonesia has undertaken the update of its trade -related and 
investment policies , as well as institutional and regulatory reform initiatives , supported by, inter alia , 
Economic Policy Packages (EPPs) in areas including transparency, anti -corruption, investment 
promotion, and economic dispute resolution.  Indonesia remains committed to t he multilateral 
trading system. During the review period, it expanded  its WTO commitments by ratifying the Trade 
Facilitation Agreement (TFA).  In addition,  it continued to focus on strengthening regional economic 
integration ties through the implementation  and/or negotiation of several ASEAN agreements  and 
bilateral RTAs. It submitted numerous notifications , and was involved in several dispute  settlement 
cases in the WTO . It also undertook efforts to liberalize and streamline its FDI regime in several 
areas , despite persisting limitations in certain activities . Its international investment agreements  
have been subject to changes to  review their provisions before renewal . 
2.1  General Framework  
2.2.  During the review period, the Constitution (last amended on 11 August 2002) remained 
unchanged, despite amendment considerations in April 2016. Under Article 33 of Chapter XIV 
(national economy and social welfare), important means of production should be controlled by the 
State, and the economy should be organized under cert ain principles including self -sufficiency.1  
2.3.  The political system consists of the legislative, executive and judicial branches .2 The executive 
branch remains centralized under the President, Vice President, and the Cabinet of Ministers. The 
Cabinet is a Presidential cabinet in which the ministers report to the President and do not represent 
specific political parties.  Both the President and Vice President are chosen through presidential 
elections. They serve for a term of five years that can be extended once by another term of five  years 
if re-elected. General  elections  were last held on 17  April 2019 , and the next are due in 2024.  
2.4.  The legislative powers remain under the People's Consultative Assembly (Majelis 
Permusyawaratan Rakyat  (MPR) ) which  has the power to set or change the Constitution and appoint 
the President.3 The MPR consists of  People 's Representative Council ( Dewan Perwakilan Rakyat  
(DPR) and Regional Representative Council ( Dewan Perwakilan Daerah  (DPD)  members who are 
elected via general election  for a five -year term. DPR members are elected through proportional 
representation , and e very province  (see below)  elects four members to the DPD (who serve for a 
five-year term) on non -partisan basis.  The DPR draws up and passes laws, prod uces the annual 
budget in cooperation with the President , and oversees the general performance of political affairs.4 
The DPD deals with bills, laws , and matters that are related to the regions, th ereby  increasing 
regional representation at the national l evel.5 Currently, the MPR has 575 members from the DPR 
and 136 members from the DPD. T he Constitution authorizes the President to conclude treaties with 
other states , and requires  DPR approval therefor .6  
 
1 More specifically, sectors of production which are considered important for the country and affect the 
life of the people shall be under the power of the State. It is also stated that the organization of the national 
economy shall be conducted on the basis of economic democracy, upholding the principles of togetherness, 
efficiency with justice, continuity, env ironmental perspective, self -sufficiency, and keeping a balance in the 
progress and unity of the national economy. The 1945 Constitution of the Republic of Indonesia as amended by 
the First Amendment of 1999, the Second Amendment of 2000, the Third Amendme nt of 2001 and the Fourth 
Amendment of 2002. Library of Congress, Indonesia, Constitutional Amendment to be Considered. Viewed at: 
https://www .loc.gov/law/foreign -news/article/indonesia -constitutional -amendment -to-be-considered/ ; and 
WIPO IP Portal, the 1945 Constitution of the Republic of Indonesia.  Viewed at: 
https://wipolex.wipo.int/en/text/200129 . 
2 Global Edge , Indonesia: Government . Viewed at: 
https://globaledge.msu.edu/countries/i ndonesia/government . 
3 Global Edge , Indonesia: Government . Viewed at: 
https://globaledge.msu.edu/countries/indonesia/government . 
4 The House of Representatives of the Republic of Ind onesia , About the House . Viewed at: 
http://www.dpr.go.id/en/tentang/pengambilan -keputusan . 
5 DPD, Republic of Indonesia. Viewed at: https://dpd.go.id/halaman -700_fungsi -tugas --wewenang . 
6 Article 11 of the Constitution ; Law No. 37 of 1999 on Foreign Relations ; Law No. 24 of 2000 on 
International Treaties ; Law No.  24 of 2000 replaces Presidential Letter No. 2826 of 1960 on the Conclusion of 
Treaties with Foreign States ; and Law No. 7 of 2014  on Trade.  Ministry of Foreign Affairs , Foreign Policy: 
Foundation, Vision and Mission . Viewed at: 
https://kemlu.go.id/portal/en/read/21/halaman_list_lainnya/related -regulations . WT/TPR/S/401 • Indonesia  
 
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  2.5.  Judicial power is implemented by the Supreme Court (Mahkamah Agung ) and the judicial 
bodies under it , in the form of public courts, religious affairs courts, military tribunals, state 
administrative courts, and a Constitutional Court .7 The Supreme Court is the final court of appeal , 
and high courts in principal cities deal with appeals from district courts. Supreme Court judges are 
chosen by the President, who selects from nominees presented by the Judicial Commission, a special 
body whose members are appointed by the MPR. The chief just ice and his /her deputies are chosen 
from among the Supreme Court justices by the justices themselves.  The Constitutional Court 
monitor s whether decisions made by the Cabinet and the MPR are in line with the Constitution .  
2.6.  Indonesia is divided into 33 provi nces, includ ing the two  special territories of Pemerintah Aceh 
and Yogyakarta  and one capital region of Jakarta.  Local governments maintain  wide responsibilities, 
making Indonesia one of the largest decentralized countries in the world.8 Most competences are 
delegated to local governments, with the central Government retaining responsibility only for areas 
of national security, foreign and m onetary policy, justice, governance and planning, and religious 
affairs. In 2015, a bout 53% of total public  spending (excluding subsidies and interest payments) 
was conducted by sub -national governments, with district governments managing about 3 8%, and 
provinces the remaining 15 %.9 Local governments are responsible for education, healthcare, labour, 
public works, spatial planning, telecommunication s, housing, transport, etc. However, the task of 
revenue collection remains primarily in the hands of the cen tral Government. To ensure that the 
regional and local governments ha ve sufficient resources to undertake their responsibilities, a 
system of intergovernmental fund transfer s is in place.  This guarantee s that at least 26% of net 
domestic revenues  goes to local governments . 
2.7.  The regional areas' funding sources consist of Own Source Revenue, the Fiscal 
Balance/Revenue Sharing Fund ( Dana Bagi Hasil , DBH), the General Allocation Fund ( Dana Alokasi 
Umum , DAU), and the Special Allocation Fund ( Dana Alokasi Khusus , DAK). These are directly 
managed by the regional government through the Regional Revenue and Expenditure Budget 
(APBD).10 The DAU is aimed at minimiz ing fiscal imbalances among  sub-national governments. DAU 
transfers are formula -based, consisting of a bas ic allocation  (proportion of personnel salary)  and a 
fiscal gap  (fiscal need -fiscal capacity) .11 This ceiling fund is allocated to the provinces ( 14.1% since 
2017, previously 10%) and the districts and municipalities ( 85.9% since 2017, p reviously 90.0%), 
and it accounts for , on average , 50% of local revenues. In 2019, additional DAU funding assistance 
for urban village s was introduced. The DBH  consists of:  the DBH from taxes (a shared tax system ) 
based on receipts from personal income tax , etc; and t he DBH from natural resources , which  is 
based on revenues derived from forestry, mining, oil, etc. The DAK is a transfer system to fund 
responsibilities that are considered as national priorities ; since 2016 , it has become based on 
programme proposal s (previously , it was  formula -based ) by local governments, and is split into DAK 
Physical and DAK Non -Physical . DAK Physical is a fund earmarked for physical capital expenditure 
(previously known as DAK ), and DAK Non -Physical is us ed for funding operational cost s and 
incentive s.  
2.2  Trade Policy Formulation and Objectives  
2.2.1   Trade policy formulation  
2.2.1.1   Executive branches of government  
2.8.  Trade-related  policy making is undertaken through a variety of  government agencies 
(Table 2.1). The Minister of Trade  remains responsible for the coordination of trade policy , and for 
 
7 Indonesia Investments , General Political Outline of Indonesia . Viewed at: https://www.indonesia -
investments.com/culture/politics/general -political -outline/item385 . 
8 Law 22 of 1999 . OECD. Viewed at: https://www.oecd.org/regional/regional -policy/profile -
Indonesia.pdf . 
9 World Bank. Viewed at: http://pubdocs.worldbank.org/en/657051513163708686/IEQ -Dec-2017-
ENG.pdf . 
10 Ni Putu Santi Suryantini, Ica Rika Candraningrat and Ni Made Wulandari Kusumadewi (2017), The 
influence of DAU (GENERAL ALLOCATION FUND) AND DAK (SPECIAL ALLOCATION FUND) on  capital 
expenditure of Bali Province , Economics & Business Solutions Journal  Volume 1, Number 2, 2017, 1 -9. Viewed 
at: http://journals.usm.ac.id/index.php/ebsj/article/view/620  and https://docplayer.net/62990497 -The-
influence -of-dau-general -allocation -fund-and-dak-special-allocation -fund-on-capital -expenditure -of-bali-
province.html . 
11 OECD. Viewed at: https://www.oecd.org/regional/regional -policy/profile -Indonesia.pdf . WT/TPR/S/401 • Indonesia  
 
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  supporting Indonesia in international trade negotiations, including the WTO. S/he is also  responsib le 
for negotiating trade agreements . However, o ther govern ment institutions and agencies  may make 
proposals. During the review period, the G overnment created a trade negotiating team  
(Tim Perunding Perjanjian Perdagangan Internasional ), directed by the Coordinating Minister of 
Economic Affairs and chaired by the Minister of Trade , under the Ministry of Trade (MoT) .12 The 
objective of the team is to enhance Indonesia 's active role in trade negotiations in multilateral, 
regional and bilateral forums , based  on national interest. It formulates and determines the country's 
negotiating position , especially regarding improv ing access to international markets and boost ing 
economic growth.  In addition, the Advocacy Bureau of the MoT, established in 2016, provides 
essential support services during negotiations, and analyses and recommends changes to 
agreements.13  
Table 2.1 Main institutions involved in trade and investment policymaking, 2020  
Institution  Trade - and inve stment -related responsibilities  
Coordinating 
Ministry of 
Economic Affairs  Sits above line ministries. Responsible for ensuring coherence of economic policy 
(including trade policy) across the Government , including in the formulation of 
regulations.  
Ministry of Trade 
(MoT)  Coordination of trade policy and supporting Indonesia i n international trade 
negotiations, including the WTO. The s ecretariat for Indonesia's anti -dumping 
committee (KADI) is located in the MoT.  
Ministry of Finance 
(MoF)  Responsible for tariffs; works with Team Tariff. The MoF has final authority to make 
changes in tariffs, export taxes, and other duties applied at the border. Formal 
decisions on tariffs are contained in decrees from the Minister of Finance.  
Team Tariff  Inter-ministerial advisory body on tariff policy , charged with reviewing Indonesia's 
tariff. Composed of Ministries of Finance, Industry, Trade, Agriculture, and Economic 
Affairs.  
Capital Investment 
Coordinating Board 
(BKPM)  At national level, charged with providing investor services, formulating investment 
policies, and coordinating with na tional government agencies and regional 
governments. Several overseas offices promote investment into Indonesia. The BKPM 
Chairman reports directly to the President. The BKPM was responsible for the issuance 
of the new negative investment list.  
National 
Development 
Planning Agency 
(Bappenas)  Responsible for formulating national development plans; has developed a number of 
regulatory reform tools.  
National 
Committee on 
Technical Trade 
Barriers (Komnas 
HTP) Established in 2017, responsible for providing re commendations related to the 
implementation of the WTO TBT Agreement, TBT issues , Indonesia's position at the 
WTO TBT Meeting , and coordinating with related stakeholders to provid e scientific 
data, regulatory impact assessment s on draft regulation s, and an alysis on technical 
regulations , and assess issues related to TBT. Komnas HTP 's Head reports directly to 
the Head of  the National Standardization Agency.  
Source:  WTO document WT/TPR/S/278/Rev.1, 16 July 2013 ; and information provided by the authorities.   
2.2.1.2   Advisory bodies  
2.9.  The Government is required to offer the public the opportunity to give input into the 
rule-making process , orally or in writing , and consultations are undertaken on an ad hoc  basis as 
issues arise.14 During the review period, it continued to interact with the private sector in relation to 
trade and investment policies, laws, and regulations. The private sector is mainly represented by 
 
12 Its members con sist of: the Minister s of Foreign Affair s; Law and Human Rights; Finance ; Health; 
Manpower; Industry; Energy and Mineral Resources; Public Works and Public Housing;  Transportation; 
Communication and Informatics; Agriculture; Environment and Forestry; Marine and Fisheries; Village, 
Development of Disadvantaged Regions and Transmigration; Tourism; and Secretary of State; as well as the 
Cabinet Secretary; and the Heads of the National Standardization Agency; the BKPM; the National Agency of 
Drug and Food Control; and the Indonesian Chamber of Commerce and Industry . Regulation of the Minister of 
Trade No. 82 of 2017  based on Article 86, paragraph (2) of Law No. 7 of 2014 o n Trade, which allows the 
Government to form a team of negotiators in the field of international trade . MoT, Regulation No. 82/2017 . 
Viewed at: http://www.apbi -icma.org/uploads/files/old/2018/02/Permendag -82-Tahun -2017-English -Version -
.pdf; and Law No. 7 of 2014 About Trade. Viewed at: 
https://eservice .insw.go.id/files/atr/Law%20No.%207%20of%202014%20on%20Trade.pdf . 
13 Minister of Trade Decree N o 8 of 2016 ; and Thomson Reuters , International trade in goods and 
services in Indonesia: overview . Viewed at: https://uk.practicallaw.thomsonreuters.com/w -017-
5557?transitionType=Default&contextData=(sc.Default)&firstPage=true&b hcp=1 . 
14 Law No. 12 of 2011 on Legislation Making . Viewed at: 
http://ditjenpp.kemenkumham.go.id/arsip/terjemahan/52.pdf . WT/TPR/S/401 • Indonesia  
 
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  the Indonesian Chamber of Commerce and Industry  (Kamar  Dagang dan Industri  (KADIN ), the 
umbrella organization of business chambers and associations.  KADIN focuse s on all matters relating 
to trade, industry and services, and is committed to tapping potentials and synergies of the national 
economy, offering a strate gic forum for Indonesian entrepreneurs.15 KADIN Indonesia Business 
Service Desk (KADIN BSD) is the international business services unit of KADIN.16 It provides an 
independent view on new opportunities and developments in the economy.  
2.10.   Technical support on trade -related policy matters continues to be provided by international 
and regional organizations such as the World Bank, the United Nations Development Programme 
(UNDP) and the Asian Development Bank  (ADB) (Section 2.3.1.2).  
2.2.2   Trade and  related policy objectives  
2.11.   During the review period, Indonesia's  trade and investment policy vision was set within the 
broader framework  of the Master Plan of National Industry Development  2015-35.17 The Master 
Plan's objective is international industry c ooperation , with the aim of : protect ing and increas ing 
market access for local industry products; open ing industrial resource access t o support the 
enhancement of local industry productivity and competitiveness;  increas ing the integration of local 
industry  into the global supply chain; and increas ing industrial investment cooperation  to develop 
local industry .18 The targets of developing international industry cooperation include increasing: the 
number of countries as export destination s of industrial produ cts; the access of national industry to 
the utilization of  industrial resources through technical cooperation; the utilization of global supply 
chain network s; and the number of industrial investment forum s in foreign countries.   
2.12.   The implementation of the Master Plan is set out in three p hases, to achiev e the long -term 
vision of industrial development .19 The first phase (2015 -19) included: increasing the added value 
of natural resources in agricultural, mineral, and oil processing upstream industries ; and selectively 
develop ing supporting and anchor ing industry through preparing skilful and competent human 
resources, and increasing the mastery of technology. The second phase (2020 -24) is aimed at 
achieving competitive advantage and environmentally friendly industries through strengthening 
industrial structure and technological mastery supported by qualified human resources. The 
third phase (2025 -35) is aimed at making Indonesia a strong industrial country with a sound and 
deep indust rial structure that is globally competitive, innovative and has technology bases.  
2.13.   The National Medium -Term Development Plan  (RPJMN)  2015-19 contain ed national 
development strategies, public policies, priority projects, ministry/ institution and 
cross-ministry/institution  program mes, regional and cross -regional development priorities , and a 
macroeconomic framework, including the indicative direction of the fiscal policy regulatory and 
funding framework .20 It also serve d as guidance for government and industrial stakeholders in 
industrial planning and development .  
2.14.   The RPJMN  for 2020 -24 under Presidential Regulation No. 18/2020 sets targets of economic 
growth at 5.7% -6.0%, poverty rate at 6%-7%, and Gini  ratio at 0.36–0.374. Its seven development 
agenda s consist of: economic resilience for quality and equitable growth; regional development for 
inequality reduction; qualified and competitive human resources; mental revolution and cultural 
development; infrastructure for the economy and basic services; env ironment, disaster resilience, 
and climate change; and stable political, legal, and security affairs , and transformation of public 
services. The first development agenda's objectives include : strengthening the pillars of economic 
growth and competitiveness ; increasing high value -added exports and strengthening the 
manufactured local content level; increasing value -added employment and investment in the real 
sector; industrialization , strengthening entrepreneurships, MSMEs, and cooperatives; meeting 
 
15 Indonesian Chamber of Commerce and Industry . Viewed at: https://bsd -kadin.org/kadin -indonesia/ . 
16 Indonesian Chamber of Commerce and Industry. Viewed at:  https://bsd -kadin.org/kadin -bsd/. 
17 Republic of Indonesia. Ministry of Industry. Industry Facts and Figures. 2017. Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
18 Republic of Indonesia. Ministry of Industry. Industry Facts and Figures. 2017. Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
19 Republic of Indonesia. Ministry of Industry. Industry Facts and Figures. 2017. Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
20 Presidential Decree No. 2 of 2015 on the National Medium -Term Development Plan (RPJMN) 
2015-2019. Online information. Viewed at: https://setkab.go.id/en/gove rnment -has-issued -medium -term-
development -plan-2015-2019/ . WT/TPR/S/401 • Indonesia  
 
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  energy needs by prioritizing an increase in new and renewable energy; increasing the 
quantity/availability of water to support economic growth; increasing the availability, access, and 
quality of food for consumption; and improving maritime and marine management. The first 
agenda's national priority projects comprise: ten priority tourism destinations; nine industrial areas 
outside Java and 31 smelters; facilitating ease of doing business and the establishment of 
350 farming and fishery corporations; Industry 4.0 i n five priority subsectors (food and beverages, 
textiles and apparel, automotive, electronics, and chemicals and pharmaceuticals); develop ing palm 
oil-based renewable energy; revitaliz ing ponds at shrimp and milkfish production centres; and bring 
fishery p ort and fish markets in line with  international standards. The fifth development agenda's 
objectives include : digital transformation; energy and electricity; basic service infrastructure; 
economic infrastructure; and infrastructure to support urban areas. Its national priority projects 
include: ICT infrastructure to support digital transformation; toll road, trans -road, railway, port 
network, and mass public transport system plans; 18 multi -purpose dams; a 27,000 MW power 
plant, 19,000 km of transmission  lines, and a 38,000 MVA substation; and  the development and 
expansion of oil refinery and natural gas pipeline s. 
2.15.   Sixteen Economic Policy Package s (EPPs) were introduced between 2015 and 2018, and are 
still ongoing (Table 2.2). Each has a different impleme ntation phase, and they focus on improving 
the investment climate,  increasing competitiveness, and accelerating infrastructure  development . 
The EPPs are operated by a Task Force of Economic Policy Implementation Acceleration and 
Effectiveness , consist ing o f four working group s and one support unit , led by the Coordinating 
Ministry for Economic Affairs  (Table  2.3).21 The objectives of the EPPs include : regulatory 
harmonization; simplifying the bureaucratic process; and ensur ing legal compliance. Deregulation  
policies are directed at reducing duplication, harmoniz ing regulations, and eliminat ing 
inconsistencies. The EPPs include revisions and/or cancelations of 225 regulations , of which 54 are 
at the Presidential level and 171 at the ministerial level. Accordi ng to the authorities, the 
trade -related EPP actions include : provision of import and export data to ministries and institutions  
through the  Indonesia National Single Window (INSW); availability of single stakeholder information 
data within the Indonesia Single Risk Management framework at the INSW portal; expansion of the 
application of import and export declaration forms , and their integr ation into the INSW portal to 
implement  the INSW nationally in 21 Customs and Exc ise Inspection and Service Offices , to improve 
user efficiency and supervision effectiveness .  
Table 2.2 Economic Policy Package phases  
Phase  Description  
Phase I  
(9 September 2015)  Improving national industry competitiveness  
Phase II  
(29 September 2015)  Easing permit requirement , and simplifying export proceeds requirement  
Phase III  
(7 October 2015)  Financial services facilitation, export financing , and elimination of unnecessary 
burden s on businesse s 
Phase IV  
(15 October 2015)  Social safety net , and improvement  of inhabitants'  welfare  
Phase V  
(22 October 2015)  Improving industry and  the investment climate through tax incentives and the 
deregulation of sharia banking  
Phase VI  
(6 November 2015)  Stimulating economic activities in border areas , and facilitating strategic commodit y 
availability  
Phase VII  
(7 December 2015)  Stimulating business activities in labour -intensive industries nation -wide, through 
incentives in the form of ac celerating the land certification process for individuals  
Phase VIII  
(21 December 2015)  Resolving land acquisition disputes, intensifying domestic oil production,  and 
stimulating domestic parts and aviation industries  
Phase IX  
(27 January 2016)  Accelerat ing electricity generation, stabilizing meat prices , and improving the 
rural-urban logistics sector  
Phase X  
(11 February 2016)  Revising the negative investment list, and improving protection for SMEs  
Phase XI  
(29 March 2016)  Stimulating the national economy through facilitation of measures for  SMEs and 
industries  
Phase XII  
(28 April 2016)  Improving Indonesia's rank on Ease of Doing Business  
Phase XIII  
(25 August 2016)  Low-cost housing for low-income communities  
 
21 Indonesia Investment Co -ordinating Board , Investment Policy Updates: Presidential Regulation No. 91 
of 2017 on Acceleration of Doing Business , 2018. Viewed at: http://www.pma -
japan.or.id/bundles/bsibkpm/download/BKPM%20Presentation%20 -%20PR%2091 -2017_3.pdf . WT/TPR/S/401 • Indonesia  
 
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  Phase  Description  
Phase XIV  
(10 November 2016)  Roadmap for e-commerce  
Phase XV  
(15 June 2017)  Improving logistics  
Phase XVI  
(16 November 2018)  Improving competitiveness and the domestic economy  
Note:  In addition to the 16 Policy Packages, on 31 August 2017, the Government issued Presidential 
Regulation No. 91/2017 for enhancing business licence service standard s. 
Source:  Coordinating Ministry for Economic Affairs.  
Table 2.3 Economic Policy Package working groups  
Working group  Chaired by  Function  
Policy Campaign  Minister of Trade  Campaign ing, socialization, dissemination, roadshow s, 
business matching, CEO meeting s, and talk show s/dialog  
Compliance  Chief of Presidential Staff  Completing all of the regulation s and technical  
regulation s necessary for the implementation of economic 
deregulation  
Ensuring regulation compliance  
Regulatory 
Impact  Senior Deputy of Bank 
Indonesia  Observing, analysing, and evaluating the implementation 
of polic ies/regulation s and their impact  
Reviewing for the "next" deregulation  
Damage Control 
Channel/The 
Bottleneck  Minister of Law and 
Human Rights  Serving a s a complaint channel for the implementation of 
the deregulation policy  
Handling cases related to the implementation of the 
deregulation policy  
Support Unit  - Supporting the administration of the working group  
Coordinating with the ministry/board and local 
government  
Business clinic and public -private consultation for testing 
policy effectiveness  
Source:  Indonesia Investment Coordinating Board (2018 ), Investment Policy Updates: Presidential 
Regulation No . 91/2017 on Acceleration of Doing Business , 28 February.  
2.16.   In 2018, the Making Indonesia 4.0 roadmap  was launched.22 Its purpose is to assist the 
Capital Investment Coordinating Board  (BKPM ) to carry out its role in promoting foreign and 
domestic direct investment in fiv e sectors : food and drink; automotive; textiles; electronics; and 
chemicals.23 The sectors are to be encouraged to increase their use of technology and digitization in 
order to enhance their capabilities and productivity. The roadmap aims to use these sectors to boost 
Indonesia's growth prospects over the period 2018 -30, and to upgrade the country's posit ion in 
GVCs. The Government set ten national priorities for Making  Indonesia 4.0: reform material flows 
(enhance domestic upstream material production ); redesign industrial zones (b uild a single 
nationwide industry zoning roadmap; resolve zoning inconsiste ncy challenges ); embrace 
sustainability ( opportunities under global sustainability trend s, e.g. biofuel, and renewables ); 
technologically empower 3.7 million SMEs ( e.g. build an SME e -commerce  and technology bank ); 
build nationwide digital infrastructure ( advance network and digital platform s); attract foreign 
investments (e ngage top global manufacturers with attractive offer s, and accelerate technology 
transfer ); upgrade human capital (r edesign education curriculum s, and c reate professional talent 
mobility  program mes); establish innovation ecosystems (e nhance research and development 
centres by Government, private sector and universities ); incentivize technology investments 
(introduce , inter alia , tax exemption s/non-tax subsidies for technology adoption , and support 
funding ); and reoptimize regulations and policies (b uild more coherent policies/regulations through  
cross-ministry collaboration ).  
 
22 Ministry of Industry,  Indonesia's Fourth Industrial Revolution, Making Indonesia 4.0 , 2018. Viewed at: 
https://kemenperin.go.id/download/18449 . 
23 BKPM, Indonesia Economic Update.  Viewed at: https://www3.investindonesia.go.id/en/why -
invest/indonesia -economic -update/making -indonesia -4.0-indonesias -strategy -to-enter -the-4th-generation -of-
ind. WT/TPR/S/401 • Indonesia  
 
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  2.2.3   Trade laws and regulations  
2.17.   The regulatory framework consists o f: the Constitution;  decree s of the People 's Consultative 
Assembly; laws; government regulations substitut ing laws; ministerial regulations; Presidential 
decree s; provincial /regional regulations; and regency/city regulations.24 Law No. 7 of 2014 grants 
the Government authority to intervene in internat ional trade by:  restricting exports to ensure local 
demand is met; guaranteeing the supply of raw materials for domestic industries; and preparing the 
country for large price increases in global commodities markets.25  
2.18.   During the review period, t he law-making regulatory framework remained broadly 
unchanged .26 The EPPs (Section 2.2.2) are  key to the regulatory reform process , and remain 
important for the development of a stronger rule of law and an effective rules -based system . 
According to the authorities , the Government also initiated the simplification of regulations , through 
the preparation of omnibus laws aim ed at improv ing the investment environment , boost ing 
competitiveness in  MSME s, and generating employment. As at June 2020, t he Government was 
preparing to submit two draft laws to Parliament, namely the Omnibus Law on Job Creation , intended 
to facilitate business to create more jobs, and the Omnibus Law on Taxation; originally , these Laws 
were to be submitted to Parliament in January 2020 and implemented in April 2020. The Omnibus 
Law on Job Creation would directly  affect trade policy , and cover  11 clusters , including: 
implementation  of licensing endeavours; investment regulations; labour reform; empowerment and 
protection of MSMEs; ease of doing business; research and innovation support; government 
administration; penalties; land acquisition; ease of government investment s and projects; and the 
Special Economic Zone  (SEZ) (Sections 2.4.4 and 3.2.4.2.4) . As at 12 December 2019, 82 laws and 
1,194 articles were identified  to be harmonized through the Omnibus Law on Job Creation . The 
Omnibus  Law on Taxation  is to encompass six  clusters: investment funding; territorial tax system; 
personal taxation; taxpayer compliance; business  equity; and tax facilitation. It is to consist of 
28 articles, and amend the following seven laws: Income Tax Law (last amended in 2008); VAT Law 
(last amended in 2001); Taxation General Provisions and Procedures Law (last amended in 2009); 
Customs Law (last amended in 2006); Excise Law (last amended in 2009); Regional Tax and Levies 
Law (last amended in 2009); and Regional Government Law (last amended in  2008).   
2.19.   Indonesia's objectives of good regulatory practice consist of : internal coordination of the 
rule-making activity (manag ing regulatory reform , and coordinat ion with trade and competition 
officials ); regulatory impact assessment s (ensur ing that better policy options are chosen , by 
establishing a systematic and consistent framework for assessing the potential impacts of 
government action, including impacts on trade ); and p ublic consultation mechanisms to improve 
transparency  (such as  the publicati on of comment s and other practices that allow wide access, and 
increasing the  quality of  consultation mechanisms ). According to the authorities, good regulatory 
practice has been implemented in several relevant ministries/agencies through: Presidential 
Instruction No. 7 of 2017 concerning Decision, Supervision, Control, and Implementation of Policy 
at the Ministry and Government's Body Level; Minister of Industry Regulation No. 40 of 2017 
concerning the Guidance to Formulate Regulations in the Ministry of I ndustry; Minister of Finance 
Regulation No.  123/PMK.01/2012 and Circular Letter of Ministry of Finance No. SE -3/MK.01/2016; 
National Standardization Body Regulation No. 9 of 2016 concerning Procedures of the Formulation 
of Laws in the National Standardizat ion Body of the Republic of Indonesia; and Minister of National 
Planning Agency Regulation No. 6 of 2018 concerning Decision -Making Rules.27 
2.2.4   Transparency  
2.20.   Indonesia attaches importance to making laws more transparent and readily accessible . Most 
laws are st ill published in the Bahasa Indonesia language only (some are translated into English , 
depend ing on the need or interest ) in the Official Gazette ; they are available to all individuals and 
 
24 Law No. 12 of 20 11, Article 7, paragraph (1) concerning the Formation of Laws and Regulations as 
amended by Law No. 15 of 2019.  
25 Law No. 7 of 2014 About Trade . Viewed at: 
https://eservice.insw.go.id/files/atr/Law%20No.%207%20of%202014%20on%20Trade.pdf . 
26 Law No. 12 of 2011 on Legislation Making . Viewed at: 
http://ditjenpp.kemenkumham.go.id/arsip/terjemah an/52.pdf . 
27 Under Presidential Instruction No. 7/2017, ministers/head s of agencies are required to consult with 
their respective coordinating ministers before taking decisions that are strategic or have wide -ranging 
implications for the public ; the I nstruction also empowers a  coordinating ministry to veto any ministry /agency 
regulation or policy not in line with the President's vision and mission.  WT/TPR/S/401 • Indonesia  
 
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  institutions, both in hard copy and online . In addition, the websit es of relevant ministries and 
agencies contain information mostly in the Bahasa Indonesia language. Indonesia ranked 88th out 
of 193 economies (97th out of 190 in the 2012 Index) in the 2020 UN E-Government Development 
Index .28 Since 2014 , Indonesia has  introduced an integrated management and data exchange 
system ( MANTRA ) as a Government Service Bus (GSB).29 The GSB  is used by various ministries . To 
promote transparency and predictability in the trade regime,  the Indonesia National Trade 
Repository is in place since 2011  (Section 3.1.1.1) .30  
2.21.   As in all countries, a lack of transparency, and thus a lack of public accountability, creates 
scope for administrative discretion and therefore corruption . During the review period, long -term 
(2012 -25) and medium -term (2012 -14) national strateg ies for the  prevention and eradication  of 
corruption  were put in place. Under Presidential Regulation No. 54/2018, the National Strategy of 
Corruption Prevention ( Strategi Nasional Pencegahan Korupsi , Stranas PK) has three focuses: the 
licensing and trade system; state finance management; and law enforcement and bureaucratic 
reform, as detailed in the 2019 -20 Corruption Prevention Action, with 11 actions and 24 sub -actions 
involving 34 provinces and 48 ministries a nd institutions.31 Public i nstitutions involved in preventing 
and countering corruption include  the: Corruption Eradication Commission (KPK) , an autonomous 
government agency ; Attorney General 's Office; judiciary; Ministry of Law and Human Rights; 
Ministry of Foreign Affairs; Ministry of Finance; Indonesian National Police; Supreme Audit Board; 
Finance and Development Supervisory Agency (BPKP); Ombudsman of the Republic of Indonesia ; 
Indonesian Financial Transaction Reports and Analysis Centre /Financial Inte lligence Unit 
(PPATK /INTRAC ); Financial Service s Authority ( Otoritas Jasa Keuangan , OJK); Ministry of National 
Development Planning  (MNDP) ; Ministry of Administration and Bureaucratic Reform ( MARBR); Civil 
Service Commission; National Public Procurement Ag ency; and Judicial Commission.  Stranas PK is 
steered by the National Team of Corruption Prevention, consisting of the KPK, the MNDP, the MARBR, 
the Ministry of Home Affairs , and the Presidential Staff Office.  The KPK is in charge of the 
coordination and su pervision of authorized institutions in their anti -corruption activities, and 
conducting corruption -prevention measures, including awareness -raising ( Article 6, Law No. 19 of 
2019 on the Second Amendment to Law No. 30 of 2002 on KPK).32 Further corruption -prevention 
units may b e established in every government agency. Each government agency enforces 
programmes related to corruption prevention.33 The KPK cooperates with the BPKP to ensure the 
coordination and supervision of corruption -prevention programmes in provincial, district and local 
governments.34 Programmes are constantly being improved for a more significant impact ; according 
 
28 E-government was developed in order to provide and improve the quality of public services, to make 
them effective, efficient, transparent and accountable. I P M Astawa and K C Dewi (2018), E-government 
Facilities Analysis for Public Services in Higher Edu cation , J. Phys.: Conf. Ser. 953 012061; and UN Department 
of Economic and Social Affairs, E-Government Survey 2020 . Viewed at:  
https://publicadministration.un.org/en/r esearch/un -e-government -surveys . 
29 The MANTRA application facilitates  the exchange of data between government agencies despite 
differing databases, applications and operating systems.  Viewed at: 
https://translate.google.ch/translate?hl=en&sl=id&u=https://kominfo.go.id/index.php/content/detail/3319/Apli
kasi%252Be -Government/0/e_go vernment&prev=search&pto=aue . 
30 INSW, Indonesia National Trade Repository . Viewed at: https://intr.insw.go.id/ . 
31 In terms of the licensing and trade system, the actions deal with service improvement and compliance 
of licensing and capital investment through the online single submission system, as well as improvement of 
data governance and compliance regarding the extractive, forestry, and plantation sectors through a map 
mechanism. The action related to state financ e covers the integration of electronic -based planning and 
budgeting systems. The actions under the third focus are strengthening the implementation of bureaucratic 
reform by building integrity zone s in government institution s, integrating law enforcement e fforts, and 
improving the integrity of the state apparatus . KPK, KPK Hands National Strategy Document To President.  
Viewed at: https://www.kpk.go.id/en/news/highlights/787 -kpk-hands -national -strategy -document -to-
president . 
32 Review of the implementation of the United Nation s Convention against Corruption , Indonesia, 2018. 
Viewed at: 
https://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/Imple mentationReviewGroup/4 -
6June2018/V1802693e.pdf . 
33 These programmes comprise : the Zone of Integrity ( Zona Integritas ) is predicated on  government 
agencies whose human resources are committed to Free of Corruption Territory (WBK)/Clean and Serve 
Bureaucracy Area (WBBM) bureaucratic reform;  the Report of State Officials Wealth ( Laporan Harta Kekayaan 
Penyelenggara Negara ), including its examination and publication ; and  the operation of the Gratuities  Control 
Unit ( Unit Pengendalian Gratifikasi ), a unit in vari ous state agencies that provide service s and information o n 
gratuities  control. Furthermore, in 2015 , the KPK issued the Guidelines for Gratuities  Control.  
34 Presidential Regulation No. 54 of 2018 concerning National Strategy on Corruption Prevention . WT/TPR/S/401 • Indonesia  
 
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  to the authorities, the Zone of Integrity Programme succeeded in i mproving the Anti-Corruption 
Percepti on Index and the Public Service Perception Index.35 
2.22.   Indonesia  is a signatory of the UN Convention against Corruption  (UNCAC)  (signed 
18 December 2003 , ratified 19 September 200 6) whose 18 6 parties (as at end -2019) are required 
to identify criminal and othe r offen ces which are considered to be acts of corruption . Indonesia  
participated in the review of the implementation of this Convention in period 1 (2011 -15) and 
period  2 (2016 -19).36 The UNCAC review cycles assist countries in the implementation of the UN CAC 
into domestic laws, by identifying critical areas and recommendations via a peer -review process.37 
Following the first UNCAC review cycle , Indonesia introduced corporate liability for corruption 
offences ; as a result, in 2018, the KPK investigated five companies for corruption.38 Another 
advancement result ing from the second UNCAC review cycle was the introduction of beneficial 
ownership, wh ich increases transparency in the private sector, and prevents conflicts of interest and 
money laundering,  by having all listed or registered  companies shar e information publicly. In 
March  2018, a presidential regulation gave companies one year to disclose  the identities of their 
beneficial owners to the Government.39  
2.23.   Indonesia adopted non -binding initiatives aim ed at prevent ing corruption in the private sector. 
It also issued OJK Regulation No. 21/POJK.04/2015, Corporate Governance Guideline for Public 
Companies.40 The International Standards on Auditing were adopted as Indonesia 's Public 
Accountant Professional Standards in 2012. Publicly listed companies are required to implement the 
principle of full disclosure in their financial statements. However, th ere is no law or regulation 
requiring the full disclosure or fair presentation of financial statements by private sector entities 
other than publicly listed companies, as foreseen under Article 12(3) of the UNCAC.41  
2.24.   As a member of the Asia -Pacific Group o n Money Laundering (APG), PPATK /INTRAC  completed 
a National Risk Assessment (NRA) of Money Laundering and Terrorism Financing Acts in 2015.42 In 
2019, the PPATK /INTRAC  updated the 2015 NRA Criminal Act of Money Laundering (TPPU) with the 
aim of ensuring that the TPPU mitigation efforts by stakeholders remained  in line with the relevant 
risks. The PPATK is currently (in 2020) implementing the latest NRA , which is to be released in 2021.   
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.3.1.1   Features  
2.25.   Indonesia was an original GATT contracting party, and has been a Member of the WTO since 
its founding in 1995 . It grants at least most -favoured -nation (MFN) treatment to all its trading 
partners. During the review period, Indonesia improved its WTO commitments by ratifying the WTO 
 
35 The Anti-Corruption Perception Index and the Public Service Perception Index reflect  public opinion on 
government efforts to prevent corruption and to give  quality  service in the public sector. It was b ased on a 
survey conducted by the MARBR and Statistics  Indonesia , involv ing more than 34,000  respondents in 
1,267 workplaces  in Indonesia.  
36 UNCAC.  Viewed at: https://www.unodc.org/unodc/treaties/CAC/country -
profile/CountryProfile.html?code=IDN . 
37 UNCAC . Viewed at: https://www.unodc.org/southeastasiaa ndpacific/en/what -we-do/anti -
corruption/topics/31 -indonesia -shares -progress -towards -uncac -implementation.html . 
38 UNCAC . Viewed at: https://www.unodc.org/southeastasiaandpacific/en/what -we-do/anti -
corruption/topics/31 -indonesia -shares -progress -towards -uncac -implementation.html . 
39 Presidential Regulation  No. 13/2018 regarding the Application of the Know -Your-Corporation -
Beneficial -Owner Principle in the Context of the Prevention and Eradication of Criminal Acts of Money 
Laundering and Terrorism Financing . 
40 Review of implementation of the United Nations Convention against Corruptio n, Indonesia , 2018. 
Viewed at: 
https://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/4 -
6June20 18/V1802693e.pdf . 
41 According to the authorities, t his is due to the typically widely dispersed ownership base that public ly 
listed  companies hold and , therefore , the number of shareholders that these companies are accountable to. 
Private companies that do  not rely on the public for investment usually need only comply with minimal 
disclosure requirements , and are not subject to OJK reporting obligations.  
42 APG, Members and Observers: Indonesia . Viewed at: http://www.apgml.org/members -and-
observers/members/details.aspx?m=7f4ab684 -6496-493f-adc8-c37cd233a7b3 . WT/TPR/S/401 • Indonesia  
 
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  TFA (5 December 2017), with 88.7% (based on notification data) implementation commitm ents to 
date across all categories  (Section 3.1.1.1).43  
2.26.   During  the review period, Indonesia remained active in WTO dispute settlement activities. As 
at January 2020, its  involvement  in new cases comprised: 6 complaints by Indonesia (1 case in 
consultation ); 10 complaints against it (4 cases in consultation); and its participation as a third party 
in 39 cases (Table 2. 4).  
Table 2.4 Involvement in WTO dispute settlement: January 2013 to July 2020  
Dispute  Raised 
by/against  Request for 
consultation  Panel 
established/  
panel report 
circulated  Current status  Document 
series  
Complaints by Indonesia  
Certain Measures 
Concerning 
Trademarks, 
Geographical 
Indications and 
Other Plain 
Packaging 
Requirements 
Applicable to 
Tobacco Products 
and Packaging  Indonesia/  
Australia  20/09/2013  26/03/2014/  
28/06/2018  Report(s) adopted; 
no further action 
required  on 
28/08/2018  DS467  
Anti-Dumping and 
Countervailing Duty 
Investigations on 
Certain Paper 
Products from 
Indonesia  Indonesia/  
Pakistan  27/11/2013   04/04/2012 
Appellate Body 
Report circulated  DS470  
Anti-Dumping 
Measures on 
Biodiesel from 
Indonesia  Indonesia/  
European 
Union 10/06/2014  31/08/2015/  
25/01/2018  Report(s) adopted, 
with 
recommendation to 
bring measure(s) 
into conformity  on 
28 February  2018 DS480  
Anti-Dumping and 
Countervailing 
Measures on Certain 
Coated Paper from 
Indonesia  Indonesia/  
United States  13/03/ 2015 04/02/2016/  
06/12/2017  Report(s) adopted ; 
no further action 
required  on 
12 January  2018 DS491  
Anti-Dumping 
Measures on A4 
Copy Paper  Indonesia/  
Australia  01/09/ 2017 27/04/2018/  
04/12/2019  Report(s) adopted, 
with 
recommendation to 
bring measure(s) 
into conformity  on 
27 January  2020 DS529  
Certain measures 
concerning palm oil 
and oil palm crop -
based biofuels  Indonesia/  
European 
Union 09/12/ 2019 29/07/2020  In consultations  on 
9 December  2019 DS593  
Complaints against Indonesia  
Importation of 
Horticultural 
Products, Animals 
and Animal Products  United 
States/  
Indonesia  10/09/2013   In consultations  
on 30 August  2013 DS465  
Importation of 
Horticultural 
Products, Animals 
and Animal Products  New Zealand/  
Indonesia  30/08/2013   In consultations  on 
30 August  2013 DS466  
 
43 WTO, Trade Facilitation Agreement Database . Viewed at: 
https://www.tfadatabase.org/members/australia . WT/TPR/S/401 • Indonesia  
 
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  Dispute  Raised 
by/against  Request for 
consultation  Panel 
established/  
panel report 
circulated  Current status  Document 
series  
Importation of 
Horticultural 
Products, Animals 
and Animal Products  New Zealand/  
Indonesia  08/05/2014  20/05/2015/  
22/12/2016  Report(s) adopted, 
with 
recommendation to 
bring measure(s) 
into conformity  on 
22 November  2017 DS477  
Importation of 
Horticultural 
Products, Animals 
and Animal Products  United 
States/  
Indonesia  08/05/2014  08/10/2015 
22/12/2016  Authorization to 
retaliate requested 
(including 22.6 
arbitration)  on 
15 August  2018 DS478  
Recourse to Article 
22.2 of the DSU in 
the US — Clove 
cigarettes dispute  European 
Union/ 
Indonesia  13/06/2014   Settled or terminated 
(withdrawn, mutually 
agreed solution)  on 
6 May 2015 DS481  
Measures Concerning 
the Importation of 
Chicken Meat and 
Chicken Products  Brazil/  
Indonesia  16/10/2014  03/12/2015/  
17/10/2017  Compliance 
proceedings ongoing  
on 24 June 2019 DS484  
Safeguard on Certain 
Iron or Steel 
Products  Chinese 
Taipei/  
Indonesia  12/02/2015  28/09/2015/  
18/08/2017  Report(s) adopted, 
with 
recommendation to 
bring measure(s) 
into conformity  on 
28 August  2018 DS490  
Safeguard on Certain 
Iron or Steel 
Products  Viet Nam/  
Indonesia  01/06/2015  28/10/2015/  
18/08/2017  Report(s) adopted, 
with 
recommendation to 
bring measure(s) 
into conformity  on 
28 August  2018 DS496  
Measures Concerning 
the Importation of 
Bovine Meat  Brazil/  
Indonesia  04/04/2016   In consultations  on 
4 April 2016 DS506  
Measures Relating to 
Raw Materials  European 
Union/ 
Indonesia  22/11/2019   In consultations  on 
22 November  2019 DS592  
Source:  WTO Secretariat.  
2.3.1.2   Trade -related technical assistance  
2.27.   Aid for Trade support to Indonesia grew from average disbursements of USD 755.8  million 
during 2006 -08 to USD 1.2 billion  in 201 7; in 2015, the top donors were Japan (34%), France 
(28%), and Germany (22%).44 The authorities indicated that several  development partners , 
i.e. Japan, the United States, Australia, Fr ance, the Republic of Korea , and Chinese Taipei,  
contributed to improving human resources capacity thro ugh technical assistance program mes in 
areas such as SME export capacity, market access and trade promotion, consumer protection, trade 
policy and facilitation development, and human competency and capacity building . To enhance 
economies in the region, Ind onesia has provided trade -related technical assistance in the field of 
legal metrology and consumer protection to the Democratic Republic of Timor -Leste since 2017 .  
2.28.   Technical support is provided by international and regional organizations  (Section 2.2.1.2 ). 
Between 2013 and 2016, the World Bank provided technical support through its Multi Partners 
Facility for Trade and Investment Climate  programme, focusing on investment, business, trade 
logistic s, and connectivity. Meanwhile, until 2019 , the ADB provided  support through its Stepping 
Investment for Growth Acceleration Program. Furthermore, technical support  was received  from 
Canada (Trade and Private Sector Assistance Program), Australia (Australia -Indonesia Partnership 
Program for Economic Development), the European Union (ASEAN Regional Integrating Support), 
 
44 WTO, Aid for Trade at a Glance - Indonesia . Viewed at: 
https://www.wto.org/english/tr atop_e/devel_e/a4t_e/profiles_e/idn_e.pdf . WT/TPR/S/401 • Indonesia  
 
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  and Germany (Gesellschaft für Internationale Zusammenarbeit GmbH). The ir projects helped  
enhanc e sustainable trade and investment , especially for SMEs; reform licensing procedures and 
e-government se rvices for business; boost export competitiveness and integrat e GVCs  through trade 
facilitation; and provid e the effective risk management scheme for import licensing and post -border 
control.  
2.3.1.3   Notifications  
2.29.   During the review period, Indonesia submitted several notifications to the WTO . From 
1 January 2 013 to August  2020, its notifications pertained to provisions of the  Agreement on 
Agriculture  (40), the  Agreement on Subsidies and Countervailing Measures (13), the Agreement on 
Sanitary and Phytosanitary Measu res (81), the Agreement on Technical Barriers to Trade (79), t he 
Agreement on Regional Trade A greements  (3), and the Agreement on Import Licensing Procedures 
(38) ( Table A2.1 ). However, notifications are outstanding in areas such as Trade -Related Investmen t 
Measures (TRIMs), and quantitative restrictions. In April 2020, the authorities indicated that a 
notification o n Rules of Origin had already been submitted but had not yet been recorded in the WTO 
Database ; concerning those on TRIMs and pre-shipment inspection , they we re still under discussion 
at the  relevant ministries.   
2.3.2   Regional and preferential agreements  
2.30.   Indonesia has been follow ing a policy of increasing regional and international integration via 
economic -trade cooperation initiatives (see below) . Currently , it has 11 RTAs in force  (Table 2.5) . 
In parallel with ASEAN undertakings, Indonesia maintains bilateral RTAs with Pakistan (IP -PTA) and 
Japan (IJEPA); they  completed their review process for further expan sion and improve ment. T he 
further -liberaliz ed IP-PTA has been in force since 2019 , whereas the protocol to amend the IJEPA  
was still under  negotiation  as at April 2020 . Intra- and extra -regional exports rely  partly  on ASEAN 
preferences (Table 2.5 and Section 1.3.1).  
2.31.   During the review period, Indonesia signed bilateral RTAs with Australia, the EFTA States, and 
Mozambique but none had entered in force by April 2020. Building on the ASEAN -Australia -
New Zealand Free Trade Agreement, an Indonesia -Australia Comprehensive Economic Partnership 
Agreement (IA -CEPA)  covering , inter alia , trade in goods (tariffs, NTMs, and trade facilitation) and 
services as well as investment was ratified by both countries in February 2020 . However, as at 
April 2020, no indication of its date of entry in to force and expected WTO notification  was available 
with the authorities .45 The broad -based EFTA -Indonesia Comprehensive Economic Partnership 
Agreement  (CEPA) cover ing trade in goods, trade in services, investment, intellectual property 
rights, government procurement, competition, trade and sustainable development , and cooperation 
was signed on 16 December 2018 ; as at April 2020 , it was expected  to enter in force by the second 
semester of 2020.46 The Indonesia -Mozambique Preferential Trade Agreement (PTA) was signed on 
27 August 2019, covering only trade in goods ; however,  as at April 2020 , it had not entered in to 
force. On 25 November 2019, a Jo int Declaration on the Conclusion of the Negotiations for the 
Indonesia -Korea Comprehensive Economic Partnership Agreement (CEPA) was issued , and both 
parties agreed to sign the Agreement in the first semester of 2020.  In November  2019, the MoT 
prioritized  the prompt conclusion of several international trade negotiations , including the Indonesia -
Tunisia PTA (4th round of negotiations was to be held in July  2020), the Indonesia -Morocco PTA 
(1st round of negotiations was to be held in the first half of 2020),  the Indonesia -Bangladesh PTA 
(3rd round of negotiation s was to be held in the first half of 2020), the Indonesia -Mauritius PTA 
(2nd round of negotiation s was to be held in the first half of 2020), the Indonesia -Iran PTA 
(five rounds of negotiations held),  the Indonesia -European Union CEPA (IEU -CEPA) (10th round of 
negotiation s was to be held on 16 -20 March 2020), and the Indonesia -Turkey CEPA (IT -CEPA)  
(5th round of negotiations was to be held on 21 -23 April 2020). However, the meetings of the 
 
45 Upon its full implementation, over 99% of Australian -originating goods exported to Indonesia are to 
enter duty free or under significantly improved or preferential arrangements; Australia is to eliminate all 
remaining tariffs on imports of Indonesian goods upon entry into force. Market access outcomes on services 
and investment are forecast to  provide increased certainty to Australian businesses and services suppliers in 
the Indonesian market, including guaranteed levels of Australian ownership.  Australian Government, 
Department of Foreign Affairs and Trade . Viewed at: https://www.dfat.gov.au/trade/agreements/not -yet-in-
force/iacepa/outcomes -documents/Pages/outcomes -goods.aspx , 
https://www.dfat.gov.au/trade/agreements/not -yet-in-force/iacepa/Pages/ia -cepa-key-outcomes -for-
australia.aspx . 
46 EFTA, Indonesia . Viewed at: https://www.efta.int/free -trade/Free -Trade -Agreement/Indonesia . WT/TPR/S/401 • Indonesia  
 
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  IEU-CEPA and the IT-CEPA had to be postponed due to the COVID -19 outbreak , and a new schedule 
was to be determined.  In addition,  in June 2020, Indonesia and Colombia ag reed to initiate and 
complete a joint feasibility study for increasing the access of several export goods to both market s.  
Table 2.5 RTAs in force: main features, 2020  
RTAs entered into force  
ASEAN -Australia –New Zealand  
Type of agreement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018):  
Australia  
New Zealand  
WTO consideration status  
WTO document series   
Free trade agreement  
27/02/2009  
01/01/2010  
2025 
Goods and services  
 
3.1% of total imports; 1.6% of total exports  
0.4% of total imports; 0.3% of total exports  
Factual presentation distributed  
WT/REG284/1/Rev.1 (Goods and Services)  
ASEAN -China (ACFTA)  
Type of agreement  
Date of signature  
 
Entry into force  
 
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
Free trade agreement and investment  agreement  
29/11/2004 (goods); 14/01/2007 (services) ; 
15/08/2007 (investment)  
01/01/2005 (goods); 01/07/2007 (services) : 
01/01/2010 (investment)  
2020 
Goods and services  
24.1% of total imports; 15.1% of total exports  
Factual presentation distributed  
WT/REG279/1 (Serv ices) 
ASEAN -India (AIFTA)  
Type of agreement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
Free trade agreement  
13/08/2009 (Goods); 13/11/2014 (Services)  
01/01/2010 (Goods); 01/07/2015 (Services)  
2024 
Goods and services  
2.7% of total imports; 7.6% of total exports  
Factual presentation distributed  
WT/COMTD/RTA/8/1 (Goods); WT/REG372/1 (Services ) 
ASEAN -Japan (AJCEP)  
Type of agreement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
Free trade agreement  
31/03/2008  
01/03/2010  
2026 
Goods  
9.5% of total imports; 10.8% of total exports  
Factual presentation distributed  
WT/REG277/1  (Goods)  
ASEAN -Republic of Korea (AKFTA)  
Type of agreement  
Date of signature  
 
Entry into force  
 
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
Free trade agreement and investment agreement  
24/08/2006 (Goods); 21/11/2008 (Services) ; 
02/06/2009 (Investment)  
01/01/201 0 (Goods); 14/10/2010 (Services) ; 
01/09/2009 (Investment)  
2024 
Goods and services  
4.8% of total imports; 5.3% of total exports  
Factual presentation distributed  
WT/COMTD/RTA13/1 (Goods); WT/REG287/1 (Services)  
ASEAN Free Trade Area  
Type of agreement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
 
WTO document series   
Free trade agreement  
28/01/1992  
01/01/1993  
2018 
Goods  
24.4% of total imports; 23.4% of total exports  
Not subject to the preparation of a factual presentation. 
Report adopted.  
L/4735  WT/TPR/S/401 • Indonesia  
 
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  RTAs entered into force  
Global System of Trade Preferences among 
Developing Countries (GSTP)  
Type of agreement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
 
WTO document series   
 
Partial scope agreement  
13/04/1988  
19/04/1989  
1989 
Goods  
36.5% of total imports; 41.8% of total exports  
Not subject to the preparation of a factual presentation. 
No Report adopted.  
L/6564  
Indonesia -Pakistan Preferential Trade 
Agreement (IP -PTA)  
Type of a greement  
Date of signature  
Entry into force  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
 
WTO document series   
 
Partial scope agreement  
03/02/2012  
01/09/2013  
2019 
Goods  
0.3% of total imports; 1.4% of total exports  
Factual presentation to be done. Data was to be 
submitted by the Parties by 07/04/2020.  
WT/COMTD/RTA12/N/1  
Indonesia -Japan Economic Partnership 
Agreement (IJEPA)  
Type of agreement  
 
Date of signature  
Entry into force 
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
 
Free trade agreement and economic integration 
agreement  
20/08/2007  
01/07/2008  
2023 
Goods and services  
9.5% of total imports; 10.8% of total exports  
Factual presentation distributed  
WT/REG241/1 (Goods and Services)  
ASEAN –Hong Kong, China  
Type of agreement  
 
Entry into force  
Date of signature  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
Free trade agreement and economic integration 
agreement  
 
01/01/2005 (Goods); 01/06/2007 (Services)  
29/11/2004 (Goods); 14/01/2007 (Services)  
Goods and services  
1.4% of total imports; 1.4% of total exports  
Not notified to the WTO  
ASEAN Framework Agreement on Services 
(AFAS)  
Type of agreement  
Entry into force  
Date of signature  
End of the transition period  
Coverage (selected features)  
Indonesia merchandise trade (2018)  
WTO consideration status  
WTO document series   
 
Partial scope agreement  
12/08/1998  
 
 
Services  
 
 
Not notified to the WTO  
Source:  WTO Secretariat, based on information from the WTO RTA Database. Viewed at: 
http://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?membercode=360 ; and UNSD, Comtrade 
Database. Viewed at:  https://comtrade.un.org/ . 
ASEAN  
2.32.   Indonesia is a member of ASEAN and , over the review  period , continued its efforts to reinforce 
its membership and deepen integration  within the group . On 31 December 2015, ASEAN established 
the ASEAN Economic Community ( AEC), built on four inter -related and mutually reinforcing 
characteristics: a single market and production base; a highly competitive economic region; a region 
of equitable economic develop ment; and a region fully integrated into the global economy.47 Under 
 
47 WTO document WT/TPR/S/394, 14 October 2019; ASEAN , ASEAN Economic Community . Viewed at: 
http://www.asean.org/wp -content/uploads/2012/05/56. -December -2015-Fact-Sheet -on-ASEAN -Economic -WT/TPR/S/401 • Indonesia  
 
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  the AEC 2015, intra -ASEAN import tariffs were virtually eliminated, and formal restrictions in the 
services sector were gradually removed. The AEC Blueprint 2025 is to guide ASEAN economi c 
integration from 2016 to 2025, and will entail the following characteristics: a highly integrated and 
cohesive economy; a competitive, innovative, and dynamic ASEAN; enhanced connectivity and 
sectoral cooperation; a resilient, inclusive and people -orient ed, people -centred ASEAN; and a global 
ASEAN. On 6  September 2016, ASEAN leaders adopted the Master Plan on ASEAN Connectivity 2025 
(MPAC  2025), which succeeded the Master Plan on ASEAN Connectivity 2010 and focuses on 
five strategic areas: sustainable inf rastructure, digital innovation, seamless logistics, regulatory 
excellence, and people mobility.48  
2.33.   Two Agreements were signed on the side -lines of the 25th ASEAN Economic Ministers' Retreat 
on 23 April 2019.49 The first, the ASEAN Trade in Services Agreem ent, encompasses all the 
achievements that the ASEAN member States have made to date under the AFAS. It also provides 
the mandate for countries to transition towards a negative -list approach for even deeper integration 
in the future. The second, the Fourth  Protocol to Amend the 2009 ASEAN Comprehensive Investment 
Agreement, incorporates obligations on the prohibition of performance requirements that will ensure 
ASEAN investors continue to get the best treatment through this Agreement.  
2.34.   Like all ASEAN members , Indonesia has been following its agreed schedule for reducing tariffs 
on goods originating in its trading partners under the ASEAN Trade in Goods Agreement (ATIGA). 
Indonesia has made significant progress in lowering intra -regional tariffs .50 More than 99% of the 
products in the Inclusion List of the ASEAN -6, comprising Brunei Darussalam, Indonesia, Malaysia, 
the Philippines, Singapore and Thailand, have been brought down to the 0 %-5% tariff range.51 As 
99.20% of the tariff lines in the List reached  zero import duty, only a minor part  are subject to  
import duties . Between 2013 and 2018, Indonesia's exports to ASEAN countries rose at an average 
annual rate of 0.5% ; during the same period, its  export s to the rest of the world declined at an 
average annual rate of 0.44% . According to the authorities, this is indicative of the fact that the 
preferential tariff under ATIGA , with a  10.79% average utili zation between 2013 and 2018, is 
adequately effective.52 
2.35.   Indonesia follows the established schedule for the liberalization of trade in services under the 
AFAS. It continued to improve its undertakings under the ninth  (27 November 2015) and 
tenth  (11 November 2018) packages of GATS -plus commitments that included business services,  
computer and related services, rental/leasing services without operators, other business services, 
and air transport services  (Section 4.4.5.2) .53 
2.36.   In addition to the A SEAN Free Trade Area and the AFAS, Indonesia is a signatory to six  other 
ASEAN RTAs, with : China; India; Japan; the Republic of Korea; Australia -New Zealand; and 
Hong Kong, China (Table  2.5). During the review period, the A SEAN -India Free Trade Area  was 
expanded to cover trad e in services. The ASEAN -Hong Kong, China Investment Agreement was 
signed on 18  May 2018 and entered into force on 17  June 2019. In 2012, ASEAN countries initiated 
the negotiation of the Regional Comprehensive Economic Partnership (RCEP) with their six ASE AN 
FTA partners (Australia, China, India, Japan, the Republic of Korea, and New Zealand).54 The 
negotiation includes trade in goods and services, investment, economic and technical cooperation, 
intellectual property , competition, dispute settlement, e -comm erce, SMEs, and other issues. As at 
November 2018, negotiating countries were determined to conclude a modern, comprehensive, 
 
Community -AEC-1.pdf; and ASEAN Economic Community Blueprint 2025. http://www.asean.orgViewed at: 
/storage/2016/03/AECBP_2025r_FINAL.pdf . 
48 ASEAN , ASEAN Leaders Adopt Master Plan on Connectivity 2025 . Viewed at: http://asean.org/asean -
leaders -adopt -master -plan-on-connectivity -2025/ . 
49 ASEAN, ASEAN economic ministers discuss AEC progress, global economy at retreat . Viewed at: 
https://as ean.org/asean -economic -ministers -discuss -aec-progress -global -economy -retreat/ . 
50 ASEAN, The ASEAN Free Trade Area.  Viewed at: https://asean.org/asean -economic -
community/asean -free-trade-area-afta-council/ . 
51 ASEAN  The ASEAN Free Trade Area . Viewed at: https://asean.org/asean -economic -community/asean -
free-trade -area-afta-council/ . 
52 Statistics Indonesia, supplied  by the Ministry of Trade.  
53 Baker Mckenzie, What's New on Indonesia's Schedule of Commitments under AFAS 9th Package . 
Viewed at: https://www.bakermckenzie.com/ -/media/files/insight/publications/2016/0 3/whats -new-on-
indonesias -schedule -of-commitments/al_jakarta_newschedulecommitments_mar16.pdf?la=en . 
54 ASEAN , Regional Comprehensive Economic Partnership . Viewed at: 
http://asean.org/?static_post=rcep -regional -comprehensive -economic -partnership%20 . WT/TPR/S/401 • Indonesia  
 
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  high-quality, and mutually beneficial RCEP in 2019.55 In November 2018, the ASEAN members 
concluded an Agreement on Electronic Com merce ( Section  4.4.7). They also participated in the 
negotiation and implementation of several ASEAN agreements/regulations, including those on: rules 
of origin for the ASEAN -China Free Trade A rea; rules of origin for the ASEAN -India Free Trade Area; 
and further liberalization of goods under sensitive lists under the ASEAN -Korea Free Trade Area and 
the ASEAN -China Free Trade Area. The implementation of recommendations from the 
ASEAN -Australia -New Zealand FTA's General Review commenced in April  2019.   
2.3.3   Other agreements and arrangements  
2.37.   Indonesia participates in a number of regional institutions, including the ADB and the Asia -
Pacific Economic Co -operation (APEC) forum. An APEC review of Indonesia's Assessment of the 
Achievements of the Bogor Goals based on its  Individual Action Plan  was undertaken in 2018.56 
Trade- and investment -related policy developments highlighted at this review comprised: the 
elimination of import duties on sports good s; the use of export duties; reforms facilitating the 
issuance of import licen ces for some products; open services policies allowing the employment of 
foreign construction workers; the 2016 negative investment list to increase FDI and competitiveness 
through liberali zation; the new Patent Law and the new Trademark Law;  a checklist to review the 
suitability of legislation regarding  fair competition policy principles; a procurement dispute 
settlement service to facilitate faster and more efficient settlement of disputes;  the 16 EPPs 
(Section  2.2.2) ; and Presidential Regulat ion No. 21 of  2016 grant ing visa-free entry to passport 
holders from 169 economies with a maximum stay of 30 days  (Section 4.4.6) . 
2.38.   Indonesia is a member of the G20 group of the world 's largest economies. Indonesia is also 
a member of the following organi zations:  the ADB, the Organization of the Petroleum Exporting 
Countries  (suspended participation on 30 November 2016, Section  4.2.2.1.1), and the Asian 
Productivity Organization.  
2.39.   Indonesia continued to benefit from several Generalized System of Preferences (GSP), 
including those of Armenia, Australia, Belarus, the European Union, Japan, Kazakhstan, 
New Zealand, Norway, the Russian Federation, Switzerland,  Turkey  and the United Stat es.57 
According to certificate -of-origin based data of the MoT, the utilization rate of these schemes 
remained relatively unchanged in the period 2017 -19 and, as at 2019, was as follows: 99.91% for 
the European Union; 95.58% for the United Kingdom; 83.73% for the Russian Federation and 
Belarus; 39.73% for Norway; 6.95% for Switzerland; 1.11% for New Zealand; and 0.53% for Japan.  
2.40.   Indonesia remains a signatory of the GSTP  framework for the exchange of trade preferences 
among developing countries in order to promote intra -developing -country trade  (Table 2.5); despite 
the relatively important share of trade with GSTP partners, its preferential treatment coverage is not 
significant. According to the authorities, Indonesia 's participation in the GSTP has not yet provided 
much trade benefit s. This is because  there have not been any developments in the framework 
agreement since the Sao Paulo Rounds in 2010 , and various challenges affecting the GSTP 's ability 
to fully deliver its potential emerged. Consequently, its level of engagement gradually declined, and 
the GSTP fell into passivity.  During the review period, Indonesia's GSTP utilization ranged from 
0.02% (2016, 2018) to 0.07% (2014) of total exports to other participants.  
2.4  Investment Regime  
2.41.   During the review pe riod, Indonesia  undertook efforts to liberali ze and streamline  its FDI 
regime in several areas, e.g. the regulatory framework, the n egative investment list and the 
business/investment licensing system . The priority of phase X of the EPPs (Section 2.2.2) was to 
revise the negative investment list. As a result, in 2016, the reform came with the issuance of the 
 
55 As at late 2018, seven Chapters, namely those  on Economic and Technical Cooperation, SMEs , 
Customs Procedures and Trade Facilitation, Government Procurement, Insti tutional Provisions, Sanitary and 
Phytosanitary Measures, and Standards, Technical Regulations and Conformity Assessment Procedures,  were 
concluded. ASEAN . Viewed at:  https://asean.org/storage/2018/11/RCEP -Summit -2_Joint -Leaders -
Statement_FINAL2.pdf . 
56 APEC, Joint Leaders' Statement on the Regional Comprehensive Economic Partnership Negotiations . 
Viewed at: https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2018 -Bogor -Goals . 
57 WTO, Preferential Trade Arrangements . Viewed at: http://ptadb.wto.org/Country.aspx?code=360 ; and 
UNCTAD (2015) , Generalized System of Preferences – List of Beneficiaries , 1 February. Viewed at: 
http://unctad.org/en/PublicationsLibrary/itcdtsbmisc62rev6_en.pdf . WT/TPR/S/401 • Indonesia  
 
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  new negative list  (Table 2.2 and Section 2.4.2) , which lifted or eased foreign equity restrictions i n 
key sectors and brought Indonesia 's FDI regime closer to international and regional levels of 
openness. According to the OECD, the current framework remains fairly restrictive to foreign 
investors overall.58 Despite an overall improvement,  Indonesia's international ranking in terms of 
ease of doing business remains relatively low compared to several neighbouring countries.59  
2.42.   The BKPM remain s responsible for promoting foreign investment and approving investment 
licences via the online single submission (OSS) system in all 20 sectors, except in mining, oil and 
gas, and banking and financial services , where approvals are obtained from the Ministry of Energy 
and Mineral Resources , the Financial Services Authority  (OJK)) and BI, respectively (Section 2.4.3) . 
The Investor Relations Unit , jointly run  between the coordinating Ministry of Economic  Affairs, the 
Ministry of Finance and BI, remains in place with the purpose of communicating Indonesian economic 
policy and address ing concerns of investors.60  
2.4.1   Regulator y framework  
2.43.   During the review period, the regulatory framework was updated in certain areas. Investment 
Law 25  of 2007 allows foreign companies or individuals to buy shares in existing foreign or domestic 
companies in sectors open to foreign investment.61 The Law specifies that a limited liability foreign 
investment company ( penanaman modal asing  (PMA)) incorporated in Indonesia must be formed, 
in which the foreign investor goes into partnership with an Indonesian person or entity as 
shareholders. In additi on, foreign individuals or foreign -owned companies may acquire shares in an 
existing domestic -capital investment company ( penanaman modal dalam negeri  (PMDN) and convert 
it to a PMA, if  the foreign ownership does not exceed the ceilings  set by the Governme nt. Foreign 
investors can have up to 100% ownership, or between 45 % and 95% ownership in certain industries, 
but this varies within sectors and business fields  (Section 2.4.2) .62 The Investment Law directly 
prohibits any agreement concerning foreign or dom estic investors where shares are held for another 
person. Presidential Decree 13 of 2018 strengthened the 2007 L aw preventing these arrangements 
and money -laundering and terrorist financing , by requiring all Indonesian companies to report their 
beneficial ownership structures.63 Regulation  14 of 2015 of Regulation No. 5 of 2019 ( replacing 
Capital Investment Co -ordinating Board  (BKPM ) Regulation No . 14 of 2015 concerning Amendments 
to BKPM Regulation No. 6 of 2018 concerning Guidelines and Procedures for Licensing and 
Investment Facilities) (Section 2.2.1.1)  stipulates that listed PMDNs must change to PMA status if 
their articles of association conta in the names of foreign shareholders and their capital structure has 
changed due to foreign investor entry.  
2.44.   Presidential Regulation No . 44 of 2016 , regarding foreign ownership, location, and special 
permit s in specific sectors , updated the list of business  fields that are closed to investment, and 
those that are  open to it with conditions (Section 2.4.2) .64 The Regulation divide s investment fields 
 
58 OECD, OECD Investment Policy Reviews – Southeast Asia . Viewed at: 
https://www.oecd.org/daf/inv/investment -policy/Southeast -Asia-Investment -Policy -Review -2019.pdf . 
59 In the World Bank 's Doing Business 2020 study, Indonesia ranked 73rd out of 190 economies for ease 
of starting a business  (in 2013 , it ranked 128th out of 185 countries ). The 2020 report highlighted Indonesia 's 
reforms regarding starting businesses, paying taxes, trading across borders, improving electricity , and 
enforcing contracts. Indonesia scored best in getting electricity (22); protecting minority investors (37); 
resolving insolvency (38); and getting credit (48). It scored lowest in starting a business (140); enforcing 
contracts (139); trading across borders (116); and registering a property (106) . World Bank, Economy Profile 
Indonesia, Doing Business 2020 . Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/country/i/indonesia/IDN.pdf ; and World Bank, 
Doing Business  2013, Smarter Regulations for Small and Medium -size Enterprises . Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/m edia/Annual -Reports/English/DB13 -full-
report.pdf . 
60 BI, Investor Relations Unit . Viewed at: https://www.bi.go.id/en/iru/default.aspx . 
61 Economist Intelligence Unit , Country Report , Indonesia , September 2019 . 
62 Ministry of Industry , Industry Facts and Figures , 2017. Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
63 Baker  Mckinsey , Limited Liability Companies Must Now Report Their Beneficial Owners , 2018. Viewed  
at: https://www.bakermckenzie.com/en/insight/publications /2018/03/limited -liability -companies . 
64 Law No. 44 of 2016 concerning Lists of Business Fields that are Closed to and Business Fields that are 
Open with Conditions to Investment . Viewed  at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/REGULATION -OF-THE-PRESIDENT -
OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . WT/TPR/S/401 • Indonesia  
 
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  into three types: open; closed (negative investment list); and open with conditions.65 The investment 
fields that are open with conditions consist of  partnership s with SME s; they involve restricted foreign 
ownership, specific location s, special permit s, 100% domestic capital, and limited capital ownership 
within the scope of ASEAN cooperation .  
2.45.   Presidential Regulat ion No. 91 of 2017  on the accelerat ion of doing business  provides, 
inter alia, for the implementation of EPP Phase XVI (Sections 2.2.2 and 2.4.4).66 
2.46.   According to the authorities, Presidential Regulation No. 20 of 2018 simplif ied the licensing 
procedure framework (documentation, and criteria) for foreigners wish ing to work in Indonesia 
(Section  1.2.4.4) . 
2.4.2   Restricted activities   
2.47.   During the review period , the negative  investment list , which includes  sectors that are 
completely or par tially closed to investment , was revised twice, in 2014 and 2016. The 2016 list 
(Table 2.6) reaffirmed a more positive attitude towards foreign investment, as the 2014 list had 
partly reversed the liberali zation trend by introducing more stringent rules fo r foreign  investors in 
some key sectors, such as mining.  The 2016 list relaxed and/or replaced entirely the provisions of 
the previous li st.67 The list was issued following extensive discussions between the Government and  
the corporate sector , with the objective  of raising  FDI levels  and competitiveness through further 
liberali zation of certain sectors . The revisions in the 2016 list included  opening of 45  business lines 
to full foreign ownership  in the following sectors: m aritime and fishery; energy and mineral 
resources ; industry ; public works; trade; tourism and creative economy; t ransportation ; 
communication and informatics ; and health.68 In addition, the list increased the foreign shareholding 
ceilings in 39 business lines ; and allow ed foreign participation in another 26 that had been closed 
off entirely in the previous list . Furthermore, it r emov ed the need for specific recommendation 
requirements from the relevant ministries for 83 lines . Indonesia's commitments contained  the 
ASEAN Comprehensive Investment Agreement (Section 2.3.2) of 2009  schedule and reservation list 
remain in place;  investors that are natural persons or juridical persons of ASEAN member States 
(ASEAN Investor s) may enjoy a higher foreign ownership perce ntage in certain sectors  (Table 2.5) .69 
2.48.   There are business lines which are now : specifically closed ; have increased minimum project 
value requirements ; or have reduced levels of  permitted foreign investment.70 These provide more 
protection for local SMEs by:  reserving 19 additional business lines for local SMEs under the public 
works sector71; increasing the project values of 39 business lines under the pub lic work sector72; 
 
65 Ministry of Industry , Industry Facts and Figures 2017 . Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
66 Presidential Regulation N o. 91 of 2017 concerning acceleration of business implementation. Viewed 
at: http://www.pma -
japan.or.id/bundles/bsibkpm/download/05323 _PERPRES_91_TAHUN_2017__Translated_(SCAN)_44.pdf . 
67 Law No. 39 of 2014 on List of Business Fields Closed to Investment and Business Fields Open, with 
Conditions, to Investment . Viewed at: http://www.indonesia -investments.com/upload/documents/Negative -
Investment -List-Indonesia -Daftar -Negatif -Investasi -Indonesia -Investments.pdf . 
68 Global Business Guide , Indonesia Foreign Investment – The 2016 Negative List . Viewed at:  
http://www.gbgindonesia.com/en/main/legal_updates/indonesia_foreign_in vestment_the_2016_negative_list .
php; and Hadiputranto, Hadinoto and Partners , Liberalized Business Lines . Viewed at: 
http://f.datasrvr.com/fr1/316/73986/Corporate__Securities_ -_Indonesia_Foreign_Investment_ -
_The_2016_N egative_List_(May_2016).pdf#page=7 . 
69 Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (2015), Information Seminar 
on the ASEAN Comprehensive Investment Agreement (ACIA) Towards Free Flow of Investment in the ASEAN 
Single Market , 11 Septe mber. Online information. Viewed at: 
http://investasean.asean.org/index.php/page/view/as ean-free-trade -area-
agreements/view/757/newsid/871/the -asean -comprehensive -investment -agreement.html . 
70 Global Business Guide , Indonesia Foreign Investment – The 2016 Negative List . Viewed at:  
http://www.gbgindonesia.com/en/main/legal_updates/indonesia_foreign_investment_the_2016_negative_list.
php; and Hadiputranto, Hadinoto and Partners, Liberalized Business Lines . Viewed at: 
http://f.datasrvr.com/fr1/316/73986/Corporate__Securities_ -_Indonesia_Foreign_Investment_ -
_The_2016_Negative_ List_(May_2016).pdf#page=7 . 
71 Example s include predesign and architecture consultancy services, architecture design services , and 
contract administration services; previously , foreign investment was permitted up to 55%.  
72 Examples include construction services using low and medium technology , and/or being low- and 
medium -risk and/or the project value being below  IDR 50 billion ; therefore,  foreign -owned construction 
services companies can only qualify for projects with a va lue of over IDR 50 billion.  WT/TPR/S/401 • Indonesia  
 
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  and a dding 3 business lines that require a partner ship with a local SME .73 According to the 
authorities, investment in activities such as e -commerce, film production, crumb rubber, cold 
storage, sports centr es, bars and café s, restaurant s, hospital management , and pharmaceutical raw 
materials  was further opened.   
Table 2.6 Negative investment list 2016, foreign equity ceilings  
Sector  Activity  Maximum foreign capital 
unless otherwise 
specified (%)  
Agriculture  
 Seeding/seedling business of staple food crops; and 
cultivation business of staple food crops (corn, soy , 
groundnut, mung bean, and other food crops, such 
as cassava and sweet potatoes ) in an area of more 
than 25  ha 49% 
 Plantation seeding business for non -main crops;  
plant cultivation for land areas exceeding 25  ha 
(non-main crops);  certain plantation businesses of 
25 ha or more; and processing industries for 
plantation products  95% 
Forestry  
 Exploitation of timber forest products of natural 
forests  100% domestic ca pital 
 Procurement and distribution of forest plant seeds 
and seedlings (export and import of forest plants 
seed and seedlings)  100% domestic capital  
 Certain nature tourism businesses  49% ( and 70% for foreign 
capital ownership by ASEAN 
countries )  
Maritime and 
fisheries  Fishery catching business using a fishing ship in 
Indonesian water territory or open sea  100% domestic capital  
Energy and mineral 
resources  Operation and maintenance of geothermal facilities  90% 
 Geothermal drilling ser vices 95% 
 Onshore oil and gas drilling services  100% domestic capital  
 Offshore oil and gas drilling services  75% 
 Oil and gas, geology and geophysical surveying 
services  49% 
 Power plant <1 MW  100% domestic capital  
 Small -scale power plant (1 -10 MW)  49% 
 Geothermal power plant with a capacity of <10 MV  67% 
 Power plant transmission and distribution  95% (100% for the  purpose 
of PPP during the concession 
period ) 
 Construction and installation of electric power: 
installation of high/extra -high voltage electric power 
utilization  49% 
 Construction and installation of electric power: 
installation of low/medium voltage electric power 
utilization  100% domestic capital  
 Power plant >10 MW  95% (100% for the  purpose 
of PPP during the concession 
period ) 
Industry  Car maintenance and repair  49% 
 Sugar industry (white , refined and raw)  Reserved for partnerships 
with SMEs  
Defence  
 Main and/or supporting equipment industry 
(according to the authorities, e quipment is a 
component similar to tools, and the main tool 
industry limitation remains at 100% domestic  
capital)  49% (and 51% SOEs)a 
 Raw material for explosives (ammonium nitrate) and 
the industry of e xplosive materials and its 
components for industry need  49% (and 51% SOEs)a 
 
73 The three business lines include the sugar industry (white sugar, refined sugar, and raw sugar); 
salting/drying fish and other water biota industry; and retail trading through mail order or the Internet.  WT/TPR/S/401 • Indonesia  
 
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  Sector  Activity  Maximum foreign capital 
unless otherwise 
specified (%)  
Public works  
 Business services /construction consultant services 
using advanced technology and/or being high-risk 
and/or the work value being  more than IDR 10 billion  67% (and 70% for foreign 
capital ownership by ASE AN 
countries ) 
 Construction services using advanced technology 
and/or being high-risk and/or the work value being  
more than IDR 50 billion  67% (and 70% for foreign 
capital ownership by ASEAN 
countries)  
 Drinking water business  95% 
Trade  
 Private cleaning service s; various retail businesses; 
large trade based on fe es or contracts (agency 
service/ agent commissi on); various survey services; 
property/real estate br oker based on fees or 
contracts; rental se rvice of land transport equipm ent 
(rental without operator); rental of machinery 
(agricultural, construction, civil engineerin g, office 
machinery, and other);  building  cleaning services; 
and other activity services (laundry services, 
barbershop s, beauty sa lons, tailor s, and other)  100% domestic capital  
Culture and 
tourism  Film promotional facilities, advertisements, posters, 
stills, photos, slides, negatives, banners, pamphlets, 
billboards, folders, etc.  100% domestic capital  (and 
51% for foreign capital  
ownership by ASE AN 
countries)  
 Hotels (one - and two -starred); guest house s; 
catering; convention s; cultural object tourism 
business; catering; spas; natural tourism business 
outside conservation area s  Hotels (one - and 
two-starred) 67%;  
motels and guest houses 
67% (70% for foreign 
capital ownership by ASEAN 
countries);  
catering 67% (70% for 
foreign capital ownership by 
ASEAN countries);  
convention s 67% (70% for 
foreign capital ownership by 
ASEAN countries);  
cultural object tourism 
business, if museum 
management 67% (70% for 
foreign capital ownership by 
ASEAN countries), but if 
management of historical or 
archaeological remains, such 
as temple s, Sultan's palace, 
inscriptions, ruin s, ancient 
building s only 67%;  
spas 51%; and  
natural tourism business 
outside conservation area s 
67% 
 Other accommodation services (i.e. motel and 
lodging services); tourism travel bureau x; 
recreational and entertainment business  67% (and 70 % for foreign 
capital ownership by ASE AN 
countries) ; and karaoke and 
"dexterity " 67% 
 Sporting facilities excluding swimming pools, tennis 
courts , football fields and fitness centres  100% domestic capital  
Transportation  
 Cargo land transportation; special cargo land  
transportation; passenger land transportation 
(scheduled and unscheduled) ; domestic and 
international sea transportation; inter -
district/intercity general and pioneering inland water 
transportation; river and lake transportation (for 
passengers, tourism, general freight, special freight, 
and hazardous freight); airport services;  provision 
and operation of crossing of rivers and lake 
harbours ; domestic and international 
scheduled/non -scheduled air transportation; and 
operation of passenger land transport fa cilities 
(public facilities and general cargo terminals only)  49% WT/TPR/S/401 • Indonesia  
 
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  Sector  Activity  Maximum foreign capital 
unless otherwise 
specified (%)  
 International passenger transportation (excluding 
cabotage); and international freight overseas 
transportation (excluding cabotage)  70% for foreign capital 
ownership by ASEAN 
countries  
 Provision of harbour facilities (jetties, buildings, tugs 
at cargo container terminals, liquid bulk terminals, 
dry build terminals, and roll -off terminals)  49%b 
 Salvage and/or underwater works  …d 
 Supporting transport business in terminals; air 
transpor tation support services (computer -based 
reservation system, passenger and cargo ground 
handling, and aircraft leasing); air freight forwarding 
services; and airline general sales agents  67% 
 Loading and unloading of goods services (maritime 
cargo handling services)  67% (and 70 % for foreign 
capital ownership by ASEAN 
countries)  
Communication 
and informatics  
 Fixed and mobile telecommunications network 
services; telecommunications network providers; 
content telecommunication services; call centres and 
other added -value telephony services; Internet 
service providers; data communication system 
providers; public Internet telephony services; and 
Internet interconnection services (network access 
points, and other multimedia services)  67% 
 Public broadca sting agencies, radio and television  Monopoly for the public 
broadcasting agency  
 Providers, operators (operation and renting) and 
construction service providers for telecommunication 
towers  100% domestic capital  
 Publishing of newspapers, magazines, and bulletins 
(press)  100% domestic capital  
 Mail providers  49% 
 Electronic commerce transaction providers with an 
investment value of less than IDR 100 billion  49% 
Financial  Investment, working capital and multi -purpose 
companies; venture capital  85% 
 Loss/life insurance compan ies; reinsurance 
compan ies; insurance agent and broker companies; 
and actuarial consultant service companies  80% 
 Guarantee companies  30% 
 Non-bank foreign exchange traders  100% domestic capital  
 Money market broker companies  …c  
Banking  Conventional banks; and sharia banks  …c 
 Conventional smallholder credit banks; and sharia 
smallholder credit banks  100% domestic capital  
Manpower sector  Indonesian worker placement service s for overseas  100% domestic capital  
 Indonesian worker placement service s in Indonesia; 
worker/labour service provider s; and work training  49% 
Health  Patent medicine industry  85% 
 
 Medical equipment testing institutions; pest 
control/fumigation services ; and medical and 
ambulatory services  67% 
 Narcotic manufacturers (pharmaceutical industry); 
and narcotic pharmaceutical wholesalers  …d 
 Traditional medicine processing; raw material 
pharmaceutical wholesale business; pharmacies, 
drugstores, health equipment stores, and opticians; 
and basic medical clinic services (private maternity 
hospitals, general medical service clinics/ public 
medical clinics, and residential health services)  100% domestic capital  
 Hospitals; basic and special medical c linics 
(specialized medical services clinics; dental services; 
nursing services; other hospital services such as 
medical rehabilitation clinics)  67% ( 70% for foreign 
capital ownership by ASEAN 
countries ) 
 Medical equipment suppliers  49%d WT/TPR/S/401 • Indonesia  
 
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  Sector  Activity  Maximum foreign capital 
unless otherwise 
specified (%)  
Security  Security consulting services; security guard 
providers, money and valuable goods transportation 
guards, security services using animals; security 
services of equipment application; and security 
education and trai ning services  49%e 
a Recommendation from the Ministry of Defence.  
b Subject to special permits from the Ministry of Transportation for the minimum foreign capital 
requirement.  
c Subject to a special licence from the Financial Services Authority.  
d Subject to a special licence from the Ministry of Health.  
e Operational lic ence from the National Police Headquarters.  
Note:  The listed activities are based on the Indonesian Standard Industrial Classification Codes (KBLI), 
2016. Viewed at: http://www.bkpm -jpn.com/assets/up/2017/04/160630 -english -dni-rev.pdf .  
Source:  Presidential Regulation No. 44 of 2016 concerning Lists of Business Fields Closed to Investment and 
Business Fields Open with Conditions to Investment . Viewed at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . 
2.49.   In addition, u nder the negative investment list, private participation by both domestic and 
foreign investors is closed in some sectors for reasons of national security, public health, safety, 
protecting the environment, preserving national heritage , or upholding public morals.74 Affected 
sectors include casinos, the provision and operation of passenger transport terminals, aids for 
shipping and airplane navigation , and the manufacture of alcoho lic beverages. Although the 2016 
list liberalized several sectors, foreign investment remain s prohibited in the following business 
activities: the publication of newspapers and magazines; foreign  exchange trading by non -banks; 
the retail sale of footwear, electronics, jewellery, cosmetics, food , and beverages; oil -and-gas well 
operation and maintenance; and oil -and-gas design and engineering services.   
2.50.   In 2018, the Government announced plans to revise the list further by opening several 
activities to 100% f oreign participation.75 The activities under consideration included: geothermal 
surveying and drilling; power generation of less than 10 MW; manufacture of some medical devices 
and over -the-counter drugs; cigarette manufacturing; provision of fixed and mob ile 
telecommunications networks; Internet access services; and Internet and postal -based retailing; 
and operation of art galleries.   
2.4.3   Registration and approval  
2.51.   In 2018, the Government launched the online single submission  (OSS) system for investment 
approv als.76 The system is intended to be the single reference in Indonesia for business licensing , 
and will be the gateway for the existing government services system at ministerial  and regional  
levels. According to the authorities , the advantages of using the OSS include : secured business 
licences in under an hour; availability of standardized business licen ces; licences  electronically 
integrated; and a ccessibi lity at any time and anywhere . The licensing process is monitored by a Task 
Force , a different entity from the OSS agency  (i.e. BKPM),  thus increasing transparency. The system 
is administered by the BKPM , which will also establish the rules and procedures for issuing business 
licences through the system .77 The BKPM  also has the authority to issue business licen ces for , and 
on behalf of , ministries, heads of agencies, governors, regents and mayors , in the form of electronic 
documents that will be stamped with an electronic signature .78 
 
74 Economist Intelligen ce Unit , Country Report , Indonesia , September 2019 . 
75 The Jakarta Post , Government revives talk on relaxing negative investment list . Viewed at: 
https://www.thejakartapost.com/news/2019/07/18/government -revives -talk-on-relaxing -negative -investment -
list.html . 
76 Regulation  No. 24 of 2018 concerning OSS. Viewed at: 
https://oss.go.id/portal/home/download/pdf/PP -24-2018-OSS-dan-Lampiran -HVS. 
77 Indonesia Investments, Indonesia to Launch Upgraded Online Single Submission (OSS) System . 
Viewed at: https://www.indonesia -investments.com/news/todays -headlines/indonesia -to-launch -upgraded -
online-single -submission -oss-system/item9096 . 
78 BKPM, Guidelines for using the OSS . Viewed at: https://oss.go.id/portal/ . WT/TPR/S/401 • Indonesia  
 
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  2.52.   The OSS provides an integrated system to facilitate the issuance of Business Identification 
Number s (Nomor Induk Berusaha , NIBs) and business licen ces in virtually all sectors (see above). 
Banks and non -bank financial institutions are required to register for an NIB through the OSS before 
applyin g for a business licen ce to the OJK/BI. The BI  implemented an online integrated licensing 
process on 1 May 2020; it includes the licensing process for monetary, macro prudential, and 
payment system s, as well as the rupiah money management sector. By Januar y 2020, the BKPM 
had process ed 28 types of licences through its online portal, such as permits for oil -and-gas 
companies, mining firms, and property developers; approval of import -duty concessions ; and 
income tax reductions and exemptions.79 
2.4.4   Investment promotion  
2.53.   Indonesia offers incentive facilities to increase FDI in certain activities, based on internal and 
external consideration s.80 Internal consideration s are priority field s based on the roadmap for the  
development  of each sector;  interes t in regional development ; and synchronization of inter -sector 
policies. External consideration s include  international best practice ; tighter global competition ; and 
commitment to bilateral, regional, and multilateral trade. Fiscal incentives, non -fiscal incentives, and 
other benefits remain available in accordance with the legislation in force. Fiscal incentives were 
strengthened, and include:  tax holiday s (to enhance direct investment , particularly in pioneer 
indust ries81) (since 2018) (Sections 3 .3.1.1.1.1, 4.2.2.1.2, 4.3.3, 4.3.5 and 4.4.5.1) ; corporate 
income t ax allowance82 (since 2016)  (Section 3.3.1.1.1.1);  and the e xemption of import duty for 
import s of capital goods and of raw materials for investment  (Section  3.1.3.6) . In addition, investo rs 
in Indonesia can also take advantage of non−fiscal incentives , such as : One-Stop Services83; eased 
immigration permits for foreign workers84; and customs facilities .85 Under the Investment Law 
(Articles 14 and 21), these incentives are available to both  domestic and foreign investors under the 
same conditions.   
2.54.   According to the authorities, other investment incentives cover: SEZs; industrial zones; free 
trade zones (FTZs) and ports; MSMEs; and e -commerce (Sections 3.2.4 and 4.4.7). SEZ investment 
incenti ves focus on no collection of VAT and the luxury goods sales tax; customs tax exemption s; 
tax allowance s and tax holiday s; suspension of import duties; and zero import duty for 
manufacturing of goods produced using local components of a specific level , meaning a minimum of 
 
79 OSS online information. Viewed at: https://oss.go.id /portal/  
80 Ministry of Industry , Industry Facts and Figures , 2017. Viewed at: 
https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
81 On 30 May 2018, the BKPM  issued Regulation of Investment Coordinating Board No. 5 of 2018 on 
Details of Business and Production Types for Pioneering Industries That Can Be Granted the Corporate Income -
Tax Deduction Facility as Well as Guidelines and Proced ures for the Granting of Corporate Income -Tax 
Deductions (Perka BKPM No. 5/2018).  Under this Regulation , 100% of the total payable corporate income  tax 
is deduct ed, under certain conditions  to 17 pioneer industries. A p ioneer industry is defined as : having  wide 
interconnection with other industries, giv ing high value added and externality ; introduc ing new technology ; 
and bringing strategic value to the national economy . Pioneer industries are listed in Appendix 1 of Perka BKPM 
No. 5/2018 regarding List of B usiness Detail and Production Type From Every Pioneer Industry Coverage . They  
consist of the following industry types: base metal upstream; refinery and/or oil refinery and natural gas; 
petrochemicals based on petroleum; basic inorganic chemistry; basic or ganic chemicals sourced from 
agricultural, plantation, or forestry products; pharmaceutical raw materials; manufacture of semi -conductor 
and other major components of computers; manufacture of communication equipment main components; 
manufacture of health main components; manufacture of industry main components; manufacture of machine 
main components; manufacture of robotic components which are integrated into the machine manufacture  
industry; manufacture of ship main components which are integrated into th e ship manufacture  industry; 
manufacture of plane main components; manufacture of train main components; power plant machines; and 
"economy infrastructure". Indonesia Foreign Investment Law. Viewe d at: 
http://www.indonesiaforeigninvestmentl aw.com/business/details -of-business -and-production -types -for-
pioneering -industries -that-can-be-granted -the-corporate -income -tax-deduction -facility -as-well-as-guidelines -
and-procedures -for-the-granting -of-corporate -in/. 
82 The incentive is given in accordanc e with Government Regulation (PP) No. 9 of 2016 concerning 
amendment to Government Regulation No. 18 of 2015 on Tax Allowance .  
83 Presidential Regulation No. 27 of 2009 concerning One Stop Services in Investment Sector . 
84 Regulation of the Minister of Manpower and Transmigration No. 02 of 2008 concerning System and 
Procedures of Foreign Workers .  
85 Custom facilities such as: (i) immediate care (rush handling) ; (ii) demolition/ hoarding outside the 
customs, temporary import ; (iii) granting permits issued prior to the import of goods that still owe duty and 
taxes in the framework of the risk import assurance ; (iv) importers ' priority lane ; and (v) importer Main 
Partner , and the Preliminary Notice (Pre−notification).  WT/TPR/S/401 • Indonesia  
 
- 60 - 
 
  30% of local content for raw material imports to benefit from zero import duty for four years , and 
two years  without local content . Investment incentives for industrial zones include: VAT exemption s 
on the import or delivery of capit al goods; import duty exemption s on machiner y, goods, and 
materials; and tax allowance s and tax holiday s. FTZ and port operations are exe mpt from: import 
duty; VAT; luxury goods sales tax; and customs duty. In addition, investments in MSME s are 
encouraged through a reduction  in MSMEs ' tax from 1 .0% to 0.5% of gross revenue. Lastly, 
investment in e -commerce is promoted via  0.5% income tax and 1 .0% VAT on non-small 
entrepreneurs ' sales from customs areas to the domestic market . The authorities indicated that the 
majority of these incentives are available to both domestic and foreign investors under the same 
conditions . 
2.55.   Under Presidential Regulation No . 91 of 2017 , Indonesia promotes investment by enhancing 
the business licence service. The policy goals of this  initiative include: efficient, streamlined, and 
integrated business licen ce service standards ; accelerat ing business licensing process es; providing 
business licensing process assurance in terms of costs and lead times ; increas ing coordination and 
synerg ies between central and regional government ; overcom ing barriers to doing business in 
Indonesia ; and i mplement ing integrated licensing process es (OSS) (Section  2.4.3). The policy is 
divided into two phases which are implemented in parallel. The first focuses on: f orming a Task 
Force to identify and overcome end -to-end licensing barriers ; implementing a licensing checklist for 
SEZs, FTZ s, industrial zones, and tourist zones; and u tilizing data sharing . The second phase 
includes: b usiness licen ce regulatory reforms ; and the i mplementation of the OSS. As at July 2020, 
both phases w ere still at the implementation and coordination stage . 
2.56.   A rapid licensing ser vice, the Priority Licensing Service, was implemented to boost investment 
in almost every sector , subject to certain conditions, e.g. minimum investment of IDR 100 billion or 
minimum employment of 1 ,000 domestic workers.86 Similarly, a regulation to simplify licensing 
within the minerals and coal mining sector through shorter bureaucratic processes and fewer 
requirements was enforced in 2017. In working towards improving the business  environment , 
Government Regulation No. 24  of 2018 on Electronic Integrated Business Licensing Services  
reflect ed the authorities'  objective o f shifting from a pre-commencing supervision system to a 
post-commencing one. This is done by reducing a large number of required business licen ces and 
permits, and by  simplifying the application processes and implementing OSS  (Section 2.4.3).  This 
regulation mandates that any existing or newly established businesses in Indonesia must obtain a n 
NIB and a business licence by using  the OSS system  (Sections 2.4. 3 and 3.3.1.1.1.1).  
2.4.5   Dispute settlement  
2.57.   The main methods used to resolve commercial disputes are litigation, arbitration and 
alternative dispute resolution.87 Each case before the courts is determined based on its particular 
facts and merits. Indonesian ge neral courts, comprising district courts, high courts and the Supreme 
Court, hear civil lawsuits, administrative lawsuits  and criminal claims. Certain courts have specialized 
jurisdiction, and address specific areas of law, which include a commercial court  which specifically 
address bankruptcy and intellectual property cases. Resolving commercial disputes in arbitration or 
alternative dispute resolution, such as consultation, negotiation, mediation, conciliation, and expert 
opinio n, is governed by Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution ; the 
Indonesian National Board of Arbitration ( Badan Arbitrase Nasional Indonesia , BANI) is the principal 
and independent domestic arbitration institution . Under the judicial power law and th e Judges' Code 
of Ethics, judges must maintain independence and impartiality, and rule without any intervention 
from any party outside the judicial power.88 The claimant is required to pay a registration fee when 
submitting a suit to the district court. Co urt costs are decided by the judge ruling on the case, and 
are usually borne by the losing party.89 In January 2019, the Director General  of the General 
 
86 APEC, Assessment of Achievements of the Bogor Goals in 2018 . Viewed at: 
https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2018 -Bogor -Goals . 
87 Baker Mckenzie , Dispute Resolution around the World - Indonesia . Viewed at: 
https://www.bakermckenzie.com/ -
/media/files/in sight/publications/2016/10/dratw/dratw_indonesia_2009_updated.pdf?la=en . 
88 Global Legal Insights , Litigation & Dispute Resolution 2020 - Indonesia . Viewed a t: 
https://www.globallegalinsights.com/practice -areas/litigation -and-dispute -resolution -laws-and-
regulations/indonesia . 
89 Thomson Reuters, Enforcement of judgments and arbitral awards in Indonesia: overview . Viewed at: 
https://uk.practicallaw.thomsonreuters.com/2 -619-
0724?transitionType=Default&contextData=(sc.Defau lt)&firstPage=true&bhcp=1#co_anchor_a563445 . WT/TPR/S/401 • Indonesia  
 
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  Judiciary Body of the Indonesian Supreme Court issued Guidelines on the Enforcement of 
Judgements by th e district courts. These guidelines assist district courts in enforcing all civil, 
criminal, and administrative decisions , including request s for national and international arbitration 
awards.90  
2.58.   Since 1982 Indonesia has been  a party to the 1958 New York C onvention on the Recognition 
and Enforcement of Foreign Arbitral Awards, an internationally recognized instrument of 
international arbitration, requiring courts of contracting States to give effect to arbitration 
agreements , and to recognize and enforce arbitration awards made in other States, subject to 
specific limited exceptions.  It is also party to the Convention on the Settlement of Investment 
Disputes between States and Nationals of Other States (ICSID , or the Washington Convention) . 
Since 2013, there  have been two investment disputes: Nusa Tenggara Partnership B.V. and 
PT Newmont Nusa Tenggara v. Republic of Indonesia (ICSID, ARB 14/15) and Oleovest Pte Ltd v. 
Republic of Indonesia (ICSID, ARB/16/26). According to the authorities, most of the disputes  
involving the Government and other countries were based on an international investment treaty.  
2.4.6   Investment treaty developments  
2.59.   Indonesia maintains 2 4 active bilateral investment treaties (BITs) (out of 63 signed BITs) ; no 
new BITs have been signed since 2008 .91 Between 2013 and 2015, Indonesia formally notified more 
than 20 of its BIT  partners that it would discontinue these  treaties; this move was in order to allow 
the authorities to align their provisions with latest legislation before renewal.92 As at April 2020 , 
Indonesia was involved in new BIT negotiations with Switzerland , and was also finali zing those  with 
Singapore and the United Arab Emirates.93  
2.60.   As at February  2020, Indonesia was party to 70 bilateral agreements for avoidance of double 
taxation (DTAs) ; 11 new DTAs, involving Armenia (2017), Belarus  (2019), Croatia (2013), 
Hong Kong, China (2013), India (2017), Lao PDR  (2017), Morocco (2013), Papua New Guinea 
(2015), Serbia (2019), Suriname (2014), and Tajikistan (2020), entered into force during the review 
period.  
 
 
 
 
90 The Guideline on the Execution of Decisions at the District Court (published in Bahasa Indonesia 
language). Viewed at: https://badilum.mahkamahagung.go.id/publik/publikasi/2820 -pedoman -eksekusi -pada-
pengadilan -negeri.html .  
91 They comprise those with: the Republic of Korea ; Thailand ; Jordan ; Bangladesh ; the Czech Republic ; 
Syria; Mongolia ; Cuba; Turkmenistan ; Iran; Denmark ; the Russian Federation; Mauritius ; Morocco ; Sudan ; 
Sweden ; Poland ; Australia ; Finland ; Tunisia ; Ukraine ; Uzbekistan ; Qatar ; and Chinese Taipei . 
92 Nine BITs have been fully terminated, although "survival clauses " or "sunset clauses " in such treaties 
may continue to protect previously made investments for further periods of time . The nine BITs are with: China 
(effective termination: 31 March 2015); Lao PDR (13 October 2015); Malaysia (20  June 2015); the 
Netherlands  (30 June 2015); Italy (23 June 2015); France (28 April 2015); the Slovak Republic (28 February 
2015); Bulgaria (25 January 2015); and Egypt (30 November 2014). The BIT with Argentina w as extinguished 
by mutual agreement on 19 October 2016, in such a way t hat its "survival clause " would not apply.  BITs with 
the following countries lapsed: Spain (on 11 November 2016); Cambodia (7 January 2016); India (7 April 
2016); Romania (7 January 2016); Turkey (7  January 2016); Viet Nam (7 January 2016); Hungary (12 
February 2016); Singapore (20 June 2016); Pak istan (2 December 2016); Switzerland (8 April 2016); and 
Kyrgyzstan (18 February 2018). Bilaterals.Org, Indonesia ramps up termination of BITs – and kills survival 
clause in one such treat – but faces new $600 mil. Claim from Indian mining investor . Viewed  at: 
https://bilaterals.org/?indonesia -ramps -up-termination -of; and Lampung University,  Journal of Legal, Ethical 
and Regulatory Issues, Vol. 21, Issue 1 , Lu Hamzah (2018), Bilateral  Investment  Treaties  (BITS) in Indonesia : 
A Paradigm  Shift, Issues  and Challenges ,. Viewed at: https://www.abacademies.org/articles/Bilateral -
investment -treaties -bits-in-indonesia -a-paradigm -shift-issues -and-challenges -1544-0044-21-1-148.pdf . 
93 APEC, Assessment of Achievements of the Bogor Goals in 2018 . Viewed at: 
https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2018 -Bogor -Goals . WT/TPR/S/401 • Indonesia  
 
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  3  TRADE POLICIES AND PRACTICES BY MEASURE  
3.1.  During the review period, the general thrust of Indonesia's trade policy was revised in several 
areas.  
3.2.  The tariff is one of the main trade policy instruments . It remains transparent , as virtually all 
tariff lines are ad valorem ; the simple average applied MFN tariff rate (10.1%, 2020) and its 
complexity increased , whereas peak rates remained unchanged. At present , 89.5% of all lines in 
Indone sia's tariff schedule are bound but, despite a decrease, the large gap between the simple 
averages of the MFN applied and bound rates suggests persistent high unpredictability in market 
access conditions; furthermore, the applied MFN rates on 99 tariff lin es appear to exceed their 
corresponding bound rate by 5 percentage points. Several trade facilitation initiatives were 
undertaken, and changes were brought to the de minimis  value for import duty exemptions , and a 
flat customs duty for consignment and e -commerce traded goods was introduced.  
3.3.  Import prohibitions, restrictions and licensing remain in place to protect the national interest 
in several areas and , in general , their scope was seemingly expanded. The main legislative 
framework governing anti -dumpin g, countervailing, and safeguard measures remained virtually 
unchanged; recourse to anti -dumping action dropped slightly but measures in force were on the 
rise. Recourse to safeguard action dropped but Indonesia remains one of WTO's most frequent 
initiator s of investigations and resulting actions. It continued to use local content requirements in 
certain areas to protect and/or develop domestic industries.  
3.4.  During the review period, export taxes on certain commodities remained a tool for attaining 
several po licy objectives , and a withholding tax was introduced; the export taxes' product coverage 
remained relatively unchanged, but the rates were revised. The scope of export prohibitions and 
licensing was slightly expanded, and some new requirements were added.  Indonesia continued to 
support exports through tax and non -tax incentives available via free trade zones, bonded zones, 
export -orientated production entrepôts and special economic zones (SEZs) schemes, two of which 
allow for corporate tax holidays. Export  finance, guarantees and credit insurance have been 
increasingly focused on a number of government -designated leading export commodities, 
penetration to non -traditional export markets, encouraging growth of export -oriented MSMEs, and 
the implementation of special -assignment export projects in synergy with a number of SOEs.  
3.5.  Indonesia continues to offer various fiscal incentives to support businesses including VAT and 
luxury goods sales tax facilities, corporate income tax holidays and tax allowances. New incentive 
schemes aim at supporting labour -intensive, vocational and research and development activities; 
incubators; and the geothermal sector. Non-fiscal incentives , in the form of loans and interest rate 
subsidies, continue to be availab le, mainly to MSMEs.  
3.6.  In 2014, a standardization and conformity assessment l aw was enacted to, inter alia , cover 
metrology. Specific trade concerns involving conformity assessment have been raised by several 
Members regarding measures on various processed and unprocessed foods (particularly with respect 
to halal requirements); toys; ceramics; cell phones and computers; broadband equipment; and 
alcoholic beverages.  Various new labelling requirements have been introduced. Over the review 
period, key SPS deve lopments have included entry into force of new laws on animal, fish and plant 
quarantine; livestock services and animal health; halal product assurance; the protection and 
empowerment of farmers; and amendments to the Law concerning State Crops. SPS  measur es on 
beef, chicken meat and chicken products , and animal and plant/horticultural products have been 
subject to WTO Members' concerns in the SPS Committee and/or in dispute settlement proceedings.  
3.7.  While t here were no changes to the main legal framework for  competition policy over the review 
period , key new regulations were issued . Price controls are in place for rice and, on an ad hoc basis, 
for other goods deemed to be basic necessities. Maximum prices are set for medicines and medical 
devices used in the National Health Insurance programme. The coal sales price for coal purchased 
by the state electricity company to generate electricity for public purposes has been regulated since 
2018.  
3.8.  State involvement in the economy persists  although  there was privatizat ion activity in the areas 
of mining, construction/engineering; development, maintenance and management of toll roads; WT/TPR/S/401 • Indonesia  
 
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  steel; airlines; and cement.  One state -trading entity (Perum BULOG) continues to import rice as well 
as other staple goods when instructed  by the Government.  
3.9.  Government procurement remains centralized in terms of regulations and systems but 
decentralized for procurement execution. The regulatory framework for government procurement 
was revised in 2018. This, inter alia , has significantly exp anded procurement price preferences for 
goods and services incorporating at least 25% local content for all bids over a certain threshold , as 
well as thresholds for international tenders.  Bid-rigging remains of concern.  
3.10.   Over the review period, new patent, copyright, and marks and geographical indications 
legislation and regulations have entered into force. Additionally, Indonesia has acceded to the Beijing 
Treaty on Audiovisual Performances; the Marrakesh Treaty to Facilitate Access to Published Works 
for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled; the Protocol Relating to 
the Madrid Agreement Concerning the International Registration of Marks, and the Nagoya Protocol 
on Access to Genetic Resources.  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures, valuation, and requirements  
3.1.1.1   Customs procedures  
3.11.   During the review period, in line with its WTO trade facilitation commitments , Indonesia 
undertook several initiatives (see below) , including: the acceptance of the WTO Trade Facilitation 
Agreement (TFA); the launching of the Authorized Economic Operator (AEO) programme; the 
Post-Border Import Supervision Policy; participation in th e ASEAN Single Window; and the 
integration of the Indonesia Single Risk Management  within the Indonesia National Single Window 
platform.  
3.12.   Indonesia ratified the TFA on 5 December 2017 , and availed itself of the flexibilities for 
developing countries in Sect ion II of it, which allows for self -designation of capacity -building needs 
and dates of implementation. Indonesia notified all four  Section I transparency provisions under 
Category A , and its Category B commitments should be implemented by 22 February 2022 ; as at 
February 2020, Indonesia had attained an 88.7% implementation rate relat ing to category A 
commitments.1 
Regulatory developments  
3.13.   During the review period, the basic customs legislation, i.e. the Customs Law 17/2006 and its 
enforcement regulations, remained virtually unchanged. Several enforcement -related regulations 
were issued , including: Government Regulation (GR) No. 20/2017 ; and Minister of Finance 
Regulation No.  40/PMK.04/2018 on Control of Import or Export of Goods that are Suspected of 
Originating or Resulting from Violations of Intellectual Property Rights. These Regulations mandate 
Customs to carry out ex officio  actions on the import or export of goods infringing intellectual 
property rights (Section  3.3.7. 3). The Directorate General of Cus toms and Excise (DGCE), under the 
Ministry of Finance (MoF), continues to implement customs legislation . Other agencies are also 
involved , depending on their area of responsibility, e.g. the Ministry of Agriculture in SPS inspection 
and licensing procedure s at the border (below and Sections 3.1.5.2 and 3.3.3).  
Registration requirements  
3.14.   Importers' main registration requirements remained virtually unchanged.2 The use of a 
customs broker is not mandatory. All importers must be registered with the DGCE . They are given 
a single business identification number ( Nomor Induk Berusaha  (NIB)) via the online single 
submission ( OSS) portal , which replaced the customs  identification number ( Nomor Induk 
Kepabeanan ) in 2017, a prior requirement to obtain an importer registration number 
 
1 WTO documents G/TFA/N/IDN/1 , 1 June 2018 ; and G/TFA/N/IDN/2 , 23 July 2019 . WTO, Rate of 
implementation commitments. Viewed at: https://tfadatabase.org/members/indonesia/timeline -of-
implementation -commitments -explanation . 
2 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  WT/TPR/S/401 • Indonesia  
 
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  (angka  pengenal importir  (API)). In addition , the DGCE still uses the taxpayer identification number 
(Nomor Pokok Wajib Pajak ) for verification .3 Both the NIB and the API may be obtained online from 
the OSS portal launched in July 2018 (Section 2.4.3).4 
3.15.   Two types of API remain in place: the General API (API -U) and the Producer API (API -P). Each 
importer may obtain only one type of A PI. Since 2013, this dual registration system has been 
modified several times , and remains regulated by Minister of Trade Regulation No. 75/2018 (entry 
into force on 20 July 2018).5 The authorities indicated that there are no longer exceptions for SOEs 
and for imports where there is a special relationship between the importing and exporting  
companies.6 The API -P is available to importers of goods for their own use, such as capital goods, 
raw materials, auxiliary materials and/or materials to support the p roduction process; trading or 
transfer of these imports is not allowed (except for market -testing purposes, under certain 
conditions). In 2016 , the MoT abolished the API holder requirement to secure a special importer 
identity number for imports of certain  commodities, such as rice, electronic products, sugar, corn, 
soybeans, toys, footwear , and textiles.7 Under the Regulation , an API may not be required for 
temporarily imported goods, promotional products , goods imported for research or scientific 
develop ment purposes, consignments, donations  such as for natural disasters, medicines and health 
equipment that use the government budget, non -tradable sample goods, etc. The API is valid for as 
long as the importer operates but must be renewed every five years.  Under the Regulation, all API 
holders are required to submit quarterly reports via the OSS portal. Between 2013 and 2018, the 
API-U and API -P numbers dropped  by 65.7% (3,270  in 2018) and 85.8% (736  in 2018), respectively , 
as a result of the introduction o f the NIB (see above).  
Documentation requirements  
3.16.   The import of goods remains subject to the verification of documentation by the DGCE , and 
physical inspection in certain specific circumstances. Documentation requirements remain 
unchanged , and include  an import declaration  form, a pro -forma invoice, a commercial invoice, a 
bill of lading , and a packing list . A certificate of origin (e.g. for tariff preferences, prohibitions , and 
restrictions measures ( lartas )), an insurance certificate , and othe r relevant documents may be 
required for certain items subject to certain conditions.8 Additional certificates are often required by 
technical agencies with an interest in the content and conformity  of the imported product , such as 
food, pharmaceuticals, seeds, or chemicals (Sections 3.1.5.2 and 3.3.2).  
3.17.   The Indonesia National Single Window (INSW) ( www.insw.go.id ), in place since 2007, 
continues to  allow for, inter alia , the single submission of customs documents and a pplications for 
trade licences, the payment of duties, synchronized processing, and a final decision by Customs . 
Since  31 May 2018, the use of the INSW system is compulsory  under PR No. 44/2018 on Indonesia 
National Single Window.9 This Regulation expanded the INSW coverage to quarantine and port 
documents (sea and air).10 It now integrates all customs documents, quarantine documents, 
licensing documents, port/airport documents, and  other documents relating to export and/or import 
to be submitted by service users to relevant ministries/institutions. In 2018 , a Single Stakeholder 
Information database  was set  up on the INSW's website . It consist s of more than 300 business 
identities ca tegorized as low risk. The Regulation established a National Single Window Institution 
 
3 MoF Regulation No. 219/2019 ; and Economist Intelligence Unit (2019), Country Commerce – 
Indonesia , January.  
4 Pursuant to GR No. 24 of 2018 on Integrated Business Licensing Services through Electronic Systems, 
on 9 July 2018, the Government launched the OSS web portal. Viewed at: www.oss.go.id .  
5 Minister of Trade Regulation No. 75/2018 replac ing Regulation No. 70/2015. Viewed at:  
http://jdih.kemendag.go.id/backendx/image/regulasi/26220717_PERMENDAG_NOMOR_75_TAHUN_2018.pdf . 
6 Article 6 of Minister of Trade Regulation 27/2012 (as amended) sets out the conditions under which a 
special relationship may be recognized.  
7 These importers are no longer subject to any other requirements, apart from those related to import 
licensing provided for under MoT Regulations 48/2015 and 70/2015.  Economist Intelligence Unit (2019), 
Country Commerce – Indonesia , January.  
8 Director General Regulation No. 16/2016 (PER -16/2016) ; and US Department of Commerce, 
International Trade Administration, Export Solutions.  Viewed at: https://www.export.gov/article?id=Indonesia -
Import -Requirements -and-Documentation . 
9 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
10 Perpres No. 44/2018 revokes PR No. 10 of 2008 on Use of Electronic System on Indonesian National 
Single Window , last amended in 2012 , and PR No. 76 of 2015 on Manager of Indonesia National Single Window 
Portal.  Indonesia Foreign Investment Law, Indonesia  National Single Window. Viewed at: 
http://www.indonesiaforeigninvestmentlaw.com/business/indonesia -national -single -window/ . WT/TPR/S/401 • Indonesia  
 
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  (LNSW) under the MoF as the INSW -operating agency replacing the PP-INSW (Pengelola 
Portal -Indonesia National Single Window). In terms of logistics, the INSW facilitates the smooth flow 
of goods by integrating ship loading and unloading systems through Inaportnet (an electronic portal 
facilitating the exchange of data and information on port services) and accelerating the process of 
shipping goods.11 As at November 2018, t he INSW was implemented in 75 major ports , accounting 
for 95%  of import/export activities , and involv ing more than 67,000 importers and exporters.12 As 
at 31 December 2019, the INSW was operational at 93 customs office s, including five main seaports 
and ai rports (eight in 2012). The authorities indicated that , in 2019 , around 97% (90% in 2012) of 
trade entered or left Indonesia through these  93 customs entry points. According to the authorities, 
between 2007 and June 2020 , 10.3 million  import declarations a nd 16.3 million  export declarations 
were processed electronically through the INSW system.  
3.18.   At the regional level , Indonesia participates in the ASEAN Single Window (ASW), a regional 
initiative agreed in 2005 that connects and integrates the national single window s of ASEAN member 
States (AMS s); it became operational in early 2020.13 The ASW's objective is to expedite  cargo 
clearance and promote ASEAN economic integration by enabling the electronic exchange of border 
trade -related documents among AMS s. On 1 January 2018, the ASW Live Operation began in 
five countries, namely Indonesia, Malaysia, Singapore, Thailand and  Viet Nam; by 
30 December  2019, all AMS s (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, 
Myanmar, the Philippines, Singapore, Thailand , and Viet Nam) had joined the Operation, where the 
granting of preferential tariff treatment is based on the Electronic Certificate of Origin (ASEAN Trade 
in Goods Agreement (ATIGA) e -Form D) exchanged through the ASW.14 The exchange of more 
documents through the ASW in the near future is currently under preparation. The following 
documents are likely to be able to be submitted through the ASW in the future, subject to the 
readiness of each AMS: ASEAN Customs Declaration Document, electronic Phytosanitary Certificate, 
electronic Animal Health Certificate , and electronic Food Safety Certificate.   
Authorized Economi c Operator programme  
3.19.   Following preparatory work since 2010, Indonesia launched the Authorized Economic Operator 
(AEO) programme in February  2015.15 The programme is aimed at ensuring: a safe supply chain; 
the active participation of AEO participants in securing the trade chain; efficient business practices 
for AEO participants; simplification of customs procedures; and compliance and recognition of 
international standards. Upon compliance  with certain conditions and criteria, the DGCE may grant 
AEO status to seven categories of operators in the supply chain: i mporters; exporters; customs 
service management company PPJK (Perusahaan Pengurusan Jasa Kepabeanan) ; temporary storage 
TPS ( Tempat Penimbunan Sementara ) entrepreneurs ; TPB ( Tempat Penimbunan Berikat ) 
entrepreneurs; carriers; and other parties.16 The expected benefits of the programme consist of: 
 
11 Ekonomi, Indonesia Pmer K esuksesan ISRM dan INSW ke Presiden Erdogan.  Viewed at : 
https://ekonomi.bisnis.com/read/20181129/9/864489/indonesia -pamer -kesuksesan -isrm-dan-insw-ke-
presiden -erdogan . 
12 Ekonomi, Indonesi a Pmer Kes uksesan ISRM dan INSW ke Presiden Erdogan.  Viewed at : 
https://ekonomi.bisnis.com/read/20181129/9/864489/indonesia -pamer -kesuksesan -isrm-dan-insw-ke-
presiden -erdogan . 
13 ASW, What is the ASEAN Single Window?  Viewed at:  
https://asw.asean.org/component/content/?view=featured . 
14 Ekonomi, Indonesia Pmer Kes uksesan ISRM dan INSW ke Presiden Erdogan.  Viewed at : 
https://ekonomi.bisnis.com/read/20181129/9/864489/indonesia -pamer -kesuksesan -isrm-dan-insw-ke-
presiden -erdogan . 
15 Preparatory work was based on: Articles 3 and 4 of Law No. 10 of 1995 as amended by Law No. 17 of 
2006 concerning Customs, especially related to the implementation of selective customs inspection as 
recommended by WCO S AFE FOS as special customs treatment to AEOs; and Presidential Instruction No. 1 of 
2010 concerning the Acceleration of the Implementation of the 2010 National Development Priorities, which 
listed one form of policy and customs information technology devel opment as the application of AEOs. DGCE, 
AEO (in Bahasa Indonesia only) . Viewed at: http://www.beacukai.go.id/arsip/pab/aeo.html ; and WTO 
document WT/TPR/S/278/Rev.1, 16 July 2013.  
16 The AEO Conditions and Requirements cover: compliance with customs regulations; maintenance of a 
trade data management system; financial ability; consultation, collaboration and communication systems; 
educa tion, training, and care; exchange, access, and confidentiality of information; cargo security; security of 
movement of goods; location security; employee safety; security of trading partners; crisis management and 
incident recovery; and system planning an d implementation. Minister of Finance Regulation PMK 
227/PMK.04/2014 concerning Authorized Economic Operators; and Director General Regulation No. 
PER-4/BC/2015 concerning Procedures for Granting Customs Recognition as an Authorized Economic Operator. 
Viewed (in Bahasa Indonesia only)  at: http://www.beacukai.go.id/arsip/pab/aeo.html .  WT/TPR/S/401 • Indonesia  
 
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  speeding up the process of releasing goods with a minimum of document verification and/or physical 
inspection, thus reducing logistics costs; worldwide recognition of AEO companies as safe, secure 
and compliant business partners in international trade; increasing the effectiveness of DGCE 
supervision, service and efficiency of resource allocati on; and recognition of Indonesia as a 
trustworthy country in international trade , resulting in a positive impact on the national economy. 
As at February 2020, there were 126 AEO -certified companies , and 144 AEO certificates had been 
issued.17 AEO companies  undertook from 8.63% (2015) to 33.33% (2018) of total imports in value 
terms.  
Customs Main/Prominent Partners programme  
3.20.   The Customs Main/Prominent Partners (MITA) programme, dating back to 2002, remains in 
place; its regulatory framework was last updated in 2017.18 Participating companies continue to 
benefit from special customs services , including: relatively few er customs checks; transposition of 
imported goods directly from maritime transportation facilities to land transportation facilities , 
without be ing stockpiled and without  submitting an application ("truck losing"); partial release of 
imported goods from containers ("stripping" (part off container)) under certain conditions; use of 
corporate guarantees for all customs activities; and payment of cus toms obligations of 
producer -importers in the form of periodic payments. In accordance with Article 3 of DGCE 
Regulation No. PER-11/BC/2017, beneficiaries must meet some requirements , including: a good 
compliance reputation regarding  their import and/or ex port activities for the past six months; and 
no arrears of customs, excise and/or tax obligations relating to imports.19 As at 20 March 2018, a 
total of 301 companies were designated as MITAs ; MITA companies accounted  from 0.07% (2013) 
to 3.57% (2019) of total imports in value terms.  
Import verification  
3.21.   During the review period, prior import verification requirements remained in place to ensure 
compliance of certain goods with the relevant legislative/regulatory provi sions. Its legal framework 
was last changed in 2018.20 Since November 2002 , KSO Sucofindo - Surveyor Indonesia (KSO SCISI) 
 
17 DGCE. Viewed (in Bahasa Indonesia only)  at: http://www.beacukai.go.id/arsip/pab/aeo.html . 
18 Relevant legislation is contained in: KEP-58/BC/2002, 27 August 2002, Concerning Priority Lane 
Tests , which was superseded by  PER11/BC/2017, 19 June 2017, Concerning Guidelines for Implementing 
Customs Main Partners.  Viewed (in Bahasa Indonesia only)  at: http://www.beacukai.go.id/arsip/pab/aeo.html ; 
Regulation of the Minister of Finance of th e Republic of Indonesia No. 211/PMK.04/2016 concerning 
Amendments to the Minister of Finance Regulation No. 229/PMK.04/2015 concerning Customs Main Partners; 
and Regulation of the Director General of Customs and Excise No. PER-11/BC/2017 Regarding the 
Implementation Guidelines for Customs Main Partners.  Viewed (in Bahasa Indonesia only)  at: 
http://www.beacukai.go.id/arsip/pab/aeo.html . 
19 Good compliance  means, inter alia : never make a major mistake in stating the quantity, type of 
goods, and/or customs value in the customs notification; never misuse facilities in the field of customs and/or 
excise; never receive recommendations based on the results of the customs audit stating that the intern al 
control system is not good and/or cannot be audited (unauditable); and never lend customs modules to other 
parties.  
20 The legislative framework in this area contains: Minister of Trade Regulations 
No. 46/M-DAG/PER/8/2014 concerning General Provisions fo r the Verification or Technical Tracing in the Trade 
Sector, 8 August 2014 ; No. 85/M -DAG/PER/10/2015 Jo; No.  64/M-DAG/PER/8/2017 concerning Provisions on 
the Import of Textiles and Textile Products; No. 07/M -DAG/PER/1/2018 on the Provisions of Import of Cl inker 
Cement and Cement; No. 117/M -DAG/PER/12/2015 concerning Provisions on the Import of Sugar; 
No. 127/M  DAG/PER/12/2015 concerning Import Provisions for Used Capital Goods; 
No. 31/M-DAG/PER/5/2016 concerning Import Provisions for Non -Hazardous and Toxic  Waste Substances 
(NON B3); No.  40/M-DAG/PER/9/2009 on Verification or Technical Tracing on the Import of Sheet Glass; 
No. 01/M-DAG/PER/1/2017 concerning Provisions on Export of Processed and Purified Mining Products; 
No. 6/M-DAG/PER/7/2007 on Verification  or Technical Assessment of Imported Ceramic; 
No. 62/M-DAG/PER/8/2015 on Import Provisions for Nitrocellulose; No. 76/M -DAG/PER/9/2015 concerning 
Revocation of Minister of Trade Regulation No. 11/M -DAG/PER/3/2010 on Import Provisions of Machine, 
Machinerie s, Raw Materials, Unrecorded Optical Discs and Recorded Optical Discs as revised by Minister of 
Trade Regulation No.  35/M-DAG/PER/5/2012; No. 77/M -DAG/PER/12/2016 Jo. No. 06/2018 concerning 
Provision of Import of Tyres; No. 82/M -DAG/PER/12/2016 Jo. 22 Tahu n 2018 on Import Provisions for Iron, 
Steel, Alloy Steel and their Derivative Products; No. 83/M -DAG/PER/10/2015 on Provision of Imports of Ozone 
Depleting Substances; No.  84/M-DAG/PER/10/2015 Jo. 18 concerning Import Provision of Refrigeration 
System -based Goods; No.  84/M-DAG/PER/2016 Jo. 12/M -DAG/PER/2/2017 on Export Provisions for Forestry 
Industrial Products; No.  86/M-DAG/PER/10/2015 concerning Provisions on Imports of Batik and Batik Motif 
Textiles and Textile Products; No.  87/M-DAG/PER/10/2015 on the Provisions of Import of Certain Products; and WT/TPR/S/401 • Indonesia  
 
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  on Import Verification Program (VPTI) ( www.scisi.co.id ), an operational cooperation between 
two SOEs (PT  Sucofindo (or PT Superintending Company of Indonesia) and PT Surveyor Indonesia), 
has undertaken these procedures on behalf of the MoT. The KSO SCISI maintains seven branch 
offices abroad (China; Singapore; Malaysia; Hong Kong, China; Thailand; Republic of Korea; and 
Viet Nam) and cooperates with nine affiliate surveyor firms (Bureau Veritas, Cotecna, SGS, Baltic 
Control, CIC, Alex Stewart International, Intertek, CWM, and OMIC). A surveyor report outlining the 
surveyor firm's inspection results is a documentary requirement for certain goods. The verification 
requirements ' (VPTI) product coverage was expanded to 29 (19 in 2013) product categories 
(338 items in 2020) , to cover: textile s and textile products; nitrocellulose; rice; salt; precursor s; 
sugar; ceramics; multifunction colour copiers and printers; non -hazardous and toxic waste; 
electronics; food and beverages; footwear; children's  toys; glass sheet; herbs and food 
supplements; hazardous and noxious substances; ozone layer -depleting substanc es; horticultur al 
products ; cell phones, handheld computers and tablet computers; apparel; cooling system -based 
goods; textile s, batik and batik moti f textile products; t yres; iron and steel, alloy steel and their 
derivative products; pearls; tobacco; sacc harin, cyclamate, and preparations of alcohol -containing 
odour; and hand tools.21 Most of these imported goods are subject to import or export licensing 
requirements (see below and Section  3.2.3.2), and some are also subject to port-of-entry 
supervision (s ee above). So far, Indonesia has never submitted a pre -shipment inspection 
notification per se  to the WTO (Section 2.3.1.3).22 During the review period, Indonesia was a 
respondent in WTO dispute settlement cases  relating to, inter alia,  its VPTI measures on the 
importation of horticultural products, animals and animal products (Section 2.3.1.1).23   
Risk management customs clearance  
3.22.   Customs clearance for shipments continues to be carried out under different channels 
according to the risk  levels associated with them as evaluated by the automated risk management 
system (Table 3.1).24 Since May 2016, there have been only three service lanes and supervision for 
the release of imported goods, namely the green lane, the yellow lane and the red lane (Table 3.1); 
between 2013 and May 2016, five types of lanes, i.e. red, yellow, green, priority MITA, and 
non-priority MITA, were in place.25 As at May 2020 , 626 importers and/or exporters  were provided 
with special services in the field of customs. At the time of the previous Review, customs clearance 
took a few minutes for "prioritized" and "non -prioritized" MITA partners, and a maximum of 
three  days for goods passing though the red channel; during the review period , the DGCE performed 
around 473 (pre viously 520) post -clearance audits on average per year. Requirements for some 
products (e.g. fishery products, alcoholic beverages, salt, certain veterinary medicines, 
ozone -depleting substances, refrigeration system goods, and batik and batik motif textil es and 
textile products) to pass through specified ports of entry for different reasons (e.g. safety, health, 
or religious) remain in place , and were updated.26 Since  2018, the importation of alcoholic beverages 
 
No. 82/M-DAG/PER/12/2012 concerning Import Provision on Mobile Phones, Handheld, Tablet Computers. 
INSW, Non-Tariff Measures. Viewed at: https://intr.insw.go.id/n tm.php . 
21 In 2013, it only covered : (i) sugar; (ii) rice; (iii) salt; (iv)  precursors ; (v) optical discs (empty and 
filled), and machines and materials used to produce them; (vi)  textiles and textile products; 
(vii) ozone -depleting substances; (viii) nitro  cellulose; (ix)  hazardous materials; (x) colour multifunctional 
machines, and colour photocopying and printing machines; (xi) non -hazardous and toxic waste; (xii) used 
capital goods; (xiii)  iron and steel; (xiv)  certain imports of electronics, ready -to-wear clothes, children's toys, 
footwear, and food and beverages; (xv) ceramics; (xvi) sheet glass; (xvii) tyres; (xviii) pearls; and 
(xix) horticultur al products. WTO document WT/TPR/S/278/Rev.1, 16 July 2013 ; Sucofindo, Commodities. 
Viewed at:  http://www.scisi.co.id/scisi/en/comodities ; and INSW, Natioal Trade and Customs Laws and Rules. 
Viewed at: https://intr.insw.go.id/regulations.php . 
22 According to the authorities, Indonesia's  notification to the WTO Committee on Trade Facilitation 
regarding its commitment to the TFA , specifically to Article 10.5 about Pre -Shipment Inspection  (PSI), states 
that it does not conduct PSI in relation to tar iff classification and customs valuation. Accordingly, Indonesia 
does not consider VPTI as PSI because each scheme serves a different purpose and objective . PSI aims to 
secur e revenue collection by ensuring the customs value of the total,  whereas the VPTI serves to ensure 
regulatory compliance for all imported goods subject to restrictions and prohibitions ( lartas). The VPTI 
facilitates international trade by expediting imports and giv ing assurance to importers to avoid the cost risk of 
re-exportation or the destructio n of goods due to non -compliance.  
23 WTO, Indonesia and the WTO. Viewed at: 
https://www.wto.org/english/thewto_e/countries_e/indonesia_e.htm . 
24 WTO document WT/TPR/ S/278/Rev.1, 16 July 2013.  
25 DGCE Regulation No. 42/BC/2008 as amended by DGCE R egulation No. 08/BC/2009 ; MoF  Regulation 
No. 229/2015 ; and DGCE Regulation No. 16/BC/2016 . 
26 INSW, Non-Tariff Measures. Viewed at: https://intr.insw.go.id/ntm.php . WT/TPR/S/401 • Indonesia  
 
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  must be conducted through a bonded logistics  centre.27 Since 2010, the DGCE has undertaken 
four time release studies (TRS s) (time required from arrival to release of containerized goods).28 
According to the most recent TRS , in 2018, the average time required from arrival to removal of 
goods was 4 days, 20 hours and 10 minutes for sea cargo, compared to 13 days, 6 hours and 
53 minutes in 2014.  
3.23.   Since end -August 2016, in accordance with the mandate of Economic Policy Package XI, an 
Indonesia Single Risk Management  (ISRM) policy was  implemented , which  integrat es risk 
management in the DGCE, the Indonesia Food and Drug Authority (Badan Pengawas Obat dan 
Makanan  (Badan POM) , and the Ministry of Marine Affairs and Fisheries (for both animal and plant 
quarantine service s) using a single submission platform on the INSW portal.29 According to the 
authorities, as at November 2019 , the ISRM Pilot Project included five agencies of 
15 ministries/institutions involved in import/export permits.  There are several steps in the 
implementation of the ISRM project. At the initial stage, piloting agencies are required to determine 
their low-risk categories , and the score for each category. Simultaneously, piloting agencies also 
prepar e their internal infrastructures in terms of building connectivity to the INSW system. In the 
next phase, all related agencies will agree on an Integrated Low -Risk Platform. In line with the 
development of the 2nd Generation INSW system that enables the single submission f unction, all 
related ministries/agencies can be integrated in to the single window system. The ISRM policy is 
expected to improve service efficiency and effective supervision in the import/export process by the 
delivery of data and information solely  throug h the INSW.30 The ISRM's integration into the INSW is 
to accelerate the process of issuing paperless export and import licen ces, document checks, customs 
clearance , and goods release permits.31 The ISRM is also intended to increase Indonesia's 
compliance with the WTO TFA , and improve its logistics performance by reducing waiting times at 
ports.  
Table 3.1 Risk management system: customs clearance channels  
Lane  Characteristics  
Priority lane  (Prime Se rvice Office 
only) until May 2016   
- Prioritized MITA lane Release of goods from Customs without documentary verification or 
physical inspection  
- Non-prioritized MITA lane Release of goods from Customs without physical inspection or 
document verification, except for: re -imports of exported goods; 
goods subject to random inspection; or temporarily imported goods  
Green lane  
 Document verification and physical examination after issuance of the 
approval letter ( Surat Persetujuan Pengeluaran Barang  (SPPB) ) for 
release of goods  
Yellow lane  Document verification before the issuance of the SPPB for release of 
goods; and no physical inspection   
Red lane  Physical in spection and document ary verification before the issuance 
of the SPPB for release of goods. Reasons for use of the red lane 
include: importer is new or high -risk; goods are temporarily 
imported; goods are type II oil operational goods; or goods specified 
by the Government  
Source:  DGCE Regulation No. 16/BC/2016.  
 
27 MoT Regulation No. 120/2018 , amend ing initial Regulation 20/2014 on the Importation of Alcoholic 
Beverages for the fifth time . Global  Trade Alert, Indonesia: Alcoholic beverag es to be imported only through 
bonded logistics centres.  Viewed at:  https://www.globaltradealert.org/state -act/36746/indonesia -alcoholic -
beverages -to-be-imported -only-through -bonded -logistics -centres . 
28 The World Customs Organization (WCO) TRS is specifically referenced in Article 7.6 of the WTO TFA 
as a tool for Members to measure and publish the average releas e time of goods.  WCO, Time Release Study – 
Version 3. Viewed at: http://www.wcoomd.org/en/topics/facilitation/instrument -and-tools/tools/time -release-
study.aspx . 
29 LNSW. Viewed (in Bahasa Indonesia only) at: 
https://www.insw.go.id/index.php/home/menu/berita_detail/174 . 
30 DGCE, Pangkas Dwelling Time, Bea Cukai Kembangkan Sistem Indonesia Single Risk Management.  
Viewed (in Bahasa Indonesia) at: http://www.beacukai.go.id/berita/p angkas -dwelling -time-bea-cukai-
kembangkan -sistem -indonesia -single -risk-management.html . 
31 Ekonomi, Indonesia Pamer Kesuksesan ISRM dan INSW ke Presiden Erdogan.  Viewed (in Bahasa 
Indonesia) at: https://ekonomi.bisnis.com/read/20181129/9/864489/indonesia -pamer -kesuksesan -isrm-dan-
insw-ke-presiden -erdogan . WT/TPR/S/401 • Indonesia  
 
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  Post-border policy  
3.24.   In order to improve the investment climate, accelerate handling processes at ports across the 
country , and prevent containers piling up in the customs areas, a Post -Border Import Supervision 
Policy was introduced on 1 February 2018. At the same time, the MoT issued several amendments 
to import regulations , as well as new regulations in this area.32 Followi ng the issue of these 
regulations, the DGCE issued several communications to all customs offices , including Circular Letter 
No. S -145/BC/2018 on 7 February 2018 on Implementation of Post -Border Import Supervision on 
Certain Imported Goods that are Subject to Restriction. The amendments and changes are aimed at 
reducing the dwelling time at the port , and improv ing business processes and the competitiveness 
of domestic logistics providers , as part of Economic Policy Package Phase XV (Section 2.2.2) . 
According to the authorities, this involved the revision of 72 regulations of seven ministries/agencies. 
The main thrust of these changes is to shift the import supervision of prohibited and/or restricted 
goods (subject to Larangan dan Pembatasan Impor  or Lartas 1) away from Customs at the entry 
point, to have the control done by the relevant ministry or institution (e.g. MoT, or the Indonesia 
Food and Drug Authority  (BPOM )) after these goods exit the customs territory or pass the border 
(post-border). Furth ermore, importers must keep the lartas  documents for five years , for the 
purpose of supervision and examination by the relevant ministry/institution , as not all relevant 
agencies had activated their self -declaration systems as at March 2018. Post-border su pervision is 
conducted by the post -audit and risk management systems. Prior to the introduction of the Policy, 
out of 10,826 HS tariff lines, 48.3% (5,229 HS Codes) were subject to limited import restriction s 
(Lartas 1) or were closely monitored by Customs ; under the new Policy, 3,204 HS lines (29.6% of 
total) shifted from border to post -border supervision , leaving 2,927  HS items (27% of total) 
regulated at the border, a ratio close to the original target of 20.8% (2,256 HS Codes) though still 
higher than t he ASEAN average of 17 .0%, covering goods restricted for safety, public health, security 
and environmental reasons  (Section 3.1.5). The authorities indicated that the original target is still 
valid, and will be reduced gradually. At the time of the previou s Review, port -of-entry supervision 
of items subject to restrictions applied to: ( i) food and beverages, toys, electronics, footwear , and 
garments; ( ii) horticultural products; ( iii) pearls; ( iv) ozone -depleting substances; ( v) salt; 
(vi) alcoholic beverages; and ( vii) hazardous materials.33 These products were also subject to prior 
import verification (see above) and import licensing requirements (see below and Sections 3.1.5.2, 
3.2.1 and 3.2.3.2). At present , rice, salt, and sugar continu e to be inspected at the border. According 
to the authorities, since the implementation of the Policy , the average dwelling time was reduced by 
13.26%.  
Transparency and appeals  
3.25.   Customs - and excise -related regulations and procedures are available online , mostly in 
Bahasa Indonesia ( http://www.beacukai.go.id/ ; and https://intr.insw.go.id/index.php ).The LNSW 
also provides information on regulations/measures on the ASE AN Trade Repository (ATR) at the 
ASEAN secretariat website and the INSW system, where all the measures are classified, summarized 
and uploaded in English; in total , 210 SPS measures and 201  TBT measures  are already published 
on the ATR website. The DGCE of ficial website does not utili ze cloud computing services but has 
already adopted the Responsive Web Design , which allows it to be accessed through several devices 
by both internal and external stakeholders.  Under the Customs Law, the DGCE may issue, upon 
request, written advance rulings on tariff classification, origin matters, and customs valuation; these 
 
32 The revised MoT regulations related to the importation  (11 regulations)  or exportation (5  regulations) 
of: pearl; t yres; cement and clinker cement; raw materials from plastics; sheet glass; multi -functional color 
printer s; color photocopy machine s and color printer machine s; horticultural products; capital goods not in a 
new condit ion; cooling system -based goods; lubricants; animal s and animal products; corn; and iron or steel, 
alloy steel and their derivative products. As a result, i nspection of the fulfillment of the import requirements for 
a product is carried out after going thr ough the customs zone; the importer in possession of an import permit 
must submit a self -declaration stating that s/he has fulfilled the import requirements before the imported 
goods are used, traded and or transferred. Cekindo, Breaking News: New Governme ntal Policy Makes Export to 
Indonesia Easier. Viewed at:  https://www.cekindo.com/blog/governmental -policy -import -to-indonesia ; and 
Conventus Law, Indonesia – Post-Border Policy – Self Declaration Scheme. Viewed at: 
http://www.conventuslaw.com/report/indonesia -post-border -policy -self-declaration/ . 
33 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  WT/TPR/S/401 • Indonesia  
 
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  rulings are binding.34 The appeal procedure for customs decisions remains unchanged since 2006.35 
Traders who disagree with customs decisions may request  administrative remedies or object (e.g. 
reviews by the DGCE, or appeals to the DGCE) by filing a written objection to the Director General 
within 60 days from the date of the determination/assessment and with prior settlement of the 
underpayment or the is sue of a guarantee; the Director General makes a decision on the objection 
within a period of 60 days of its receipt.  Traders not satisfied with the outcome of the administrative 
remedies or objections may refer their case to the Tax Court in writing within 60 days from the date 
of the assessment or decision, after the underpayment amount has been entirely settled. The he aring 
process is normally completed within 12 months, but it could be extended in some cases for a further 
three months.36 Between 2014 and April 2020, there were 53,825 cases of review or objection cases 
and 20,397  cases of appeal; tariff classification a nd customs valuation cases accounted for 54.1% 
and 45.9% of these cases , respectively.  
3.26.   In January 2011, to promote transparency and predictability in the trade regime, the 
Government introduced the Indonesia National Trade Repository (INTR).37 The INTR is  a single 
reference point, providing information on tariff and non -tariff measures applied on goods entering, 
exiting and transiting the country. It aims to provide information on trade rules and regulations 
through the existing INSW portal. The INTR inclu des information on: HS code s; regulations issued 
by government agencies related to import or export permit licences; exchange rates; rules of origin; 
e-commerce regulations; and does trade simulations.  
International cooperation, appraisal and other issues  
3.27.   During the review period, Indonesia, a member of the World Customs Organization  (WCO) , 
became a signatory to the major customs -related international conventions, i.e. the WCO Revised 
Kyoto Convention (22 August 2014) and the Istanbul Convention on Tempora ry Admission 
(17 November  2014). It maintains bilateral agreements or memorand a of understanding (MOU s) for 
the exchange of customs information with 15  countries (13 in 2013) , and provisions on customs 
cooperation are incorporated in to its RTAs (Section 2. 3.2).38 During the review period , the DGCE 
signed MOUs  relating to , inter alia , electronic certificates of origin mechanisms (China , and Republic 
of Korea, 2019), mutual administrative assistance in customs matters (Hong Kong , China (2017), 
Republic of Kor ea (2019), United Arab Emirates (2019)), capacity -building exchange of information 
and information exchange and enforcement (China, 2018) , and trade facilitation for certain products 
originating from Palestin e (2018).  
3.28.   Since its previous TPR and prior to the introduction of recent trade facilitation initiatives, 
Indonesia's position in some ease -of-trading indices dropped.  According to World Bank Doing 
Business data, in 2019 , Indonesia stood 116th out of 190 economies in the ease of trading across 
borders,  lower than a number of economies in the East Asia and Pacific region (15th out of 
25 economies) , and its 54th position (out of 189 economies) in 2013.39 Furthermore, it ranked 
 
34 Advance Ruling on Classification , known as Notification of Classification prior to Import ( Penetapan 
Klasifikasi Sebelum I mpor (PKSI)) is now regulated by MoF Regulation No. 194/2016 on Procedures for 
Submitting and Determining the Classification of Imported Goods Prior to Submitting Customs Notification. 
Service users can submit a PKSI to seek the right tariff classification  (HS Code) , and receive  a written official 
decision from the DGCE. Advance Ruling s on Valuation s, also known as Valuation Advice , are regulated by  MoF 
Regulation No. 134/2018 on Procedures for Submitting Requests and Giving Instructions on How to Calculate  
Customs Value in the Form of Cost and/or Value Treatment of Goods to be Imported before Submitting 
Customs Declaration. According to the authorities, Advance Ruling s on Origin cannot be implemented yet  due 
to a lack of relevant legal framework for the implementation , at both law and m inisterial regulation  levels.  WTO 
document WT/TPR/S/278/Rev.1, 16 July 2013 ; and INSW, Administrative Rulings.  Viewed at: 
https://intr.insw.go.id/administrative.php . 
35 Law No. 17/2006 Concerning Amendment of Customs Laws No. 10/1995 . Viewed at: 
http://www.flevin.com/id/lgso/translations/JICA%20Mirror/english/7201_ UU_17_2006_EN.html . 
36 Deloitte (2017), Indonesia Customs Info – Special Edition: Customs Audit and Litigation , March.  
37 INTR. Viewed at: https://intr.insw.go.id/index.php . 
38 The signatories are: Australia; Azerbaijan; Belgium;  China; Hong Kong, China; India; Iran; Japan; the 
Netherlands; Palestine ; Papua New Guinea; the Republic of Korea; the United States; the United Arab Emirates; 
and Uzbekistan. W TO document WT/TPR/S/278/R ev.1, 16 July 2013 . 
39 World Bank (2019), Doing Business 2020 - Comparing Business Regulation in 190 Economies , 
24 October . Viewed at: https://www.doingbusiness.org/ en/reports/global -reports/doing -business -2020; World 
Bank (201 3), Doing Business 2014 - Understanding Regulations for Small and Medium -Size Enterprises , 
29 October . Viewed at: https://www.doingbusiness.org/en/reports/global -reports/doing -business -2014; World WT/TPR/S/401 • Indonesia  
 
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  70th out of 136 economies in the World Economic Forum's (WEF) Enabling Trade In dex 2016 
rankings , compared to 58th out of 138 economies in 2014 . Regarding domestic market access , it 
ranked 30th and 20th, respectively . In terms of efficiency and transparency of border administration , 
it ranked 79th and 69th, respectively.40 According to World Bank Doing Business data, in 2019 , 
importing a shipment of goods (auto parts) required an average of 106 hours for documentary 
compliance and 99 hours for border compliance , at a cost of USD 164 and USD  383, respectively, 
requiring  nine documents.41 In 2013, importing a shipment required eight documents, took 23 days , 
and cost USD 660.42 According to the WEF 2015 assessment, import procedures remained 
burdensome , although Indonesia has seen some improvement in the predictability of these  
procedures, with upgrades of key functions of the INSW.43 Infrastructure was also a barrier for trade 
given the country 's geography ; while it ranked well in terms of its airport connectivity, Internet 
connectivity rates remained relatively low for the reg ion. At the same time, it indicated that , in 2015 , 
the most problematic factors for importing were: corruption at the border; tariffs and non -tariff 
barriers; high cost or delays caused by domestic and/or international transportation; domestic 
technical requirements and standards; and burdensome import pr ocedures.44 
3.29.   Preventing smuggling by sea into the Indonesian archipelago remains difficult . In 2018, 
Indonesia ranked 68th (69th regarding its customs environment) out of 84 economies (16th in 
Asia-Pacific out of 21 economies) in the Economist Intelligence Unit's  Global Illicit Trade Environment 
Index.45 Between 2014 and 2019 , action was taken to build synergies to combat customs and excise 
violations  by improving inter -agency cooperation among the DGCE, the Indonesian National Police, 
the Indonesian Nationa l Defence Forces, the Directorate General of Tax, the Directorate General of 
Immigration , the Directorate General of Population and Civil Registration, the Indonesian Financial 
Transaction Reports and Analysis Centre (PPATK), and the Nuclear Energy Supervi sory Agency 
(Bappeten).46 Action was to be taken in areas to, inter alia : eliminate or reduce the regulations which 
are considered to hinder the law enforcement agencies from taking any action; regulate the exclusive 
and private terminals at both formal an d informal seaports (more than 1,200  informal seaports are 
considered as prone to smuggling); and evaluate, reduce, and close down seaports that have 
exclusive terminals, particularly for private activities (mainly prone to drug smuggling). Drugs, illegal 
diesel, wildlife , and counterfeit goods seem to be the main smuggled items; in addition to trading 
prohibited or illicit merchandise, tax avoidance could be another reason for smuggling. Between 
2014 and 2019, the number and value of smuggling -related seiz ure cases declined by 20% to 32  and 
by 60.2% to IDR 89.3 billion. The biggest increase in seizures was of drugs (narcotics and 
psychotropics) whose value amounted  to IDR 253.34 billion.  
3.1.1.2   Customs valuation  
3.30.   During the review period, the basic customs valuati on legislation (Article 15 of Customs Law 
No. 17 of 2006) remained unchanged but implementing regulations were amended in the following 
 
Bank, Ease of Doing Business rankings. Viewed at: https://www.doingbusines s.org/en/rankings?region=east -
asia-and-pacific . 
40 WEF and the Global Alliance for Trade Facilitation (2016), Global Enabling Trade Report 2016 . Viewed 
at: http://reports.weforum. org/global -enabling -trade-report -2016/ ; WEF, Indonesia.  Viewed at: 
http://reports.weforum.org/global -enabling -trade -report -2016/economy -profiles/#economy=IDN ; WEF (2014), 
The Global Enabling Trade Report 2014 , 24 March. Viewed at: https://www.weforum.org/reports/global -
enabling -trade -report -2014. 
41 World Bank (2019), Economy Profile of Indonesia - Doing Business 2020 Indicators . 
42 World Bank (201 3), Doing Business 2014 - Understanding Regulations for Small and Medium -Size 
Enterprises , 29 October . Viewed at: https://www.doingbusiness.org/en/repor ts/global -reports/doing -business -
2014. 
43 WEF and the Global Alliance for Trade Facilitation (2016), Global Enabling Trade Report 2016 . Viewed 
at: http://reports.weforum.org/globa l-enabling -trade-report -2016/ . 
44 WEF, Indonesia . Viewed at: http://reports.weforum.org/global -enabling -trade -report -2016/economy -
profiles/#econo my=IDN . 
45 This Index is a measure of the extent to which economies enable (or inhibit) illicit trade through their 
policies and initiatives to combat illicit trade. It is built around four main categories (government policy, supply 
and demand, transparency and trade, and the customs environment ), each of which comprises a number of 
indicators. Economist Intelligence Unit (2018), The Global Illicit Trade Environment Index - A report by The 
Economist Intelligence Unit . Viewed at: 
http://illicittradeindex.eiu.com/documents/EIU%20Global%20Illicit%20Trade%20Environment%20Index%202
018%20 -%20Overall%20Results%20White%20Paper%20June%206%20FINAL.pdf . 
46 Cabinet Secretariat, 5 Government Measures to Prevent Smuggling. Viewed at: 
https://setkab.go.id/en/5 -governme nts-measures -to-prevent -smuggling/ . WT/TPR/S/401 • Indonesia  
 
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  areas: customs value for calculation of import duties (in 2016 and 2018); and procedures for 
determination of tariffs, c ustoms value, and administrative sanctions (in 2018).47 Indonesia uses the 
transaction value as the basis for customs valuation; this method was used in 85% (2019) and 75% 
(2020) of all cases. When this is not feasible, the sequential methods set out in th e Customs 
Valuation Agreement are used.  
3.31.   To combat under -invoicing and mis -invoicing (see below), Indonesia continues to maintain 
two databases of market prices for customs valuation purposes: the Customs Value Database I; and 
the Customs Value Database II .48 The declared customs value is classified based on a fairness test 
as: reasonable, if the value is lower by no more than 5%, the same or higher than that the value of 
identical goods in the Customs Value Database I; or unfair, if the customs value is lo wer by more 
than 5% of the value of identical goods in Database I. The INSW webpage refers , without detailed 
information , to Administrative Measures Affecting Customs Value relating to Minimum Import Prices, 
Reference Prices and Other Administrative Measur es Affecting the Customs Value, n.e.s.49 
Reportedly, the DGCE relies on a schedule of reference prices ("price checks") to assess duties on 
some imports (e.g. food products) rather than using transaction values; the DGCE Director General 
seemingly makes a valuation assessment based on the perceived risk status of the importer and the 
average price of a same or similar product imported during the previous 30  or 90 days.50 In addition, 
it seems that the DGCE does not publicize the list or the methods used to arrive at those prices.51 
During the review period , under -invoicing ranged from 46,411 (2018) to 63,719 (2017) cases per 
year, and foregone tax revenue from IDR 756 trillion (2016) to IDR 1,163.6 trillion (2018); it affected 
parts and accessories of the motor vehicles, plastic goods, and handbags with an outer surface of 
sheeting of plastic or of textile material.  
3.32.   Mis-invoicing ( e.g. under -invoicing by exporters/importers or overpricing by importers) 
remains an area of concern for Indonesia. By using a trade gap analysis, Global Financial Integrity 
 
47 PMK No. 160/PMK.04/2010 concerning Customs Value for Import Duty Calculation as amended by: 
PMK No. 34/PMK.04/2016 concerning Amendments to PMK No. 160/PMK.04/2010 concerning Customs Value 
for Calculation of Import Dut ies; and PMK No. 62/PMK. 04/2018 concerning the Second Amendment to PMK 
No. 160/PMK.04/2010 concerning Customs Value for Calculation of Import Duties. PMK No. 51/PMK.04/2008 
concerning Procedures for Determination of Tariffs, Customs Values, and Administra tive Sanctions, and 
Determination of the Director General of Customs and Excise or Customs and Excise Officials as amended by: 
PMK No. 147/PMK.04/2009 concerning Amendments to PMK No. 51/PMK.04/2008 concerning Procedures for 
Determining Tariffs, Customs Va lue, and Administrative Sanctions, and Determination of the Director General 
of Customs and Excise or Customs and Excise Officials; PMK No. 122/PMK.04/2011 concerning the Second 
Amendment to PMK No. 51/PMK.04/2008 concerning Procedures for Determination of  Tariffs, Customs Value, 
and Administrative Sanctions, and Determination of Director General of Customs and Excise or Customs and 
Excise Officials; and PMK No. 61/PMK. 04/2018 concerning the Third Amendment to PMK No. 51/PMK.04/2008 
concerning Procedures f or Determination of Tariffs, Customs Value, and Administrative Sanctions, and 
Determination of the Director General of Customs and Excise or Customs and Excise Officials.  Deloitte (2018), 
New Tax Regulations , KM No.9/July/2018, 2 July; and WTO document WT/ TPR/S/278/Rev.1, 16 July 2013.  
48 Data sources used for the Customs Value Database I  are: Customs Value Database II data; customs 
declaration values based on the transaction value; data on the audit report on customs values based on the 
transaction value; d ata on objection decision letters for customs values based on the transaction value; and/or 
catalogues, brochures or other information from outside of the Customs Area. Data sources for the Customs 
Value Database II  are the customs declaration values based  on the transaction value with the date of the bill of 
lading or the airway bill being no later than 60 days prior to the preparation of value at the Database II. PMK 
No. 62/PMK.04/2018 concerning the Second Amendment to PMK No. 160/PMK.04/2010 concerning Customs 
Value for Calculation of Import Duties , 6 June 2018.  
49 The authorities indicated that t he INTR menu on the  INSW webpage displays government agencies ' 
regulations that set prohibition s or restriction s on trade in goods based on the Minister of Finance Decree 
submitted by the DGCE to the LNSW. In addition, regulations that are classified into several categories, 
including non-tariff measures and administrative rulings, which also contain regulations related to customs 
valuation , are also available in the ATR menu on the  INSW webpage.  INSW, Non-Tariff Measu res. Viewed at:  
https://intr.insw.go.id/ntm.php . 
50 US Department o f Commerce International Trade Administration, Export Solutions. Viewed at: 
https://www.export.gov/article?id=Indonesia -Trade -Barriers ; and United States Trade Representative ( USTR ) 
(2019), National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2019_National_Trade_Estimat e_Report.pdf . 
51 The price of imported goods that are already in the Customs Value Database (DbNP) functions as a 
risk assessment tool. The Database update procedure begins with the analysis process , and uses several data 
sources , including import customs n otification and other information originating from within and outside the 
Customs Area that has been re -calculated. The DbNP is not publicly available  (categorized as confidential , and 
limited to customs and excise officials who have the task of examining customs value or compiling a customs 
value database).  WT/TPR/S/401 • Indonesia  
 
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  (GFI) estimated the value of potential revenue losses due to the trade gap for mis-invoic ed goods 
at USD  38.5 billion, or 13.7% of the country 's total trade in 2016.52 Of the total estimated potential 
foregone tax revenue of USD  6.5 billion, approximately USD  3.9 billion was due to export 
mis-invoicing , and approximately USD  2.6 billion was due to import mis -invoicing , consisting of 
uncollected VAT (USD  1.2 billion), uncollected customs duties (USD  302 million), and uncollected 
corporate income tax (USD  1.1 billion); the USD  3.9 billion in export mis -invoicing consisted of 
uncollected cor porate income tax (USD  1.8 billion) and royalties (USD  2.1 billion). In 2016 , 
under -invoiced imports of beverages and essential oils from Singapore, plastics from China , and 
vehicles from Japan and China, represent ed potential high -level risks for revenue losses.  
3.1.2   Rules of origin  
3.33.   Indonesia does not apply  non-preferential rules of origin (ROO s).53 Its preferential ROOs , 
based on the wholly obtained or wholly produced criterion and the substantial transformation 
criterion termed as not wholly obtained or prod uced, are set out in its RTAs (e.g. ATIGA, 
ASEAN -China FTA, ASEAN -Australia -New Zeeland FTA, ASEAN -Korea FTA, ASEAN -India FTA, and 
ASEAN -Japan CEP) (Sections 2.3.2 and 3.1.3. 5). Product -specific preferential ROOs remain as 
follows: the good must be wholly produced or obtained; the good must have a regional value content 
of not less than 40% or a change in tariff subhead ing (CTSH) (for ATIGA and all ASEAN Plus FTAs, 
except the ASEAN -India FTA), and 35% plus CTSH (for  the ASEAN -India FTA); all non -originating  
materials used in the production of the good must have undergone a change in tariff classification 
for the majority of the product -specific rules, or at the 2 -digit or 6 -digit level for certain products; 
or all non -originating materials used in the produc tion of the good must have undergone specific 
processing.54  
3.1.3   Tariffs  
3.1.3.1   General features  
3.34.   Since 1 January 2017, Indonesia's Customs Import Tariff Schedule has been based on the 
2017 version of the Harmonized Commodity Description and Coding System (HS).55 The current 
Schedule, which is available online also in English ( https://intr.insw.go.id/tariff.php?id=1&pg=1 ), 
consists of 10,813 eight -digit tariff lines (HS2017 nomenclature), and contains 80 1 more than the 
HS 2012 version (10,012 ten -digit tariff lines). It has a single set of rates, i.e. the MFN rates applied 
to goods from WTO Members , or to economies  that accord reciprocal treatment to Indonesia. 
Preferential tariff rates under RTAs are con tained in MoF regulations and are available online 
(https://www.intr.insw.go.id ) (Sections 2.3.2 and 3.1.3. 5). The share  of customs tariffs as in total  
revenue dropped from 2.9% of total tax revenue in 2013 to 2. 6% in 2018 (Section  3.3.1). During 
 
52 Trade mis -invoicing is a method for moving money illicitly across borders which involves the 
deliberate falsification of the value, volume, and/or type of commodity in an international commercial 
transaction of goods or services by at least one party to the transaction , and constitutes the largest component 
of illicit financial flows as measured by the GFI. GFI, GFI: Indonesia lost estimated US$6.5 billion to trade 
misinvoicing in 2016. Viewed at: https://gfintegrity.org/press -release/gfi -indonesia -lost-estimated -us6-5-
billion -to-trade -misinvoicing -in-2016/ ; and IndianEconomy.n et, What is trade misinvoicing?  Viewed at: 
https://www.indianeconomy.net/splclassroom/what -is-trade -misinvoicing/ . 
53 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.   
54 Authorities comm ents; and INSW, Preferential ROO. Viewed at: 
http://intr.insw.go.id/roo.php?id=3&pg=1 . 
55 Due to the importance of the HS as a global tool for collecting trade statistics and monitori ng trade, 
there were amendments to the HS Codes in agricultural, chemical s, wood, textile s, base metal s, machinery, 
transport , and other sectors. Following the se amendments, the Minister of Finance issued Regulation 
No. 6/PMK.010/2017 (PMK -06) regarding cl assification of commodity and import duty rate s on 
27 January  2017, to adjust the classifications of imported goods and the applicable import duty rates . PMK 
No. 213/PMK.010/2017 concerning Amendments to PMK No. 6/PMK.010/2017 concerning the Establishment of 
the Classification System for Goods and the Imposition of Tariffs on Imported Goods; and PMK 
No. 17/PMK.010/2018 concerning the Second Amendment to PMK No. 6/PMK.010/2017 concerning the 
Determination of the Goods Classification System and the Imposition of Duties on Imported Goods.  PWC, 
Indonesia Updates: No more ten -digit commodity nomenclature on Indonesian Tariff Book. Viewed at: 
https://customs.pwc.com/en/recent -developments/id -no-more-ten-digit-commodity -nomenclature -
201704.html ; Deloitte, Update on tariff nomenclature and import duties.  Viewed at: 
https://www.taxathand.com/article/7007/Indonesia/2017/Update -on-tariff-nomenclature -and-import -duties ; 
and INSW, ASEAN Harmoni zed Tariff Nomenclature 2017. Viewed at:  
https://intr.insw.go.id/tariff.php?id=1&pg=1 . WT/TPR/S/401 • Indonesia  
 
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  the review period and until 2018, the Customs Tariff was regularly notified to the WTO; the latest 
notification consists of the 2018 Customs Tariff.56  
3.35.   Procedures for changes to the tariff schedule remained unchanged. The Minister of Finance 
has the authority to change applied tariff rates, and draws on the recommendations of the 
inter-ministerial advisory  group,  Team Tariff (Section 2.2.1.1); the affected  stakeholders are 
consulted by other relevant ministri es and agencies.57 Changes are enacted and promulgated 
through a n MoF regulation.  
3.36.   The MoF has the flexibility to reduce or increase customs duties temporarily on an MFN basis 
at the request of another government ministry or agency , and did so on various o ccasions over the 
review period, often in order to stabilize domestic commodity prices (particularly for rice, sugar, and 
soybeans).58  
3.1.3.2   Applied MFN tariffs  
3.37.   During the review period, Indonesia's simple average applied MFN tariff rate rose from 7.8% 
in 2012  to 10.1% in 2020 (Table 3.2) , mainly due to an increase in duty rates on a number of 
products and the splitting of tariff lines (e.g. transport equipment (HS Section 17)) resulting from 
the tariff nomenclature change. Indonesia amended its Customs Tariff t o, inter alia,  introduce 
HS2017 changes (Section 3.1.3.1). Products that benefited from tariff reductions include auxiliary 
plant for use with boilers (HS84.04). Products that were subject to tariff increases include coffee 
and tea (HS09), preparations of meat and fish (HS Chapter 16), sugar confectionary not containing 
cocoa (HS17.04), leather articles (HS Chapter 42), wood articles (HS  Chapter 44), cotton 
(HS Chapter 52), textiles and clothing, carpets and other textile coverings (HS57.02), worn clothing 
(HS 63.09), footwear (HS Chapter 64), iron and steel (HS Chapter 72) , and motor vehicles (HS87.02 
and 87.03). Furthermore, the applied tariff rates for a range of goods that reportedly compete with 
locally  manufactured products, including electronic produc ts, electrical and non -electrical milling 
machines, chemicals, cosmetics, medicines, wine and spirits, iron wire and wire nails, and some  
agricultural products including milk products, animal and vegetable oils, fruit juices, coffee and tea, 
were also rais ed.59 As indicated by the World Bank, while Southeast Asian countries have exhibited 
an overall trend toward tariff reduction, Indonesia has hiked import tariff rates further , increasing 
the cost and/or reducing the quality of productive inputs and consume r goods; empirical evidence 
has shown that increasing tariff rates tends to reduce the productivity and output of firms in 
protected sectors, as diminished import competition weakens incentives to invest and increase 
efficiency.60  
Table 3.2 Structure of the tariff schedule, 2012 and 2020  
  
  MFN applied  Bound ratea 2012  2020  
Bound tariff lines (% of all tariff lines)  .. 89.5 89.5 
Simple average rate (%)  7.8 10.1 37.9 
HS 01 -24 9.5 10.2 47.8 
HS 25 -97 7.5 10.1 35.7 
WTO agricultural products  10.5 11.2 49.8 
WTO non -agricultural products  7.4 9.9 35.9 
Duty-free tariff lines (% of all tariff lines)  12.5 12.0 2.9 
Simple average of dutiable lines only  9.0 11.5 39.1 
Tariff quotas (% of all tariff lines)  0.0 0.0 0.0 
Non-ad valorem  tariffs (% of all tariff lines)  0.6 0.2 0.0 
Domestic tariff "peaks" (% of all tariff lines)b 2.6 4.7 0.8 
 
56 WTO document  G/MA/IDB/2/Rev.51, 27 May 2020 .  
57 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
58 WTO docum ent WT/TPR/S/278/Rev.1, 16 July 2013.  
59 USTR (2019), National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf ; US Department of Commerce 
International Trade Administration, Export Solutions. Viewed at: https://www. export.gov/article?id=Indonesia -
Import -Tariffs . 
60 World Bank Group (2018), Indonesia Economic Quarterly - Strengthening competitiveness , December 
2018; and World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  WT/TPR/S/401 • Indonesia  
 
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  MFN applied  Bound ratea 2012  2020  
International tariff "peaks" (% of all tariff lines)c 3.4 13.5 84.7 
Nuisance applied rates (% of all tariff lines)d 0.0 0.0 0.0 
Standard deviation  11.4 13.2 14.8 
Total number of tariff lines  10,012  10,813  10,813  
Ad valorem  rates (>0%)  8,696  9,487  9,368  
Duty-free rates  1,251  1,299  310 
Specific  rates 65 27 0 
Unbound tariff lines  n.a. n.a. 1,135  
.. Not available.  
n.a. Not applicable.  
a  Based on the 2020 tariff schedule. The latest certified bound data is provided in the HS02 
nomenclature. Concordance to HS17 is done to the best possible extent. Including partially bound 
rates.  
b  Domestic tariff peaks are defined as those exceeding three times the overall simple average applied 
rate. 
c  International tariff peaks are defined as those exceeding 15%.  
d Nuisance rates are those greater than zero, bu t less than or equal to 2%.  
Note:  Calculations for averages are based on the national tariff line level (10 -digit for 2012; 8 -digit for 
2020). The 2012 and 2020 tariffs are based on the HS12 and HS17 nomenclature s, respectively. 
Including AVEs for specific  rates, as available. For 2012, AVEs for all specific rates were provided by 
the authorities; for 2020, 24 AVEs were calculated by the WTO Secretariat based on 2018 import 
data provided by the authorities.  
Source:  WTO Secretariat calculations, based on dat a provided by the authorities.  
3.38.   Tariff protection continues to vary across and within sectors , averaging 11.2% for agricultural 
products and 9.9% for non -agricultural goods in 2020 (WTO definitions) (Table 3.2). Average tariffs 
are highest for transport equ ipment (HS Section 17) , at 26.3%, followed by prepared foodstuffs, 
beverages and tobacco (HS Section 4) (Chart 3.1 and Table A3.1). Manufacturing tariffs are highest 
for transport equipment (HS Section 17) , followed by footwear and headgear (HS Section 12) , at 
16.4% , and textiles and articles thereof (HS Section 11) , at 15.3%. By according varied and 
substantial levels of protection to selected sectors, especially agriculture, tariffs distort competition 
by favouring some activities. Reducing high tariffs w ould improve Indonesia's resource allocation 
and welfare.  
3.39.   The tariff structure has changed slightly since the last Review. 99.8% (99.4% in 2012) of 
tariffs continue to be levied at ad valorem  rates (including zero rate), and are therefore transparent. 
There are some 22 different rates (17 ad valorem  duties and 5 specific duties), compared to 
18 (11 ad valorem  and 7 specific) in 2012 , of which 4 involve 0.5 decimal rates (none in 2012); 
specific duties apply to 0.2% of total tariff lines or 27  lines, down fr om 65 in 2012 , as most specific 
rates on alcoholic beverages were converted to ad valorem  duties (see below). Tariff rates continue 
to range from zero to 150% (Table  A3.1).61 Tariffs of 150% apply to 28 lines (8 to certain food 
preparations (HS 21.06), 18 to alcoholic beverages (all falling under undenatured ethyl alcohol of 
an alcoholic strength by volume of less than 80% vol., spirits, liqueurs and other spirituous 
beverages, HS 22.08), and 2 to mixtures of odoriferous substances of a kind used in the foo d or 
drink industries (HS 33.02) ).62 The second highest tariff rate remains at 90%, and is  applied on 
30 tariff lines (alcoholic beverages). In 2020, 77. 1% of rates ( ad valorem  only) are 10% or below, 
and rates of over 25% apply to 5.3% of tariff items, co mpared to 86 .0% and 2.1% in 2012 , 
respectively (Chart  3.2). The tariff could be rationalized, for example, by reducing the number of 
rates and removing the decimal rate.  
 
61 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
62 At the time of the previous Review, the highest t ariff, of 150% , applied to 43 lines (34  non-ad 
valorem  lines relati ng to alcoholic beverages; 7 lines relating to food preparations (not elsewhere specified) , 
and 2 lines relating to mixtures of odoriferous substances used in the food or drink industries). The second 
highest tariff rate , of 90%, affected five  non-ad valor em lines, relating to wine and shandy. All other tariff rates 
are applied at 40% or below.  WT/TPR/S/401 • Indonesia  
 
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  Chart 3.1 Average applied MFN and bound  tariff rates, by HS section, 2012 and 2020  
 
Note:  The 2012 tariff is based on the HS12 nomenclature; the 2020 tariff and final bound rates are based 
on HS17. HS  Sections 01, 02, 03, 04, 08, 09, 10, 11, and 13 are fully bound. HS Sections 19 and 21 
are fully unbound.   
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
Chart 3.2 Distribution of MFN tariff rates, 2012 and 2020  
Number of tariff lines  
 
n.a. Not applicable.  
Note:  The 2012 tariff is based on the HS12 nomenclature;  the 2020 tariff is based on HS17. Figures above 
the bars refer to the percen tage of total lines.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.40.   Non-ad valorem  tariffs continue to consist of specific duties on rice, sugar, beer made from 
malt, and cinematographic films and related media (Table A3. 2); as indicated above , the number of 
tariff lines subject to specific rates dropped considerably over the review period. According to 
0%10%20%30%40%50%60%
010203040506070809101112131415161718192021TotalChart 3.[IDN]  Average applied MFN and bound tariff rates, by HS section, 2012 and 2020
01   Live animals & products        
02   Vegetable products
03   Fats & oils      
04   Prepared food, beverages
05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins
09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles
12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.
15   Base metals & products
16   Machinery
17   Transport equipment
18   Precision instruments19   Arms & ammunition
20   Miscellaneous manufacturing
21   Works of art, etc.MFN 2020
Final bound
Note:  2012 tariff is based on HS12 nomenclature; 2020 tariff and final bound rates are based on HS17.  HS sections 01, 
02, 03, 04, 08, 09, 10, 11, and 13 are fully bound.   HS Sections 19 and 21 are fully unbound.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.MFN 2012
12.554.3
1.0 n.a.18.2 
2.08.4
n.a.0.72.1
0.612.0 48.2
1.2 0.115.7
1.67.4
0.37.8
5.3
0.2
01,0002,0003,0004,0005,0006,000
Duty free 5.0% 7.5% 9.0% 10.0% 12.5% 15.0% 17.5% 20%-25% >25% Specific
ratesNumber of tariff linesChart 3.[IDN]  Distribution of MFN tariff rates, 2012 and 2020
MFN 2012
Total number of lines:  10,012
MFN 2020
Total number of lines: 10,813
n.a.     Not applicable.
Note:  2012 tariff is based on HS12 nomenclature; 2020 tariff is based on HS17.  Figures above the bars refer to the percenta ge of 
total lines. 
Source:  WTO Secretariat calculations, based on online data provided by the authorities.WT/TPR/S/401 • Indonesia  
 
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  calculations of the WTO Secretariat based on 2018 import data for 24 items, in 2020 , the ad valorem  
equivalents (AVEs) of  the specific rates ranged from 0.2% (broken rice) to 107.5% (beer made from 
malt) (Table A3.2); these specific duties form part of Indonesia's WTO tariff binding commitments 
on an ad valorem  basis (from 40% to 160%), and specific rates for cane sugar (HS1 7.01.13 and 
17.01.14) and items under HS85.23 underwent  nomenclature changes. The average AVE of 
non-ad valorem  tariff rates is 96.6% (102.9% in 2012), compared to the overall 10.1% average 
MFN average applied rate (Table 3.2).63  
3.1.3.3   MFN tariff dispersion and  escalation  
3.41.   Since the previous Review, the standard deviation indicator of tariff dispersion increased , and 
positive tariff escalation became more pronounced for virtually all industries (Table  3.2 and 
Chart  3.3); mixed escalation (e.g. negative from the f irst to the second stage, and then positive) 
affects food, beverages and tobacco (previously positive) , as well as paper, printing and publishing 
(mixed escalation (slightly).  
Chart 3.3 Tariff escalation by 2 -digit ISIC industry, 2012 and 2020  
 
n.a. Not applicable.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
 
63 In 2012 , the AVEs for all 65 specific rates at that time were provided by the authorities.  
Chart 3.3    Tariff escalation by 2 -digit ISIC industry, 2012 and 2020
n.a.n.a.
0%2%4%6%8%10%12%14%16%18%20%
31 32 33 34 35 36 37 38 39 Total
manuf.n.a.n.a.
0%2%4%6%8%10%12%14%16%18%20%
31 32 33 34 35 36 37 38 39 Total
manuf.Average applied rate in manufacturing
(8.1%)
Not applicable
WTO Secretariat calculations, based on data provided by the authorities.n.a.
Source :First stage of processing Fully processed Semi-processedAverage applied rate in manufacturing
(10.6%)2012
2020
31   Food, beverages and tobacco      
32   Textiles and leather  
33   Wood and furniture      37   Basic metals
38   Fabricated metal products and machinery
39   Other manufacturing34   Paper, printing and publishing
35   Chemicals
36   Non -metallic mineral productsWT/TPR/S/401 • Indonesia  
 
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  3.1.3.4   MFN tariff bindings  
3.42.   Currently,  rates in 89.5% in HS17 lines (95% lines in HS02 ) (last certifi ed schedule of tariff 
concessions ) (see below) in Indonesia's tariff schedule are bound (Table 3.2).64 Seventy -five per 
cent (about 72% under HS02) of these are at bound at rates of 40% or above. The simple average 
bound rate is 49.8% for agricultural products (WTO definition), and 35.9% for non -agricultural 
products. In its 2020 customs tariff schedule, b ound and MFN applied tariff rates virtually coincided 
(i.e. low difference) for about 2.3% of all tariff lines , whereas for most of the rest the difference was 
relatively significant (Chart 3.1), suggesting high unpredictability in the tariff. Since 2012, as a result 
of tariff increases (Section 3.1.3.2) , the overall gap between the simple average MFN applied and 
bound rates has decreased from 29.6 to 27.8 percentage points; the difference between MFN applied 
and bound rates ranges from 4 to 205 percentage points (dairy products (milk and cream)) , 
depending on the item. The gap is 38.6 percentage points for rates affecting agricultural items , and 
26 percentage points for non -agricultural products. Furthermore, the applied MFN rates on 99 HS17 
eight-digit tar iff lines (e.g. chemical elements, worn clothing, machines for 
manufacture/parts/accessories for the manufacture of semiconductors, and several types of 
measuring instruments and apparatus) appear to exceed their corresponding bound rate by 
5 percentage po ints (Table A3.3).  
3.43.   During the review period, pursuant to the revised HS2002 procedures affecting a list of tariff 
items, Indonesia's Schedule XXI, which remains in the HS02 nomenclature, was modified once, 
effective 27 July 2017.65 As at June 2020 , Indone sia ha d not been included in collective waivers that 
suspended the application of the provisions of Article II of GATT 1994 , in order to allow it to reflect 
the changes resulting from the introduction of the HS2012 and HS2017 nomenclatures in its 
Schedule of Tariff Concessions.  
3.1.3.5   Tariff preferences  
3.44.   Indonesia's efforts to expand its bilateral and regional FTAs during the review period led to  
its simple average preferential tariff rate on imports from RTAs/FTAs r ising from 2.7% in 2012 to 
3.7% in 2020, due to the entry in to force of three new agreements (see below) and the rise of MFN 
applied rates. Nevertheless, it remained considerably below the 10.1% MFN average applied tariff 
rate.66 Under its RTAs, Indonesia provides preferential access to imports originating from: ASEAN 
members ( since 1993), Australia/New  Zealand ( since 2010), China ( since 2005), Republic of Korea 
(since 2010), Japan  (since 2008), India ( since 2010), Pakistan ( since 2013) , and Chile ( since 2019) 
(Table 3.3).67 These agreements cover an average of 72.6% of the total tariff lines , on top of the 
12.0% of lines that are already duty -free at the MFN level (Table 3.3 and Section 3.1.3.2).  
 
64 Unbound products include salt; some chemical products; certain plastic articles; platinum; articles of 
iron and steel; transport equipment; and arms and ammunitions.  WTO document WT/TPR/S/278/Rev.1, 
16 July 2013 .  
65 WT/Let/1273 WLI/100 , 14 August 2017 ; and WTO, Current Situation of Schedules of WTO Members. 
Viewed at:  https://www.wto.org/english/tratop_e/schedules_e/goods_schedules_table_e.htm#fnt -a. 
66 More specifically, the rise of the average preferential rate comp ared to 2012 is explained by the 
following: in the Indonesia -Pakistan Preferential Trade Agreement, only 2.3% of tariff lines have a preferential 
rate lower than the MFN applied rate (average 9.9%); in the Indonesia -Chile Comprehensive Economic 
Partnership  Agreement, coverage is relatively high but not many duty -free rates are in place (average 6.5%); 
and, as MFN applied rates have increased for many tariff lines, those excluded from the preferential coverage 
drive the preferential average upwards. WTO docu ment WT/TPR/S/278/Rev.1, 16 July 2013.  
67 Legislation endorsing preferential tariff treatment undertakings is contained in: PMK No. 
208/PMK.011/2012  concerning Stipulation of Import Duty Tariffs in the Framework of the ASEAN Trade in 
Goods Agreement (ATIGA) ; PMK No. 26/PMK.010/2017 concerning Stipulation of Import Duty Tariffs in the 
Framework of the ASEAN -China Free Trade Area ; PMK No. 24/PMK.010/2017 concerning Stipulation of Import 
Duty Tariffs in the Framework of the ASEAN -Korea Free Trade Area ; PMK No. 18/PMK.010/2018 concerning 
Stipulation of Import Duty Tariffs in the Framework of the ASEAN -Japan Comprehensive Economic Partnership ; 
PMK No. 27/PMK.010/2017 concerning Stipulation of Import Duty Tariffs in the Framework of the ASEAN -India 
Free Trade Area ; PMK No. 28/PMK.010/2017 concerning Stipulation of Import Duty Tariffs in the Framework of 
the ASEAN -Australia -New Zealand Free Trade Area as  amended by PMK No. 129/PMK.010/2017 concerning 
Amendments to the Determination of Import Duty Tariffs within the Framework of the ASEAN -Australia -New 
Zealand Free Trade Area ; PMK No. 63/PMK.010/2017 concerning the Amendment of the Minister of Finance 
Regulation No. 30/PMK.010/2017 concerning Stipulation of Import Duty Tariffs within the Framework of the 
Agreement between the Republic of Indonesia and Japan on an Economic Partnership ; PMK No. 
29/PMK.010/2017 concerning Stipulation of Import Duty Tariffs in the Framework of Preferential Trade 
Agreements between the Government of the Republic of Indonesia and the Government of the Islamic Republic WT/TPR/S/401 • Indonesia  
 
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  Table 3.3 Summary analysis of preferential tariffs, 2020  
 
Total  WTO agriculture  WTO 
non-agriculture  
  Average 
(%) Range 
(%) Coveragea 
(%) Duty -
free 
ratesb 
(%) Average 
(%) Duty -free 
ratesb 
(%) Average 
(%) Duty -
free 
ratesb 
(%) 
MFN 10.1 0-150  
12.0 11.2 8.4 9.9 12.5 
ATIGA  0.7 0-150 86.9 98.8 5.1 94.4 0.1 99.5 
ASEAN -Australia -New 
Zealand FTA  2.2 0-150 84.4 88.8 5.9 83.5 1.7 89.6 
ASEAN -China FTA  3.5 0-150 77.3 83.6 5.2 93.1 3.3 82.2 
ASEAN -India FTA  4.8 0-150 76.4 43.3 7.0 59.8 4.4 40.9 
ASEAN -Japan 
Comprehensive Economic 
Partnership  2.8 0-150 78.8 88.4 5.7 84.4 2.4 88.9 
ASEAN -Republic of Korea 
FTA 1.4 0-150 86.2 87.5 4.1 93.0 0.9 86.6 
Indonesia -Japan 
Economic Partnership 
Agreement  1.5 0-150 81.6 89.7 5.5 84.2 0.9 90.4 
Indonesia -Pakistan 
Preferential Trade 
Agreement  9.9 0-150 2.5 13.2 10.7 10.9 9.8 13.5 
Indonesia -Chile 
Comprehensive Economic 
Partnership Agreement  6.5 0-150 79.5 55.1 8.1 56.5 6.3 54.9 
a  Per cent of total number of lines. Only rates that are lower than the corresponding MFN rate are 
taken into account.  
b  Duty-free lines as a percentage of total tariff lines.  
Note:  Preferential calculations are based on the 2020 MFN tariff schedule. The lo wer preferential rate is 
replaced with the applied MFN rate at the national 8 -digit level. If the preferential rate is higher than 
the MFN applied rate, the latter is used for the calculations.  
Source:  WTO Secretariat calculations, based on data received by the authorities.  
3.1.3.6   Duty concessions/exemptions  
3.45.   During the review period, the main regulatory framework in this area remained unchanged 
but specific implementing regulations were revised (see below). Rules on customs duty exemptions 
are set out in Articles  25 and 26 of the Customs Act.68 Under Article 25, customs duty exemptions 
are, inter alia , extended to goods for research and scientific purposes. Under Article 26, duty 
exemptions may be granted, inter alia , for machinery for the establishment and develo pment of an 
industry; goods and materials for the establishment and development of an industry for a specified 
period of time; seeds and stocks for the establishment and development of agriculture, animal 
husbandry or fisheries; marine products caught by l icensed vessels; and goods purchased by the 
Government for public purposes. Provisions on exemptions to be granted must be set out in 
ministerial regulations.  
Import Duty Borne by Government scheme   
3.46.   To promote the competitiveness of certain industries in strategic sectors , Indonesia continued 
to temporarily waive import duties on imported inputs for the production of certain goods under the 
 
of Pakistan as amended by PMK  No. 14/PMK.010/2019 concerning Amendment to the Import Duty Tariff in the 
Context of  Preferential Trade Agreement between the Government of the Republic of Indonesia and the 
Government of the Islamic Republic of Pakistan; PMK No. 18/PMK.010/2018 concerning the Minister of Finance 
Regulation concerning the Stipulation of Import Duty Tariff s in the Framework of the ASEAN -Japan 
Comprehensive Economic Partnership ; PMK No. 126/PMK.010/2018 concerning Stipulation of Tariffs of Import 
Duty in the Framework of Trade Facilitation for Certain Products Originating in the Palestinian Territory ; and 
PMK No. 105/PMK.010/2019 concerning Stipulation of Import Duty Tariffs in the Framework of Comprehensive 
Economic Partnership Agreement between the Government of the Republic of Indonesia and the Government of 
the Republic of Chile . WTO, RTA Database.Viewed at: 
http://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?MemberCode=360&lang=1&redirect=1 . 
68 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  WT/TPR/S/401 • Indonesia  
 
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  Import Duty Borne by Government (IDBG or BM DTP) scheme, which has been in place since 2008. 
During the review period , the IDBG regulatory framework was revised on several occasions; a few 
MoF operational regulations are available online , and all are in the Bahasa  Indonesia language.69 
The IDBG w aivers (up to specified budget ceilings) are destined for industries using imported goods 
and materials to produce goods and services sold on the domestic market , in accordance with the 
following unchanged criteria: ( i) they must be provided for the public interest, public consumption , 
or to protect the public; ( ii) they improve the competitiveness of the industries; ( iii) they increase 
employment; and ( iv) they increase the State's revenue. Import items concerned: must not be 
produced domestically; can be domestically produced but not meet the specification neede d; may 
be domestically produced but not in sufficient quantities to meet the industry's needs; and  are not 
subject to zero import duty based on an international agreement.70 It seems that these waivers are 
based on ceiling values (Table 3.4) , and are valid  for one calendar year; no data on the number of 
waivers issued since 2013 were available from the authorities.71 In 2016, the following industrial 
sectors benefited from the IDBG facility: plastic packaging, carpets, resins, stationery, sandpaper, 
blowing  agent s, catalysts and the neutralizing wastewater chemicals manufacturer industry; modes 
of transport components, medical devices, agricultural equipment, electronics, smart card s, and the 
telecommunications manufacturer industry; and animal feed manufact urers, and pharmac eutical  
industries.72 
3.47.   In addition, since August 2019 , imports of taxable goods in the framework of contracts of 
work or work agreements between the Government and coal mining entrepreneurs (PKP2B) benefit 
from exemption from , or relief on , import dut ies and/or exemption from VAT under certain 
conditions.73 Under MoF Regulation No. 70/2013, goods imported for upstream oil -and-gas 
exploitation activities are exempt from import duties, VAT and the luxury -goods sales tax.74  
 
69 They include: MoF Regulation No. 273/PMK.010/2015 in Order to Promote Production of Goods and/or 
Services for the Public Interest and to Increase the Competitiveness of Certain Industry Sectors in Fiscal Year 
2016; MoF  Regulation No. 12/PMK.010/2018, rega rding Import Duty Borne by Government for Certain 
Industrial Sectors in the 2018 Budget Year , 7 February 2018 ; and MoF  Regulation No.  14/PMK.010/2018 
regarding Import Duty Borne by Government (BM DTP) on Import of Goods and Material to Produce Goods 
and/or  Services for the Public Interest and to Increase the Competitiveness of Certain Sectors, 8 February 
2018, amend ing Regulation No. 248/PMK.011/2014.BM DTP . GNV Consulting, Import duty borne by the 
government on import of goods and material to produce goods  and/or services for the public interest and to 
increase the competitiveness of certain sectors. Viewed at:  https://gnv.id/2018/03/09/import -duty-borne -by-
the-government -on-import -of-goods -and-material -to-produce -goods -and-or-services -for-the-public -interest -
and-to-increase -the-competitiv eness -of-certain -sectors/ ; Global Trade Alert, Indonesia: Adjusted goods list 
and budgetary ceilings for government borne import duties in FY2016. Viewed at: 
https://www.globaltradealert.org/state -act/11198/indonesia -adjusted -goods -list-and-budgetary -ceilings -for-
government -borne -import -duties -in-fy2016 ; and Deloitte ( 2016), Indonesian Tax Info  February 2016 . 
70 WTO document WT/TPR/S/278/Rev.1, 16 July 2013 ; MoF Regulation No. 273/PMK.010/2015 in Order 
to Promote Production of Goods and/or Services for the Public Interest and to Increase the Competitiveness of 
Certain Industry Sectors in Fiscal Year 2016 . 
71 MoF Regulation No. 273/PMK.010/2015 in Order to Promote Production of Goods and/or Services for 
the Public Interest and to Increase the Competitiveness of Certain Industry Sectors in Fiscal Year 2016 ; MoF  
Regulation No. 12/PMK.010/2018, regarding Import Duty Borne by Government for Certain Industrial Sectors 
in the 2018 Budget Year, 7 February 2018 ; and Deloitte ( 2016), Indonesian Tax Info  February 2016 .  
72 MoF Regulation No. 273/PMK.010/2015 in Order to Promote Production of Goods and/or Services for 
the Public Interest and to Increase the Competitiveness of Certain Industry Sectors in Fiscal Year 2016 . 
Deloitte ( 2016), Indonesian Tax Info  February 2016 . 
73 Under MoF Regulation No. 116/2019 of 13 August 2019 concerning Exemption or Relief of Import 
Duty and/or Exemption of VAT on Import Goods in the Framework on Contract of Work or Coal Mining Contract 
of Work, this incentive can be utilized until the expiration of the contract for: contractors whose Coal Contract 
of Work (CCoW/PKP2B) was signed before 1990; contractors whose CCoW/PKP2B contains provisions on 
granting exemption or relief from import dut ies in accordance with PKP2B; contractors whose CCoW/PKP2B  
does not  contain  provisions on granting exemption or relief from import duty; and contractors whose imports 
are owned by the State.  ITR, Indonesia: Indonesia issues a flurry of tax -related regulations.  Viewed at:  
https://www.internationaltaxreview.com/article/b1hlmyxmjb4msb/indonesia -indonesia -issues -a-flurry -of-tax-
related -regulations . 
74 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  WT/TPR/S/401 • Indonesia  
 
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  Table 3.4 Import duty waivers coverage/ceiling s, FY2012 and 2020  
Product  Ceiling value  
2012   
Production of certain parts of heavy equipment or the assembly of heavy 
equipment  IDR 58,000,000,000  
Production of ballpoint pens  IDR 1,205,600,000  
Production of carpet s and/or rugs  IDR 24,000,000,000  
Production of automotive components  IDR 147,350,000,000  
Production and repair of box wagon s of passenger train s, electric/diesel train s, 
bogie s, and train components  IDR 10,000,000,000  
Production and/or repair of ships  IDR 30,500,000,000  
Production of electronics components and/or products  IDR 25,000,000,000  
Production of optical fibre cable  IDR 3,382,000,000  
Production of communication devices  IDR 14,880,000,000  
Production of toner  IDR 824,900,000  
Production of plastic packages, plastic sheets, biaxially orientated polypropylene 
film, plastic sacks, plastic threads, welding plastic sheets, geotextile s, and 
household goods and/or furnishings made of plastic  IDR 81,957,400,000  
Production  of resin in the form of alkyd resin, unsaturated polyester resin, amino 
resin, pigment phthalate, solution acrylic/synthetic latex, and plasticizer  IDR 9,518,000,000  
Production of fertilizer  IDR 22,000,000,000  
Repair and/or maintenance of planes  IDR 109 ,676,000,000  
Production of packaging and/or drug -infusion products  IDR 9,372,600,000  
2020   
Manufactur e of motorized vehicle components and/or AMMDes components 
(rural multi-purpose mechanical equipment)  IDR 131,319,954,000  
Manufactur e of electric motor bikes IDR 40,295,000  
Manufactur e of certain parts of large equipment and/or large equipment 
assembly  IDR 903,274,000  
Manufactur e of agricultural equipment and machinery  IDR 500,000,000  
Manufacture of boilers and electricity component equipment  IDR 4,448,264,000  
Manufacture of electronic components and/or products  IDR 11,000,000,000  
Manufactur e of telecommunications equipment  IDR 300,000,000  
Manufactur e of fiber optic cable  IDR 3,600,000,000  
Manufactur e of resins in the form of alkyd resins, unsaturated polyester resins, 
amino resins, emulsion resins, pigment phthalates, solution acrylic/ synthetic 
latex, latex synthetic dispersion resins, plasticizer s, formaldehyde , and 
formaldehyde resins IDR 8,200,000,000  
Manufacture of special chemicals , namely masterbatch; neutralizing wastewater 
in the form of the aquaclear series ( flocculant), chemicals for paper, and 
catalysts in the form of mepoxe, cypoxe, cypoxe liquid, and b enzoxe  IDR 4,310,000,000  
Manufacture of plastic packaging (except customs collect ion bags), plastic 
sheets, biaxially oriented polypropylene film, plastic bags, plastic pallets, plastic 
bottles and jerrycans, plastic pipes, plastic sheeting, geotextiles, and p lastic 
household items and/or furniture  IDR 114,000,000,000  
Manufactur e of cosmetics  IDR 6,950,000,000  
Manufacture of paint  IDR 13,150,000,000  
Manufactur e of frit IDR 410,805,000  
Manufactur e of gypsum  IDR 7,341,744,000  
Manufactur e of carpets, rugs, prayer mats, and/or PU, artificial PVC  IDR 78,500,000,000  
Manufactur e of artificial filaments/ yarn/strips and/or staple fibres IDR 3,600,000,000  
Tannery  IDR 1,000,000,000  
Almond processing  IDR 2,100,000,000  
Manufactur e of pharmaceutical preparations  IDR 13,900,000,000  
Source:  MoF; and information provided by the authorities . 
3.48.   To support industrial development areas (Section 3.3.1) , an import duty exemption scheme 
for companies engaged in either the establishment or moderni zation of a factory, remains in place 
since 2009.75 It includes an extended duty exemption period , conditional upon certain local content 
requirements being met (S ection  3.1.7) in terms of use of machinery, installation, and appliances 
or utensils for industrial production , over a period of two years , with a possible extension of one 
additional year . Such extension is conditional upon the use by the importing compan y benefitting 
 
75 Letter of Request for Consultations by the European Union, 22 November 2019 . Viewed at: 
https://trade.ec.europa.eu/doclib/docs/2019/november/tradoc_158451.11.19IDNDSRequestasagreed.pdf . WT/TPR/S/401 • Indonesia  
 
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  from the duty exemption of at least 30% of locally produced "machinery, …installation, appliances 
or …utensils…"; the authorities indicated that there have been no such cases since 2013. On 
22 November 2019, in the context of the WTO dispute settlement mechanism , the European Union 
requested consultations with Indonesia regarding various measures concerning certain raw materials 
necessary for the production of stainless steel, as well as a cross -sectoral import duty exemption 
scheme conditiona l upon the use of domestic over imported goods (Section  2.3.1.1).76  
3.49.   For 2016 and 2017 , import duties and excise tax expenditure estimates included: IDR 2 trillion 
(2016) and about IDR 2.5 trillion (2017) for machines, goods, and materials for construction  or 
industry development for capital investment; IDR 4 billion (2016) and IDR 3 billion (2017) for capital 
goods for construction/development of the power -plant industry in the public interest; IDR 4 billion 
(2016) and IDR 3 billion (2017) for seeds and se edling s for the construction/development of 
agriculture, animal husbandry, or fishery; and IDR 164 billion (2016) and IDR 194 billion (2017) for 
imported goods based on oil and gas profit -sharing contract s.77 
Consignment/e -commerce goods  de minimis exemption  and imposition  
3.50.   According to the Government,  to prevent the market from being flooded with mass -made or 
counterfeit products from overseas markets , and also to level the playing field for local 
manufacturers who import materials or goo ds in bulk and thus have to pay duties and taxes 
regardless of the import value, Indonesia reduced drastically the de minimis  value for  the import 
duty exemption for consignment , including e -commerce traded goods , on a B2C basis , in place s ince 
November 20 16.78 This f.o.b.  threshold value passed from USD 50 to USD 100 in November 2016, 
to USD 75 in October 2018 , and to USD 3 in January  2020.  
3.51.   Similar to changes to the de minimis  value,  the duty and tax concessions for these types of 
goods , also in place sin ce November 2016 , were modified. Between September 2016 and 
January  2020, Indonesia levied a flat 7.5% charge on "consignment goods" shipped by business 
entities abroad and imported through a postal service in accordance with the postal laws and 
regulation s, regardless of the relevant customs tariff rate , if their customs value was more than the 
de minimis  but up to an f.o.b. value of USD 1,500; however , this exemption does not cover VAT 
(10%), luxury goods sales taxes, or corporate taxes that are also levi ed on all items , regardless of 
their value.79 Since  end-January 2020, the general taxation level for these goods was reduced from 
a range of 27.5%  to 37.5% to a rate of 17.5% , consisting of the 7.5% import duty -equivalent 
charge, 10% VAT , and zero corporate income tax. Since  the same date, certain commodities in high 
 
76 WTO, Indonesia – Measures Relating to Raw Materials. Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds592_e.htm . 
77 MoF/Fiscal Policy Agency (2018), Tax Expenditure Report 2016 -17, Table 7, August.  
78 Reportedly, Indonesia experienced a 814% increase in imported parcels  classified under e -commerce 
activity, from 6.1 million packages in 2017 to 49.69 million in 2019,  with most of the goods originating from 
China. Domestic craftsmen and manufacturers of bags, shoes and garment products have especially been 
affected in recent years by the import  surge of these items, resulting in many being driven out of business. On 
6 September 2018, the MoF issued Regulation No. 112/PMK.04/2018 (PMK -112), effective on 10 October 
2018; this Regulation amend ed MoF Regulation No. 182/PMK.04/2016 (PMK -182) of 2016.  PMK-112 reduced 
the threshold value, and revised some definitions and limits concerning the importation of tobacco and alcohol 
products. The latest amendment can be found in MoF Regulation No.  199/PMK.010/ 2019 on Provisions on 
Customs, Excise and Taxes of Consignment Goods , effect ive since 30 January  2020. USTR ( 2019), National 
Trade Estimate Report on Foreign Trade Barriers . Viewed at:  
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf ; EY, Tax Alerts . Viewed at: 
https://www.ey.com/gl/en/services/tax/international -tax/alert --indonesia -releases -new-regulations -on-import -
taxes ; Janio, Indonesia De Minis 2020: What the Changes Mean for E -Commerce Importers.  Viewed at:  
https://janio.asia/tw/articles/indonesia -de-minimis -2020-what-the-changes -mean -for-e-commerce -importers/ ; 
Baker McKenzie, To Create a Level Playing Field, the Indonesian Government Wil l Lower Import Duty 
Exemption on E -Commerce. Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2020/01/indonesian -government -lowers -import -duty-
exemption ; The Jakarta Post, Indonesia to lower threshold for import taxes on e -commerce goods. Viewed at: 
https://www.thejakartapost.com/news/2019/12/24/government -to-lower -threshold -for-import -taxes -on-e-
commerce -goods.html ; and Baker McKenzie, Lower Threshold for Import Duty Exemption on E -commerce as 
Part of Making Indonesia 4.0.  Viewed at:  
https://www.bakermckenzie.com/en/insight/publications/2020/01/l ower-threshold -for-import -duty-indonesia . 
79 USTR ( 2019), National Trade Estimate Report on Foreign Trade Barriers . Viewed at:  
https://ustr.gov/sites/default/files/ 2019_National_Trade_Estimate_Report.pdf ; and EY, Tax Alerts.  Viewed at:  
https://www.ey.com/gl/en/services/tax/international -tax/alert --indonesia -releases -new-regulations -on-import -
taxes .  WT/TPR/S/401 • Indonesia  
 
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  demand have been subject to their normal applied MFN tariff rates (i.e. bags 15% -20%, shoes 
25%-30%, and textile  products 15% -25%), VAT of 10% , and the withholding corporate income tax 
of 7.5% -10%.80   
3.1.4   Other charges affecting imports  
3.52.   Indonesia continues to charge a Customs Electronic Data Interchange fee , set at 
USD 30 (same for imports and exports) ; no customs clea rance fee is levied.  
3.53.   Harbour dues remain based on the classification of the port (i.e. main port, or Class I, II, III, 
IV and V ) rather than the tonnage or volume for the use of the approach channel to a port; according 
to the authorities , service charges  must be linked to capital return , whereas the World Bank 
considers that they do not reflect cost recovery.81 According to data from the authorities, the dues 
for loading and unloading in Makassar and Balikpapan Container Terminals are the same. However , 
harbour dues for overseas routes seem higher than for domestic routes (Section 4.4 .5). According 
to World Bank data, in 2016 , harbour  dues at a main port were estimated to be 16 times higher for 
international routes than for domestic routes; furthermore, in 2015 , Lift-on Lift -off charges were 
estimated at 195.6% (20 cubic foot, full container with quayside crane, Pontianak port, Pelindo  II) 
higher for international routes than for domestic routes.82 The authorities indicated that this 
difference is due to the fact that international route vessels have bigger capacity than domestic, 
therefore they need more equipment and services; in addi tion, it depends on exchange rate 
fluctuations between the rupiah and the US dollar.83  
3.54.   In addition to customs duties, imports remain subject to the withholding tax, VAT, the 
luxury -goods sales tax , and excise tax (Section 3.3.1). Following a product cover age expansion in 
2015, to curb imports, reduce the current -account deficit , and stem rupiah depreciation, in 
September 2018 , Indonesia raised the withholding tax rates for certain imported (and exported) 
goods , covering  1,147 products , including from: 2.5%  to 7.5% for 719 consumer goods (e.g. 
audio -visual equipment, and textiles); 2.5% to 7.2% for 218 daily necessities (e.g. shampoos, and 
cosmetics); and 7.5% to 10% on 210 luxury goods.84 The withholding tax policy allows the 
Government to collect more tax revenue in advance but can result in tax overpayment by importers.  
3.1.5   Import prohibitions, restrictions, and licensing  
3.55.   During the review period, the regulatory framework governing foreign trade , including import 
prohibitions, restrictions, and licensing , was updated (see below),  via, inter alia,  Law No. 7/2014, 
and MoT Regulations 48/2015 and 70/2015 as amended by MoT Regulation 75/2018. Under Law 
7/2014 , the Government may set a prohibition or r estriction on trade in goods and/or services in 
the national interest to protect: economic sovereignty; national security; public morals and culture; 
 
80 Baker McKenzie, To Create a Level Playing Field, the Indonesian Government Will Lower Import Duty 
Exemption on E -Commerce. Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2020/01/indonesian -government -lowers -import -duty-
exemption . 
81 Ministry of Transportation Regulation No. 95/2015 on Guidelines for the Determination of Port 
Services Charge by the Port Business Entity. Viewed  (in Bahasa Indonesia)  at: 
http://jdih.dephub.go.id/produk_hukum/view/VU UwZ09UVWdWRUZJVlU0Z01qQXhOUT09 ; and World Bank 
Group/IFC/Foreign & Commonwealth Office (2019), Review of Port Tariff Structure and Levels  in Indonesia , 
September.  
82 World Bank Group/IFC/Foreign & Commonwealth Office (2019), Review of Port Tariff Structure and 
Levels  in Indonesia , September.  
83 Article 12 of Ministry of Transportation Regulation 72/2017 on Types, Structure, Class and 
Mechanisms of Determination of Ports Tariff Services. Viewed (in Bahasa Indonesia) at: 
http://jdih.dephub.go.id/index.php/produk_hukum/view/VUUwZ056SWdWRUZJVlU0Z01qQXhOdz09 . 
84 Indonesian income tax is collected mainly through a system of withholding taxes.  The valuation basis 
for imports is the c.i.f. value plus payable customs duties. PMK-110 reclassifie d certain goods from Category 2 
(7.5%) to Category 1 (10%) ; this reclassification affect ed more than 1,100 items of goods, such as consumer 
goods, care products, cosmetics , and luxury cars. MoF Regulation 107/2015 ; (MoF) Regulation 
No. 110/PMK.010/2018 (PMK -110); EY, Tax Alerts.  Viewed at: 
https://www.ey. com/gl/en/services/tax/international -tax/alert --indonesia -releases -new-regulations -on-import -
taxes ; Indonesia (2019), Tax Services Indonesian Pocket Tax Book 2019 ; USTR (2019), National Trade 
Estimate Report on Foreign Trade Barriers . Viewed at:  
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf ; US Department of Commerce 
International Trade Administration, Export Solutions.  Viewed at: https://www.export.gov/article?id=Indonesia -
Import -Tariffs ; and Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.   WT/TPR/S/401 • Indonesia  
 
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  the health and safety of humans, animals, fish, plants, and the environment; natural resources from 
excess ive use for production and consumption; and the balance of payments and/or trade balance . 
In addition it may also do so to: implement legislation in several areas; and/or in accordance with 
the duties of the Government.85 The same Law promotes the use of l ocally  produced goods to protect 
and develop domestic industries.86 Most goods are freely importable, though restrictions (and 
prohibitions) do apply on some items , grouped together as limited import goods and import 
prohibited goods contained in the Restr icted and Banned Goods list, also known as the lartas  list 
(Section 3.1.5.1). Only new and unused goods may be imported, unless an exemption is granted by 
the Minister of Trade.87 If imports are classified as restricted, approval from a relevant licensing 
body is required, in addition to obtaining an API and a surveyor report (below , and Section  3.1.1.1).  
3.1.5.1   Import prohibitions and quantitative restrictions  
3.56.   Since the previous Review , Indonesia has changed the scope of its import bans from 
143 ten-digit HS ite ms (2013) to 124 eight -digit HS items (February 2020), involving  three  fisheries 
items (HS 03.06, crustaceans) and the rest industrial (HS 25 -97) items, including narcotics and 
other illegal drugs, firearms and other guns, hunting rifles, ammunition, and e xplosives.88 
Furthermore, t o prevent the spread of COVID -19 into its territory, since 11 February 2020 , Indonesia 
has temporarily prohibited imports of live animals originating in and/or transiting through China; 
according to the authorities , this measure is no longer in force.89 Similar to exports, direct imports 
from Israel continue to be hampered by the lack of bilateral diplomatic relations (Section 3.2.3.1).  
3.57.   During the review period, Indonesia continued to explicitly or implicitly restrict imports of 
some products (e.g. carcass meat, feed corn, horticultur al products , rice, cloves (until 2015), sugar, 
milk, salt, alcoholic beverages, fertilizer , and ozone -depleting substances) through licensing and 
state trading requirements (Section 3.1.5.2, and Table A3.4). In 2018, new restrictions regarding  
the import of rice were introduced; importers of rice to be  used as raw materials were not allowed 
to import some forms of rice (HS codes 1006.30.30, 1006.30.40, and 1006.30.99) , as these 
products may only be imported by state -owned companies.90 At the time of the previous Review , 
imports subject to quantitative r estrictions on rice, sugar, animals and animal products, salt, 
alcoholic beverages and certain ozone -depleting substances were in place.91 The authorities 
indicated that import volumes are determined annually , at ministerial -level coordination meetings , 
and take into consideration domestic production and consumption forecasts.  
3.1.5.2   Import licensing  
3.58.   Under Law No. 7/2014 , Indonesia's policy objective has been to structure licensing procedures 
for the smooth flow of goods.92 According to the authorities, Indonesia  simplified import (and export) 
licensing through online and digital signature , thus improving its efficiency and centralization.  
3.59.   Import licensing requirements remain in place for a number of reasons (see above), including 
to prevent smuggling and to impl ement policies aimed at protecting and/or promoting domestic 
production (Table A3.4). During the review period, the regulatory framework of import licensing was 
 
85 Reportedly, Law No. 7/2014 has attr acted concern from the international business community, since 
it does not ensure these interventionist measures will be only temporary. Critics say more broadly that the Law 
reinforces a current protectionist trend in the country's trade policy. Economist  Intelligence Unit (2019), 
Country Commerce – Indonesia , January. Article 35 of Law No. 7/2014, 11  March  2014.  
86 Article 22 of Law No. 7/2014, 11  March 2014 . 
87 For example, MoT Regulation No. 127/M -DAG/PER/12/2015 governing the import of used capital 
goods, which are goods used as working capital to produce products that can be used or that can be 
reconditioned, remanufactured or refunctioned , took effect on 1 February 2016 , and expire d on 
31 December  2018. Global  Busine ss Guide, Update on Import Regulatio ns for Indonesia.  Viewed at:  
http://www.gbgindonesia.com/en/main/legal_updates/update_on_import_regulations_for_indonesia.php . 
Articles 2 and 4 of MoT Regulation No. 48/M -DAG/PER/7/2015, 3 July 2015. Economist Intelligence Unit 
(2019), Country Commerce – Indonesia , January.  
88 Online i nformation ( https://intr.insw.go.id/regulations.php  and 
https://www.paulhypepage.co.id/import -laws-and-regulati ons-in-indonesia/ ). 
89 MoT Regulation Number 10 of 2020 .  
90 MoT Regulation No. 1/2018 amending R egulation 103/M -DAG/PER/12/2015 . Online information 
(https://www.globaltradealert.org/state -act/31714/indonesia -2018-update -on-import -and-export -provisions -
for-rice). 
91 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
92 Article 5 of Law number 7/2014, 11  March 2014 . WT/TPR/S/401 • Indonesia  
 
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  expanded and revised for several items , including: animals and animal products; cloves; sugar; 
horticultur al products ; alcoholic beverages; salt; pearl s; lubricants; plastic; nitro cellulose; sodium 
triopoly -phosphate; ozone -depleting substances; non -hazardous and non -toxic waste; optical discs 
(empty and filled) and machines and materials used to p roduce them; textiles and textile products; 
cell phones, handheld computers, and tablets; and colour multi -functional machines, colour 
photocopying and printing machines.  
3.60.   According to the authorities , the product categories subject to import licensing inc reased from 
30 to 40 over the review period (Table A3.4), with new requirements being  introduced on , inter alia : 
dairy; fisheries and forestry products; feed corn; saccharin; cement (and clinker cement); textile 
and batik textile products and batik motifs; iron, steel or alloy , and derivative products; hand tools; 
refrigeration and cooling system -based goods; and tyres. As at 20 July 2020, 3,308 ten -digit HS  lines 
(2,060 eight -digit tariff lines in 2012) were subject to import licensing requirements;  this represents 
30.6% (one fifth in 2012) of all tariff lines.  
3.61.   In certain cases, the issue of import authorization s for some products remains subject, 
inter alia, to use -related (e.g. of carcass meat, horticultur al products , feed corn, cloves (until 2015 ), 
ozone -depleting substances, and textiles and textile products), domestic produce purchase (e.g. 
milk, feed corn, sugar , and salt), state trading (e.g. rice and feed corn) , or distributorship 
arrangement (e.g. alcoholic beverages, cell phones, handheld c omputers, and tablets) requirements 
that explicitly or implicitly restrict quantitatively their importation (Table A3.4).  
3.62.   The Directorate -General of Foreign Trade (DGFT), within the MoT , remains responsible for 
granting import licences ; these are  generall y approved , contingent upon recommendation by one or 
more other ministries or agencies with technical competence in the respective area.93 In certain 
cases , import permits are also required on a per shipment basis. The licensing process (applications 
and a pprovals) is done through the INSW (Section 3.1.1.1). According to the authorities, no licensing 
fees or charges are levied. In most cases , importers of goods subject to licensing requirements must 
submit import implementation reports, and many of these go ods are also subject to pre -shipment 
inspection VPTI requirements (Section 3.1.1.1).  
3.63.   During the review period, Indonesia submitted to the WTO Committee on Import Licensing 
several notifications under Article s 5.1 to 5.4 of the Agreement on Import Licensing Procedures , and 
several notifications on Replies to Questionnaire on Import Licensing Procedure s, covering the years 
2011, 2012, 2013, 2014, 2015 and 2019.94 In the context of the Committee , concerns continu ed to 
be raised regularly by Members regarding the complexity, lack of transparency, and trade -impairing 
effects of Indonesia's import licensing requirements relating to: horticultural products; animals and 
animal products; carcasses and /or processed meat products; milk supply and circulation; tyres; and 
cell phones, handheld computers and tablets.95 During the review period, Indonesia was a 
respondent in WTO dispute settlement cases, inter alia,  relating to its import licensing measures on 
horticultural pr oducts, animals and animal products, and bovine meat (Section 2.3.1.1).96 
3.1.6   Anti-dumping, countervailing, and safeguard measures  
3.64.   During the review period, the main legislative framework governing anti -dumping, 
countervailing, and safeguard measures, consisti ng of GR No. 34 of 2011, remained virtually 
unchanged , with one regulation amended in 2013.97  
 
93 WTO document WT/TPR/S/ 278/Rev.1, 16 July 2013.  
94 WTO documents G/LIC/N/3/IDN/6 , 26 September 2014 ; G/LIC/N/3/IDN/7 , 26 September 2014 ; 
G/LIC/N/3/IDN/8 , 2 November 2015 ; G/LIC/N/3/IDN/9 , 2 November 2015 ; G/LIC/N/3/IDN/10 , 
12 February  2016; and G/LIC/N/3/IDN/11 , 28 February 2020 . 
95 WTO documents G/LIC/M/38, 28 February 2014; G/LIC/M/39, 22 August 2014; G/LIC/M/40, 
10 February 2015; G/LIC/M/41, 9 July 2015; G/LIC/M/42, 21 January 2016; G/LIC/M/43, 23 September 2016; 
G/LIC/M/44, 27 April 2017; G/LIC/M/45, 21 September 2017; G/LIC/M/46, 1 February 2018; G/LIC/M/47, 
25 September 2018; G/LIC/M/48, 14 March 2019; G/LIC/M/49 , 21 August 2019 ; and G/LIC/M/5015 , 
January  2020. 
96 WTO, Indonesia and the WTO.  Viewed at: 
https://www.wto.org/english/thewto_e/countries_e/indonesia_e.htm . 
97 WTO documents G/ADP/N/1/IDN/3, and G/SCM/N/1/IDN/3, 27 April 2012; and MoT Regulation 
No. 53/M-DAG/PER/9/2013 on Changes to the MoT Regulation No. 76/M -DAG/ PER/12/2012 on Research 
Procedures in the Form of Implementation of Antidumping and Remuneration Measures.  WT/TPR/S/401 • Indonesia  
 
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  3.65.   The Indonesia Anti -Dumping Committee (KADI) remains responsible for investigations in 
relation to anti -dumping and countervailing measures, and the Indonesian Sa feguards Committee 
(KPPI) for investigations in relation to safeguard measures; both committees are under the 
supervision of , and accountable to , the Minister of Trade . T heir websites 
(http://kadi.kemendag.go.id/  and http://kppi.kemendag.go.id/ ) provide information on 
investigations, reviews, and measures adopted. The Directorate of Trade Defence and the Bureau of 
Trade Advocacy within the MoT are charged with defending Indonesian exporters facing remedy 
actions by foreign governments.  
3.1.6.1   Anti-dumping and countervailing  
3.66.   The KADI may undertake anti -dumping and countervailing investigations on its own initiative , 
or launch an investigation based on an application from domestic industry.98 The petitioner or the 
domestic industry supporting the petition must constitute at least 25% of total domestic production 
of the like product(s) to be investigated. Investigations must be completed within 12 months 
(extendable to 18 months in special circumstances). Any provisional measures imposed must be 
applied no sooner than 60 days from the date of initiation of the investigation , and may be applied 
for a maximum of four months (in specific circumstances they ma y be applied for up to nine months). 
The maximum period for the duration  of anti -dumping and countervailing duties is five years from 
the date of imposition.  
3.67.   During the period under review, recourse to anti -dumping action dropped slightly but 
measures in force rose.99 Between 2013 and 2019 (end -June), Indonesia initiated 40  anti-dumping 
investigations (46 in 2006 -12) involving hot -rolled (steel) coil (China, Belarus, India, Kazakhstan, 
Republic of Korea, Malaysia, Russian Federation, Thailand, and Chinese Taipei), cold -rolled (steel) 
coil/sheet (China, Japan, Chinese Taipei, Republic of Korea, and Viet Nam), hot -rolled (steel) plate 
(China, Singapore, and Ukraine), tinplate (steel) (China, Republic of Korea,  and Chinese Taipei), 
I and H  section (China), amm onium nitrate and polyethylene terephthalate (China, Republic of 
Korea,  and Malaysia), wheat flour (India, Sri Lanka, and Turkey), cavendish bananas (the 
Philippines), spin drawn yarn (China), polyester staple fib re (China, India, and Chinese Taipei) , and 
biaxially oriented polypropylene (Thailand, and Viet Nam).100 As at end-June 2019, 27 anti -dumping 
measures were in force on nine products , mainly hot -rolled coil (7 cases), biaxially oriented 
polypropylene (5), hot -rolled plate (3), tinplate coil/sheet (3) and polyester staple fib re (3); 
20 measures were in place in June 2013.101 Action affected mostly products originating in 
Asia (23, China (8), Thailand (4), India (3), Chinese Taipei (3) , and Malaysia (2)) and , to a lesser 
extent , Commonwealt h of Independent States countries (Belarus, Kazakhstan, Russian Federation, 
and Ukraine). All final measures consisted of definitive duties. Eighteen measures were reviewed 
and, in most cases , extended at least once for periods of up to six years.  
3.68.   Indonesi a has not initiated any countervailing investigation so far. Since its last Review, it has 
regularly submitted semi -annual reports on anti -dumping and countervailing actions to the relevant 
WTO Committees (Section 2.3.1.3 and Table A2.1).  
3.1.6.2   Safeguards  
3.69.   GR No. 34 provides for "national interest consideration" , whereby the MoT reviews KPPI 
recommendations to ensure that the envisaged action is in the national interest.102 The industry may 
 
98 More information on the regulatory and procedural framework in this area, see WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013.  
99 With 136 cases initiated between 199 6 and 201 9 (June) , Indonesia  was the world's 13th largest  user 
of anti -dumping measures.  WTO, Anti-dumping Initiations by Reporting Member. Viewed at: 
https://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByRepMem.pdf . 
100 WTO document G/ADP/N/328/IDN, 28 October 2019.  
101 WTO document G/ADP/N/244/IDN, 25 April 2014.  
102 "Considerations of national interest" means considerations of the overall interests which are directly 
or indirectly related to the Safeguard Measure, inter alia : considerations of the existence of the petitioner's 
industry in the country as the party tha t is injured directly because of the existence of increased imports 
resulting in serious injury or threat of serious injury, either financially, in the form of declining market share, 
declining number of employees, or losses, etc; and considerations of the  impact of the Safeguard Measure on 
the industries in the country, in accordance with the interest of developing national industry, national food 
security and food price stability, increasing employment, and fiscal interests. WTO document G/SG/N/1/IDN/3, WT/TPR/S/401 • Indonesia  
 
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  submit a structural adjustment plan to  the KPPI as part of the investigati on process; during the 
review period , the KPPI annually monitored and evaluated these plans but no further information on 
specific cases was available with the authorities . 
3.70.   During the period under review, recourse to safeguard action dropped but Indonesia remained 
one of the most frequent initiators of investigations and resulting actions.103 Between 2013 and 
2019, it initiated 11 safeguard investigations (20 in 2006 -12), and imposed 9  measures (11 in 
2006-12); virtually all measures were in the form of cust oms duty (one quota) (Table 3.5). As at 
February 2020, one provisional and four (of which one extended) definitive safeguard measures 
were in place, and two investigations were underway (Table 3.5). At its previous Review , Indonesia's  
relatively frequent recourse to safeguards was attributed to greater industry awareness of the 
availability of trade remedies to counter the negative effects of trade liberalization.104  
Table 3.5 Safeguard ac tions, 2013 -20 (February)  
Products  Legal basis  Date/period  Stage/Type of 
action  
Wheat flour  MoT Regulation 
No. 23/M-DAG/PER/4/2014  4 May 2014  – 
4 December 2014  Definitive 
measures 
(quota)  
Seamless pipe casing and 
tubing  MoF Regulation 
No. 108/PMK.011/2013  6 August 2013  – 
5 August 2017  Definitive 
measures 
(import duty)  
Flat-rolled product s of  
iron or non-alloy steel  
under HS code  
7210.61.11.00  MoF Regulation 
No. 137.1/PMK.011/2014  22 July 2014  – 
21 July 2017 Definitive 
measures 
(import duty)  
I and H section s of other alloy 
steel MoF Regulation 
No. 12/PMK.010/201 5 
MoF Regulation 
No. 2/PMK.010/201 8 21 January 2015  – 
20 January 2018  
21 January 2018  - 
20 January 2021  Definitive 
measures 
(import duty)  
Extension of 
measures 
(import duty)  
Bars and rods, hot -rolled, in 
irregularly rolled coils, of iron or 
non-alloy steel, or of non -alloy 
steel, or of other alloy steel  MoF Regulation 
No. 155/PMK.010/201 5 11 August 2015 – 
10 August 2018  Definitive 
measures 
(import duty)  
Coated paper and paperboard, 
not including cast -coated paper 
and banknote paper  MoF Regulation 
No. 165/PMK.010/201 5 8 September 2015 – 
7 September 2018  Definitive 
measures 
(import duty)  
Flat-rolled product s of  
iron or non-alloy steel  
under HS code  
7210.61.11.00  MoF Regulation 
No. 130/PMK.010/2017  
 
MoF Regulation 
No. 6/PMK.010/2019 
concerning  
amendment to MoF 
Regulation  
No. 130/PMK.010/2017  3 October 2017 – 
2 October 2019  
 
27 March 2019  Extension of 
measures  
(import duty)  
 
End of measures  
Ceramic flags and paving, 
hearth or wall tiles  MoF Regulation 
No. 119/PMK.010/2018  21 September 2018 – 
20 September 2021  Definitive 
measures  
(import duty)  
Evaporators  MoF Regulation 
No. 1/PMK.010/2020  11 January 2020 – 
10 January 2023  Definitive 
measures 
(import duty)  
Fabric products  MoF Regulation 
No. 162/PMK.010/2019  9 November 2019  Provisional 
measures  
Curtains (including drapes), 
interior blinds,  
bed valances, and other  
furnishing articles  MoF Regulation  
No. 163/PMK.010/2019  18 September 2019 
(initiation)  Process of 
investigation  
 
22 December 2011. More information on the regulatory and procedural framework in this area is available in 
WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
103 With 34 cases initiated between 199 5 and 201 9, Indonesia  was the WTO's  2nd largest  user of  
safeguard action . WTO, Viewed at:  https://www.wto.org/english/tratop_e/safeg_e/safeg_e.htm ; and KPPI. 
Viewed at: http://kppi.kemendag.go.id/ . 
104 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  WT/TPR/S/401 • Indonesia  
 
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  Products  Legal basis  Date/period  Stage/Type of 
action  
Fructose syrup   13 November 2019  Process of 
investigation  
Yarn products (other than 
sewing thread) from synthetic 
and artificial staple fib res MoF Regulation 
No. 161/PMK.010/2019  9 November 2019 - 
25 May 2020  Provisional 
measures  
Aluminium foil MoF Regulation 
No. 153/PMK.010/2019  7 November 2019 – 
6 November 2021  Definitive 
measures 
(import duty)  
D-glusitol (sorbitol)  - 28 March 2013  Termination  of 
investigation  
Sheath contraceptive s  - 20 November 2013  Termination of 
investigation  
Kilowatt hour (Kwh) meters  - 25 November 2013  Termination of 
investigation  
Mackerel  - 2 December 2013  Termination of 
investigation  
Dextrose monohydrate  - 13 June 2016  Termination of 
investigation  
Source : Information received from the  authorities ; and WTO notifications.  
3.71.   Since its last Review, Indonesia has regularly submitted safeguard action notifications to the 
WTO Committee on Safeguards (Section 2.3.1.3 and Table A2.1).   
3.72.   Indonesia maintains its right to impose special safeguards (SSGs) on nine (eight dairy, and 
one coffee, tea, spices) broad categories of agricultural products (0.9% of all HS1996 agricultural 
tariff lines) (Section 4.1).105 Its notifications to the WTO Committee on Agriculture indicate that no 
SSG provisions were invoked in the period 2012 -18 (Section s 2.3.1.3 and 4.1.3).  
3.1.7   Other measures affecting imports  
3.73.   During the review period, Indonesia continued to use local content requirements (LCRs) to 
protect and develop domestic industries.106 Domestic legislation in several areas enforces LCRs. Law 
No. 7/2014 sets a framework for promoting the use of locally produced goods (Section 3.1.5).107 
Law No. 3/2014 (Article s 85-86) mandates the use of LCR s in government procurement , and is 
further regu lated by PR No. 16/2018 (Article 66) which requires the use of suppliers of goods or 
services with a local content plus a corporate contribution value exceeding 40% (Section 3.3.6).108 
Extension of the import duty exemption scheme for the establishment or m odernization of a factory 
in an industrial development area is conditional upon the use of at least 30% LCRs (Section  3.1.3.6). 
Product - or activity -specific LCRs  apply to, inter alia : oil and gas projects (from 61% in 2012 to 64% 
by 2024); power generatio n (varying levels on goods and services used in power plants, including 
steam, hydroelectric, geothermal (with a combined value of minimum local contents in goods and 
services varying from 28 .95% to 42% , depending on the development capacity), gas, solar ( 60% in 
solar modules and 100% in services , since 2019), and in the transmission and distribution network); 
4G Long-Term Evolution (LTE) enabled devices (30%) and base stations (40%) (base stations, cell 
phones, tablets, and palmtop computers) since January  2017; equipment used in certain wireless 
 
105 SSGs, permitted under Article  5 of the WTO Agreement on Agriculture, allow the imposition of 
additional duties when import quantities exceed SSG trigger volumes , or import prices fall below SSG trigger 
prices. WTO document  TN/AG/S/29, 20 October 2016.  
106 Despite the long -standing and predominately negative evidence of the impact of LCRs on economic 
development and trade, they continue to play a significant role in policy today.  While LCRs may help 
governments achieve certain short -term objectives, they undermine long -term competitiveness.  The WTO 
Agreement on Trade -Related Investment Measures (TRIMS) recognizes that certain investment meas ures can 
restrict and distort trade.  A list of prohibited TRIMS, such as LCRs, is part of the Agreement.  OECD, Local 
content requirements. Viewed at: https://www.oecd.org/trade/t opics/local -content -requirements/ ; and WTO, 
Agreement on Trade Related Investment Measures.  Viewed at: 
https://www.wto.org/english/tratop_e/invest_e/invest_info_e.htm . 
107 Article 22 of Law No. 7/2014, 11  March 2014 ; Economist Intelligence Unit (2019), Country 
Commerce – Indonesia , January . 
108 Corporate contribution value is defined as the appreciation that the companies invest ing in Indonesia 
provide in terms of empowering SMEs and cooperation through partnership, maintaining health, work security, 
environmental, community developmen t, and providing aftersales services.  WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013.  WT/TPR/S/401 • Indonesia  
 
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  broadband services (30% for subscriber stations, 40% for base stations) and all wireless equipment 
(50%); telecommunication operators ' capital expenditures on components or services for network 
development (minimum  50%); Indonesian film broadcasting/projection (60% of all hours for a 
consecutive period of six months); franchising (80% of equipment and inventory, unless waiver 
granted); and modern retail establishments (at least 80% of the total amount and types of g oods 
sold).109   
3.2  Measures Directly Affecting Exports  
3.2.1   Customs procedures and requirements  
3.74.   Registration and documentation requirements and developments for exports, in general, 
remain similar to those for imports (Section 3.1.1.1). Exporters must be registered with the DGCE 
prior to engaging in any export business; they may also benefit from AEO  status and the Customs 
MITA programme (Section 3.1.1.1); in value terms , MITA companies accounted for  0.07% (2013) 
to 2.08% (2019) of total exports , while the shares of AEO firms ranged from 8.3% (2013) to 50.2% 
(2018) and 19.3% (2019).110 Various export permits and authorizations are required. For certain 
items, verification by a surveyor is also needed , specifically for goods whose export is prohibited or 
restricted (Sections  3.1.1.1 and 3.2.3.2, and Table 3.8).111 For all commercial exports, exporters 
must submit a declaration to the DGCE, together with a commercial invoice, airway bill or bill of 
lading, packing list, letter of insurance, and export licenc e whenever required. The timeframe for 
submission of these documents is any time from seven days prior to departure to just before the 
departure of the export. Export documentation (excluding licences) may be provided electronically 
through the INSW (Secti on 3.1.1.1), as long as the goods are leaving through one of the customs 
points where the system is operational. Export duties (Section 3.2.2) must be settled at the time 
documentation is submitted.  
3.75.   During the review period, regulatory developments in thi s area  related to rules and certificate 
of origin of Indonesian goods, letters of credit for payment of certain exports (13 types of minerals, 
7 types of coal , and crude palm oil) and retaining export proceeds from exports of natural resources 
(e.g. coal, minerals, and oil and gas) onshore.112 According to the Indonesian research institute 
 
109 Minister of Agriculture Regulation s No. 26/PERMENTAN/PK.450/7/2017 on Supply and Distribution of 
Dairy Product s; No. 30/PERMENTAN/PK.450/7/2018 on Amendment of Minister of Agriculture Regulation No. 
6/PERMENTAN/PK.450/7/2017; and No. 33/PERMENTAN/PK.450/7/2018 on Second Amendment of Minister of 
Agriculture Regulation No. 26/PERMENTAN/PK.450/7/2017; 2018 draft Ministry of Industry (MOI) Regulation 
for Implementing Presiden tial Instruction 6/2016 on Acceleration of the Development of Pharmaceutical and 
Medical Device Industries and Ministry of Health Regulation 17/2017; MOI Regulations 54/2012, 4/2017, 
5/2017 and 29/2017; Ministry of Communication and Information Technology Regulations 7/2009, 41/2009, 
19/2011 and 27/2015; MoT Regulations 53/2012 and 70/2013;  Law No. 33 on Film of 2009; and USTR (2019), 
National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf . 
110 Individual e xporters need a taxpayer identification number and other documents requir ed under 
specific legislation. Institutions or businesses exporting restricted or non -restricted goods must have: a trading 
business permit from the MoT or a business permit from a technical ministry/non -ministerial government 
institution/agency; company r egistration; taxpayer identification number; and other documents required under 
legislation. To export prohibited goods, business/institutional entities also need: recognition as a registered 
exporter, and export approval, from the MoT; a surveyor's report  (Section 3.1.1.1); a certificate of origin; and/or 
other documents required under legislation. WTO document WT/TPR/S/278/Rev.1, 16 July 2013 ; and ASEAN 
Briefing, Importand Export Procedures in Indonesia – Best Practices.  Viewed at: 
https://www.aseanbriefing.com/news/import -export -procedures -indonesia -best-practices/ . 
111 MoT Regulations No. 01/M -DAG/PER/1/2017 concerning Provisions on Export of Processed and  
Purified Mining Products; and No. 84/M -DAG/PER/2016 Jo. 12/M -DAG/PER/2/2017 on Export Provisions for 
Forestry Industrial Products . 
112 MoT Regulations No. 77/M -DAG/PER/10/2014 on Provisions for the Origin of Indonesian Goods  
(Rules of Origin of Indonesia); No. 22/M -DAG/PER/3/2015 on Provisions and Procedures for the Issuance of 
Certificate of Origin for Goods from Indonesia; No. 25 of 2018 on Institutions Issuing Certificates of Origin; 
No. 37 of 2018 on Procedure for Payment of State Revenues from the Issua nce of Certificates of Origin for 
Goods from Indonesia Electronically; and No. 94 of September 2018 and No. 111 of 2018 on Provisions and 
Procedures for Making the Origin Declaration for Indonesian Exported Goods; GR  No. 1 of 2019 on Export 
Proceeds from E xploitation, Management and/or Processing Activities of Natural Resources , 10 January 2019 ; 
BI Regulation No. 21/3/PBI/2019 on Receipt of Export Proceeds from Exploitation, Management and/or 
Processing Activities of Natural Resources  (PBI 21/2019); M oF Regulation No. 98/PMK.04/2019 on 
Administrative Sanctions in the Form of Fines for Breach of Requirements relating to Export Proceeds from the 
Exploitation, Management and/or Processing Activities of Natural Resources (PMK 98/2019); M oF Decree 
No. 1523/KM.4/2019 listing the Natural Resources Export Goods that are Subject to the Obligation to Deposit WT/TPR/S/401 • Indonesia  
 
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  Perkumpulan Prakarsa (Centre for Welfare Studies), between 1989 and 2017 , USD 142.07  billion of 
illicit financial flows were facilitated by exports of six leading export c ommodities (coal, copper, palm 
oil, rubber, coffee , and crustaceans) , resulting in USD  11.1 billion in lost revenue.113 Under -invoicing 
of palm oil and rubber exports caused USD  4 billion of lost revenue.  
3.76.   According to World Bank Doing Business data, in 2019 , exporting a shipment of goods (auto 
parts) required an average of 61 hours for documentary compliance and 56 hours for border 
compliance , at a cost of USD 139 and USD 211 , respectively, as well as six documents.114 In 2013, 
exporting a shipment required four documents, took 17 days , and cost USD 615.115 According to the 
WEF, in 2015 , the most problematic factors for exporting were: high cost or delays caused by 
domestic and/or international transportation; technical requirements and standards abroad; 
identi fying potential markets and buyers; inappropriate production technology and skills; difficulties 
in meeting quality/quantity requirements of buyers; corruption at foreign borders; access to 
imported inputs at competitive prices; and access to trade finance .116  
3.2.2   Taxes, charges, and levies  
3.77.   During the review period, Indonesia continued to use  export taxes as a policy tool for, 
inter alia, tax revenue collection (1.5% of total tax revenue in 2013, 0.4% in 2018), fostering the 
development of downstream processing  facilities, ensuring domestic supply of intermediate inputs 
at below world market prices, raising domestic value -added , and reducing the rate of depletion of 
non-renewable mining resources.117 The regulatory framework was revised in 2014 , and was last 
updated in 2018 to enforce changes involving the types and level of rates , including their 
implementation criteria (Table 3.6).118 The product coverage encompassing palm oil, crude palm oil 
and its derivative products, leather and wood, raw cocoa , and mineral ore products remained 
relatively unchanged. Export tax revenue from palm oil is directed to a state -administered fund, the 
Crude Palm Oil (CPO) Fund, that is used to finance biofuel subsidies and rejuvenate plantations 
(Section 4.2.2.3).119 Exports of certain coal, metal mineral and non -metal mineral commodities have 
been subject to a 1.5% withholding tax since 2015 (Sections 3.1. 4 and 3.3.1.1.1.1).120  
 
Export Proceeds in the Indonesian Financial System (KMK 1523/2019); and Members of Board of Governors 
Regulation No. 21/15/PADG/2019 on Recei pt of Export Proceeds from Exploitation, Management and/or 
Processing Activities of Natural Resources (PADG 21/2019) . Baker McKenzie, Indonesia: Onshoring Export 
Proceeds: New Implementing Regulations. Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2019/08/onshoring -export -proceeds -new-
implementing ; Economist Intelligence Unit (2019), Country Commerce – Indonesia , Januar y.  
113 Trade Based Financial Crimes News, Indonesia reveals US$11.1 billion of revenue losses due to mis -
invoicing.  Viewed at: https://amlnewsflow.coastlinesolutions.com/2019/04/19/indonesia -reveals -us11-1-
billion -of-revenue -losses -due-to-mis-invoicing/ .  
114 World Bank (2019), Economy Profile of Indonesia - Doing Business 2020 Indicators . 
115 World Bank (201 3), Doing Bus iness 2014 - Understanding Regulations for Small and Medium -Size 
Enterprises , 29 October . Viewed at: https://www.doingbusiness.org/en/reports/global -reports/doing -business -
2014. 
116 WEF, The Global Enabling Trade Report 2016.  Viewed at: http://reports.weforum.org/global -
enabling -trade -report -2016/economy -profiles/#economy=IDN . 
117 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
118 PP No. 3 of 1996 concerning Taxat ion Treatment for Taxable Entrepreneurs with Status of Production 
Entrepôts for Export Purposes (EPTE) and Processing Companies in Bonded Zones (KB) ; MoF Regulation 
No. 13/PMK.010/2017 concerning Stipulation of Exported Goods Subjected to Export Levy and E xport Duty 
Rates as amended by MoF Regulation No. 164/PMK.010/2018 concerning Amendments to PMK 
No. 13/PMK.010/2017 concerning Stipulation Export Goods Subject to Export Levy and Export Levy Tariffs ; 
MoF Regulation 70/PMK.03/2010 concerning Limitation on A ctivities and Types of Taxable Services for Exports 
subject to Value Added Tax as amended by PMK 30/PMK.03/2011 concerning Amendments to MoF Regulation 
No. 70/PMK.03/2010 concerning the Limits of Activities and Types of Taxable Services for which Exports are 
Subject to Value Added Tax ; and MoF Regulation s 6/2014 and 1/2017 . Economist Intelligence Unit (2019), 
Country Commerce – Indonesia , January.  
119 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  
120 MoF Regulation 107/2015 ; EY, Tax Alerts.  Viewed at:  
https://www.ey.com/gl/en/services/t ax/international -tax/alert --indonesia -releases -new-regulations -on-import -
taxes ; and Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  WT/TPR/S/401 • Indonesia  
 
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  Table 3.6 Export taxes, 2020  
Product (date intr oduced)  Tax rate 
Palm oil, crude palm oil and its 
derivative products (2011)  Multiple rates , ranging from zero (below a price threshold) to 
USD 262/tonne (previously , single ad valorem  rate of 40%) , selected in 
accordance with 12 reference price ranges for each item , based on the 
average weighed c.i.f. prices in Kuala Lumpur (20%), Rotterdam (20%), 
and Jakarta (60%).  
Leather (2009)  15% and 25% , depending on the item.  
Wood (2009)  2%, 5%, 10% and 15 %. 
Cocoa beans (2010)  Zero (up to USD  2,000/tonne), 5% (more than USD  2,000/tonne up to 
USD 2,750/tonne), 10% (more than USD  2,750/tonne up to 
USD 3,500/tonne) , and 15% (more than USD  3,500/tonne) applied on the 
reference price level based on the New York  Board of Trade average c.i.f. 
price.  
Mineral ore products (2012)  
 Zero (Stage III), 2.5% (Stage II) and 5% (Stage I) (period 2017 -22) 
(previously , single rate of 20% of export benchmark price, based on 
prevailing domestic factors and international price s) applied in accordance 
with 3  smelter facility development stage levels , as well as a rate of 10% 
(nickel ore of a grade below 1.7%, and washed bauxite) from 2017 
onwards.  
Seven metals called Type 1 minerals (copper, ilmenite, iron ore, lead, 
manganese, titanium , and zinc) exempt from refining requirements . Metals 
face a 60% export duty since 2016, unless the relevant mining company 
can provide proof of progress in the construction of smelters or refining 
facilities (Section 3.2.3.2).  
Source:  MoF Regulation No. 13/PMK.010/2017 concerning Stipulation of Exported Goods Subjected to Export 
Levy and Export Duty Rates as amended by PMK No. 164/PMK.010/2018 concerning Amendments to 
PMK No. 13/PMK.010/2017 concerning Stipulation Export Goods S ubject to Export Levy and Export 
Levy Tariffs; and WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
3.2.3   Export prohibitions, restrictions, and licensing  
3.78.   During the review period, policy objectives in this area remained unchanged but the legislation 
was updated  (Sections 3.2.3.1 and 3.2.3.2). Under Law No. 7/2014 , the Government may set a 
prohibition or restriction on trade (including exports) in goods and/or services in the national 
interest , to protect: economic sovereignty; national security; public morals an d culture; the health 
and safety of humans, animals, fish, plants, and the environment; natural resources from excessive 
use for production and consumption; the balance of payments and/or trade balance; implementing 
legislation; and/or in accordance with t he duties of the Government (Sections 2.2, 3.1.5.1 and 
3.1.7). These measures may also promote the use of locally produced goods, ensure that local 
demand for the supply of raw materials for domestic industries is met, prevent domestic shortages , 
and shiel d the country against large price increases in global markets of essential goods (price 
stabilization).121 The Minister of Trade retains the authority to impose export restrictions and 
prohibitions.122 Exported goods are categorized into free exported goods,  restricted exported goods 
(e.g. coal and minerals) , and prohibited exported goods (e.g. minerals). Free exported goods may 
be exported by individuals, institutions and business entities.  
3.2.3.1   Export prohibitions  
3.79.   In addition to reasons under Law No. 7/2014 (se e above , and Sections 2.2.3, 3.1.5.1 and 
3.1.7), export prohibitions remain in place for: the protection of intellectual property rights; and the 
implementation of international treaties or agreements.123 Similar to imports, direct exports to Israel 
continu e to be hampered by the lack of bilateral diplomatic relations (Section  3.1.5.1).124 
 
121 Articles 22, 25 and 26  of Law No. 7/2014, 11  March 2014 . 
122 MoT Regulation No. 13,  in force since 2012, cited in WTO document WT/TPR/S/278/Rev.1, 16 July 
2013.  
123 WTO document WT/TPR/S/278/Rev.1, 16 July 2013 ; Indonesia Company Law, Prohibited Export 
Goods.  Viewed at: http://www.indonesiacompanylaw.com/articles/prohibited -export -goods/ ; and MoT 
Regulation No. 45 on the Export Prohibited Goods, of 21 July  2019.  
124 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  WT/TPR/S/401 • Indonesia  
 
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  No prohibition is in place for exports to Israel; however , the majority of exports to this market are 
carried out through a third country.125  
3.80.   Since the last Review , the mai n regulatory framework governing export prohibitions was 
updated.126 The scope of export prohibitions increased slightly (Table 3.7); no comprehensive data 
on the number of tariff lines subject to export prohibition in 2013 and 2020 were available from the 
authorities. Its main addition was the export ban on nickel ore in 2014 , that was partly and 
temporarily relaxed (2017 -19) for nickel ore with a concentration below 1.7%; on 
22 November  2019, in the context of the WTO dispute settlement mechanism , the Euro pean Union 
requested consultations with Indonesia regarding various measures concerning certain raw materials 
necessary for the production of stainless steel , including restrictions (an actual prohibition) 
(Sections  2.3.1.1, 3.1.3.6 and 3.2.3.2) on exports  of nickel.127  
Table 3.7 Export  prohibitions, 2012 and 2020  
Product  Rationale  
Raw rubber (natural rubber in forms other than ribbed 
smoked sheets, such as air -dried sheets, crepe latex, and 
sole crepe) (10 eight-digit HS items (HS 40.01))  To add value -added domestically and increase high -
quality export products  
Certain wood products, including raw and semi -processed 
rattan and, since 2019, conifer and bearing tree wood for 
railroad or tramway crossties (15 eight -digit HS items)  To encourage the domestic processing industry and 
prevent smuggling  
Certain iron and metal scrap  Implementation of commitments under the Basel 
Convention on the Control of Transboundary 
Movements of Hazardous Wastes and their Dis posal 
Raw minerals (except coal) (since 2014) including nickel 
ore except for nickel ore with a concentration below 1.7% 
(temporary export permission between 2017 and 31 
December 2019 and, since 2  January  2020, reinstatement 
of export prohibition)  To deve lop and accelerate certain downstream industry 
sectors, including stainless steel production  
Certain mining products  Environmental protection; and commitments under the 
Basel Convention on the Control of Transboundary 
Movements of Hazardous Wastes and th eir Disposal  
Silica sand and quartz sand, mullite and topsoil (including 
topsoil and humus land) (15 eight -digit HS items)  Environmental protection  
Subsidized urea fertilizer  Improve the effective control of fertilizer regarding 
abuse and diversion  
Various animals, birds, reptiles, insects, fish, crustaceans, 
and plants  Commitments under the Convention on International 
Trade in Endangered Species of Wild Fauna and Flora 
(CITES Convention)   
Source:  MoT Regulation s No. 44, 2012 Concerning Goods Subject to Export Prohibition; No.  48, 2012 
Concerning Provisions on the Export of Non -Subsidized Urea Fertilizer; No.  2, of 2007, Concerning 
Prohibition of Export of Sand, Soil and Top Soil; and No. 45 , of 21 July 2019 , on the Export 
Prohibited Goods; online information Viewed at: 
https://trade.ec.europa.eu/doclib/docs/2019/november/tradoc_158451.11.19IDNDSReq uestasagree
d.pdf; MoT Regulation No. 1/2014, as amended by MoT Regulation No. 1/2017 , cited in Economist 
Intelligence Unit (2019), Country Commerce – Indonesia , January; and WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013.  
 
125 Minister of Industry and Trade Decree s No. 26/MPP/Kep/II/2000 and No. 23/MPP/01/2001 . 
126 It mainly consists of: Law of Trade No. 7 on Trade , of 2014 ; MoT Regulation  
No. 14/M-DAG/PER/2/2017 on Adjustment of Classification of Goods Affected by Provisions o n the Prohibition 
and Restriction of Exports and Imports Based on the Goods Classification System; and MoT Regulation  
No. 45 on Export Prohibited Goods, of 21 July  2019.   
127 Indonesia was the world 's largest nickel producer in 2018 , with 560,000 ton nes. According to the 
Ministry  of Energy and Mineral Resources , it would need 81 million ton nes of nickel ore supply per year to meet 
domestic processing capacity; in 2020, it has 11 working smelters and would build 25 more. Average 
produc tion is expected to grow by 8.1% overall in the period 2018 -27, outperforming all other global nickel 
producers. Indonesia had proven reserves of about 698 million ton nes of nickel that could be mined over the 
next seven to eight years.  The Jakarta Post, Indonesia to ban nickel exports from January 2020. Viewed at: 
https://www.thejakartapost.com/news/2019/09/02/indonesia -to-ban-nickel -export s-from-january -2020.html ; 
and WTO, Indonesia – Measures Relating to Raw Materials . Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds592_e.htm . WT/TPR/S/401 • Indonesia  
 
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  3.2.3.2   Export restrictions and licensing  
3.81.   According to the authorities, during the review period , export policy instruments were relaxed 
by revising five MoT regulations related to exports; furthermore, export (and import) licensing 
procedures were simplified through online and digital signature, thus raising the efficiency (time) 
and centralization of the licensing process. Export licensing continues to be undertaken for the 
reasons contained in Law No. 7/2014 that were similar to those in place at the time of the previous 
Review  (see above , and Sections 2.2.3, 3.1.5.1 and 3.1.7).128 Export licences may be obtained 
through the INSW (Sections 3.1.1.1 and 3.2.1). Similar to imports, export authorizations are issued 
by the DGFT within the MoT (Section 3.1.5.2); generally, this remains contingent upon o btaining a 
recommendation from another ministry.  
3.82.   During the review period, the regulatory framework governing export licensing was 
updated/amended in several areas , including: coffee; rice; palm oil ; crude palm oil; banana s and 
pineapple s to Japan in the context of the Indonesia -Japan Economic Partnership Agreement   
(Section  2.3.2); animals and animal products; forestry industry products; natural plants and wildlife; 
non-subsidized urea fertilizers; mining products; rough diamonds; metal waste and scrap; a nd tin.129 
Product coverage was expanded , and some new requirements were added (Table  3.8); no 
comprehensive data on the number of tariff lines regarding  restrictive export licensing in 2020 were 
available from the authorities. The main additions include co ffee; rice; palm oil ; crude palm oil ; coal 
and coal -based products ; domestic marketing requirements for crude oil ; and mineral ore domestic 
processing requirements.130 In 2017, Indonesia partially relaxed the export ban on mineral ore s by 
temporarily allowing exports of certain minerals, including nickel ore with a concentration below 
1.7%, subject to certain additional requirements (see below); the full export prohibition is to be 
reinstated on 11 January 2022 (Section 3.2.3.1). In Aug ust 2018, the nickel ore export permits of 
three companies and the bauxite export permit of one firm were temporarily revoked for making 
virtually no progress in smelter development; in 2019 , there were 11 smelters (3 in 2013).131 In 
 
128 MoT Regulation No. 13 of 2012 (Article 4) ; and WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
129 MoT Regulation s No. 72/M -DAG/PER/12/2013, amending  MoT Regulation  No. 47/M-DAG/PER/7/2012 
on Export of Non -Pharmaceutical Precursors; No.  44/M-DAG/PER/7/2014  on Tin Export Provisions; No.  49/M-
DAG/PER/8/2014 on Amendment to Regulation of the Minister of Regional Regulation No. 39/M-
DAG/PER/7/2014 concerning Provisions on the Export of Coal and Coal Products; No. 97/M -DAG/PER/12/2014 
on Provisions on the Export of Forestry Industry Products; No. 02/M -DAG/PER/1/2015 on Third Amendment to 
MoT Regulation  No. 29/M -DAG/PER/6/2013 concerning Verification or Technical Tracing of Exports of Palm Oil, 
Crude Palm Oil (CPO) and its Derivative Products; No. 33/ M-DAG/PER/5/2015 on Amendment to the Regulation 
of MoT Regulation No. 44/M -DAG/PER/7/2014 on the Export of Tin; No.  36/M-DAG/PER/5/2015 on Amendment 
to MoT Regulation No.  24/M-DAG/PER/6/2008 concerning Provisions on the Export of Banana s and Pineapple s 
to Japan in the Context of IJ -EPA (Indonesia -Japan Economic Parties Agreement); No. 66/M -DAG/PER/8/2015 
on Amendment to MoT Regulation No. 97/M -DAG/PER/12/2014 concerning Provisions on the Export of Forestry 
Industry Products; No. 25/M -DAG/PER/4/2016 on Amend ment to MoT Regulation No. 89/M -DAG/PER/10/2015 
concerning Provisions for the Export of Forestry Industry Products; No. 84/M -DAG/PER/12/2016 on Provisions 
on Export of Forestry Industry Products; No. 01/M -DAG/PER/1/2017 on Provisions on the Export of Proce ssing 
and Refining Mining Products; No. 12/M -DAG/PER/2/2017 on Amendment to Regulation of the Minister of 
Regional Regulation No. 84/M-DAG/PER/12/2016 concerning Provisions on the Export of Forestry Industry 
Products; No. 13/M -DAG/PER/2/2017  on Amendment t o MoT Regulation No. 59/M -DAG/PER/8/2016 concerning 
Provisions on the Export and Import of Animals and Animal Products; No. 38/M -DAG/PER/6/2017 on Second 
Amendment to MoT Regulation No. 84/M -DAG/PER/12/2016 concerning Provisions on the Export of Forestry 
Industry Products; No.  01 of 2018 on Provisions on Rice Export and Import; No. 04 of 2018 on Provisions on 
the Export of Metal Waste and Scrap; No. 11 of 2018 on Second Amendment to MoT Regulation No. 10/M -
DAG/PER/6/2005 concerning Provisions on the Export and Import of Rough Diamonds; No. 52 of 2018 on 
Changes to MoT Regulation No.  39/M-DAG/PER/7/2014 concerning the Export of Coal and Coal Products; 
No. 53 of 2018 on Second Amendment to MoT Regulation No. 44/M -DAG/PER/7/2014 concerning Provisions on 
Tin Export; No. 95 of 2018  on Third Amendment to MoT Regulation No.  39/M-DAG/PER/7/2014 concerning 
Provisions on the Export of Coal and Coal Products ; No. 109 of 2018 on Coffee Export Provisi ons; No. 114 of 
2018 on Provisions on the Export of Non -Subsidized Urea Fertilizers; No. 122 of 2018 on Provisions on the 
Export of Natural Plants and Wildlife that are Not Protected by Law and Included in the List of CITES ; No. 29 of 
2019 on Provisions on  the Export and Export of Animals and Animal Products; No. 36 of 2019 on Amendment 
to MoT Regulation No. 4 of 2018 concerning Provisions on the Export of Metal Scrap and Scrap; No. 72 of 2019 
Amendment to MoT Regulation No. 29 of 2019 concerning Provisions  on the Export and Import of Animal and 
Animal Products.  
130 Since 2 018, new reporting requirements for coal exporters  (MoT Regulation No. 95 of 
September  2018) seemingly place a burden on SMEs  operating in the sector ; most of Indonesia 's estimated 
4,000 coa l miners and exporters fall into th is category.  Economist Intelligence Unit (2019), Country Commerce 
– Indonesia , January.  
131 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.   WT/TPR/S/401 • Indonesia  
 
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  August 2019, the Ministry of Energy and Mineral Resources established that the validity of certain 
documents necessary to export low -concentration nickel ore were to  expire on 31 December 2019, 
thereby effectively reinstating the total export prohibition of nickel ore from 2 January 2020.132 On 
22 November 2019, in the context of the WTO dispute settlement mechanism , the European Union 
requested consultations with Indonesia regarding various measures concerning certain raw materials 
necessary for the production of stainless steel, including: domestic processing requirements for 
nickel, iron ore, chromium and coal; domestic marketing obligations for coal products; and export 
licensing requirements for nickel.133  
Table 3.8 Export r estrictions and licensing, 2012 and 2020  
Product   Rationale and requirements  
Coffee 
(since 2019)  Rationale: simplification of export documents . 
 
Requirements:  MoT Regulation No. 80/2019 revised the use of NIB documents to be 
registered as a coffee exporter ( Eksportir Terdaftar Kopi ), and eliminated police 
investigation repor t (Berita Acara Pemeriksaan  (BAP) as a requirement for export.  
  
Banana s and 
pineapple s  Rationale: exports to Japan in the context of the IJ-EPA. 
 
Requirements: maximum export quota 1,000 tonne s/year for banana s and 
300 tonne s/year for pineapple s 
Rice ( since 2015)  Rationale: fulfil domestic demand. It may be exported if ric e production exceeds domestic 
demand.  
 
Requirements: an export approval valid for six months; rice exports may only be 
conducted by state -owned companies (BULOG), regionally -owned enterprises, and private 
companies under certain conditions: ( i) BULOG: with  a maximum Prime Quality/Level of 
Broken  Rice of 25% , and a recommendation from the Coordinating Ministry for Economic 
Affairs and the Ministry of Agriculture; and (ii) private companies: with a maximum Prime 
Quality/Level of Broken Rice of 5%, organic ric e with certificate, and a recommendation 
from the Ministry of Agriculture.  
Processed -timber 
products and their 
derivatives, 
finished rattan 
(non-prohibited)  Rationale: increase Indonesia 's standard and effectiveness for export s of timber products . 
 
Requirements: only companies with a registered exporter of forestry industry products 
(ETPIK) licence , and those with an ETPIK non -producer licence , from the MoT may export 
processed timber; in 2020, MoT Regulation No. 45/2020 revoked the use of the ETPIK 
licence; based on MoT Regulation No. 84/2016, the exporter only needs to obtain V -Legal 
(verification of wood legality) and surveyor report s for certain HS codes.  
Tin bar  Rationale: ( i) prevent excessive exploitation and environmental damage; ( ii) suppor t 
sustainable use; ( iii) fulfil domestic demand; and (iv) boost competitiveness and 
improved quality of tin exports.  
 
Requirements: tin may only be exported by entities recognized as "ET -Tin" by the DGFT. 
Recognition is valid for three years (extendable). A VPTI by an authori zed surveyor is 
required.   
Mineral ore 
products  
 Rationale: ( i) prevent excessive exploitation and environmental damage; ( ii) fulfil 
domestic demand; ( iii) develop the competitiveness of the downstream industry; 
(iv) increase investment in smelter construction , and provide job opportunities; and 
(v) improve surveillance of the mining process and collection of royalty payments.  
 
Requirements: 131 metal and non -metal mineral and 12 rock products may only be 
export ed by mining business permit holder s, and the implementation of exports is verified 
by an authorized surveyor ( VPTI); and 13 minerals , including con centrat es and certain 
criteria product of minerals (washed bauxite) , may only be export ed by mining business 
permit holder s after obtaining export approval from the DGFT . These approvals also 
require a recommendation from the DG of Mineral and Coal , specifying the product, 
exported amount, duration, port of loading, and export destinations of product. Pre -
shipment in spection by an authorized surveyor is required, at the cost of the exporter. 
Registered exporters must submit monthly written reports to the DGFT. Mining companies 
must submit a work plan for processing and purification development. Since  
11 January  2014, mining companies have been required to domestically process mineral 
ore before shipping it abroad; since 2017, refining requirements are limited to metals, 
 
132 Request for Consultations by the European Union  Letter of Request for Consultations by the 
European Union of 22 November 2019 . Viewed at: 
https://trade.ec.europa.eu/doclib/docs/2019/november /tradoc_158451.11.19IDNDSRequestasagreed.pdf . 
133 WTO, Indonesia – Measures Relating to Raw Materials. Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds592_e.ht m. WT/TPR/S/401 • Indonesia  
 
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  Product   Rationale and requirements  
their associated minerals, by -products and residuals, and refining requirements for seven 
metals ca lled Type 1 minerals (copper, ilmenite, iron ore, lead, manganese, titanium , and 
zinc) as well as low -grade nickel and washed bauxite were eased until 11 January 2022. 
These exempt metals face a 60% export duty since 2016, unless the mining company can 
provide proof of progress in the construction of smelters or refining facilities. Other 
products are subject to export duties of 20% (Section 3.2.2). Applications to be 
recognized as a registered exporter must be made to the DGFT and , inter alia , must 
include  a recommendation from the DG of Mineral and Coal (Ministry of Energy and 
Mineral Resources).  
Non-subsidized 
urea fertilizer  
 Rationale: ensure availability of fertilizer for the domestic market , and put in place 
effective controls to prevent abuse and diversion of subsidized urea fertilizer.  
 
Requirements: export of non -subsidized urea fertilizer may only be undertaken by certain 
state-owned companies approved by the DGFT.   
Non-
pharmaceutical 
precursors  
 Rationale: combat illicit international narcoti c and psychotropic distribution, given that 
precursors may be misused as raw or auxiliary materials in the illegal  manufacture of 
narcotic and psychotropic drugs.  
 
Requirements: listed types of non -pharmaceutical precursors may only be exported by a 
compan y recognized as a registered exporter by the Minister of Trade. Companies must 
submit written applications to the DGFT, inter alia , attaching a recommendation from the 
DG of Manufacturing Industry Base (Ministry of Industry). Registration is valid for 3 ye ars 
(extendable). For each export, registered exporters must obtain an approval from the 
DGFT, which is based on recommendations from the National Narcotics Agency and the 
Indonesian police. Approval to export is valid for 180 days (non -extendable). Regist ered 
exporters must notify a national shipment plan, and each shipment must be verified by an 
appointed surveyor. Registered exporters must also submit export reports to the MoT 
every 3 months.   
Silver and gold  Rationale: minimize environmental damage fr om uncontrolled mining . 
 
Requirements: based on MoT Regulation No. 01/2017, the export requirement for silver 
and gold only require s a surveyor report for traceability.  
Metal rest and 
scrapa 
(non-prohibited)  Rationale: availability and adequacy of raw materials for the establishment and 
development of national industries, especially metal and machinery industries . 
 
Requirements: exporters of certain metal rest and scrap (affecting 18 tariff lines) require 
a letter of approval. To obtain the letter, expo rters must apply to the Director of Industry 
and Mining Export Products ( MoT), inter alia , attaching a recommendation from the 
Director of Metal Base Material Industry (Ministry of Industry). The approval letter is valid 
for six months (extendable). Exporters must report on export implementation regardless 
of whether exports have been made. Ce rtain metal rest and scrap items may only be 
exported from Batam Island (6 tariff lines).  
Class C minerals 
other than sand, 
soil and topsoil  Rationale: to minimize environmental damage caused by uncontrolled mining , and to 
prevent illegal exports.  
 
Requir ements: pre -shipment inspection prior to export, and Class C minerals must be 
verified by a surveyor approved by the DGFT.  
Raw diamonds  Rationale: implementation of commitments under UN Resolution N o. 55/56 (2000) on the 
prevention of violations of trade of diamonds related to armed conflicts and the resulting 
Kimberly Process Certification Scheme (KPCS).  
 
Requirements: raw diamonds may only be exported by exporters approved by the DGFT, 
which, inter alia , is contingent upon obtaining a letter of recommend ation from the DG of 
Mineral s and Coal (Ministry of Energy and Mineral Resources). Such recognition is valid 
for 3 years (extendable). Raw diamonds may only be exported to KPCS participants. Each 
consignment is subject to pre -shipment inspection , and requi res the approval of the 
DGFT.  
Coal and coal -
based products 
(since 2014)  Rationale: not indicated.  
 
Requirements: coal exporters must obtain export permits from the MoT. Before obtaining 
the permit , a coal exporter must secure a recommendation from the Ministry of Energy 
and Mineral Resources . All exports must be inspected by a government -appointed 
surveyor prior to shipment abroad. In 2018 , new reporting requirements for coal 
exporters were issued.  WT/TPR/S/401 • Indonesia  
 
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  Product   Rationale and requirements  
Oil and gas  Rationale: ( i) sovereignty (Constitution, Article 33(3)); ( ii) sustainable and efficient 
management of oil and gas as non -renewable natural resources; ( iii) prevention of 
excessive exploitation and environmental damage; ( iv) ensure the exploit ation of these 
resources contributes to the prosperity and welfare of the Indonesian people; and 
(v) supply domestic demand.  
 
Requirements: exporters must be approved by the DGFT, which, inter alia , is contingent 
upon obtaining a letter of recommendation f rom the DG of Oil and Gas (Ministry of Energy 
and Mineral Resources). Since  2018, oil producers have been required to give priority to 
providing a portion of their crude oil to the domestic market before allocating it for 
export. Producers holding production -sharing contracts are required to offer their portion 
of crude oil to the stat e-owned oil -and-gas company Pertamina or other oil -refining 
companies in Indonesia, at least 3 months before export ing it. 
a Rest is defined as products that have not been used up in production, or goods that still have the 
same characteristics, but their  function has changed.   
Source:  MoT Regulations No. 10 (2005), as amended by No. 25 (2008); No. 3 (2007); No. 29 (2012) as 
amended by No. 52 (2012); No.  45 (2012); No. 46 (2012); No.  47 (2012); No. 48 (2012); No. 64 
(2012); No. 78 (2012); No. 39/2014 as a mended  by No. 95/2018; No. 1/2018 amending regulation 
103/M -DAG/PER/12/2015; and No. 1/2014, as amended by No. 1/2017 ; Ministry of Energy and 
Mineral Resources Regulation No. 42 of September 2018 ; Global Trade Alert, Indonesia: 2018 
update on import and ex port provisions for rice.  Viewed at:  https://www.globaltradealert.org/state -
act/31714/indonesia -2018-update -on-import -and-export -provisions -for-rice; and Economist 
Intelligence Unit (2019), Country Commerce – Indonesia , January.  
3.2.4   Export support and promotion  
3.2.4.1   Duty and tax concessions  
3.83.   Exports of goods and import s of materials, intermediate products and machinery used in their 
manufact ure remain exempt from customs duty and VAT (Sections 3.1.3.6 and 3.3.1). During the 
review period, the regulatory framework in this area, including that related to SME export activities, 
was updated.134 Eligible manufacturers located outside of bonded zone s and SEZs 
(Sections  3.2.4.2.2 and 3.2.4.2. 3) are required to export 100% of their output.135 To receive 
import -duty exemptions on materials purchased domestically and used in the production of export 
items, a company must submit the prescribed application form to the BKPM (Sections 2.2.1.1 and 
2.4). The DGCE allows exporters operating at ports of entry to be reimbursed the relevant amount 
of import duties , within seven days of the exportation date; coffee, garments, gas, oil, plywood, 
rubber, tin , and products covered by export or quota agreements are excluded.136 No information 
on the refund calculation formula in place and no data on the amounts disbursed to exporters by 
main product categories and their f.o.b. export value were available from the authorities.  
3.2.4.2   Export zones  
3.84.   During the review period, Indonesia continued to support  exports through incentives available 
via its FTZ, bonded zone, export -orientated production entrepôt (EPTE) (until 2015) and SEZ 
schemes. In addition to other incentives (see below), under MoF Regulations No. 176/2009 and 
No. 188/2015, companies operating  within FTZs, SEZs and bonded zones may import capital goods , 
not available in Indonesia in sufficient quantities or specifications , duty-free for two years during the 
 
134 MoF Regulations: PMK No. 160/PMK.04/2018 concerning Exemption of Import Duties and the No 
Value Added Tax or Value Added Tax and Sales Tax on Luxury Goods on the Import of Goods and Materials to 
be Processed, Assembled, or Installed on Other Goods for  the Purpose of Exporting; PMK No. 
161/PMK.04/2018 concerning Returns of Import Duty that has been Paid for the Import of Goods and Materials 
to Be Processed, Assembled, or Installed on Other Goods for the Purpose of Exporting; and PMK No. 
177/PMK.04/2016 concerning Exemption of Import Duties and No Value Added Tax or Value Added Tax and 
Sales Tax on Luxury Goods on Imported Goods and/or Materials, and/or Machines Conducted by Small and 
Medium Industries with Export Purposes as amended by PMK No. 110/PMK.04 /2019 concerning Amendments 
to PMK No. 177/PMK.04/2016 concerning Exemption of Import Duties and the No Value Added Tax or Value 
Added Tax and Sales Tax on Luxury Goods over Import Goods and/or Materials, and/or Machines Conducted by 
Small and Medium Enter prises with Export Purposes.  
135 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  
136 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  WT/TPR/S/401 • Indonesia  
 
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  investment project 's construction (Section 3.1.3.6); this may be further extended, depen ding on the 
construction period.137  
3.2.4.2.1   Free trade zones  (FTZs)  
3.85.   The FTZ scheme under Law No. 1 (2000) on Free Trade Zones and Free Ports (last amended 
in 2007) aim ing to  promot e regional economic development, remained virtually unchanged.138 FTZs 
are geographic ally distinct areas located near seaports and airports, where imported goods may be 
stored, repacked or processed, free from the imposition of import and export duties, VAT, luxury 
tax, and excise tax. Import and export documentation is simpler than for re gular imports. Indonesia 
maintains one FTZ , set up in 2007 and situated on the Riau Islands of Batam, Bintan and Karimun 
(BBK), off the coast of Singapore , to attract investment from Singapore via comparatively cheap 
labour and low rents. However , it appea rs that the BBK FTZ has not lived up to hopes, employing 
just 2,000 workers at end -2015, with its operation bogged down by institutional bureaucracy issues 
(e.g. the lack of demarcation between the central government -appointed FTZ authority (BP Batam) 
and the local governments) , creating legal uncertainties for investors.139 In December 2015, the 
authorities planned to dissolve this FTZ, and convert it into a regular SEZ; no update on this matter 
was available from the authorities.140 In May 2019 , upon the recommendation of the Corruption 
Eradication Commission (Section  2.2.4) , the cigarette and alcohol excise tax exemption for the FTZ 
BBK and the free port of Sabang at the northern tip of Sumatra was lifted because it had been 
abused to smuggle these it ems to other regions.141 At the time of the previous Review , the main 
business sectors operating within the FTZ were technology, medical equipment and electronics, 
telecommunications, agri -business, textiles, industrial assembly and fabrication, shipbuildin g, 
tourism, and oil and energy services.  
3.2.4.2.2   Bonded zones   
3.86.   The bonded zones scheme under MoF Regulation No. 147/2011 (last amended on 
26 September 2018) governs bonded zones, and is implemented by various DGCE regulations . It 
was updated in certain areas , including , in 2015, the introduction of Bonded Logistics Centres for 
storing commodities without processing them.142 The EPTE scheme under MoF Decree No. 855/1993 
was merged with the Bonded Zone regime under GR No. 33/1996 (last amended by 
GR No. 85/2015).143 Bonded zones are buildings or confined areas used to process goods and 
materials for export, including design, engineering, sorting and packaging activities.144 100% foreign 
ownership of manufacturing plants in the zones continues to be allowed for five year s, and 95% 
ownership is permitted thereafter, provided 100% of production is exported.145 Goods may be 
imported into a bonded zone and then re -exported without the payment of import duties. Exemptions 
from VAT, excise and luxury taxes apply , including to ra w materials purchased from local companies. 
In addition, operators are exempt from the payment of corporate income tax and local taxes 
(Section   3.3.1).146 Since  2013, the sale of products from a bonded zone to domestic customers may 
 
137 Economist Intelligence Unit (2019), Country Commerce – Indonesia , January.  
138 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
139 Wiryawan, B., A. (2016), Addressing Innovation Competitiveness of Batam Free Trade Zone: What 
Went Wrong? , International Conference on Social and Political Issues (ICSPI 2016) . Viewed at: 
https://knepublishing.com/index.php/KnE -Social/article/view/2907/6222 ; Vujanovic , P. (2017), 
Decentralisation to promote regional development in Indonesia , OECD Economics Department Working Papers 
No. 1380, ECO/WKP(2017)12, 4 April.  
140 A 2009 law on SEZs foresees that the existing FTZs will either expire within a pre -determined period 
or will become SEZs with broader activities. Once FTZs have changed status o r expired, Law No. 1 (2000) will 
become n ul and void.  
141 The Jakarta Post, Tackling smuggling in FTZs . Viewed at: 
https://www.thejakartapost.com/academia/2019 /05/28/tackling -smuggling -in-ftzs.html . 
142 MoF Regulations: PMK No. 272/PMK.04/2015 concerning Bonded Logistics Centers as amended by 
PMK No. 28/PMK.04/2018 concerning Amendments to PMK No. 272/PMK.04/2015 concerning Bonded Logistics 
Centers; PMK No. 131/PM K.04/2018 concerning Bonded Zones; PMK No. 204/PMK.04/2017 concerning Duty -
Free Stores; and PMK No. 143/PMK.04/2011 concerning Bonded Warehouses.  
143 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
144 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
145 WTO docume nt WT/TPR/S/278/Rev.1, 16 July 2013.  
146 Article 3.1(a) of the WTO Agreement on Subsidies and Countervailing Measures prohibit s subsidies 
contingent  upon export performance,  including those illustrated in Annex I  whose paragraph  (e), inter alia , 
refers to t he full or partial exemption remission, or deferral specifically related to exports, of direct taxes  paid 
or payable by industrial or commercial enterprises.  WT/TPR/S/401 • Indonesia  
 
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  not exceed 50% of the t otal value of exports (previously , at least two thirds of production had to be 
exported), plus sales to other bonded zones, FTZs and other economic areas in the previous year.147 
If a bonded -zone company exceeds this limit, its domestic market sales quota f or the next year is 
reduced. The 50% limit may be increased , upon the approval of the DGCE, based on a 
recommendation by the Ministry of Industry. Importers selling to the domestic market may defer 
payment of taxes until imported goods are released from th e bonded zone. A Bonded Zone Plus 
facility allows for simpler business licensing provisions and import procedures.   
3.87.   As at 30 March 2020, there were 1,366 (1,557 at end -2012) bonded zones and 176 bonded 
logistics centres; the main business sectors operating within the bonded zones were textile s and 
textile products, electronics, plastic goods, food and beverage s, and footwear. According to the latest 
survey in 2017, bonded zone users contributed IDR 634.1 trillion to export value, employed  
1.95 million workers , and realized IDR 178.17 trillion in investment in Indonesia.  
3.2.4.2.3   Special economic zones (SEZs)  
3.88.   The SEZ scheme , under the 2007 Investment Law and the Special Economic Zones Law 
39/2009, aim s to enhanc e the competitiveness of Indonesian business and  encourag e value -added 
processing activities and exports . It was updated with regulations improving incentives (see 
below).148 Regulatory changes included: GR No. 1 of 2020 concerning Implementation of Special 
Economic Zones; and GR No. 12 of 2020 concernin g Facilities and Ease in Special Economic Zones 
(related to taxation, customs and excise facilities). SEZ proposals must be approved by the National 
Council for Special Economic Zones, consisting of government ministers and heads of certain other 
governmen t institutions, which have overall responsibility for administering SEZs, as well as by the 
President. Any business entity (e.g. SOES (BUMN, BUMD), cooperative s, private companies,  joint 
venture s, or consorti a), district/city government or provincial gover nment may put forward 
proposals for developing SEZs, funding their development and maintenance, and running business 
activities within them. Tax and non -tax incentives remain available to participating firms. The former 
consist of rebates or exemptions on:  corporate income tax , property tax , import duty, VAT, excise  
tax, luxury taxes , and local taxes.149 Non-tax incentives  include assistance relating to fast-track land 
acquisitions, expedited business licen ces, streamlined port procedures , and simplified 
working-permit procedures for foreigners; the 2009 legislation specifies that priority regarding 
employment in SEZs is given to Indonesian citizens . In November 2015, further incentives for firms 
to set up within SEZs were strengthened by offering corporate tax discounts ranging from 20% and 
100% for up to 25  years , depending on the level of investment.150  
 
147 MoF Regulations No. 120/2013 and No. 131 of November 2018, cited in Economist Intelligence Unit 
(2019), Country Commerce – Indonesia , January.  
148 These zones must have distinct geographical boundaries, be situated in strategic positions (i.e. close 
to trade and or maritime routes), and/or be supported by a business cluster or key sector, as well as b eing 
linked to well-developed external infrastructure. The concept is that there should be various zones located 
within the SEZ, including: export -processing zones (assembly and logistics for exports); bonded zones 
(processing, warehousing, and logistics f or goods destined for the domestic market and for export); industrial 
zones (processing and manufacturing for the domestic market); technology parks; and supporting activities 
(such as ports, hotels, and housing). WTO document WT/TPR/S/278/Rev.1, 16 July 2 013. 
149 Article 3.1(a) of the WTO Agreement on Subsidies and Countervailing Measures prohibit s subsidies 
contingent  upon export performance,  including those illustrated in Annex I  whose paragraph  (e), inter alia , 
refers to t he full or partial exemption remi ssion, or deferral specifically related to exports, of direct taxes  paid 
or payable by industrial or commercial enterprises.  
150 More specifically, s ome of the available tax facilities include the following : tax holiday for primary 
industry -corporate income tax reduction (of up to 100% for 10 to 25 years for investment more than 
IDR 1 trillion (USD  68.32 million) , of up to 100 % for 5 to 15 years for investment between IDR 500 billion 
(USD 4.16 million)  and IDR 1 trillion(  USD 68.32 million) , at a rate decided by the MoF for 5 to 15 years for 
investment below IDR 500 billion (USD  34.16 million) ; tax allowance for other industries (reduction in net 
taxable income of up to 30 % of the amount invested in the form of fixed assets, pro -rated at 5% for six years 
of commercial production , accelerated depreciation and/or amortization , extension of tax loss carry forward 
from five years to up to 10 years , and a reduction in withholding tax on dividends paid to non -residents to 
10%, or applicable treaty rat e); Value added tax (VAT) and sales tax exemption on luxury goods (imported , 
delivered among companies in SEZ, and those delivered among companies in other SEZs ); customs clearance 
exemption (on all goods entering the SEZs and  Goods exiting from the SEZs t o foreign countries  (except 
leather, woods, cocoa beans, crude palm oil and its derivatives, and minerals ), goods exiting from the SEZs to 
the domestic market, however, subject to customs duty, except those that fulfil the minimum local content 
requirement  of 40%); and import duties and excise (deferred import duties for imported goods and exempted 
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  3.89.   As at 17 February 2020, there were 15 SEZs , 11 of which were in  operati on and another 
4 were in development; 8 SEZs with a special focus, such as palm oil processing or tourism , were 
also in development.151 As at June 2020, 29 companies were installed in SEZs; they represented 
IDR 87,509 trillion of investment , and employed 8,862 persons. Reportedly, as at 2015 , most SEZs 
suffered from inadequate infrastructure, especially in light of their often isolated locations; 
moreover, their potential impact on broader economic development remained uncertain.152   
3.2.5   Export finance, insurance, and guarantees  
3.90.   The entirely state -owned Indonesia Eximbank ( Lembaga Pembiayaan Ekspor Indonesia ), 
supervised by the MoF, remains the sole institution to support national export performance, 
increasing the added  value and competitiveness of export commodities by providing financing, 
guaran tees and local and overseas insurance and consultation services for exporters , as well as 
contribut ing to the development of export -orientated SMEs (Table 3.9).153 It provides finance for 
transactions or projects that cannot be financed by banks, but have t he prospects to increase 
exports; and assists in overcoming barriers encountered by the banks or financial institutions in 
providing financing for exporters that have commercial potential and/or are important for the 
country 's economic development. Indones ia Eximbank provides both conventional and sharia 
financing for exporters. The financing can be given  for either short or long term, in cash or non -cash 
facilities, in rupiah  or US  dollars . According to the authorities , Indonesia Eximbank operates under 
normal commercial terms , applying the prevailing market interest rate which is above the BI's 
borrowing rate. It charges a premium for guarantee s based on risk (Table 3.9).154 In principle, 
Indonesia Eximbank 's short-term export insurance product is similar to that of the Asuransi Ekspor 
Indonesia (see below), i.e. to mitigate financial risk via insurance protection for the default of 
payment of commercial receivables due to unexpected losses result ing from inso lvency, protracted 
default or political risk. In September 2015, a Government Special Assignment , the National Interest 
Account (NIA) , was introduced to provide export financing for transactions or projects that are 
commercially difficult to implement, but  are considered necessary to support export policies or 
program mes.155 During the review period, it  undertook efforts to , inter alia , increase the focus on 
financing a number of government -designated leading export commodities (e.g. leather and 
jewellery), penetrate non -traditional export markets (e.g. Africa, South Asia, the Middle East , and 
Eastern Europe ), encourage growth of export -oriented MSMEs, and implement special -assignment 
export projects in synergy with a number of other SOEs . Examples of the lat ter include  aircraft 
produced by the SOE Indonesian Aircraft Company (Thailand, Nepal, United Arab Emirates , and 
African countries not under UN embargo) and train cars produced by the SOE Indonesian Railway 
 
(FTA) tariff rates ). Non-tax incentives involve  easy licensing and labo ur-related incentives to investors that 
include low wages that keep production costs low, immigration facilities, and labo ur market flexibility. 
Immigration facilities include visa on arrival for 30 days, extendable five times; option to  transfer visit visa into 
temporary stay permit; and option to transfer temporary stay permit into permanent stay permit for 
individuals working in SEZs and their families. Furthermore, foreign investors investing in the SEZs are allowed 
to have the buildi ng right on land (Hak Guna Bangunan), which is extendable up to 80 years; own property in 
the SEZs; and those who own property have the option to apply for the permanent stay permit in Indonesia.  
Online information ( https://www.aseanbriefing.com/news/indonesias -growing -special -economic -zones -
opportunities -and-challenges/ ); MoF Regulation 96/2015  cited at Economist Intelligence Unit (2019), Country 
Commerce – Indonesia , January ; Petar Vujanovic (2017), Decentralisation to promote regional development in 
Indonesia , OECD Economics Department Working Papers No. 1380, ECO/WKP(2017)12, 4  April.  
151 These include the Riau Islands SEZ, which encompasses the FTZ BBK and nearby islands ; the 
Sabang SEZ in Aceh province; the SEZ Tanjung Lesung in Banten province ; and the SEZ Sei Mangkei in North 
Sumatra. Those under development are in Palu (in Central Sulawesi), Bitung (North Sulawesi), Mandalika 
(West Nusa Tenggara), Morotai (North Maluku), Tanjung Api -Api (South Sumatra), Tanjung Kelayang (Bangka 
Belitung), Sorong (Papua Barat) and Maloi Batuta Trans Kalimantan (East Kalimantan).  WTO document 
WT/TPR/S/278/Rev.1, 16 Jul y 2013 ; Economist Intelligence Unit (2019), Country Commerce – Indonesia , 
January.  
152 Petar Vujanovic (2017), Decentralisation to promote regional development in Indonesia , OECD 
Economics Department Working Papers No. 1380, ECO/WKP(2017)12, 4 April.  
153 Indonesia Eximbank (201 9), Annual Report 2018:  Unlocking Developmental Potential, Expanding 
Export Boundaries , April . Viewed at: http://www.indonesiaeximbank.go.id/annual -report# ; WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013.  
154 The percentage of the coverage depends on the underwriting of the buyer , and on the country risk. 
The repayment term is normally set for  a short-term tenor (≤1 year); medium -term tenor (1 -5 year s); or 
long-term tenor (>5 year s). A grace period is acceptable under certain conditions , for a limited time , 
depending on various aspect s, including the risk management consideration.  
155 MoF, Government Strengthening E xport Financing through National Interest Account. Viewed at: 
https://www.kemenkeu.go.id/en/publications/news/gov ernment -strengthening -export -financing -through -
national -interest -account -1/. WT/TPR/S/401 • Indonesia  
 
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  Company (Bangladesh and Sri Lanka) via two NIAs in 2018. Under MoF Decree 
No. 787/KMK.08/2017 of 6 November 2017 on Indonesia Eximbank's National Interest Account to 
Promote Exports to Nations within the African Region, all goods and services meeting "domestic 
contribution" criteria benefit from financin g, guarantees and/or insurance products . Foreign 
companies with a  majority of foreign legal entit y or foreign national  shareholders are not eligible for 
this facility.156 Since  2019, foreign firms operating in the country are now fully eligible to access 
Indonesia Eximbank 's NIA program me.157 In 2017, Indonesia Eximbank launched the 
Export -Oriented Small Business Loan facility in support of the Economic Policy Package Phase XI 
(Section  2.2.2  and 3.3.1.2 ).  
Table 3.9 Indonesia Eximbank services, 2019  
Service  Product  Form  
A. Financing  
Domestic  
 
 
 
 
 
 
 
 
Overseas  
 
 
 
Sharia   
• Working capital export financing  
• Investment export financing  
• Warehouse receipt financing  
• Export bills purchasing  
• Project financing  
• Trust receipt s 
• Supplier bills purchasing  
• Export -oriented business credit 
 
• Investment financing  
• Project financing  
• Buyer 's credit  
 
• Export working capital,  
• Export investment cinancing  
• Sharia trade  
• Financing facility.   
• Financing disbursements  
B. Guarantee s  • Project guarantee s 
• Custom bonds 
• Credit guarantee s for banks and 
financial institutions  
• Reguarantee s • Guarantee s for Indonesian exporters 
regarding  payments received from the 
overseas buyer of goods and/or 
services;  
• Guarantee s for Indonesian importer s of 
goods and services abroad regarding  
payment provided to Indonesian 
exporters to finance export contracts on 
the sale of goods and/or services or 
fulfilment of work or services carried out 
by Indonesian companies;  
• Guarantee s for Eximb anks' partner s 
providing financ e for export transaction s 
to Indonesian exporters; and/or  
• Guarantee s in the framework of tenders 
related to the implementation of 
projects that partly or entirely support 
export activities  
 • Trade credit insurance  
• Marine cargo ( since 2015)  
• Reinsurance  • Insurance to cover the risk of failure of 
export s (marine cargo insurance for the 
product (export) at 100% of invoice and 
10% of expected profit);  
• Insurance to cover the risk of payment 
failure (commercial risks at a maximum 
of 90%, political risks at a maximum of 
95%);  
 
156 As at 31 December 2019, total disbursements of the NIA funds for the African region stood at IDR 
185 billion . Indonesia  Eximbank (2019) , Annual Report 2018:  Unlocking Developmental Potential, Expanding 
Export Boundaries , April . Viewed at: http://www.indonesiaeximbank.go.id/annual -report# . 
157 Under MoF Regulation No. 787/KMK.08/2017 of 6 November 2017, all exporters  to the African region  
were eligible for NIA financing , except for those with majority foreign investment or whose ownership was 
controlled by foreign legal entities or foreign citizens. Howe ver, under  MoF Regulation No. 01/KMK.08/2019 of 
2 January 2019 , the reference to exporters was broadened to "business entities, both in the form of legal 
entities and not in the form of legal entities, including individuals who conduct export activities". It also 
remove d the clause "except business entities with foreign investment status whose ownership is majority 
owned, or controlled, by foreign legal entities or foreign citizens ", under KMK No. 787/2017.  WT/TPR/S/401 • Indonesia  
 
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  Service  Product  Form  
• Insurance to cover investment by 
Indonesian companies abroad (only for 
political risk , to a maximum of 95%); 
and/or  
• Insurance to cover political risk in 
export destinations (up to 95% of non -
payment due to political risk, trade 
credit insurance at a maximum of 
90%).  
D. Consultation 
services  • Coaching Program for 
New Exporter s (since 2014)  
• Capacity building  
• Corporate Social Responsibility   
Source:  Indonesia Eximbank (2019), Annual Report 2018:  Unlocking Developmental Potential, Expanding 
Export Boundaries , April. Viewed at: http://www.indonesiaeximbank.go.id/annual -report# . 
3.91.   By 2018, Indonesia Eximbank's  values for financing, guarantees and insurance had 
significantly risen to IDR 108,859 billion (IDR 55,203 billion in 2014), IDR 11,307 billion 
(IDR 3,629  billion in 2014) and IDR 11,322 billion (IDR 702 billion in 2014), respectively; at the 
same time , although its total assets rose to IDR 120,071 billion (IDR 60,503 billion in 2014), its net 
profit dropped to IDR 172 billion (IDR 1,182 billion in 2014) , due, inter alia,  to an increase in 
non-performing loans (13.73% (gross) in 2018) , resulting from numero us customers' cash -flow 
readjustment to deal with unfavourable global economic conditions.158 Financing remained relatively 
balanced between the rupiah (54.9% of total in 2018) and the US dollar. Rupiah financing increased 
by 14.83% from IDR 1.77 trillion i n 2017 to IDR 59.84 trillion in 2018. US dollar financing decreased 
slightly to IDR 49.01 trillion in 2018 from the previous year's position of IDR  49.24 trillion. Export 
Working Capital Financing and Export Investment Financing continued to hold dominant position s, 
at 51.64% and 48.26% , respectively,  of total disbursements in 2018. Export financing for SME s and 
large corporations increased by 24.30% and 5.34% , respectively , in 2018; the value for export 
financing to SMEs and large corporations stood at IDR  16.03 trillion (14.7% of total amount 
disbursed) and IDR 92.7 trillion , respectively , in 2018. Conventional financing grew 10.47% to 
IDR 93.24 trillion in 2018 compared to 2017 , while sharia financing decreased by 5.96% to 
IDR 15.62  trillion; in 2018, con ventional financing represented 85.65% of total disbursements , 
whereas sharia was 14.35%. In 2018, the main beneficiaries of sharia financing were the crude palm 
oil (CPO) sector (59.27% of total amount of disbursements), the mining sector (8.44% ), and 
maritime transport (4.94%). In 2018 , the number of guarantee certificates increased 2% to 
1,192  certificates compared to 1,171 in 2017 ; in 2019 , it decreased by 2% to 1,060 . As at  
December  2019, 217 guarantee debtors were insured by Indonesia Eximbank . In 2019 , Indonesia 
Eximbank 's portfolio covered: various industrial business sectors (48.35%); agriculture, hunting and 
its equipment (17.9%); mining (9.37%); construction (6%); freight, warehous ing and 
communication (5.3%); electricity, gas, and water(4 .4%); and others (3.94%). In 2019 , the 
insurance business activity gave insurance protection to 46 insured  companies  (81 in 2018) and 
574 buyers/ contracts  (678 in 2018). Indonesia Eximbank is currently repositioning its insurance 
products , and increasing  failed-payment insurance. The insurance business continued to 
predominantly benefit the industrial sector (87.27% of the total in 2019) , including CPO and 
derivatives, paper, plastic, chocolate, seaweed flour, furniture, frozen fish, textiles, pharmac eutica l 
products , skin tanning, t yres, and transportation and construction (12.73%). As at 2018, Indonesia 
Eximbank 's financing developmental impact was estimated to have increased: investment by 
2.9 times , meaning that every IDR 1 billion of financing increased  investment by IDR 2.9 billion; 
and GDP by 2.7 times , meaning that every IDR  1 billion of financing increased the GDP by 
IDR 2.7 billion.   
3.92.   The state -owned Asuransi Ekspor Indonesia (ASEI), supervised by the Ministry of 
State -owned Enterprises, continues to , inter alia,  offer export credit insurance to exporters for all 
products other than oil and gas, in the event that they do not receive payment from the buyer, and 
export bill insurance to banks, in the event that exporters fail to repay their loans due to commercial 
 
158 On 31 December 2011, the value of export financi ng to 224 debtors was IDR  20,541.08  billion; 
nearly half of this went to the industrial sector ( in particular , CPO, textiles, and oil, gas and mining). Export 
guarantee values were IDR 347.85 billion, with 317  certificates issued. There were 22 buyers of export 
insurance for a value of IDR 38.58 billion).  WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  Indonesia 
Eximbank (201 9), Annual Report 2018:  Unlocking Developmental Potential, Expanding Export Boundaries , 
April. Viewed at: http://www.indonesiaeximbank.go.id/annual -report# . WT/TPR/S/401 • Indonesia  
 
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  and/or political risks.159 The ASEI may reimburse up to 85% of losses, and the remaining 15% is 
borne by the exporter. Sharia -compliant insurance products are also av ailable. The premium is 
calculated based on country repayment risks; terms of payment associated with the transaction; 
and the credit term. The authorities noted that there is no regulation forbidding domestic insurance 
companies (including the ASEI) from providing services to foreign clients. The ASEI's premium 
receivables from export credit insurance rose from IDR 3,076.1 million  in 2017 (of total receivable 
premiums) to IDR  5,170 .2 million  in 2018 , representing 0.9% and 1.5% of total receivable premiums 
of the company, respectively; reinsurance receivables by export credit insurance remained virtually 
stable , at IDR 4,835 .7 million  in 2017 and IDR 4,860 .6 million  in 2018, accounting for 1.1% and 1% 
of total of reinsurance receivables , respectively. In 201 8, the ASEI's net profit after tax amounted 
to IDR  4 billion compared to losses of IDR 173 billion in 2017; in 2019 , it targeted an IDR 6 billion 
profit after tax. Losses that occurred in 2017 were compensated by either allowance f or bad debt 
expenses amou nting to IDR 52 billion, or employee benefit (based on actuary calculation) of 
IDR 37 billion. The ASEI's profit in 2018 was due to an increment of underwriting results in ASEI 
export credit insurance (IDR 1 .8 billion), credit guarantee s (IDR 25 .0 billion) , general insurance 
(IDR 39.0 billion) , and inward business (IDR 54 .0 billion).  
3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.3.1.1   Taxation  
3.3.1.1.1   Central government taxes and related tax incentives  
3.93.   Central government taxes include corporate and personal incom e tax; VAT; the Luxury Goods 
Sales Tax, excise taxes, the Land and Building Tax, import duties , and export duties.  
3.94.   The central Government's  main source of tax revenue is domestic taxes, which accounted for 
between 95.6% and 97.4% of the total value of tax receipts over the review period . The largest 
category of domestic taxes is income tax (which comprises both personal income tax and corporate 
income tax) , followed by VAT. Taxes on international trade comprise import duties and export taxes; 
together , they accounted for between 2.6% and 4.4% of total tax receipts over the review period 
(Table 3.10). Over the review period, reliance on international trade tax revenue dropped, despite 
rising tax rates, largely due to faster income tax revenue growth.   
3.95.   At end-January 2020, the Government submitted an "omnibus" tax bill to Parliament , 
containing corporation tax rate cuts (to 22% in 2021 and 20% in 2023) and the imposition of a VAT 
of 10% on Internet companies, regardless of where they are based. It also pro poses aggregating 
various tax incentives under one piece of legislation; as indicated by the authorities , as at mid -July 
2020, this bill was still under discussion between the Government and the Parliament.160 In response 
to the COVID -19 outbreak , this corp orate tax reduction was fast -tracked in Spring 2020 
(Section  3.3.1.1.1.1) and other new tax measures were introduced to mitigate its impact, namely, 
companies were able to defer tax payments for six months , and personal income tax was waived for 
six months  to boost consumption.161  
 
159 Commercial risks include importer insolvency, importer default, and importer refusal to accept the 
goods. Political risks include the prohibition of foreign  exchange transfers, import quota restrictions, the 
revocation of import licences, and acts of war or other hostile situations in the importing country. WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013. ASEI (2019), Annual Report 2018:  Providing Excellent Ser vice Through 
Continuous Technology Development . Viewed at: http://www.asei.co.id/en/annual -report/ ; ASEI, Export Bill 
Insurance. Viewed at: http://www.ase i.co.id/en/ebi/ ; and ASEI, Export Credit Insurance. Viewed at: 
http://www.asei.co.id/en/export -credit -insurance -eci/.  
160 Reuters , Indonesia government seeks parliament approval for corporate tax cut, other tax changes . 
Viewed at: https://www.reuters.com/article/u s-indonesia -economy -tax/indonesia -government -seeks -
parliament -approval -for-corporate -tax-cut-other -tax-changes -idUSKBN1ZZ0VA . PWC. Viewed at: 
https://www.pwc.com/id /en/taxflash/assets/english/2019/taxflash -2019-18.pdf . The Insider Stories. Viewed 
at: https://theinsiderstories.com/indonesias -house -receives -tax-omnibus -law-draft/. 
161 MoF Regulation No. 23/PMK.03/2020. Viewed at: 
https://jdih.kemenkeu.go.id/fullText/2020/23~PMK.03~2020Per.pdf . WT/TPR/S/401 • Indonesia  
 
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  Table 3.10 Central government tax revenues, 2013 -19 
   2013  2014  2015  2016  2017  2018  2019  
Tax revenues  
(IDR trillion)  1,077.3  1,146.9  1,240.4  1,285.0  1,343.5  1,518.8  1,545.3  
% of GDP 11.9 10.7 10.8 10.4 9.9 10.2 9.8  
(% of total)  
Direct tax  49.4 49.7 50.8 52.7 50.6 49.5 51.1 
Income tax  47.0 47.6 48.4 51.1 49.3 48.2 49.8 
Non-oil and gas  38.8 39.5 43.9 48.3 43.7 44.5 46.0 
Oil and gas  8.2 7.6 4.0 2.8 3.7 4.3 3.8 
Land and Building Tax 2.3 2.0 2.4 1.5 1.2 1.3 1.2 
Indirect tax  48.7 48.8 48.3 45.8 49.8 49.0 55.5 
VAT 35.7 35.7 34.2 32.1 35.8 49.0 42.4 
Excise duties  10.1 10.3 11.7 11.2 11.4 11.1 10.7 
Import duties  2.9 2.8 2.5 2.5 2.6 2.6 2.4 
Export duties  1.5 1.0 0.3 0.2 0.3 0.4 0.2 
Other domestic taxes  0.5 0.5 0.4 0.6 0.8 0.4 0.5 
Source:  MoF, Central government financial report  2019. Viewed at: 
https://www.kemenkeu.go.id/publikasi/laporan/laporan -keuangan -pemerintah -pusat ; and MoF, 
State Budget  (January 2020) . Viewed at: https://www.kemenkeu.go.id/apbnkita . 
3.96.   According to the latest Indonesia Tax Expenditure Report, which covers the years 2016 and 
2017, tax expenditures (or revenue foregone from tax incentives) amounted to IDR 154.7 trillion in 
2017 or around 1.14% of GDP (IDR 143.6 trillion in 2016 or 1.16% of GDP).162 In 2017, it was 
estimated that , of total tax expenditures of IDR 154,660 billion, 81% was related to VAT and the 
Luxury Goods Sales Tax, 13% was related to income tax , and 6% was related t o import duties and 
excise taxes. In the same year, the main beneficiaries were multi -sector (IDR  70,300  billion); 
financial services (IDR 17,631 billion); agriculture and fisheries (IDR  14,246  billion); transport 
(IDR 12,854 billion); electricity, water a nd gas (IDR 12,392 billion) and manufacturing 
(IDR 12,383  billion ). However, the report cautions that these figures may not reflect reality due to 
difficulty in collecting data on income and excise tax incentives granted.163  
3.3.1.1.1.1   Corporate and personal income t ax  
3.97.   The legislative basis for income tax remains the Income Tax Law No. 7 of 1983 as amended 
by Law No. 36 of 2008.164 Taxation policies are also regulated by Government Regulation in Lieu of 
Law No. 1 of 2020, which was issued to help manage the impact of the COVID -19 pandemic. The 
standard corporate tax rate is 22% (reduced from 25% as from the tax year 2020). It will be reduced 
further to 20% from 2022. Certain reductions apply to MSMEs (Section 2.4.4) and public companies 
achieving a minimum listing requ irement of 40% on the Indonesia Stock Exchange. D epreciation 
and amortization deductions are provided. A withholding tax is raised on many import items and 
some exports (Sections  3.1.4 and 3.2.2). Personal income tax rates range from 5% to 30% , 
depending o n the amount  of annual taxable income.165  
3.98.   To attract investment, create  employment and increase economic equality in various regions 
which are orientated towards natural resource processing, the Government continues to have in 
place two main long -standing tax incentive policies, namely tax holidays and tax allowances. 
Additionally , a "super deduction" tax incentive scheme for labour -intensive, vocational and research 
and development activities was introduced.  
 
162 MoF, Tax Expenditure Report for 2016 and 2017 . Viewed at: 
https://fiskal.kemenkeu.go.id/publikasi/tax -expenditure -report . 
163 As indicated in the report, data on tax expenditures for VAT and the LGST can be estimated using 
macro data, while obtaining figures on income tax duties and excise relies on micro data which is harder to 
reliably obtain.  
164 Law No. 36 of 2008. Viewed (in Bahasa Indonesia) at: 
https://jdih.kemenkeu.go.id/fullText/2008/36TAHUN2008UU.HTM . 
165 Deloitte , International Tax – Indonesian Highlights 2019 . Viewed at: 
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl -tax-indonesiahighlights -2019.pdf . WT/TPR/S/401 • Indonesia  
 
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  Corporate tax holiday  
3.99.   The corporate tax holiday is an exemption/reduction which is provided for a certain period, 
for companies undertaking new investments over a value of IDR 100 billion in pioneer industries. 
These  industries include certain activities in the following sector s: natural resources; chemicals; 
machinery/manufacturing; transportation components; agriculture, plantation s, or forestry 
producing pulp -based processing , with or without its derivatives; economic infrastructure; and digital 
economy (including data proces sing, hosting and associated activities). Its legal and regulatory basis 
is: Law No. 25 of 2007 Concerning Investments (Chapter X)166, PMK No. 150 of 2018167, and BKPM 
Regulation No. 1 of 2019 (as amended by BKPM Regulation No. 8 of 2019).168 Changes to the t ax 
allowance scheme over the review period provide legal certainty for assets that are eligible for tax 
allowance facilities, simplified procedures, and expanded sectors that may benefit from tax holiday 
facilities. Companies must be Indonesian legal entit ies. Corporate income tax holidays/reductions 
are provided over two time periods, as set out in Table 3.11 , and are applicable to 18 pioneer 
industry groups. According to the authorities, over the period April 2018 to June 2020, 79 companies 
received tax h olidays, mainly in the power plant and metal industries.   
Table 3.11 Corporate tax holiday thresholds and amounts  
New investment plan value (IDR)  First period  Second period  
100 billion - less than 500 billion  50% of total corporate income tax 
liability for 5 fiscal years  25% of total corporate income 
tax liability for 2 fiscal years  
500 billion – less than 1 trillion  100% of total corporate income tax 
liability for 5 fiscal years  50% of total corporate  income 
tax liability for 2 fiscal years  
1 trillion – less than 5 trillion  100% of total corporate income tax 
liability for 7 fiscal years  50% of total corporate income 
tax liability for 2 fiscal years  
5 trillion – less than 15 trillion  100% of total corporate income tax 
liability for 10 fiscal years  50% of total corporate income 
tax liability for 2 fiscal years  
15 trillion – less than 30 trillion  100% of total corporate income tax 
liability for 15 fiscal years  50% of total corporate income 
tax liability for 2 fiscal years  
30 trillion or above  100% of total corporate income tax 
liability for 20 fiscal years  50% of total corporate income 
tax liability for 2 fiscal years  
Source : Information provided by the authorities.  
Corporate tax allowance  
3.100.   The corporate tax allowance is a tax reduction which is calculated based upon the value of 
the investment made. Its legal and regulatory basis is Article 31A of the Income Tax Law169 and 
GR No. 78 of 2019.170 In addition, Ministry of Industry Decre e No. 47/2019 and MoF Decree No.  11 
of 2020 were issued in order to regulate changes in investment provisions.171 Changes to the tax 
allowance scheme since 2014 relate to certainty of capital asset facilitation, simplified procedures , 
and expansion in secto r coverage. The allowance covers 130  eligible types of investment 
(119 designated sectors , and 11 categories of investment in designated sectors and regions), 
including SEZs and bonded zones. The tax allowance facility comprises a reduction in net income b y 
30% of the total investment, prorated at 5% per year for six years.172 In addition, it also comprises 
accelerated depreciation and amortization; a reduction of the withholding tax rate on dividends paid 
 
166 Law No. 25 of 2007  (unofficial English translation). Viewed at: https://www.indonesia -
investments.com/business/foreign -investment/investment -law-indonesia/item8322 . 
167 PMK No. 150 of 2018. Viewed at: https://foresight -id.com/wp -content/uploads/2018/12/MOF -150-
PMK-010-Year-2018.pdf . 
168 BKPM Regulation No. 1 of 2019 concerning Details of Business Fields and Types of Production of 
Pioneer Industry Eligible for the Corporate Income Tax Reductions. Viewed (in Bahasa Indonesia) at:  
https://peraturan.bkpm.go.id/jdih/userfiles/batang/2019._1_PERBKPM_TH_KUMHAM_.pdf . Brigitta I. Rahayoe 
& Partners, Legal Update – Tax Holiday.  Viewed at:  http://www.brigitta.co.id/wp -
content/uploads/2019/04/2019 -04-24-Legal -Update -Tax-Holliday -Clean1.pdf . 
169 Income Tax Law. Viewed (in Bahasa Indonesia ) at: https://www.pajak.go.id/sites/default/files/2019 -
07/UU%2036%202008.pdf . 
170 Details in English of the changes made to the tax allowance in 2019. PWC, Tax Flash.  Viewed at: 
https://www.pwc.com/id/en/taxflash/assets/english/2019/taxflash -2019-18.pdf . 
171 These regulations were viewed at: https://peraturan.go.id/common/dokumen/bn/2020/bn114 -
2020.pd f and https://peraturan.go.id/common/dokumen/bn/2019/bn1773 -2019.pdf . 
172 By way of example, if a company made an IDR 100 billion investment, the amount of tax allowance 
for the company would be 30% of IDR 100 billion, or equal to IDR 30 billion, charged at IDR 5 billion per year 
for six years.  WT/TPR/S/401 • Indonesia  
 
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  to non -residents to 10% (or lower if treaty relief is available); and extension of tax loss carry -forward 
for up to ten yea rs. To be eligible to apply for the tax allowance facility, the applicant must meet 
criteria including high investment value, export orientation and high labour absorption. According to 
the authorities, 11 companies with a total investment of IDR 13.14 tri llion were eligible for the tax 
allowance in 2019 , and 16 companies with a total investment of IDR 15.24 trillion in 2020.  
Super -deduction tax incentives for labour -intensive, vocational and research and 
development activities  
3.101.   In 2019, the Government intro duced new " super-deduction" tax incentives for industries 
with certain features , through GR No. 45/2019173, and MoF implementing regulations 
(MoF Regulations No. 128 of 2019 and No. 16 of 2020) (Table 3.12). As indicated by the authorities, 
ten companies were granted tax relief under these schemes; no data was available on the revenue 
foregone from incentives provided.  
Table 3.12 Super -deduction tax incentives  
Incentive scheme  Tax facility provided  Eligibility  
Facility for 
labour -intensive 
industries  Tax facility based on type of entity. 
Reduction in net income of 60% of 
amount invested in the form of 
tangible fixed assets (including land 
used for main business), spread over a 
certain period.  Companies that carr y out a new 
investment or expand certain businesses: 
which are ( i) a labour -intensive industry; 
and ( ii) have not been granted corporate 
tax allowances or holidays.  
Facility for human 
resources 
development in 
certain competencies  Tax deduction based on type of eligible 
expense. Reduction in gross income of 
up to 200% of the amount spent on 
this activity.  Companies that conduct an internship or 
vocational training program me in certain 
competencies , to upskill human resources 
as part of the investment and fulfilment 
of workforce demand.  
Facility for certain 
research and 
development 
activities  Tax deduction based on type of eligible 
expense. Reduction in gross income of 
up to 300% of the amount spent for 
this activity, spread over a certain 
period . Compani es that conduct certain research 
and development activities which produce 
invention and innovation, master a new 
technology, or transfer technology to 
ultimately increase the competitiveness of 
national industries.  
Source : PWC, Tax Flash . Viewed at: https://www.pwc.com/id/en/taxflash/assets/english/2019/taxflash -
2019-11.pdf .  
3.3.1.1.1.2   Value Added Tax (VAT)  
3.102.   Legislation governing VAT remains the Value -Added Tax and Luxury Tax Law No. 42 of 2009. 
VAT continues to be levied at a flat rate of 10%. It is applied equally to imports and domestically 
produced goods174 and services. With respect to imports, VAT is applied on the customs value plus 
the sum of import du ties levied. Certain goods/services are VAT zero -rated, non -taxable for VAT , or 
VAT exempt. On certain items , VAT is not collected (Table 3.13). Additionally, VAT incentives are 
available to companies operating in FTZs, SEZs, and bonded zones (Section 3.2. 4.2). As indicated 
by the authorities, changes to the VAT regime over the review period relate to product coverage and 
VAT facilities. In 2019, VAT non -collection was extended to transport rental services (ships, aircraft 
and trains) to improve the economy 's competitiveness.175 In the same year , a 0% VAT was extended 
to the export of a wider range of domestically produced services.176  
 
173 GR No. 45 of 2019. Viewed (in B ahasa Indonesia ) at: https://pajak.go.id/sites/default/files/2019 -
07/PP_Nomor_45_Tahun_2019.pdf . 
174 VAT also applies to intangible goods (including royalties). Deloit te, International Tax – Indonesia 
Highlights 2019 . Viewed at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl -tax-
indonesiahighlights -2019.pdf . 
175 World Bank, Indonesia Economic Quarterly – Investing in People , December 2019. Viewe d at: 
http://documents.worldbank.org/curated/en/622281575920970133/pdf/Indonesia -Economic -Quarterly -
Investing -in-People.pdf . 
176 As reported by SSEK Indonesian Legal Consultants, MoF Regulation No. 32/PMK.010/2019 regarding 
the Limitation of Activities and Ty pes of Taxable Services for Export Subject to Value Added Taxes was enacted 
in March 2019, replacing MoF Regulation. No. 70/PMK.03/2010 (as amended in 2011). SSEK, Legal Updates . 
Viewed at: https://www.ssek.com/id/blog -id/indonesia -imposes -0-value -added -tax-for-the-export -of-certain -
services . WT/TPR/S/401 • Indonesia  
 
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  Table 3.13 VAT rates, 2020  
 VAT rate  
General rate  10% 
Reduced VAT rates  Factoring (5% on the fees received); and package deliveries and travel agent 
services (1%)  
VAT zero -rated items  All exports of goods  
Exports of the following services: (i) services connected to movable goods 
utilized outside the Customs Area (toll manufac turing; repair and maintenance 
services; and freight forwarding services on export orientated goods); (ii) 
services connected to immovable goods located outside the Customs Area in the 
form of consultation services for construction; (iii) other services wh ere output 
is used outside of the Customs Area, based on a request from an overseas 
recipient through either: direct or indirect transmission or the provision of 
access outside the Customs Area (including: information and technology 
services, research and development services; rental of aircraft, and/or ships for 
international flights or shipping activities; various consultation services; trading 
services in the form of services that assist in finding domestic sellers of goods 
for export purposes; and inter connection, satellite operations and/or 
communication/data connectivity services).  
Non-taxable goods  Basic necessities (rice, grain, maize, sago, soy bean, salt, meat, eggs, milk, 
fruit and vegetables); mining or drilling products taken from their source s; food 
served in hotels and restaurants, including food and drinks provided by catering 
services; and money, gold, and securities.  
Non-taxable services  Medical, social and religious services; postal services; certain financial and 
insurance services; edu cational services; entertainment services performed by 
artists and entertainers; radio and television broadcasting services (other than 
advertisements); public transportation services; manpower and recruitment 
services; hotel and boarding house services; g overnment services; parking 
services; public telephone (coin) services; remittance services by money orders; 
and food and catering services.  
VAT exemption facilities for 
goods deemed "strategic" 
(GR No. 81/2015 and MoF 
Regulation 
No. 68/PMK.03/2015)  Import of the following "strategic" taxable goods: (i) machinery and factory 
equipment which are one unit, whether installed or detached, directly  used in 
the process of producing taxable goods by a taxable entrepreneur (does not 
include spare parts); (ii) goods resulting from business activities in fisheries 
(both catch and aquaculture); (iii) raw hides and skins, not tanned; 
(iv) livestock; (v) se eds and/or seeds from agriculture, plantations, forestry, 
livestock or fisheries; (vi) animal feed, not including pet food; (vii) fish food; 
(viii) feed ingredients for producing animal and fish feed, not including feed 
additives and supplements; and (ix) raw materials for silver craft in the form of 
silver granules and/or silver bar.  
Other VAT exemption schemes 
to support the achievement of 
certain national objectives 
(MoF Decree 
No. KMK-370/KMK.03/2003 as 
amended by GR  No. 50/2019)  Import and delivery of  the following taxable goods/services: (i) weapons, 
ammunition, armoured vehicles, patrol vehicles and other special vehicles, 
including their spare parts; (ii) components or materials that have not been 
made domestically, and are used in the manufacture o f weapons and 
ammunition for the purposes of the armed forces and state police; (iii) polio 
vaccines for use in the National Immunization Program; (iv) general education 
and religious books; and (v) simple housing, very -simple housing, simple flats, 
tempor ary housing, student dormitories, and certain other housing.  
VAT non -collected on the import 
and delivery of certain 
transportation vehicles and the 
delivery and utilization of 
taxable services related to 
certain transportation vehicles 
(GR 50/2019)  Import and delivery of the following taxable goods/services: (i) transportation 
vehicles and spare parts thereof, used by the armed forces and the state police; 
(ii) ships and spare parts thereof, as well as navigational or personal safety 
equipment used by national commercial shipping companies, national fishing 
companies, national seaport operators or national river, lake and ferry 
operators; (iii) aircraft and spare parts thereof, as well as aviation and personal 
safety equipment, and repair  and maintenance equipment used by national 
commercial airlines; (iv) trains and spare parts thereof, as well as equipment 
for repair, maintenance and infrastructure used by national train enterprises; 
(v) services received by national commercial shipping companies, national 
fishing companies, national seaport operators or national river, lake crossing 
and ferry operators, covering vessel leasing services, port services and vessel 
maintenance or docking services; (vi) services received by national commercia l 
airlines, covering aircraft leasing services, and aircraft maintenance or repair 
services; and (vii) train maintenance or repair services received by national 
train enterprises.  
GR No. 85/2015; 
GR No. 15/2015; and 
GR No. 106/2015  VAT is not collected on  the following events: the traffic of goods/services under 
the concessions on special projects and special zones; deliveries of certain fuels 
for petrol -fueled ships that transport goods to or from overseas ports; and 
deliveries of anode slime to be furthe r processed in producing gold bars.  
Source:  VAT Law No. 42 (2009); MoF Decree No. 231 (2001) as amended by MoF Regulation No. 616 (2004) 
and MoF Regulation No. 27 (2012); PWC , Indonesian Pocket Tax Book 2019 . Viewed at: 
https://www.pwc.com/id/en/pocket -tax-book/english/pocket -tax-book-2019.pdf ; SSEK, Legal 
Updates. Viewed at: https://www.ssek.com/id/blog -id/indonesia -imposes -0-value -added -tax-for-
the-export -of-certain -services ; and information provided by the authorities . WT/TPR/S/401 • Indonesia  
 
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  3.3.1.1.1.3   Luxury Goods Sales Tax (LGST)  
3.103.   The LGST continues to be applied to domestic produ ction and imports of a variety of products 
deemed non -essential. It is collected at the manufacturer level for domestic production; and on the 
customs value plus the sum of import duties levied, for imports.  The minimum applied rate is 10% , 
and the maximum  is 75%. Under the Value -Added Tax and Luxury Tax Law, maximum rates may 
be raised to 200%. Since 2013, there have been various changes to goods subject to luxury taxes 
as well as to LGST rates (Table 3.14 ). LGST rates on property were eased in 2019; the 2 0% threshold 
used to apply to landed property of IDR  20 billion and apartments of IDR  10 billion; it now applies 
to landed property and apartments worth at least IDR 30 billion.177  
Table 3.14 LGST rates, 2013 and 2020  
Luxury items subject to sales tax  Tax rate 
2013 (%)  Tax rate 
2020 (%)  
Perfumery  20 - 
Specified luxury devices using electrical power, batteries or gas for household use  10 - 
Photographic and cinematographic devices, video cameras, digital cameras  10 - 
Electric and non -electric musical instruments  20 - 
Transmitters and receivers  10, 20  - 
Luxurious houses, apartments, condominiums, town houses  20 20 
Luxury devices using electrical power, batteries or gas for household use and 
recreation not included in the 10% category  20 - 
Specified sporting goods and games  10, 30, 50  - 
Specified clothes and goods made of leather  40 - 
Suitcases, executive bags and boxes, and purses with an import value exceeding 
IDR 500,000  40 - 
Watches, clocks  40 - 
Carpets made of special material  40, 50  - 
Ships, vessels and yachts  30, 40, 75  75 
Aircraft (hot air balloons and gliders)  40 40 
Firearms, bullets and other firearms, except for national use  40, 50  40 
Helicopters  - 50 
Aircraft, except helicopters  - 50 
Goods made of crystal, marble or granite  40 - 
Motor vehicles with a capacity of 10 to 15 passengers  10 10, 25, 40  
Motor vehicles of 1,500 cc to 2,500 cc, with a capacity of fewer than 
10 passengers  20 20 
Sedans or station wagons with a cylinder capacity up to 1,500 cc  30 30 
Motor vehicles other than sedans and station wagons with a cylinder capacity up to 
1,500 cc  60 30 
Special -purpose vehicles for golf  50 50 
Motorcycles with a cylinder capacity of 250 to 500 cc  60 60 
Special -purpose vehicles to be used on snow, the beach, mountains, and the like  60 60 
Sedans and station wagons with a cylinder capacity of more than 3,000 cc  75 75 
Diesel sedans and station wagons with a cylinder capacity of more than 2,500  cc 75 75 
Motorcycles with a cylinder capacity of more than 500  cc 75 75 
Caravan trailers and semi -trailers for housing and camping  75 75 
Note:  "–" indicates that the LGST is not applied.  
Source:  Information provided by the authorities based on GR No. 41 of 2013 on Taxable Goods Classified as 
Luxury Goods in the form of Motor Vehicles that are the Object of Sales Tax on Luxury Goods , and 
MoF Regulation No. 35/PMK.010/2017 o n Types of Taxable Goods Classified as Luxury Goods other 
than Motor Vehicles that are the Object of Sales Tax on Luxury Goods.  
3.104.   Since May 2013, LGST incentives have been provided for vehicles which use advance 
technology , with a view to encourag ing the use  of energy -saving and environmentally friendly 
vehicles; they reduce the LGST base by 75% to 50% from its sales price , depending on certain 
criteria. Under low -cost and green -car program mes, the LGST basis is 0% from its sales price  
(Table  3.15) .178  
 
177 Reuters , Indonesia eases luxury sales tax for property to boost sales . Viewed at: 
https://www.reuters.com/article/indonesia -property/indonesia -eases -luxury -sales-tax-for-property -to-boost -
sales-idUSL4N23Q1SE . 
178 The LGST base is a percentage of the sales price that is used as the basis to calculate the LGST. The 
LGST incentive formula is  calculated  by multiply ing the  LGST base by the vehicle sale price : this is then 
multipl ied by the LGST tariff (LGST = (LGST base x sale price) x LGST tariff). The regulation currently 
governing this incentive is GR No. 41 of 2013, as amended by GR No. 22 of 2014. The new GR No. 73 of 2019 WT/TPR/S/401 • Indonesia  
 
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  Table 3.15 LGST incentives  
LGST base  Items subject to incentive s 
75% Motor vehicles using advance d diesel -/petrol -engine technology, dual petrol -gas engines 
(CNG/LGV converter kit s), biofuel engines, hybrid engines, and CNG/LGV -dedicated engines 
with oil fuel consumption (and other similar fuel) of 20 to 28 km/litre.  
50% Motor vehicles using advance d diesel -/petrol -engine technology, biofue l engines, hybrid 
engines, CNG/LGV -dedicated engines with oil fuel consumption (and other similar fuel) of more 
than 28  km/litre . 
Zero Motor vehicles under Low -Cost Green Car and Low Carbon Emission program mes, other than 
sedans or station wagons, with th e following requirements: (i) spark ignition up to 1,200  cc; 
or (ii) compression ignition (diesel/semi -diesel) up to 1,500  cc with oil fuel consumption ( or 
other similar fuel) of at least 20  km/litre.  
Source:  PWC, Indonesian Pocket Tax Book 2019 . Viewed at: https://www.pwc.com/id/en/pocket -tax-
book/english/pocket -tax-book-2019.pdf . 
3.3.1.1.1.4   Excise taxes  
3.105.   Excise taxes remain levied on ethanol, beverages , and concentra tes containing ethyl alcohol; 
and tobacco products. Legislation governing excise taxes remains the Excise Tax Law (1995) as 
amended by Law No. 39 of 2007.  
3.106.   Excise tax rates on tobacco products are set out in MoF Regulation No. 146/PMK.010/2017 
concerning E xcise Tariffs on Tobacco Products, as amended in 2018 and 2019.179 The cigarette tax 
on domestically produced cigarettes is divided into tiers , based on the type of cigarette, the volume 
of cigarette production by the domestic factory, and retail sale price  limits. The tariff for imported 
tobacco products does not consider cigarette factory production capacity , and is equivalent to the 
highest excise tax rate applied to domestic production (Table 3.16) . As noted by the World Bank, 
these tiers aim to accommod ate small -scale cigarette firms, especially hand -rolled clove cigarette  
firms, which account for over half of the total factories in the tobacco industry and employ a 
significant share of workers in tobacco manufacturing, most of whom are women.180  
Table 3.16 Excise taxes on imports and domestic production of tobacco, 2020  
Cigarette type  Excise tax rates 
on imports 
(IDR  per 
cigarette/gram)  Group (based on cigarette production 
in factory)  Excise tax rates on 
domestic 
production 
(IDR  per 
cigarette/gram)a 
Machine -made clove 
cigarette s  740 I (More than three billion sticks)  
II (Maximum 3 billion sticks)  470-740  
455 
Machine -made white 
cigarette s  790 I (More than three billion sticks)  
II (Maximum 3 billion sticks)  485-790 
425-470 
Hand-rolled clove 
cigarette s  425 I (More than 2 billion sticks)  
II (Between  500 million and 2 billion sticks)  
III (Maximum 500 million sticks)  330 
200 
110 
Filter-tipped hand -
rolled clove cigarettes  740 No group/total production limit  740 
Sliced tobacco  30 No group/total production limit  10-30 
Corn-leaf cigarettes  30 No group/total production limit  30 
Rhubarb and incense 
cigarettes  25 No group/total production limit  25 
Cigars  110,000  No group/total production limit  275-110,000  
a Excise tax rates vary according to retail sale price limits.  
Source:  MoF Regulation No. 146/PMK.010/2017. Viewed (in English) at : 
https://www.globaltobaccocontrol.org/sites/default/files/Translation_of_Ministerial_Regul ation_on_t
obacco_excise_rates_with_highlights_on_e -cigs_IND.pdf ; and MoF Regulation 
No. 152/PMK.010/2019. Viewed (in Bahasa  Indonesia ) at: 
https://jdih.kemenkeu.go.id/fullTex t/2019/152~PMK.010~2019Per.pdf . 
 
governing LGST rates on motor vehicles and a revised formula for calculating the LGST will be implemented 
from October 2021. PWC, Tax Flash . Viewed at: 
https://www.pwc.com/id/en/taxflash/assets/english/2019/taxflash -2019-17.pdf . 
179 MoF Regulations No. 156/PMK.010/2018 and No. 152/PMK.010/2019.  
180 World Bank, The Economics of Tobacco Taxation and Employment in Indonesia . Viewed at: 
http://documents.worldbank.org/curated/en/919961507699751298/pdf/120352 -REVISED -
WBGIndoEmploymentweb.pdf . WT/TPR/S/401 • Indonesia  
 
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  3.107.   Excise tax rates on alcohol were last set out in M oF Regulation PMK No. 158/PMK.010/2018. 
They are applied at the same rates on imported and domestically  produced goods. In 2019, excise 
tax rates on alcohol of up to 5% were increased from IDR 11,000/litre to IDR  15,000/litre  
(Table  3.17) . 
Table 3.17 Excise Tax rates, 2020  
Group  Rate 
Ethyl alcohol  IDR 20,000/litre  
Alcoholic drink s IDR 15,000/litre – IDR 139,000/litre  
Ethyl alcohol concentrate  IDR 1,000/gram  
Tobacco products  IDR 10 to IDR 110,000 /stick or gram , or 57% for certain tobacco products  
Source:  PWC, Indonesian Pocket Tax Book 2019 . Viewed at: https://www.pwc.com/id/en/pocket -tax-
book/english/pocket -tax-book-2019.pdf . 
3.3.1.1.1.5   Other fiscal incentives  
3.108.   Other fiscal incentives include:  import duty concessions and facili ties offered through SEZs, 
industrial zones , and FTZs (Sections 2.4.4, 3.1.3.6 and 3.2.4.2). Foreign companies undertaking 
business through a permanent establishment in Indonesia may be exempt from branch profit tax if 
they reinvest their after -tax profits  in Indonesia no later than the following year.181 Support 
programmes to specifically assist the mining, energy, manufacturing, agriculture, fisheries and 
services sectors are described in Section 4.  
3.3.1.1.2   Regional taxes and tax incentives  
3.109.   Regional taxes are sepa rated into provincial taxes and district/municipal taxes:  
• provincial taxes consist of: ( i) motor vehicle tax (tax rate: 1% to 2% of motor vehicle sale 
price for first ownership; progressive tariff from 2% to 10% of motor vehicle sale price for 
second owner ship, and so on); ( ii) motor vehicle ownership transfer fee (tax rate:  20% of 
motor vehicle sale price for first handover; 1% of motor vehicle sale price for 
second  handover and on); ( iii) motor vehicle fuel tax (tax rate: max 10% of sale price of 
motor ve hicle fuels before being subject to VAT; can be set at 50% lower for public 
vehicle s); (iv) surface water tax (tax rate: max 10% of surface water acquisition price); 
and ( v) cigarette tax (tax rate: 10% of cigarette excise) ; and  
• district/municipal taxes consist of ( i) hotel tax (tax rate: max imum  10% of payment for 
use of hotel facilities); ( ii) restaurant tax (tax rate: max imum  10% of restaurant service 
payment); ( iii) entertainment tax (tax rate: max imum  35% of the amount of mone y 
received by the entertainment organizer for common entertainment; max imum  75% for 
fashion shows, beauty contests, discos, karaoke, night clubs, dexterity games, massage 
parlours, and steam baths/spas; max imum  10% for folk/traditional entertainment); ( iv) 
advertisement tax (tax rate: max imum  25% of advertisement rental price); (v) road 
illumination tax (tax rate: max imum  10% of electricity sale price; max imum  3% for use 
of electricity from other sources by industry, petroleum mining and natural gas; max imum 
1.5% for use of self -generated electricity); ( vi) non-metal and rock minerals tax (tax rate: 
maximum  25% of sale price of non -metal and rock mineral extraction); ( vii) parking tax 
(tax rate: max imum  30% of the parking lot organizer payment); ( viii) groun d water tax 
(tax rate: max imum  20% of ground water acquisition price); (ix) swallow -nest tax (tax 
rate: 10% of swallow -nest sale price); (x) land and building tax for rural and urban area s 
(tax rate: max imum  0.3% of tax object sale price); (xi) acquisition  duty of right on land 
and building (tax rate: max imum  5% of tax object obtaining price). 
3.110.   Most local tax rates are set out in Law on Regional Taxes and Regional Retribution 
No. 28/2009 , and only determine the maximum rate of regional taxes. Local governments are given 
discretion to set tariffs in accordance with the conditions in each region. In this regard, the 
authorities indicated that tax rate reductions/holidays have been implemente d in several regions to 
support economic activity.   
 
181 The reinvestment must take one of a number of stipulated forms. For more details see PWC, 
Indonesian Pocket Tax Book 2018 . WT/TPR/S/401 • Indonesia  
 
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  3.3.1.2   Non-fiscal incentives  
3.111.   Various interest rate subsidies and loan schemes provided by the central Government are in 
place to assist MSMEs. They include:  
• under the  People's Business Credit  (Kredit Usaha Rakya t (KUR) ) programme182, the 
Government gives interest subsidies to banks who facilitate lending to MSMEs and 
low-income household farmers at capped interest rates. Annual lending targets are set by 
the Government , and the banks participating in the scheme ( government -owned banks, 
private banks , and financial leasing companies) are allocated a  share of the subsidies in 
order to give  loans at the government -subsidized interest rate .183 Interest rates have been 
progressively reduced from 12% in 2015 to 6% in 2020  and the value of annual loan 
disbursements/target disbursements has increased nearly nine-fold over the same period 
(from just over IDR 22 trillion in 2015 to a target of IDR 190 trillion in 2020).184 As 
indicated by the authorities, the costs of the KUR p rogramme were: IDR 10.61 trillion in 
2019 (unaudited), IDR 11.58 trillion (2018); IDR 3.17 trillion (2017); and IDR 3.78 trillion 
(2016) ; 
• under the MoF, the Government provides ultra -micro financing for persons who cannot 
access KUR loans; maximum loans ar e for IDR 10 million ; 
• the Indonesian Eximbank implements an export -orientated  small business  loan 
programme  (the KUR Bororientasi Export (KURBE) programme). It is an integrated export 
financing facility for export -orientated MSMEs , with a view to improving  the quality and 
competitiveness of their export products. Under the scheme, interest rates are set at 9% , 
with maximum loans of IDR 5 million for micro businesses, IDR 25 million for small 
businesses , and IDR 50 million for medium -sized businesses.185 The tenor period is 
five years for export working capital loans and for investment -export loans ; 
• the Ministry of Maritime Affairs and Fisheries , through the Public Service Body for Marine 
and Fisheries Fund Management , provides financing fac ilities to MSMEs in the fishery 
sector through micro -financing agencies or non -banking financial institutions , at a 
maximum interest rate of 4% ; 
• the Ministry of Forestry and Environment, through the Public Service Body for Forest 
Management Financing , provides financing for the business sector in forestry, both 
on-farm (such as financing development for forest plantations, agro -forestry , and 
maintenance of forest plantations) and off -farm (such as financing for the utilization of 
forest products and product ion equipment) ; and  
• under the SOE corporate social responsibility programme ( Program Kemitraan dan Bina 
Lingkungan  (PKBL), low -interest loans are available for MSMEs; the maximum term is 
three  years , and the interest rates are set by the company itself (bu t apparently may be 
as low as 3% per annum).186  
3.112.   Sector -specific loan and grant schemes are described in Section 4.1. These include the 
various grant schemes notified by Indonesia to the Committee on Subsidies and Countervailing 
Measures, namely the nationa l fish logistic system; the empowerment of community salt companies 
 
182 The KUR pr ogramme was established in 2007 as a guarantee scheme. Following an evaluation in 
2015, and to better target KUR beneficiaries, it was changed into an interest subsidy programme.  
183 ILO (2019), Financing Small Businesses in Indonesia, Challenges and Opportu nities . Viewed at: 
https://www.ilo.org/wcmsp5/groups/public/ ---asia/---ro-bangkok/ ---ilo-
jakarta/documents/publication/wcms_ 695134.pdf . 
184 KUR online information. Viewed at: https://kur.ekon.go.id/evolusi -kur and Jakarta Post. Viewed at: 
https://www.thejakartapost.com/news/2019/11/13/government -to-reduce -kur-annual -interest -rate-to-6-
percent -in-2020.html . 
185 Indonesia Eximbank. Viewed at: http://www.indonesiaeximbank.go.id/products -
services/detail/kurbe . 
186 As noted by the ILO (2019), under the PKBL, SOEs can provide credit of up to IDR 200 million to 
MSMEs with less than IDR 200 million in assets, with no collateral on loans up to IDR 30 million.  WT/TPR/S/401 • Indonesia  
 
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  programme; the development of community salt companies programme; the fishing vessel 
construction programme; the rural business development programme; and fisher insurance.187 
3.3.2   Standards and other technical requirements  
3.3.2.1   Legal, institutional and policy framework  
3.113.   The National Standardization Agency of Indonesia ( Badan Standardisasi Nasional  (BSN)), a 
non-ministerial government institution, continues to be responsible for coordinati ng and facilitating 
all activities related to standardization and conformity assessment in Indonesia.188 The Committee 
for Standard Development Policy (KKPS (formerly MTPS)) is responsible for providing standard 
development policy recommendations to the BSN  Chairman for approval, including 
recommendations on the National Program for Standard Development. The KKPS  consists of experts 
and representatives from government/regulators, and consumer and producer associations. The BSN 
is also the contact point for c ooperation with international standard -setting bodies , and is the enquiry 
point and notification body responsible for the implementation of the WTO TBT Committee.  
3.114.   The Indonesian Standardization Society ( Masyarakat Standardisasi Indonesia  (MASTAN)) 
represe nts stakeholders concerned with standardization, including from business, consumer groups, 
academia, and government , and undertakes training activities. It is an independent, no t-for-profit 
non-governmental organization.189 
3.115.   The law governing standard -settin g and other related activities is Law No. 20 of 2014 on 
Standardization and Conformity Assessment.190 It has a higher legal status than its predecessor ( GR 
No. 102 of 2000191), and its scope was expanded to cover metrology. Its implementing regulation is 
GR No. 34 of 2018192, which amended/expanded the rules of GR No. 102 of 2000 in the areas of: 
standardization and conformity assessment activities; related institutions; traceability of conformity  
assessment results; research and development; cooperation; information systems; guidance and 
supervision; and public participation. Other r egulations concerning standardization are: PBSN No. 3 
of 2018 on Guidelines on the Development of Indonesia n Nationa l Standard (SNI) and PBSN No. 2 
of 2018 on International Standard Adoption and Publication Guidelines to be Indonesian National 
Standard (SNI).193 
3.116.   The policy being implemented for national standards' development is the "National Policy on 
Standardization St rategy 2015 -2025".194 This incorporates the following steps: developing technical 
regulations; strengthening voluntary standards with a view to enhancing public confidence in 
national products and accessing global markets; strengthening synergies with the n ational 
innovation system; and strengthening the efficiency of national production.  
3.3.2.2   Standards  
3.117.   Technical committees (TCs) within specific ministries are responsible for drafting standards 
within their respective spheres of competence; the technical committ ee chairs and secretariats are 
appointed by the BSN. TCs comprise representatives from government, consumer associations, 
experts and industry.  
 
187 WTO document G/SCM/N/343/IDN, 2 August  2019.  
188 Standardization  activities include: planning, developing, stipulating, implementing, enacting, 
maintaining and monitoring the SNI.  
189 Mastan. Viewed at: https://mastan.or.id/profil/ . 
190 The law covers: standard -setting and implementation, accreditation, certification, inspection, 
metrology, research and development, cooperation, information systems, mentoring, monitoring, and public 
participation. Law 20/2014 was viewed (in Bahasa Indone sia) at: 
http://peraturan.go.id/peraturan/view.html?id=11e4b02f0fd4417e95e5313434313330 . 
191 GR No. 102 of 2000 . Viewed (in Bahasa Indonesia ) at: 
http://peraturan.go.id/peraturan/view.html?id=11e44c4f716c74408f98313232313231 . 
192 GR No. No. 34 of 2018 . Viewed (in Bahasa Indonesia ) at: 
http://peraturan.go.id/peraturan/view.html?id=11e8a044784edb0cac9c313133343137 . 
193 PBS No. 3 of 2018. Viewed (in Bahasa Indonesia ) at: 
http://peraturan.go.id/peraturan/view.html?id=11e862430fde1af488bd313334383030 ; and No.2 of 2018. 
Viewed (in Bahasa Indonesia ) at: 
http://pe raturan.go.id/peraturan/view.html?id=11e837e2bcb296d2bd21313533323430 . 
194 BSN Regulation No. 2 of 2014. Viewed (in Bahasa Indonesia ) at: 
http://peraturan.go.id/peraturan/view.html?id=11e530d8ede666849b36303831393536 . WT/TPR/S/401 • Indonesia  
 
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  3.118.   As indicated in the previous Review, the process of developing SNIs generally comprises five 
phases: programmin g; drafting; national consensus and finalization; SNI establishment; and SNI 
maintenance. The 152 TCs are responsible for drafting standards within their spheres of competence. 
They submit proposals for new or revised standards to the BSN based on stakehol ders' needs.  The 
BSN reviews the proposal and, if necessary, coordinates with the TC to ensure it is aligned with the 
TC's scope, before submitting it to the KKPS for approval. Approved proposals are put on the National 
Program for Standard Development. A draft SNI is then prepared by the TC, which may invite other 
stakeholders to provide inputs, and is sent to the BSN to be posted on its website for electronic 
balloting/physical voting by TC members (draft standards that are identical to international 
standards are directly subject to ballot approval (see below)). Technical experts and other interested 
parties are invited to examine draft standards , and their opinions are considered in the redrafting 
stage. The final draft, which is published on the BSN web site, is subject to electronic ballot approval 
by the BSN; interested parties who are persons or companies that have a legal entity in Indonesia 
are eligible to participate in this ballot. All standards in force are published on the BSN website 
(http://sispk.bsn.go.id/SNI/DaftarList ). 
3.119.   As at early May 2020, Indonesia had a total of 10,858 SNIs195, nearly 18% of which were 
harmonized with international standards.196 The sectors where standards are most prese nt are 
technology of materials , and agriculture and food technology (Table 3.1 8). As indicated by the 
authorities, almost all standards in the electronic, information and communication technology 
sectors are adopted from international standards (i.e. ISO, IEC and/or ITU standards), while many 
standards on agriculture and food technology are non -harmonized standards, due to environmental, 
geographical and cultural specificities. As at mid -2020, 6,182 enterprises were implementing SNIs, 
with 6,151 products be ing certified.197 
Table 3.18 SNIs by sector, May 2020  
Sector  Number of SNIs  
Agriculture and food technology  2,250  
Construction  871 
Electronic, information and communication technology  488 
Engineering technology  1,674  
General infrastructure and science  759 
Health, safety and environment  942 
Technology of materials  2,945  
Special technology  381 
Transportation and food distribution  532 
Total  10,858  
Source:  Information provided by the authorities.  
3.120.   Over the period 2013 -19, Indonesia adopted a total of 2,744 SNIs, 45% of which were 
harmonized with international standards (Table 3.1 9).  
Table 3.19 Standards development activity, 2013 -19 
Year SNIs harmonized with 
international standards  SNIs not harmonized with 
international standards  Total  
2013 153 257 410 
2014 201 217 418 
2015 262 253 515 
2016 277 245 522 
2017 206 220 426 
2018 93 199 292 
2019 29 132 161 
Total  1,221  1,523  2,744  
Source:  Information provided by the authorities.  
 
195 BSN, SNI Statistics 2020 . Viewed at: https://www.bsn.go.id/main/bsn/isi_bs n/20325/statistik -sni-
2020. 
196 As indicated by the authorities, 1,927 SNIs were harmonized with international standards, consisting 
of 1,348 harmonized with ISO, 578 with IEC, and 1 with CAC.  
197 A list of these certified products was viewed at: https://bangbeni.bsn.go.id/barang -ber-sni. WT/TPR/S/401 • Indonesia  
 
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  3.3.2.3   Technical regulations  
3.121.   As set out in law, the Government, through its relevant technical agencies, may issue a 
policy to make SNIs compulsory in cases where they relate to interests of national security, safety, 
security, public health, environmental conservation , or economic re asons.198 Over the review period, 
WTO Members expressed concerns about the lack of notifications to the WTO of draft technical 
regulations (see below).199 As indicated by the authorities, activities to improve the timeliness of 
notifications include : establishing a National Committee on TBT , comprising representatives from 
related stakeholders (both regulators and the private sector) for easy coordination ; activities on 
various issues relat ing to the implementation of the WTO TBT Agreement ; and the de velopment of 
a website ( https://tbt.bsn.go.id ) as an integrated media of information and communication for 
stakeholders , to improve the notification and enquiry tasks.  
3.122.   As at February 2020, 205 technical regulations were in force, most of which were issued by 
the Ministry of Industry (Table 3. 20). Of these, 134 were notified to the WTO. Most technical 
regulations in force are available online.200 
3.123.   Between January 2013 and early April 2020, Indonesia submitted 58 regular no tifications to 
the WTO Committee on Technical Barriers to Trade; the 60 -day period for comments was observed 
for 57 regular notifications. The type of measures notified to the WTO included 58  technical 
regulations (Article 2.9) and 48 conformity assessment  procedures (Article 5.6). Indonesia did not 
notify any urgent technical regulations (Article 2.10) or any urgent conformity assessment 
procedures (Article 5.7). The notified measures mainly related to human health protection or safety; 
consumer informatio n and labelling; and prevention of deceptive practices and consumer 
protection.201 
Table 3.20 Mandatory SNIs, February 2020  
Technical agency  Number of technical 
regulations  Technical regulations 
notified to the WTO  
Ministry of Industry  114 107 
Ministry of Energy and Mineral Resources  26 22 
Ministry of Agriculture  3 3 
Ministry of Maritime and Fisheries  2 2 
Ministry of Transportation  14 0 
Ministry of Public Works  46 0 
Total  205 134 
Source:  BSN. Viewed  (in Bahasa Indonesia)  at: 
https://bsn.go.id/uploads/download/2_sni_wajib(share)_feb_2020_utk_tayang.pdf . 
3.124.   According to the World Integrated Trade Solution Database (WITS) (last updated in 
September 2018), registration and authorization requirements for TBT reasons are among the top 
ten non-tariff measures  applied by Indonesia. Registration requirements for TBT reasons covered 
49.94% of the value of imports , and are especially prevalent for fuels, textiles , and clothing and 
footwear. Authorization requirements for TBT reasons covered 38.64% of the value of imports, and 
are especially prevalent for fuels, animals, food products , and chemicals.202 
3.125.   Since January 2013, specific trade concerns  (STCs)  were raised by several Members 
regarding Indonesia's measures on: various processed and unpr ocessed foods, particularly with 
respect to halal requirements; toys; ceramics; cell phones and computers; broadband equipment; 
 
198 Law No. 20 of 2014 (Article 24) and Regulation No. 34 of 2018 (Article 35). BSN, Technical 
Regulations . Viewed (in Bahasa Indonesia) at: https://www.bsn.go.id/main/bsn/isi_bsn/20054/regulasi -teknis -
sni-yang-diwajibkan .  
199 This was, for example, in the case of t he STC raised about MoH Regulation 30/2013 on the inclusion 
of sugar, salt and fat content information, as well as health messages, on the labels of processed foods. WTO 
document G/TBT/M/60, 23 September 2013.  
200 As indicated by the authorities, technical r egulations in force may be found on the following 
websites: INSW web portal ( https://www.insw.go.id ); BSN web portal 
(https: //bsn.go.id/main/bsn/isi_bsn/20054/regulasi -teknis -sni-yang-diwajibkan ). Some are also available on 
individual ministry websites.  
201 WTO, TBT IMS . Viewed at: http://tbtims.wto.or g. 
202 WITS. Viewed at: https://wits.worldbank.org/tariff/non -tariff-measures/en/type -
count/country/IDN/ntmcode/B . WT/TPR/S/401 • Indonesia  
 
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  and alcoholic beverages (Table 3.2 1). All of these STCs were raised for the first time during the 
review period, with the except ion of the one related to toy safety requirements, which was first 
raised in 2011 and continues to be of concern to several WTO Members.   
Table 3.21 TBT-related STCs raised against Indonesia, January 2013 -March 2020  
Title Objective of measure and issues raised by Member(s)  First raised - 
Last raised  
(number of 
times 
raiseda) Member(s) 
raising STC  
Halal Product Assurance 
Law No. 33 of 2014  
 Objectives : consumer information and protection; labelling; 
and prevention of deceptive practices.  
Issues raised:  discrimination; further 
information/clarification; and transparency.  09/03/2016 - 
26/02/2020  
(13) 
 Australia, 
Brazil, 
New Zealand, 
United States, 
European  
Union, and 
Canada  
Technical guidelines for 
the implementation of the 
adoption and supervision 
of Indonesian national 
standards for obligatory 
toy safety  Objectives:  consumer safety; increased product quality; and 
establishment of fair trade. competition.  
Issues raised:  discrimination; further 
information/clarification; international standards; time to 
adapt; transparency; unnecessary barriers to trade; 
accreditation of foreign laboratories; acceptance of the results 
of conformity assessment; burdensome conformity 
assessment procedures; exemption of companies holding 
certified certificates; unclear restrictions for certain 
substances; administrative procedures related to certification; 
and negative impact on business activities.  10/11/2011 -
13/11/2019  
(24) Canada, 
Japan, Mexico, 
United  States, 
and European 
Union  
Regulation of the 
Chairman of NADFC RI 
No. 14 of 2016 on the 
safety and quality 
standard of alcoholic 
beverag es Objectives:  support public morals.  
Issues raised:  further information/clarification; unnecessary 
barriers to trade; concern about 
terminology/wording/definition; lack of clarity/regulatory 
uncertainty; and restrictions on advertising, promotions and 
sales. 20/06/2018  
(1) Mexico  
SNI 2973:2011, and the 
certification requirements 
for the import of biscuits, 
as notified under the WTO 
TBT Agreement on 
20 April 2016 Objectives:  protection of human health or safety.  
Issues raised:  further information/clarifica tion; and 
conformity assessment  20/06/2018  
(1) Switzerland  
Ministry of Health 
Regulation 30/2013 on the 
inclusion of sugar, salt and 
fat content information, as 
well as health messages 
on the labels of processed 
foods  Objective:  consumer protection; reduction of certain 
diseases; and consumer education through health messages.  
Issues raised:  further information/clarification; international 
standards; time to adapt; transparency; unnecessary trade 
barriers; adverse impact of manda tory health warnings; 
methods used for tests verifying nutrition declarations; 
acceptance of tests performed by foreign laboratories or in -
house laboratories of companies; and acceptance of stickers 
applied to labels after importation.  17/06/2013 - 
10/11/20 16 
(11) Australia, 
Brazil, 
Canada, 
Guatemala, 
Mexico, 
Switzerland, 
United States 
and European 
Union  
Ministry of Industry (MOI) 
69/2014 Article 3: LCR 
Requirements for LTE 
Devices – Requirement 
that Domestic Component 
Level (TKDN) of LTE, TDD 
and FDD broad band 
services equipment  Objective: develop domestic industries.   
Issues raised:  further information/clarification; international 
standards; time to adapt; transparency; unnecessary barriers 
to trade; static reference to prescribed compliance with 
specific standards; and local content requirements.  17/06/2015 -
10/11/2016  
(5) Australia,  
Canada, 
Chinese 
Taipei, Japan, 
United  States 
and European 
Union  
Regulation of the Minister 
of Agriculture 
No. 139/Permentan/PD.4, 
10 December 2014, 
concerning Importation of 
Carcasses, Meat and/or 
Processed Meat Products 
into the Territory of the 
Republi c of Indonesia, and 
Regulation of the Minister 
of Agriculture No. 
02/Permentan/PD.4, 
10 January 2015, 
concerning the 
Amendment of the 
Regulation of the Minister 
for Agriculture 
No. 139/Permentan/PD.4  Objective:  protection of human health/safety; protection  of 
animal life/health; protection of the environment; provision of 
fluidity and certainty for the importation of carcasses, meat, 
and/or processed meat products; and separation of halal 
products from non -halal products.  
Issues raised:  discrimination; furt her 
information/clarification; transparency; unnecessary barriers 
to trade; regulations only allow SOEs to import secondary beef 
cuts; import decisions based on governmental direction 
instead of commercial considerations; additional labelling and 
packaging  requirements imposed for imports only; and food 
safety should be treated as an SPS issue.  18/03/2015 - 
15/06/2016  
(5) Australia, 
Brazil, 
Canada, and 
European 
Union  WT/TPR/S/401 • Indonesia  
 
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  Title Objective of measure and issues raised by Member(s)  First raised - 
Last raised  
(number of 
times 
raiseda) Member(s) 
raising STC  
MoT Regulation No. 10/M -
DAG/PER/1/2014 
concerning Amendment of 
MoT Regulation No. 67/M -
DAG/PER/11/2013 
concerning Affixed 
Mandatory Labels in 
Indonesian Language for 
Goods  Objectives:  consumer information; and labelling.  
Issues raised: time to adapt; transpar ency; and unnecessary 
barriers to trade.  18/06/2014 -
18/03/2015  
(3) Japan, 
Republic of 
Korea, United 
States, and 
European 
Union  
MoT Regulation No. 
82/M-DAG/PER/12/2012 
on Imported Cell Phones, 
Handheld and Tablet 
Computers  Objectives:  prevention of decepti ve practices and consumer 
protection; protection of human health/safety; protection of 
the environment; import licensing, labelling and certification; 
rights of consumers to get clear information; ensure 
interconnectivity, interoperability, and security fo r networking 
and information; facilitate Conformity Assessment Body (CAB) 
to determine appropriate technical regulations; and facilitate 
applicants to complete application forms with appropriate HS 
code.  
Issues raised:  further information/clarification; 
rationale/legitimacy; time to adapt; transparency; 
unnecessary barriers to trade; excessive labelling 
requirements; and burdensome pre -shipment inspections.  17/06/2013 - 
19/03/2014  
(3) Canada, 
United States, 
and European 
Union  
MoA Regulation 
No. 84/Permentan/PD.140
/2013 on Halal Food  Objectives:  quality requirements; and compliance with 
Islamic requirements.  
Issues raised:  further information/clarification; international 
standards; rationale/legitimacy; transparency; and 
unnecessar y barriers to trade.  30/10/2013  
(1) Brazil  
Mandatory Indonesia 
National Standard for 
glazed ceramic  Objectives:  quality requirements; protection of consumers; 
and establishment of fair trade competition.  
Issues raised:  further information/clarification; i nternational 
standards; unnecessary barriers to trade; mandatory third -
party certification for products which comply with international 
standards; and burdensome and costly certification 
requirements.  30/10/2013  
(1) European 
Union  
a Indicates the number o f times raised in total (including the first time raised).  
Source:  WTO, TBT IMS . Viewed at: https://tbtims.wto.org . 
3.3.2.4   Conformity assessment and market surveillance  
3.126.   The National Accreditation Body ( Komite Akreditasi Nasional  (KAN)) remains responsible for 
accrediting conformity assessment bodies (CBs), including laboratories, inspection bodies and 
certification bodies. Where SNIs are mandatory, conformity assessment is undertaken by 
KAN-accredited CBs, desi gnated by the respective regulators.203 As at April 2020 , there were 
1,402  accredited laboratories (314 calibration laboratories, 71 medical laboratories , and 
24 proficiency testing providers) ; 162 accredited inspection bodies; 74 accredited product 
certification bodies; 50 accredited quality management certification bodies; 22 accredited 
environmental management certification bodies; 10 accredited anti -bribery certification bodies; 
10 accredited information security management certification bodies; 3  accredited energy 
management certification bodies ; and 8 food safety management certification bodies.204 According 
to the authorities, the recognition of foreign CBs occurs through bilateral or multilateral recognition 
agreements following the reciprocal p rinciple. The KAN is a signatory of the International Laboratory 
Accreditation Cooperation ( ILAC) and Asia-Pacific Laboratory Accreditation Cooperation ( APLAC ) 
mutual recognition agreements ( MRAs ), and the International Accreditation Forum ( IAF) and Pacific 
Accreditation Cooperation ( PAC) multilateral recognition agreements (MLAs) . Over the review period, 
conformity assessment issues were raised regularly by WTO Members in their STCs regarding 
Indonesia's technical regulations.  
3.127.   Market surveillance/supervisi on of goods and services in the domestic market is carried out 
by the Directorate of Supervision of Circulated Goods and Services , within the MoT. However, for 
 
203 WTO document G/TBT/GEN/190, 17 March  2016.  
204 List of laboratories accredited by the KAN. Viewed at: 
http://kan.or.id/index.php/documents/ter akreditasi/doc17020/sni -iso-iec-17025/laboratorium -penguji . The list 
of other accredited bodies is available on the KAN website ( http://kan.or.id ) under the tab " Direktori 
LPK/Terakreditasi ". WT/TPR/S/401 • Indonesia  
 
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  technical regulations, market surveillance is the responsibility of the institution which is des ignated 
in the technical regulation itself. These individually  designated institutions must coordinate their 
activities with the MoT, and must also comply with the rules on MoT market surveillance procedures.  
3.3.2.5   Labelling  
3.128.   Over the review period, there were the following labelling -related developments:  
• in 2019, M oH Regulation 30/2013 (as amended by M oH Regulation 63/2015) entered into 
force; this requires  inclusion of sugar, salt and fat content information, as well as health 
messages , on the label s of processed and fast foods; the content information must be 
based on testing reports conducted by an accredited laboratory.205 Indonesia has not yet 
determined the categories of processed food for which labelling is mandatory. In the 
context of this Review, the authorities indicated that the regulation is being  revised, and 
public consultation will be opened. Various STCs were raised in the WTO TBT Committee 
regarding these requirements (Table 3. 21); 
• in 2018, a new regulation on food labelling (BPOM Regula tion No. 31) was issued, replacing 
and merging labelling rules on food contained in several previous regulations .206 It 
regulates the criteria for non -halal information on the label s of processed foods that 
contain pork and alcohol ;   
• new mandatory labellin g (and certification) requirements are being progressively 
introduced for halal products under the Halal Product Assurance Law No. 33 of 2014 and 
its implementing regulation, GR No. 31 of 2019.207 Halal products include: food and 
beverages; traditional medi cines and health supplements; medicinal products; cosmetics; 
chemical products; genetically engineered products; clothing, headgear and accessories; 
household appliances; Muslim worship equipment; stationary and office equipment; and 
goods for medical devi ces in risk classes A, B, and C. Under the Regulation, non -halal 
information is also required for these products . Various STCs were raised in the WTO TBT 
Committee regarding these requirements (Table 3. 21). As indicated by the authorities in 
the context of  this Review, the requirements of halal labelling and non -halal information 
are not intended to create cost, be burdensome for companies or create confusion for 
consumers, but aim to provide adequate protection to M uslim consumers by providing 
clear inform ation on these products ;  
• in 2017, tobacco labelling requirements were amended in order to revise the definition of 
health warning , and provide new guidance on the procedures for, and inclusion of, health 
and information warnings on tobacco product packaging208;  
• in October 2015, less onerous labelling requirements were introduced for certain imported 
and domestically  produced goods; t he labels in Bahasa Indonesia  may now be stamped 
on, included in , or inserted in the good and/or package, rather than having to be embossed 
printed or glued onto the product , as previously. Importers also no longer need to get a 
separate licen ce for the la belling; labels must just fulfil the SNI requirements.209 The 
 
205 WTO document G/TBT/N/IDN/84, 13 January 2014.  
206 BPOM Regulation No. 31 replaces the following BPOM Regulations: No. 27 of 2017 on Processed Food 
Registration; No. 23 of 2016 on Labelling and Advertising of Information for Non -Additive Food; and 
HK.03.1.23.06.10.5166 of 2016 on Origins  of Certain Material, Alcohol Content, and Expiration of Drug Labels, 
Traditional Drugs, Food Supplements and Food Information. Conventus Law, Indonesia – Food and Drugs 
Supervisory Agency Unifies Processed Food Label Provisions . Viewed at: 
http://www.conventuslaw.com/report/indonesia -food-and-drugs -supervisory -agency/ . 
207 An English translation of GR No. 31 of 2019 was viewed at: 
https://www.amcham.or.id/assets/kcfinder/upload/files/Gov%20Reg%2031 -
2019%20Law%2033%20Year%202014%20Implemen tation%20Provisions%20 -
%20Unofficial%20Translation.pdf . 
208 MoH Regulation No. 56 of 2017 amended MoH Regulation No. 2013 Concerning Health Warnings and 
Health Information on Tobacco Product Packaging. Tobacco Control Laws , Legislation by Country - Indonesia . 
Viewed at: https://www.tobaccocontrollaws.org/legislation/country/indonesia/pl -health -warnings . 
209 Global Trade Alert, Indonesia: Relaxed labelling requirements for certain imported goods . Viewed at: 
https://www.globaltr adealert.org/intervention/12763/import -related -non-tariff-measure -nes/indonesia -WT/TPR/S/401 • Indonesia  
 
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  updated list of goods facing the labelling requirement is contained in M oT Regulation 
No. 79/2019 , which entered into force on 18 April 2020. It  includes, inter alia , asbestos, 
various textiles a nd clothing products, leather articles, footwear, paper, fertilizers and 
pesticides, paints, hydraulic brake fluids, rubber t yres, tableware and kitchenware ; certain 
products made out of glass, ceramic and clay; cement; furniture; musical instruments; 
game s and toys; iron, steel and metal products; pumps; air -conditioning machines; air 
filters; domestic appliances; office and computer machinery; electrical apparatus and 
equipment; wires and cables; telephones, cameras, microphones and loudspeakers; 
glasses frames; watches and clocks; and motor vehicle and motorcycle parts ; and 
• additionally, over the review period , various regulations entered into force requiring 
certain products (electric motor devices, air conditioners, refrigerators , and compact 
fluorescent lamps) to be affixed with energy saving labels.  
3.3.3   Sanitary and phytosanitary requirements  
3.3.3.1   Institutional and  legislative framework  
3.129.   The competent authorities for regulating and executing sanitary and phytosanitary (SPS) 
requirements in Indonesia are: the Fish Quarantine and Inspection Agency (FQIA) which falls under 
the Ministry of Marine Affairs and Fisheries, t he BPOM which falls under the President's authority, 
and various entities under the Ministry of Agriculture (M oA) (the Indonesian Agricultural Quarantine 
Agency (IAQA), the Directorate  General of Livestock and Animal Health, the Directorate  General of 
Horticulture, the Directorate  General of Estate Crops; the Directorate  General of Food Crops, and 
the Indonesian Agency for Food Security). The IAQA is Indonesia's national notification authority 
under the WTO Agreement on the Application of Sanitary and Phyto sanitary Measures, and national 
enquiry points are: the IAQA, the FQIA , and the Director of Standardization for Processed Food.  
3.130.   Over the review period, various new SPS -related laws entered into force: Law No. 21 of 2019  
on Animal, Fish and Plant Quarantin e; Law No. 41 of 2014  concerning Livestock Services and Animal 
Heath210; the Halal Product Assurance Law (Law No. 33 of 2014)211; and Law No. 19 of 2013  
concerning Protection and Empowerment of Farmers (Farmers Law).212 Additionally, Law 
No. 18/2009 concernin g State Crops was amended  under Law No. 39/2014. Other SPS -relevant laws 
are Law No. 18/2012  concerning Food213; Law No.  31/2004 on Fisheries (as amended by Law 
No. 45/2009)214; and Law No. 13 of 2010 on Horticulture (Table 3.2 2). Numerous SPS -related 
regulations were issued over the review period.  
3.131.   Indonesia is a member of the Codex Alimentarius Commission and the World Organization 
for Animal Health (OIE) , and is a contracting party to the International Plant Protection Convention 
(IPPC).  
3.132.   SPS-related agreements reached between Indonesia and third countries over the review 
period include: a partnership arrangement on the implementation of electronic certificati on (with 
Australia in 2016 ); an MRA on the application of plant quarantine and phytosanitary measures 
(Pakistan, 2013 (for five years)); a partnership agreement on the launch of the project on electronic 
certification (Netherlands, 2015); an MOU on Biosecu rity Quarantine Activities (Papua New Guinea, 
2018 (for five years)); an arrangement for exporting palm kernel expeller (New Zealand, 2013); the 
 
relaxed -labelling -requirements -for-certain -imported -goods . The relevant regulation introducing new measures 
is MoT Regulation 73/M -DAG/PER/9/2015 which revokes the previous MoT  Regulation 67/M -DAG/PER/11/2014.  
210 Law No. 18 of 2009 on Husbandry and Animal Health . Viewed  at: 
http://extwprlegs1.fao.org/docs/pdf/ins98701.pdf ; and Law No. 41 of 2014 (in Bahasa Indonesi a). Viewed at: 
https://www.gpmt.or.id/view/VGhlIExhdyBvbiBBbmltYWwgSHVzYmFuZHJ5IGFuZCBBbmltYWw gSGVhbHRoIE5v
LiA0MSBvZiAyMDE0/f85e687a2371ab9c08d04730cc83b586.pdf . 
211 Halal Product Assurance Law . Viewed at: http://extwprlegs1.fao.org/docs/pdf/ins139990.pdf . 
212 Farmers Law (in Bahasa Indonesia ). Viewed at: 
https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/95245/112068/F336716490/IDN95245%20Idn.pdf . 
213 Ecolex, Law No. 18/2012 on Food . Viewed at:  https://www.ecolex.or g/details/legislation/food -act-
no-18-of-2012-lex-faoc139381/ . 
214 Law on Fishery No. 31/2004. Viewed at: 
https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/ 89345/102625/F765882697/IDN89345%20Eng.pdf ; and 
Amendment to Law on Fishery No. 45/2009. Viewed at: 
https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/89346/10 2626/F1953216388/IDN89346.pdf . WT/TPR/S/401 • Indonesia  
 
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  Protocol of Phytosanitary Requirement for the Export of Mangosteen Fruits from Indonesia to China 
(China, 2019) ; and the Protocol of Phytosanitary Requirement for the Export of Dragon Fruits from 
Indonesia to China (China, 2019). Additionally, a letter of intent was signed between Indonesia and 
the FAO (2014).  
Table 3.22 SPS-related laws, 2020  
Law  
(date of entry into force)  Coverage and key SPS -related implementing regulations  
Law on Food 
(17.11.2012)  Regulates national food production, planning, management, availability, 
affordability, distribution, consumption , and trade. Contains provisions on: 
control of food additives; control of genetically engineered food products; 
food packaging standards; food quality and safety guarantees; and halal 
product guarantees.  
Law on Livestock Services and 
Animal Health  
(17.10.2014)  Provides the legal framework for  the organization of husbandry and animal 
health. Regulates animal s and animal products. Includes halal 
requirements.  
Law on Animal, Fish and Plant 
Quarantine  
(18.10.2019)  Provides the legal framework for anim al, fish and plant quarantine.  
Law on Fisheries (as 
amended)  
(29 October 2009)  Sets the general rules for fisheries , including fisheries management, fish 
cultivation, fishery business, monitoring and surveillance, information and 
statistics, research and development, training , and penalties. Establishes 
the court jurisdiction for fisheries -related cases. Includes general 
provisions relating to protection of human health and the environment . 
Law on Horticulture  
(24 November 2010)  Sets general rules on hort iculture , including planning, development 
research, finance, investment, marketing , and imports. Includes provisions 
on food safety, quality, packaging and labelling requirements, import 
licensing requirements, import permit requirements , and designated import 
entry points.  
Halal Law  
(17 October 2014)  Sets out mandatory certification and other requirements for halal products.  
Farmers Law  
(6 August 2013)  Applies to agricultural commodities , and aims to help farms deal with 
production and marketing challenges. Includes various import measures , 
including designation of entry points and import licensing requirements.  
Source:  WTO document s WT/DS477/R ; and WT/DS478/R, 22 December 2016.  
3.133.   According to  the authorities, the review period saw infrastructural improvements to 
laboratories operated by the Research and Development Agency and quarantine facilities. Since early 
2018, the Indonesian Quarantine Full Automation System (IQFAST) has been operational , it 
integrates various kinds of information system platforms for quarantine service users, other 
agencies, and competent authorities/governments of trading partners. This has reportedly increased 
transparency, optimi zed risk mitigation, assisted in the ex port acceleration of Indonesian agricultural 
products , and led to improvements in the quarantine inspection application (PPK online) for 
quarantine service users. IQFAST data was integrated into the INSW (Section 3.1.1.1) and into the 
iMace application , which maps exports.  
3.3.3.2   SPS measures  
3.134.   All SPS -related regulations are issued at central government level, following coordination 
with subnational governments. Over the period January 2013 to 16 April 2020, Indonesia submitted 
134 regular notifications to the WTO Committee on Sanitary and Phytosanitary Measures. Five of 
these were emergency notifications, which related to measures to prevent the spread of COVID -19 
and Avian Influenza. The 60 -day period for comments applied to 18 regular notifications.  Most 
notifica tions relate to human health and food -safety objectives (Chart 3 .4). The authorities estimate 
that 97% of Indonesian standards conf orm to the relevant international standards.  
3.135.   According to the WITS database, SPS measures cover nearly 20% of the value of In donesia's 
imports.215 It has also been estimated that SPS measures have a significant impact on import prices . 
The World Bank Group estimat es that non -tariff measures , such as quality requirements , other SPS 
 
215 WITS. Viewed at: https://wits.worldbank.org/tariff/non -tariff-measures/en/type -
count/country/IDN/product/A ll_Products . WT/TPR/S/401 • Indonesia  
 
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  measures , hygiene measures , and SPS conformity , add between 15% and 40% to the price of 
import s in ad valorem  terms.216  
Chart 3.4 Main elements contained in SPS measures notified by Indonesia, January 2013 
to mid -April 2020  
 
Note:  This chart indicates the "keywords" contained in notifications as picked out in the SPS Information 
Management System. Most notifications contain more than one "keyword".  
Source : WTO, SPS Information Management System . Viewed at: http://spsims.wto.org . 
3.136.   Over the review period, three STCs about Indonesia's SPS measures were raised in the WTO 
SPS Committee. In 2019, Brazil raised a concern related to undue delays in authorization procedures 
for beef; in 2018, the E uropean Union raised one about approval procedures for animal and plant 
products; and , in 2016, the Philippines raised one about food safety measures affecting horticultural 
products and animal products.217  
3.137.   Over the review period, two new WTO dispute settlement cases , which relate, inter alia , to 
rules under the WTO SPS Agreement, were brought by Brazil regarding  Indonesia's measures 
concerning the importation of bovine meat (DS 506) and measures concerning the importation of 
chicken meat and chicken p roducts (DS 484) (Section 2.3.1.1 and Table 2.4).  
3.3.3.2.1   Food safety  
3.138.   The main regulation governing food safety is GR No. 86 of 2019. This  includes, inter alia, 
provisions on food sanitation, including maximum residue limits, food additive rules , genetically 
engineered foods (see below) , food irradiation, and food packaging standards.218  
3.139.   The Indonesia Food and Drug Authority (BPOM) is responsible for determining which food 
additives are permitted and prohibited , and for setting maximum limits for their use; according to 
the authorities , it follow s Codex standards. It maintains a list of 27 groups of food additives, with 
 
216 World Bank Group (2019),  Unlocking the Dynamism of the Indonesian Private Sector . Viewed at: 
https://www.ifc.org/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-dbe79e7544f5/201910 -CPSD -Indonesia -
v2.pdf?MOD=AJPERES&CVID=m.8RZD6 , which cites data from Calli and Puzzello (2018), The Welfare Impact 
of Non -Tariff Measures on Indonesia . 
217 WTO, SPS Information Management System . Viewed at: http://spsims.wto.org . 
218 GR No. 86 of 2019 replaces GR No. 28 of 2004 on Safety, Quality and Nutrition. Viewed (in Bahasa 
Indonesia) at: 
http://bkp.pertanian.go.id/storage/app/media/Bahan%202020/PP%20Nomor%2086%20Tahun%202019%20pl
us%20lampiran.pdf . 
IrradiationHeavy metalsBeveragesPest- or disease-free regionsTraceabilityPackagingBacteriaPlant healthAvian influenzaLabellingCertification, control and inspectionPestsContaminantsZoonosesAnimal diseasesTerritory protectionAnimal healthFood additivesFood safetyHuman health
0 10 20 30 40 50 60Chart 3. [IDN] Main elements contained in SPS measures notified by Indonesia, January 
Source: WTO SPS Information Management System. Viewed at: http://spsims.wto.org [data current to 16 AprilNote:  This chart indicates the "keywords" contained in notifications as picked out in the SPS Information
Management System.  Most notifications contain more than one "keyword".WT/TPR/S/401 • Indonesia  
 
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  each group having several types of additive.219 Maximum limits for food additive use are set out in 
various regulations. Over the r eview period, Indonesia notified to the WTO various food additive 
regulations relating to: maximum levels of food additives for specific food categories; flavo urings; 
preservatives; sweeteners; antioxidants; colo uring agents; bulking agents; stabilizers; f lavor 
enhancers; foaming agents; colo ur retention agents; emulsifiers; gelling agents; packing gas; 
emulsifying salt s; thickeners; propellants; anti -foaming agents; glazing agents; raising agents; 
anti-caking agents; firming agents; acidity regulators; flo ur treatment agents; carriers; humectant s; 
and carbonating agent s. Indonesia notified that all these regulations conform with the relevant 
Codex standards.  Food additives from animal sources must have a halal conformity certificate , issued 
by the Halal Pro ducts Certification Agency (BPJPH) or one of the Halal Certifier Bodies that officially 
cooperates with the BPJPH (see below).220 The authorities indicated that if food additives are not 
regulated, stakeholders may nevertheless request permission to import/ circulate them; they must 
submit a request to the BPOM who will assess and decide.  
3.140.   Maximum residue limits (MRLs) are set out in Ministerial Decree No. 55 of 2016 concerning 
Food Safety Control on Importation and Exportation of Fresh Food of Plant Origin an d Ministerial 
Decree No. 53 of 2018 concerning the Quality and Safety of Fresh Food of Plant Origin. The 
authorities indicated that Indonesia always follows Codex standards for the setting of MRLs.   
3.141.   Over the review period, Indonesia also notified to the WT O new regulations on processing 
aids; heavy metal contaminants in processed food; prohibited raw materials in processed food; and 
irradiated food.  
3.3.3.2.2   Processed food  
3.142.   Packaged p rocessed food products (imports and domestic production) for trade in retail must 
be registered with the BPOM to ensure that they comply with regulations relating to labelling 
(Section  3.3.2.5) , safety, quality , and nutrition; a distribution license issued by the BPOM is also 
required. Registration involves submission to the BPOM of product information and samples for 
testing by either government laboratories or laboratories accredited by (or institutions acknowledged 
by) the National Accreditation Committee. BPOM Regulation 27/2017 sets out types of food which 
are not required to be registered ; it appears to exempt processed foods packaged in bulk and sold 
in business -to-business trading.221 Reportedly, registration requirements are one of the most difficult 
issues facing importers.222 Approval from the head of the BPOM is required for each imported 
shipment of processed food, raw food materials, food additives, processing aids, and food 
ingredients.   
3.3.3.2.3   Horticulture  
3.143.   MoA Regulation No. 55/2016 concerning Food Safety Control on Importation and Exportation 
of Fresh Food of Plant Origin governs food safety control system recognition , and laboratory 
registration requirements to import fresh foods of plant origin to Indonesia. It was notified to the 
WTO. It stipulates that fr esh food of plant origin may only be imported to Indonesia from countries 
whose food safety control systems are recognized by Indonesia or countries with registered food 
safety testing laboratories.223 According to the authorities, changes introduced by the Regulation 
 
219 Regulations governing permitted and prohibited food ad ditives are: BPOM Regulation No. 11 of 2019. 
Viewed (in Bahasa Indonesia ) at: 
https://standarpangan.pom.go.id/dokumen/peraturan/2019/PerBPOM_No_ 11_Tahun_2019_tentang_BTP.pdf  
and BPOM Regulation No. 22 of 2016. Viewed (in Bahasa Indonesia ) at: 
https://standarpangan.pom.go.id/doku men/peraturan/2019/PerKa_BPOM_Nomor_22_Tahun_2016_Tentang_P
erisa.pdf . 
220 US Department of Agriculture (USDA),  GAIN Report No. 1841  (2019). V iewed at: 
https://agriexchange.apeda.gov.in/IR_Standards/Import_Regulation/FoodandAgriculturalImportRegulationsand
StandardsReportJakartaIndonesia3182019.pdf . 
221 The types of food not required to be registered un der Regulation No. 27/2017 are (i) fast food; and 
(ii) food which only has minimal processing (after harvesting), which consists of cleaning, stripping, drying, 
grinding, cutting, salting, cracking, mixing and/or pickling, as well as not having food additi ves, with the 
exception of food waxing additives.  
222 USDA, GAIN Report No. 1841  (2019) . Viewed at: 
https://agriexchange.apeda.gov.in/IR_Standards/Import_Regulation/FoodandAgriculturalImportRegul ationsand
StandardsReportJakartaIndonesia3182019.pdf . 
223 This regulation was notified to the WTO in WTO document G/SPS/N/IDN/114, 10 January 2017. It 
replaces MoA Regulation No.04/2015 which, in turn, replaced MoA Regulation No. 88 of 2011.  WT/TPR/S/401 • Indonesia  
 
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  were to simplify import procedures. As at end -April 2020, 36 trading partners  had been granted 
access to the Indonesian market.224 The Centre for Plant Quarantine and Biological Safety 
undertakes risk analysis of plant pests and plant products t o be imported into Indonesia for the first 
time. A list of these risk assessments is publicly available.225 As indicated by the authorities, the 
time to complete a risk assessment generally ranges from between six months and two years, 
depending on the comp leteness of the required documentation submitted by the exporting country. 
No fees are charged.  
3.144.   As indicated by the authorities, changes to rules on import recommendations for horticultural 
products over the review period were to facilitate importation.226 Import procedures, including import 
licensing requirements , are contained in Table A3.4. Port of entry requirements for the import of 
horticultur al products are set out in Ministry of Agriculture ( MoA) Decree No. 42 of 2012 , and those 
for fresh fruit, fresh vegetables and fresh bulbs in MoA Decree No. 43 of 2017. Quarantine regulations 
for plants did not change over the review period , and are set out in GR No. 14 of 2002 concerning 
Plant Quarantine.227 Fees for quarantine, testing and in spection are contained in GR No. 35 of 2016 
on Non -Tax Revenue to be Paid by Importers.   
3.3.3.2.4   Live animals, meat and dairy products  
3.145.   Risk assessment procedures for the import of live animals are based on Ministerial Decree 
No. 41 of 2019; they are implemented b y the Directorate General of Livestock and Animal Health 
within the M oA. Only approved meat and poultry establishments, and those exporting animal -derived 
products (i.e. dairy and eggs) , may import  products into Indonesia. Since 2017, fees have been 
levied  for the inspection of animal product s under GR No.  35/2016 (previously , the costs were borne 
by the Indonesian Government); fees charged depend on the number of establishments to be 
inspected, the number of auditors , and the number of audit days. Accordin g to the authorities, they 
are usually more -or-less USD 10,000 , depending on the distance the auditors must travel , and 
air-fare and accommodation costs.  
3.146.   MoA Regulation No. 42 of 2019 regarding the Importation of Carcass, Meat, Offal and/or 
their Processe d Products into the Territory of the Republic of Indonesia and M oT Regulation 
No. 29/2019 regarding the Provisions of Export and Import of Animal and Products of Animal Origin 
(as amended by M oT Regulation No. 72/2019), detail  the meat products eligible for import.228 
Importers must apply for an import recommendation from the M oA in order to receive an import 
permit from the M oT. Import permits are valid for six months. Requirements to have a distribution 
plan, contained in earlier regulations (M oA Regulation No. 58 of 2015 as amended by MoA Regulation 
No. 34 of 2016) are no longer in place. Halal certificates, from a halal certifier recognized by the 
Indonesian halal authority, must be provided. In 2020, new reg ulations were issued requiring 
confirmation (though laboratory tests) that imports of live animals are free from COVID -19229; 
according to the authorities , these requirements are being revised and are no longer valid. M oA 
Regulation No. 33/2018 on the Suppl y and Distribution of Milk removes the pre -existing 
requirements for dairy processers and importers to establish partnerships with local dairy farmers 
as one of the requirements to obtain an import permit.230  
 
224 These trading p artners are: New Zealand, Canada, Australia, Argentina, South Africa, Japan, the 
United States, France, Chile, the Netherlands, China, India, Egypt, Ukraine, Peru, Pakistan, the Republic of 
Korea, Thailand, Viet Nam, Turkey, Greece, Myanmar, Austria, Malay sia, Spain, Chinese Taipei, Brazil, 
Germany, the Russian Federation, the Philippines, Iran, Romania, Bulgaria, Lithuania, and Italy.  
225 Agricultural Quarantine Agency. Viewed at: https://karantina.pertanian.go.id/page -94-hasil-analisis -
risiko -karantina -tumbuhan.html . 
226 In this regard, the relevant MoA Regulations are: No. 47 of 2013, No. 86 of 2013, No. 16 of 2017, 
No. 38 of 2018, No. 39 of 2019, and No. 2  of 2020. Viewed at: http://jdih.pertanian.go.id/ . 
227 GR No. 14 of 2002 concerning Plant Quarantine . Viewed at: 
http://extwprlegs1.fao.org/docs/pdf /ins89738.pdf . 
228 USDA, GAIN Food and Agricultural Import Regulations and Standards Country Report - Indonesia  
(February 2020). Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20 Report_Jakarta_Indonesia_12 -31-
2019. 
229 WTO documents G/SPS/N/IDN/133, 22 April 2020; and G/SPS/N/IDN/132, 20 March 2020.  
230 USDA, GAIN Report  No. 1841  (2019). Viewed at: 
https://agriexchange.apeda.gov.in/IR_Standards/Import_Regulation/FoodandAgriculturalImportRegul ationsand
StandardsReportJakartaIndonesia3182019.pdf . WT/TPR/S/401 • Indonesia  
 
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  3.147.   Imports of live animals, meat , and dairy produc ts may enter through any port of entry that 
has the necessary quarantine facilities in place. Quarantine and certification regulations for animals 
are set out in GR No. 82 of 2000 concerning Animal Quarantine and  MoA Regulation  
No. 17/Permentan/KR.120/5/20 17.  
3.3.3.2.5   Fisheries  
3.148.   Ministry of Marine Affairs and Fisheries (MOMAF ) Regulation No. 41/2014 lists the live aquatic 
species banned from import , and replaces the previous regulation in force. It extends the list of live 
species banned from import from 30 to 152 ( exceptions allowed for scientific research). The rationale 
for the measure is to preserve fish resources and their environment , and to protect human health .231 
As indicated by the authorities, the species on the list are determined by a risk assessment on 
invasive alien species by experts, by the Indonesian Institute of Sciences, and as contained in 
literature studies , and by recommendations from appropriate experts and discussions with relevant 
stakeholders. Import permits are required for all live aquatic species and fisheries products.232  
3.149.   Director General of Fishery Product Processing and Marketing Decree No. 125/201 4 specifies 
the fishery products permitted for import into Indonesia . They include  fish species not available in 
Indonesian waters , except in the event of shortages and seasonal production limitations.233 MOMAF 
Regulation No. 74/2016 covers quality control and safety for those imported fish products which are 
allowed and intended for human consumption. The regulation, inter alia , sets out importer 
registration requirements234; import permit requirements; labelling requirements; documentary 
requirements235; qua rantine, testing and sampling (the costs of which are borne by the importer); 
and specifies the entry points for seafood shipments (eight sea ports; all international airports; and 
two border posts).236 Under M oT Regulation  No. 66/2018, import agreements ar e required for 
imports of 325 fish types; these are valid for one year.237 MOMAF Regulation No. 11/2019 covers 
entry requirements for disease -/pest-carrier media and/or fisheries products.238 
3.150.   Inspection of imports of fish and fish products is undertaken by t he Fish Quarantine and 
Inspection Agency within the MOMAF . MOMAF Decree No. 91/2018 lists the kinds of fish diseases , 
with the categories and carrier s, and stipulates that imports (as well as exports and domestic 
movement) of the carrier s are to  be free fr om these diseases.239 
3.3.3.2.6   Halal requirements  
3.151.   Under the 2014 Halal Product Assurance Law and its implementing regulation, GR No. 31 of 
2019, all halal products sold on the Indonesian market must obtain certificates from the newly 
established Halal Products Certification Agency (BPJPH), under the Ministry of Religious Affairs. 
Previously, certification was voluntary , and was undertaken by the Indonesian Ulema Council. Since  
2019, halal certification requirements have applied to food and beverages , and will be intr oduced 
 
231 MOMAF Regulation No. 41/2014 replaces MOMAF Regulation No. PER.17/MEN/2009 concerning 
Import Prohibition of Several Hazardous Fishes from Overseas into the Territory of the Republic of Indonesia. 
USDA GAIN Report No. ID1501  of 13 January 2015. Viewed at: 
https://apps.fas.usda.gov /newgainapi/api/report/downloadreportbyfilename?filename=Indonesia%20Revises%
20Seafood%20Import%20Rules_Jakarta_Indonesia_1 -13-2015.pdf ; and MOMAF Regulation No. 41/PERMEN -
KP/2014. Viewed at:  http://usdaindonesia.org/wp -content/uploads/2014/12/Permen -41-app-Translation.pdf .  
232 The regulatory basis for import permit requirements is MOMAF Regulation No. 56/PERMEN -KP/2018 
concerning Recommendation for Importation of Parent Candidate, Parent and Seed of Fish, and/or Pearls Core.  
233 USDA, GAIN Report  No. ID1501 , 13 January 2015. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Indonesia%20Revises%
20Seafood%20Import%20Rules_Jakarta_Indonesia_1 -13-2015.pdf .  
234 Importation of fishery products is done by importers that have an API -P, importers that have an 
API-U, or representatives of friendly countries. Exporters must be registered with the MOMAF, and with the 
competent authority in the country of origin.  
235 Documentary requirements include: a Fish Health Certificate; a Health Certificate of Fish Processing 
Products; a Catch Certificate; and a Certificate of Origin from the competent authority in the country of origin.  
236 MOMAF Regulation No. 74/2016. Viewed at:  http://fsvps.ru/fsvps -
docs/ru/importExport/indonezia/files/74 -2016reg.pdf .  
237 Global Trade Alert, Indonesia: Import licensing restrictions on fish . Viewed at: 
https://www.globaltradealert.org/state -act/36739/indonesia -import -licensing -restrictions -on-fish. 
238 MOMAF Regulation No. 11/2019. Viewed at: http://jdih .kkp.go.id/peraturan/b542c -11-permen -kp-
2019-ttg-pemasukan -media -pembawa -dana.pdf.  
239 WTO document G/SPS/N/I DN/130, 12 December 2019.  WT/TPR/S/401 • Indonesia  
 
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  for other products over the period 2021 -26 (Section  3.3.2.5). As indicated by the authorities, all 
halal certificates issued by foreign halal certifier bodies (LHLN s) that cooperate with the BPJPH can 
be accepted; as at mid -2020, there were 45 LHLNs in 26 countries.240 Importers must register halal 
certificates with the BPJPH , and place the registration number on the package before the product 
may be distributed in Indonesia. As noted in Section  3.3.2.5, various concerns about the 
implementation of this law were raised in the WTO TBT Committee, including with respect to labeling 
requirements and certification requirements.  
3.3.3.2.7   Genetically  modified organisms (GMOs)  
3.152.   The legal and regulatory framework for GMOs comprises: Law No. 18 of 201 2 on Food; 
GR No. 21/2005 concerning Security of Biological Genetically Engineered Products241; and 
GR No. 86/2019 concerning Food Safety (see above). Under GR 21/2005, applications for imports 
of genetically engineered items (plant, animal, fish and microo rganisms and their products) must be 
presented  to the competent minister or head of agency. In assessing these applications, 
ministers/heads of agency rely on recommendations made by the Indonesian Commission for 
Biological Safety , which conducts technical  evaluations and analysis through its technical  team. The 
time-frames for undertaking assessments are set out in GR 21/2005 , which also provides a window 
for stakeholder inputs. The FDA or the Ministry of Environment undertakes laboratory testing of 
GMOs; the costs are covered by the proponent. The competent minister/head of agency gives 
successful applicants a licen ce for the release and/or circulation of these products. According to the 
authorities, Indonesia allows the import of 34 types of genetically e ngineered products considered 
to be food -safe. There is no commercial production of genetically engineered products in Indonesia.   
3.3.4   Competition policy and price controls  
3.3.4.1   Competition policy  
3.153.   The legal framework for competition policy remains Law No. 5/1999 concerning the 
Prohibition of Monopolistic Practices and Unfair Business Competition (Competition Law)242; there 
were no amendments to this Law over the review period. An amendment to it has been on the 
national legislative agenda since 2015; accordi ng to the authorities, discussion in Parliament on the 
bill had advanced considerably in 2019 but was not concluded due to the general election , and has 
now been withdrawn from the national legislation list. Concerns regarding limitations of the existing 
competition law relate largely to the ability of the competition agency to detect anti -competitive 
behaviour and sanction it. As indicated in a recent World Bank Group report, the Indonesia 
Competition Commission (KPPU) (see below): cannot perform unannounc ed inspections to gather 
evidence at the premises of firms investigated for anti -trust infringement; cannot act against firms 
located abroad, even if their behaviour directly affects competition and/or consumers in domestic 
markets, resulting in limited de tection of cartels by the KPPU; and has limited deterrence powers , 
with maximum penalties being a lot lower than comparable agencies in other jurisdictions. The report 
also notes that , in the absence of a formal feedback mechanism from the Government, the impact 
of the KPPU's opinions on policy -making are unclear.243 
3.154.   As indicated in Indonesia's previous Reviews, the Competition Law covers a wide spectrum 
of anti -competitive behaviour. It, inter alia,  prohibits abuse of dominance as well as vertical 
restricti ons on competition and any deals or contracts allowing for monopolies, oligopolies, price 
fixing, cartels, trusts, and geographical designations of markets between suppliers. The Law also 
prohibits business actors from conspiring with other parties (includ ing government bodies, SOEs,  
and private companies) to bid -rig in tender awards. Activities excluded from the Competition Law 
are set out in Articles 50 and 51; these  include , inter alia , agreements related to intellectual property 
 
240 LPPOM, List of Halal Certification Bodies. . Viewed at: http://www.halalmui.org/mui14/main/page/list -
of-halal-certification -bodies . 
241 GR No. 21/2005 on Biological Safety of Genetic Engineering Products. Viewed at: 
http://extwprlegs1.fao.org/docs/pdf/ins60788.pdf . There are three areas of GMO regulation, for food safety, 
feed safety, and environmental safety.  
242 Law No. 5/1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition. 
Viewed at:  http://eng.kppu.go.id/wp -content/uploads/2016/11/law_5_ye ar_1999_.pdf . 
243 World Bank Group, Creating Markets in Indonesia: Unlocking the Dynamism of the Indonesian 
Private Sector , October 2019. Viewed at: https://www.ifc.org/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-
dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJPERES&CVID=m.8RZD6 . WT/TPR/S/401 • Indonesia  
 
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  rights , and the producti on and marketing of goods and services "affecting the livelihood of society 
at large" as stipulated in the Law and as implemented by SOEs. 
3.155.   Enforcement of the Law is the responsibility of the KPPU, established in 2000. In 2018, the 
KPPU had a budget of IDR 135 billion and a total of 347  officers in headquarters and representative 
offices.244 According to the authorities, its current areas of priority are enforcement and prevention , 
and the  undertaking of studies and monitoring. Over the review period, the KPP U promot ed use of 
its competition policy assessment checklist in the Government's regulatory process (see below).245  
3.156.   Over the review period, various new regulations were introduced .246 Key new regulations 
include:  
• Commission Regulation No. 4/2019 concerning the Case Handling Procedure for 
Partnership Infringement. This was issued to improve the implementation of elements in 
the 2008 MSME s Law and its implementing regulation.247 It sets out a case handling 
procedure for partnership infringement cases  between MSMEs and large enterprises , and 
among  MSMEs. It covers: ( i) shorter procedural time -frames for complaints clarification in 
partnership cases (7  days) compared with competition cases (30 days); ( ii) the 
introduction of a behavioural changes provis ion, so that if, after the preliminary hearing, 
the defendant admits its wrongdoing, the KPPU stops the case and issues a written warning 
to the defendant to stop the infringement. If the defendant does not comply with the 
warning within seven days of receiving the letter, then the KPPU issue s a maximum of 
three  more warnings. In the event of non -compliance, the KPPU continues the case, with 
shorter time -frames applied248; and ( iii) the hearing session with the Panel of 
Commissioners is only started at the s tage of Further Examination (rather than at the 
stage of the Preliminary Examination) so as to simplify the case handling procedure for 
partnership cases and reduce the burden on the reported party to be present at so many 
hearing sessions. In its decision , the KPPU may apply penalties (which are quite low , at a 
maximum of IDR  10 billion) or order the withdrawal of the defendant's business licence.249 
In the context of this Review, the authorities indicated that , as at end -2019, warning 
letters had been sent  in four cases; these letters are confidential. As at mid -2020, no 
business licen ces had been withdrawn under this procedure , and no other sanctions had 
been applied ;  
• Commission Regulation No. 1/2019 on the Procedure for Cases of Monopolistic Practice 
and Unfair Competition. This was issued to provide more details on how the KPPU's 
handling of cases should be regulated.250 It aims to address concerns from business actors 
regarding the lengthy pre -investigation period and uncertainty on the statu s of a case 
during this period , by obliging the KPPU to notify all related parties should the investigation 
be halted. The Regulation also defines and specifies criteria on indirect evidence , and 
 
244 OECD, Annual Report on Competition Policy Developments in Indonesia 2018 , 
DAF/COMP/AR(2019)4 6, 3 May 2019. Viewed at: 
https://one.oecd.org/document/DAF/COMP/AR(2019)46/en/pdf . 
245 The toolkit was viewed at KPPU, Guideline on Competition Policy Assessment Checklist. Viewed at: 
http://eng.kppu.go.id/wp -content/uploads/Guideline -on-Competition -Policy -Assessment -Checklist.pdf . 
246 All KPPU regulations may be viewed at: https://www.kppu.go.id/id/produk -hukum/peraturan -kppu/ . 
247 Law No. 20/2008 concerning MSMEs and GR No. 17/2013. The issuance of Commission Regulation 
No. 4/2019 revoked Commission Regulati on No. 1/2017 concerning the Case Handling Procedure for 
Partnership Infringement, and Commission Regulation No. 3/2016 concerning the Supervision of Partnership 
Implementation, as the new Regulation covers both the procedures for supervision, and the hand ling of 
partnership cases.  
248 KPPU, 2017 Annual Report on Competition Law and Policy . Viewed at: http://eng.kppu.go.id/wp -
content/uploads/KPPUs -Annual -Report -2017.pdf . The shorter time -frames are designed to provide more 
certainty for, and avoid further damages to, the MSMEs affected by the violation, as well as to help the KPPU to 
better manage its resources . 
249 OECD, Annual Report on Competition Policy Developments in Indo nesia 2017 , 
DAF/COMP/AR(2018)28, 31 October 2018.  
250 KPPU Regulation No. 1/2019 . Viewed at: 
https://www.kppu.go.id/docs/Perkom/2019/Perkom_No.1_Tahun_2019.pdf ; Baker McKenzie , Indonesian 
Competition Commission Issues New Case Handling Procedure . Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2019/05 /indonesian -competition -commission . WT/TPR/S/401 • Indonesia  
 
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  provid es opportunities for reported parties to commit to cha nging their behavior to comply 
with the Competition Law251; 
• Commission Regulation No. 3/2019. This provides for clearer and faster procedures for 
post-merger notification and review , by requiring companies to do a merger 
self-assessment prior to notificatio n. The Regulation also expands the scope of what should 
be notified , to include asset transfers (previously , only merger consolidation needed to be 
notified).252 Pre-merger notification in Indonesia remains voluntary, and post -merger 
notification is mandato ry. In the context of this Review, the authorities indicated that , 
even though they have the legal right to cancel mergers, this is not done in practice ; and  
• Commission Regulation No. 4/2016 on Competition Policy Assessment Checklist. This 
Checklist is exp ected to be used by both central and regional governments to identify the 
conformity of the draft bill/policy/regulation with the Competition Law. The Checklist was 
formulated based on the OECD Competition Assessment Toolkit, with certain adjustments.  
3.157.   The KPPU investigates anti -competitive practices based on reports from the community, or 
on its own initiative. The maximum period from preliminary investigation until the execution of a 
decision is 180 days. In 2018, the KPPU received 132 complaints from the public (71% of which 
related to bid -rigging) and undertook 38 own -initiative investigations (63% related to bid -rigging). 
According to the authorities, most other complaints/investigations relate to cartels and monopolies.  
3.158.   The KPPU is authorized to impose  administrative actions against any business actors who 
violate s the law. These may take the form of: ( i) an order to stop the anti -competitive agreement 
or activity; ( ii) the cancellation of a merger, consolidation, or share acquisition; ( iii) the imposit ion 
of compensation for damages; or (iv) the imposition of administrative fines, which may range from 
IDR 1 billion to IDR 25 billion. Over the period 2000 -18, fines for administrative violations 
contributed IDR 526 billion to state revenues. The Competiti on Law also provides for criminal 
sanctions for certain actions, which may include fines ranging from IDR 1 billion to IDR  100 billion; 
imprisonment for a certain time -period; revocation of business licences; prohibitions on individuals 
violating the Law from taking Director/Commissioner positions for a time -period; and orders to cease 
certain activities/actions. As at mid -2020, the KPPU had only imposed administrative sanctions.  
3.159.   Objections to KPPU decisions may be taken first to the District Court and , thereafter , 
appealed to the Supreme Court. Over the period 2014 -18: 58 decisions were taken to the District 
Court (of which, 34 were affirmed and 24 rescinded); 45 appeals were made to the Supreme Court 
(27 affirmed and 18 rescinded); and 22 went to judic ial review (22 affirmed and none rescinded).  
3.160.   In addition to Competition Law enforcement responsibilities, the KPPU has a competition 
advocacy role. At the invitation of a ministry, or on its own initiative, it may undertake competition 
impact assessments o f proposed or existing laws and regulations , and issue policy 
recommendations.253 Over the period 2013 -19, the KPPU undertook 103 impact assessments in a 
broad range of areas ( Table A3.5 ). Over the same period, it issued 107 policy recommendations, 
42% of which were adopted by the Government (Table 3.2 3). Policy recommendations are not 
publicly available, they are not binding, and ministries /agencies are not obliged to inform the KPPU 
of the reasons for not adopting its recommendations.254  
 
251 This commitment would be outlined in an "integration pact", and the examination would be 
suspended as the KPPU monitors compliance with the commitment for a period of up to 60 days. If the 
monitoring result is positive , the KPPU issues a "commitment decision". If the monitoring result is negative, 
further examination is initiated.  
252 A more detailed analysis of this measure was viewed at Baker McKenzie, Merger Control Update: 
Calculation of Assets Threshold Refers to th e Worldwide Figures of the Acquirer Group. Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2019/12/merger -control -update -calculation -of-
assets . 
253 Article 35(e) of the Compet ition Law allows the KPPU to provide advice and opinions on government 
policies identified as potentially harming competition.  
254 Recommendations were not adopted in the areas of procurement, construction, property, trading, 
electronics, automotive, electri city, drinking water, farmers, livestock, forests and fish, telecommunications, 
broadcasting, information technology, health, pharmaceuticals, finance and banking, manufacturing, textiles, 
chemicals, public education, population, employment, energy and min eral resources, mining, and tourism.  WT/TPR/S/401 • Indonesia  
 
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  Table 3.23 KPPU policy recommendations to the Government, 2013 -19 
Year Total  Adopted  Not adopted  
2013 13 2 11 
2014 13 5 8 
2015 15 7 8 
2016 17 4 13 
2017 20 11 9 
2018 12 8 4 
2019 17 8 9 
Source:  OECD , Annual Report on Competition Policy Developments in Indonesia - 2018. Viewed at: 
https://one.oecd.org/document/DAF/COMP/AR(2019)46/en/pdf ; and information provided by the 
authorities.  
3.161.   The KPPU also undertakes market monitoring activities.255 The selection of sectors or issues 
to be monitored is based on several sources, such as assessment results, findings in examination 
processes, the results of public hearings conducted by the Commission, incomplete reports, news in 
the media, and data or o ther information. This monitoring activity is conducted to look for potential 
violation s in the market . Should an alleged violation be found, the result of monitoring could be used 
to initiate a case investigation. If the alleged violation com es from a pol icy or regulation which is not 
aligned with the Competition Law, the KPPU can also issue policy recommendations (see above). 
The KPPU does not publish the report of its market monitoring activities. Over the period 2013 -19, 
the KPPU undertook 36 monitoring  activities (Table 3.24). 
Table 3.24 Market monitoring activities, 2013 -19 
 Market monitoring activities  
2013 None 
2014 Ground handling services  
2015 Solar fuel industry; chicken industry; optical industry; and poultry industry  
2016 PT BKI Indonesia; Indonesia Palm Oil Pledge; and vaccine industry  
2017 Credit distribution; drug distribution in the e-catalogue; alleged monopolistic practices in granting  of 
migrant worker (TKI)  visas in Malaysia; garlic industry; Kharisma Archipelago Collective Marketing 
(KPBN)  business actors; appraisal service industry; determination of broker service reward 
standards by Indonesian Securities Companies Association; and provision of electric po wer for 
buildings in limited areas, apartments  
2018 Painted aluminium -zinc alloy -coated steel industry; requirements of SOEs'  public accountant office s; 
cement industry; trade association; nickel mining industry; distribution of liquefied petroleum gas in  
Belitung; PET industry; pedigree chicken egg industry; pedigree chicken industry; various 
pharmaceutical inputs (amitriptyline, methotrexate, valsartan, atorvastatin, and telmisartan); and 
rice industry  
2019 Financial technology; price formulation of liv e chickens; baggage tariff determination on low-cost 
carrier  airlines; flight fares; and garlic industry  
Source:  OECD , Annual Report on Competition Policy Developments in Indonesia 2018 . Viewed at: 
https://one.oecd.org/document/DAF/COMP/AR(2019)46/en/pdf ; and information provided by the 
authorities.  
3.162.   Indonesia does not have extensive bilateral agreements on competition. As mentione d in 
the previous Review, there are competition chapters in the ASEAN -Australia -New Zealand FTA 
(focusing mainly on supporting the creation of a fairer business environment in the signatory 
countries) and the Indonesia -Japan Comprehensive Economic Partners hip Agreement (relating 
mainly to exchanges of public information, notification on enforcement activity, and capacity 
building) (Section 2 .3.2). There is a competition chapter in the recently signed EFTA -Indonesia 
Comprehensive Economic Partnership Agreeme nt (which is not yet in force) , whereby signator ies 
agree to apply domestic competition laws and regulations to proscribe anti -competitive practices 
according to principles of transparency, non -discrimination and procedural fairness , as well as to 
ensure t hat their state enterprises, designated monopolies and enterprises with special rights do not 
maintain anti -competitive practices affecting trade between them. It also has provisions on 
cooperation and consultations.256 There is also a competition chapter in the Indonesia -Australia 
 
255 The legal bases for this activity are Law No. 5/1999; Commission Regulation No. 1/2019 on 
Procedures for Case Handling; and Commission Regulation No. 2/2019 on KPPU's Organizational Structure and 
Working Arrangements.  
256 EFTA-Indonesia Comprehensive Economic Partnership Agreement, Chapter 7. 
https://www.efta.int/sites/default/fi les/documents/legal -texts/free -trade-relations/indonesia/efta -indonesia -
main-agreement.pdf . WT/TPR/S/401 • Indonesia  
 
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  Comprehensive Economic Partnership Agreement , which has also been signed but has not yet 
entered into force. It  contains, inter alia , provisions on: the application of competition laws and 
regulations, including with respect to procedural transparency and fairness in the implementation of 
administrative and judicial procedures; cooperation; notification of competition enforcement 
activities that may affect the other party's interests; transpare ncy of competition law enforcement 
policies ; competition law exclusions and exemptions; and consumer protection.257 
3.3.4.2   Price controls  
3.163.   As at the time of the previous Review, the Government remain ed involved in stabilizing the 
price of rice through the state -owned Perum BULOG's guaranteed purchase of rice from domestic 
producers at a set procurement price , and through its import activities (Sections  3.3.5.1  and 4.1.5).  
3.164.   Additionally, the MoT monitors prices and , if necessary, undertakes some mark -up 
operations to  guarantee the availability and stability of prices of necessities. The most recent 
regulation in this regard was MoT Regulation No. 7 of 2020 , which set reference prices for the 
purchase of certain necessities (corn, soybeans, sugar, cooking oil, shallots, beef, purebred chicken , 
and purebred eggs) at the farmer level , and reference prices for sales of these items at the consumer 
level. These re ference prices are determined by the Minister of Trade considering reasonable cost 
structures of farmers and retailers. If prices at the farm level are below the reference prices , or if 
prices at the consumer level are above the reference price, the Minist er may instruct Perum BULOG 
to undertake purchases and sales , respectively.  
3.165.   The Government sets the price of medicines used in the National Health Insurance 
programme through the e -catalogue (Section 3.3.6).258  
3.166.   The coal sales price for the supply of elect ricity for public purposes has been regulated since 
2018.259 The fixed price is USD 70 per tonne for 2020. This price regulation is only applicable to coal 
being used by the State Electricity Company to generate electricity. The purpose of this measure is 
to fulfil the Government's public service obligation to provide electricity for every region in Indonesia , 
as well as to ensure energy security and equal access to electricity, particularly for the poor.  
3.3.5   State trading, SOEs , and privatization  
3.3.5.1   State trading  
3.167.   Indonesia's latest WTO notification on state trading was in 2018 (new and full notification).260 
It covers the trading operations of Perum BULOG, which was established in 2003. Its objectives are 
to provide a staple food logistics business to meet society' s needs. Additionally, it may be called 
upon by the Government to stabilize staple food prices , manage government rice reserves /buffer 
stocks, and distribute rice to low -income persons  (Section 4.1.5).  When there are  rice buffer stock 
shortages, the Govern ment instructs Perum BULOG to import rice, and these imports are subject to 
customs duties  (Section 4.1.5) . 
3.168.   Perum BULOG does not have a monopoly on the importation of rice or any other staple food 
items. However, some forms of rice to be used as raw materi als may only be imported by Perum 
BULOG (Section 3.1.5.1). Perum BULOG is also one of the entities authorized to export rice 
(Table  3.8), but has not been instructed to do so by the Government over the review period. The 
Government may require Perum BULOG to import other staple goods; over the review period these 
have included: buffalo meat, beef, sugar, garlic , and onion s.  
 
257 Indonesia -Australia Comprehensive Economic Partnership Agreement , Chapter 16. Viewed at: 
https://www.dfat.gov.au/trade/agreements/not -yet-in-force/iacepa/iacepa -text/Pages/iacepa -chapter -16-
competition . 
258 E-catalogue. Viewed at: https://e -katalog.lkpp.go.id . 
259 The current regulation in force is Ministry of Energy and Mineral Resource Regulation No. 
261/30/MEM/2019. This replaces  Ministry of Energy and Mineral Resource Decision No. 1395K/30/MEM/2018.  
260 WTO document G/STR/N/17/IDN, 19 September 20 18. WT/TPR/S/401 • Indonesia  
 
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  3.3.5.2   SOEs and privatization  
3.169.   At end -2018 (latest available data), the total assets of SOEs exceeded IDR  8,800  trillion, 
profits were IDR 212  trillion, and the SOE contribution to the state budget was IDR  454 trillion.261  
3.170.   The legislation governing SOEs is Law No. 19/2003. The existence of SOEs in Indonesia is 
derived from the constitutional requirement (Article 33 of the Constitution) that bran ches of 
production that are essential to the State and that affect the livelihood of the masses must be 
state-controlled (Section 2.1). As indicated by the authorities, as at mid -2020, Parliament was 
proposing changes to the SOE law.   
3.171.   To boost private pla yers' participation in the economy, SOEs have been encouraged to 
procure a certain amount of their supply from SMEs. SOE procurement of goods and services has 
been regulated by the Minister of SOE s' general guidelines since 2008; SOEs are not subject to 
general government procurement rules (Section 3.3.6).262 In 2019, changes were made to these 
guidelines , with a view to improving procurement objectives, making procurement more competitive, 
transparent and accountable, and simplifying contractual arrangement s, so as to allow parties the 
freedom to regulate contractual rights and obligations while observing legal and regulatory 
requirements and good corporate governance.  
3.172.   As at 2019, 112 SOEs were under the Ministry of SOEs (141 in 2012)  and 4 SOEs were 
directly controlled by the MoF; they operate in the infrastructure, energy and financial sectors. The 
World Bank Group recently estimated that there are also 782  regional SOEs operating in 
Indonesia.263  
3.173.   As at December 2018, there were 341 SOE subsidiaries and 317 SOE -affiliated companies, 
under the SOEs controlled by the Ministry of SOEs.264 Data was not available on SOE subsidiaries or 
affiliated companies under the MoF. In 2019, the definition of what constitutes SOE subsidiaries and 
affiliated companies w as redefined to include companies with SOE share ownership of more than 
50%, rather than 90% as previously; this was done in order to adopt the general definition accepted 
in company management.265 As at end -2018, 4% of SOEs, 7% of subsidiaries, and 12% of affiliated 
companies were operating at a "stable loss".266  
3.174.   As at May 2020, 17 SOEs were listed on the Indonesia Stock Exchange, with a market 
capitalization contribution of around 20% ( Section 4.4.3.4 ). In numerical terms, SOEs are most 
active in manufactu ring, financial services , and transport/warehousing (Chart 3.5 and Table 3. 25). 
According to OECD/World Bank estimates, Indonesia has SOEs active in a wider range of sectors 
than most comparable countries (except China), with 30 economic subsectors having at least one 
SOE.267 
 
261 Ministry of State -Owned Enterprises Annual Report (2019). Viewed at: 
http://bumn.go.id/upload/download_img/file_download/5e2c0e00de527_202 00125044432/5/#zoom=z  (no 
longer available online) . 
262 The rules on procurement price preferences are contained in Minister of SOEs' Regulations No. 5 of 
2008, No. 15 of 2012, and No. 8 of 2019.  
263 World Bank Group, Creating Markets in Indonesia - Unlocking the Dynamism of the Indonesian 
Private Sector . Viewed  at: https://www.ifc.org/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-
dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJ PERES&CVID=m.8RZD6 . 
264 Ministry of State -Owned Enterprises Annual Report (2019). Viewed at: 
http://bumn.go.id/upload/download_img/file_download/5 e2c0e00de527_20200125044432/5/#zoom=z  (no 
longer available online) . 
265 MSOE Regulation No. PER -08/MBU/12/2019 contains the definition of company subsidiaries and 
affiliated companies.  
266 Ministry of State -Owned Enterprises Annual Report (2019). Viewed at: 
http://bumn.go.id/upload/download_img/file_download/5e2c0e00de527_20200125044432/5/#zoom=z  (no 
longer available online) . 
267 World Bank Group, Creating Markets in Indonesia - Unlocking the Dynamism of the Indonesian 
Private Sector . Viewed at: https://www.ifc.o rg/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-
dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJPERES&CVID=m.8RZD6 . WT/TPR/S/401 • Indonesia  
 
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  3.175.   Various concerns have been expressed about the operation of SOEs in Indonesia; these  
relate, inter alia , to public subsidies provided to them; their negative impact on competition and the 
crowding -out effect on the private sector; and operational inefficiencies.  
Chart 3.5 SOEs based on sectors, 2019  
 
Note:  Figure s in brackets refer to the number of SOEs under the Ministry of SOEs. Classification based on 
Indonesian Standard Industrial Classification which refers to ISIC.  
Source:  Ministry of State -Owned Enterprises Annual Report (2019). Viewed at: 
http://bumn.go.id/upload/download_img/file_download/5e2c0e00de527_20200125044432/5/#zoo
m=z (no longer available online) . 
3.176.   As indicated by the World Bank Group, whi le there is limited data on SOE finances, it was 
estimated that , in 2015, 38 of the largest SOEs received fiscal transfers , totalling around 
USD 6.3 billion net of the corporate taxes paid by them; these subsidies accounted for at least 4.6% 
of total gover nment spending. The negative impact of the strong presence of SOEs on competition 
has been pointed out, with SOEs holding monopoly or quasi -monopoly positions in sectors where 
competition would be feasible, such as energy generation and distribution, sea p orts, toll roads , and 
imports of agricultural inputs and cereal grains. Likewise, it has been noted that SOE dominance 
crowds  out the private sector, with a regularly -cited case being infrastructure development which is 
largely being undertaken through SOE s. Private -sector access to finance may also be being 
negatively impacted by bank loans largely being geared to SOEs. In certain activities, for example 
transport, it has been reported that underinvestment, the dominance of inefficient SOEs , and the 
weak e nforcement capacity of sectoral regulators has contributed to high transportation costs 
(including road, air and sea), poor operational performance , and insufficient infrastructure 
development. Finally, recent analysis suggests that SOE import monopolies s ignificantly increase the 
cost of imports without generating clear economic benefits.268 In this regard , the authorities 
commented that SOEs  are value creator s that contribute to the national  economy and state revenue ; 
are development agenc ies that reali ze government programmes to create a multiplier effect on the 
national economy ; provide goods and services for the livelihood needs of the community ; pioneer 
business activities that have not been able to be carried out by the private sector or cooperatives ; 
and are involved in helping entrepreneurs economically. They noted that fiscal transfers received by 
 
268 World Bank (December 2019), Indonesia Economic Quarterly . Viewed at: 
https://openknowledge.worldbank.org/bitstream/handle/10986/33033/Investing -in-
People.pdf?sequence=1&isAllowed=y ; World Bank Group,  Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector . Viewed at: https://www. ifc.org/wps/wcm/connect/8f1d3b14 -66c2-
4452-a70c-dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJPERES&CVID=m.8RZD6 ; US Department 
of State, 2019 Investment Climate Statement : Indonesia . Viewed at: https://www.state.gov/reports/2019 -
investment -climate -statements/indonesia/ ; and Reuters, Private sector left in dust in Indonesia's infrastructure 
push. Viewed at: https://www.reuters.com/article/us -indonesia -economy -infrastructure/private -sector -left-in-
dust-in-indonesias -infrastructure -push-idUSKBN1CP12B . 
A -Water supply, sewerage, waste management, and
remediation activities
B - Agriculture, forestry and fishing
C - Wholesale and retail trade
D - Mining and quarrying
E - Manufacturing
F - Professional, scientific, and technical activities
G - Electricity, gas, steam, and air conditioning supply
H - Information and communication
I - Transportation and storage
J - Construction
K - Financial and insurance activities
L - Accommodation and food service activities
M - Real estate activitiesChart 3. [IDN] SOEs based on sectors, 2019
Source: Ministry of State -Owned Enterprises Annual Report (2019). Viewed at:
http://bumn.go.id/upload/download_img/file_download/5e2c0e00de527_20200125044432/5/#zoom=z .E(28)
F(10)
G(2)H(4)B(7)A (2)
C (4)
D(1)
I(25)
Note:  Figure in brackets refers to the number of SOEs under the Ministry of State -Owned Enterprises.  Classification 
based on Indonesian Standard Industrial Classification (KBLI) which refers to ISIC.J(9)K(19)M(2)
L(1)WT/TPR/S/401 • Indonesia  
 
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  SOEs are generally in the form of reimbursement and capital injection269, and that , in most cases , if 
SOE have monopolistic power this is the result of past government policy, with current policy being 
to liberalize industries and allow participation of private players. Furthermore , it was indicated that 
efforts, through SOEs, are being made to stimula te private -sector activities, through the Ministry of 
SOEs' initiatives to develop ecosystems involving SOEs, the national private sector and MSMEs to 
support domestic economic growth , as well as through procurement practices (see above).  
Table 3.25 Major SOEs, 2012 and 2020  
Firm Activity  State ownership 
2012 (%)  State ownership  
2020 (%)  
PT Perusahaan Listrik Negara  Electricity  100.00  100.00  
PT Bank Mandiri Tbk  Banking  60.00  60.00  
PT Bank Rakyat Indonesia Tbk  Banking  56.75  57.20  
PT Pertamina  Oil and gas  100.00  100.00  
PT Bank Negara Indonesia Tbk  Banking  60.00  60.00  
PT Jamsosteka Insurance  100.00  0.00 (not divided into 
shares)  
PT Taspen  Insurance  100.00  100.00  
PT Telekomunikasi Indonesia 
(Persero) Tbk  Telecommunications  53.24  52.09  
PT Bank Tabungan Negara Tbk  Banking  71.85  60.00  
PT Pupuk Indonesia  Fertilizer  100.00  100.00  
PT PGN Tbkb Oil and gas  56.97  0.00 (1 golden share)  
Perum Pegadaian  Financial services  100.00  100.00  
Perum Bulog  Logistics  100.00  100.00  
PT Krakatu Steel Tbk  Steel 80.00  80.00  
PT Semen Gresik Tbk Cementc Cement  51.01  51.01  
PT Jasa Marga Tbk  Highway  70.00  70.00  
PT Garuda Indonesia Tbk  Airlines  69.14  60.54  
PT Antam Tbkd Mining  65.00  0.00 (1 golden share)  
PT Askese  Insurance  100.00  0.00 (not divided into 
shares)  
PT Bukit Asam Tbkf Mining  65.02  0.00 (1 golden share)  
PT Pelabuham Indonesia II  Sea port management  100.00  100.00  
PT Angkasa Pura I  Airport management  100.00  100.00  
PT Angkasa Pura II  Airport management  100.00  100.00  
PT Wijaya Karya Tbk  Construction  66.37  65.05  
a Transformed into PBJS Ketenagakerjaan.  
b Government shares in PT PGN Tbk were transferred to Pertamina  (Persero) in 2018.  
c Transformed into strategic holding company PT Semen Indonesia (Persero) Tbk in 2012.  
d Government shares in PT Antam Tbk were transferred to Indonesia Asahan Aluminium (Persero) in 
2017. 
e PT Askes was transformed into BPJS Kesehatan.  
f PT Bukit Asam Tbk was transferred to PT Indonesia Asahan Aluminium (Persero) in 2017.  
Source:  Information provided by the authorities.  
3.177.   As at mid -2020, the Government did not have plans to privatize SOEs. Over the review 
period, there was privatization a ctivity in the sectors of: mining; construction/engineering; 
development, maintenance and management of toll roads; steel; airlines; and cement.  
3.3.6   Government procurement  
3.3.6.1   Features  
3.178.   Indonesia became an observer to the WTO Government Procurement Agreement (GPA)  in 
2012. In the context of this Review, the authorities indicated that Indonesia needs to consider 
 
269 In the case of reimbursement, payment is made to SOEs to reimburse expenses that were previously 
spent in delivering a government assignment which provided public service/goods obligations. Capital 
injections are provided as government support because SOEs conduc t government assignments, such as 
developing toll roads, granting loans for SMEs, and strengthening the capital structure of badly performing 
SOEs.  WT/TPR/S/401 • Indonesia  
 
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  various aspects before joining the GPA, including the development of the government procurement 
field at the international level , and global trends.  
3.179.   Accord ing to the authorities, overall government spending on procurement in FY2019 was 
IDR 2,173 trillion (both by central and sub -central governments).  Government procurement is 
centralized in terms of regulations and systems but decentralized for procurement e xecution. The 
authorities  indicated that  there are no plan s to move to a centralized system for procurement 
execution in the foreseeable future. Public procurement is undertaken by numerous entities, 
including 87 national ministries and agencies; 34  provin cial authorities; and 508  regenc y/city 
municipalities.270  
3.180.   Each procuring entity is required to organize its procurement arm into four separate units , 
so as to ensure solid management controls: ( i) a "budget authority" to plan and carry out 
procurements; ( ii) a "procurement service unit" or "procurement officer" to implement individual 
procurements (evaluat e bids and award contracts); ( iii) a "project result receiver committee" to 
evaluate administrative aspects resulting from procurements; a nd (iv) a "contract -making 
officer ".271 Ministries, institutions and local governments are also required to create a Procurement 
Service Unit , to manage procurement and electronic procurement services, develop procurement -
related human resources and institutions, and implement assistance, consultancy and/or technical 
guidance.  
3.181.   All procuring entities must operate their own electronic procurement system (LPSE), on 
which they must post information on individual tenders up until the signing of the contract; the 
LPSEs can be accessed through the portal http://inaproc.id/lpse . Providers of goods and services 
that want to take part in bidding processes must register with these LPSEs (this is free of charge). 
Almost all central government ministries and agencies as well as local governments have established 
their LPSEs, except some in the eastern part of Indonesia. A  distributed procurement database is 
installed with the LPSEs , and aggregates all their procurement announcements and accompanying 
tender documentation. In turn, tender announcements are publicly available through the single 
national e -portal INAPROC ( http://inaproc.id/tender ).  
3.182.   An e-catalogue system was introduced in 2012 , in order to enhance transparency regarding , 
and curb corruption in, government procurement; it is a publicly  available electronic information 
system ( viewed  at: https://e -katalog.lkpp.go.id ) which contains detailed product, pricing, 
specification, and supplier information , as well as current openings. The website contains 
commodities and products for the  national catalogue (managed by the National Public Procurement 
Agency (NPPA)), sectoral catalogues (managed by ministries) and local catalogues (managed by 
local governments). For some commodities, such as medicine, the availability (stock) of goods is 
also included in the e -catalogue. Since 2018, it has become a formal feature of the procurement 
process (see below). Foreign suppliers seeking to have their products listed in the e -catalogue must 
use an Indonesian company agent or distributor company to com mence the sales , and adhere to  all 
national laws and regulations.  
3.183.   Reportedly, some of the main public procurement system challenges relate to: the NPPA's 
(Section 3.3.6.2) reliance on technical institutions to provide it with accurate and complete 
informa tion, so it can carry out its monitoring function effectively; procurement exemptions (notably 
SOE purchases which do not use the state budget, and defence spending); and a lack of 
accountability of some aspects of the electronic system, including a non -transparent mechanism for 
determining which companies can enter the e -catalogue system.272 It has also been noted that 
although there is increased transparency of public procurement information at the tendering phase 
through information posted at the variou s electronic portals, this is not the case for the 
post-tendering phase.273 With respect to key positive developments over the review period, the 
authorities indicated that PR  No. 16/2018 (see below) contains provisions which refer to best 
 
270 A list of these entities was viewed at: 
https://monev.lkpp.go.id/monitor/monitorAdjustment?rekap=semua&pilihProv=semua&pilihBulan=Rekap&tah
un=2020&page= . 
271 The regulatory basis for this requirement is PR No. 16/2018 which replaced PR No. 54/2010.  
272 TPP Rating, Assessing Public Procurement Practice in Indonesia - 2017. Viewed at: https://www.tpp -
rating.org/public/uploads/data/29/AOIL/5d1f4ba97f728Implementation_Assessment_Indonesia.pdf . 
273 Hivos and Institute for Development of Freedom of Information, (2018), Recommendations for the 
Public  Procurement System of the Republic of Indonesia . Viewed at: 
https://openupcontracting.org/assets/2019/04/Indonesia -Brief-on-Public -Procurement.pdf . WT/TPR/S/401 • Indonesia  
 
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  practices and int ernational standards, encourage procurement processes to be conducted via 
electronic means to create more transparent and efficient processes, and promote the development 
of professional human resources. They also noted that the Government committed to int egrate the 
treasury budget with the procurement system. Additionally, the NPPA (see below) developed various 
knowledge, skill -training and certification schemes , and it provides technical assistance and expert 
advice for procurement implementations, partic ularly for strategic and complex projects.  
3.3.6.2   Institutional and regulatory framework  
3.184.   The NPPA ( also known as the LKPP) remains the public procurement policy -making agency. 
It continues to be responsible for: developing strategy; policies and regulations; cond ucting 
monitoring and evaluation ; developing and implementing e -procurement; developing and improving 
the capacity of procurement practitioners; and providing advice, recommendations, and complaint 
resolution. The NPPA is coordinated by the State Minister of the National Development Planning  
Agency  (BAPPENAS) , and is answerable  directly to the President.274 The Chairman of the NPPA is 
elected and dismissed by the President. Every year , all procuring entities  must submit their 
procurement plans to the central ized procurement plan portal , developed by the NPPA. Information 
on public procurement annual plans is publicly available on the NPPA's SiRUP portal.275 
3.185.   The legislative framework for government procurement, including procurement methods, 
was revised by PR No. 16 of 2018 on Public Procurement of Goods/Services, that entered into force 
on 22 March 2018.276 As set out in the preamble to the Regulation, the overall objectives of the new 
regulatory framework are to achieve value for money and contribute to: the in creased use of 
domestic products ; the increasing role of MSMEs; and sustainable development. The structure of the 
Regulation has been simplified as compared with its predecessor; it now only regulates normative 
aspects, leaving standard matters/procedures to be regulated under  NPPA regulations and related 
technical ministry regulations.277  
3.186.   PR No. 16/2018 covers the procurement of goods and services at the central and local 
government levels that are financed (wholly or partially) through the state or region al budgets , as 
well as procurement financed by domestic or foreign loans or grants. It does not apply to: 
procurement for public service agencies; procurement carried out based on a publicly published 
tariff; procurement carried out in accordance with an e stablished business practice; or procurement 
stipulated under other prevailing laws and regulations.278 Procurements by SOEs and their 
subsidiaries and affiliated companies are not covered by this Regulation . 
3.187.   Key changes introduced by PR No. 16/2018 are: ( i) regulation and recognition of 
e-marketplaces as new media for electronic procurement; ( ii) simplification of tender procedures 
through reducing the variety of tender methods and type of contracts, simplifying requirements for 
providers to join a bidding,  and simplifying procedures for procurement in a state of emergency; 
(iii) the introduction of a "quick tender" method of selection and the elimination of "contests" as a 
method of selection (see below); ( iv) harmonization with other prevailing regulations related to 
procurement; ( v) adoption of international best practices; ( vi) reflection of government policy in 
relation to participation of MSMEs, use of local products, research practices, handling of emergency 
situations, offshore procurement,  international tender/selection, and sustainable procurement279; 
 
274 TPP Rating, Assessing Public Procurement Practice in Indonesia - 2017. Viewed at: https://www.tpp -
rating.org/public/uploads/data/29/AO IL/5d1f4ba97f728Implementation_Assessment_Indonesia.pdf . 
275 SiRUP portal. Viewed at: https://sirup.lkpp.go.id/sirup/ro . Data on procurement planning by central 
and local governments for the fiscal year was a lso viewed at: http://monev.lkpp.go.id.  
276 PR No. 16/2018 replaces PR No. 54 of 2010 as amended in 2015 by PR No. 4/2015. Viewed at: 
https://jdih.lk pp.go.id/regulation/peraturan -presiden/peraturan -presiden -nomor -16-tahun -2018. 
277 NPPA. Viewed at: https://jdih.lkpp.g o.id/news/14/siaran -pers-peraturan -presiden -nomor -16-tahun -
2018-tentang -pengadaan -barangjasa -pemerintah . 
278 Further explanations on the types of procurement that are excluded from PR No. 16/2018 are 
contained in NPPA Regulation No. 12 of 2018. Viewed at: https://jdih.lkpp.go.id/regulation/peraturan -
lkpp/peraturan -lkpp-nomor -12-tahun -2018. 
279 In the context of this Review, the authorities indicated that some o f the purposes of procurement are 
to increase the MSME role in the national economy/development, promote the use of local products (as 
reflected in Law No. 3/2014 on Industry), and use sustainable procurement as a tool to fight climate change 
and adhere to  international best practices. They noted that research practices have special characteristics and, 
hence, need special procurement arrangements. An exclusive procurement mechanism for emergency 
situations is needed, due to Indonesia's geographical positio n, and it being prone to natural disasters. Offshore WT/TPR/S/401 • Indonesia  
 
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  (vii) strengthened institutional and human resources procurement; ( viii) an increase in the 
maximum threshold for direct procurement for consultancy services from IDR 50 million to 
IDR 100 million; (i x) inclusion of the concept of the e -reverse auction as a price offering method 
that is conducted repeatedly; ( x) amendments to, and extension of, the scope of types of special 
procurement; ( xi) stipulation of minimum bid bond values required for c onstruction products; and 
(xii) introduction of contract dispute resettlement services (see below).280  
3.188.   Government policy remains focused on promoting domestic suppliers and producers via 
several procurement requirements. As under previous rules, foreign co mpanies may only bid in 
tenders that exceed certain thresholds (Section 3.3.6.3). Similar to previous practice, 
PR No. 16/2018 mandates the use of domestic products (including design and engineering services) 
in government procurement if there are provider s offering goods or services with a local content 
plus corporate contribution value exceeding 40%. Procurement of imported goods can be carried 
out if the goods are not yet produced in Indonesia or the volume of domestic production is 
insufficient.  
3.189.   Procur ement price preferences were significantly expanded under PR No. 16/2018. Article  67 
of this Regulation contains a procurement preference of 25% on goods and services incorporating 
at least 25% local content for all bids over IDR 1 billion. Previously, und er PR No. 54/2010 
(Article  98), the procurement preference was 15% on goods and services incorporating at least 25% 
local content for all bids over IDR 5 billion. Price preferences for construction work remain 
unchanged , at 7.5% above the lowest bid price of the foreign contractor. Through a 2019 Regulation 
issued by the Ministry of SOEs,  SOE subsidiaries and affiliates may opt to follow these rules.281 
3.190.   PR No. 16/2018  continues to reserve procurement packages for goods, construction services 
and other servic es up to a value of IDR 2 .5 billion for small businesses (unless they cannot be 
undertaken by such entities because they are too technically demanding).282 Small businesses are 
the micro and small enterprises as regulated by Law No. 20/2008. They are also permitted to bid 
for contracts above this value.  
3.191.   PR No. 16/2018 indicates  that procurement packages cannot be split up into smaller 
packages with the inte ntion of evading the tender/selection  process . It also contains a new "blacklist" 
mechanism for the listing of providers that violate Articles 78 or 80 of the Regulation (breach of 
contract, underperformance, false testimony or fake documents, corruption, collusion, nepotism , 
etc.). Blacklisted entities cannot submit a tender for a period of between one and two years.  
3.192.   In July 2018, the NPPA issued 13 procedures for goods and services procurement , to 
implement provisions in PR No. 16/2018. These are:  NPPA Re gulations  No. 7/2018 regarding 
Government Procurement Planning; No. 8/2018 regarding In-house Procurement; No. 9/2019 
regarding Tender/ Selection Implementation; No. 11/2018 regarding E-catalogue; No.  12/2018 
regarding Procurement Excluded from Government P rocurement; No.  13/2018 regarding 
Procurement in Emergency Situations; No. 14/2018 regarding Procurement Service Unit; 
No. 15/2018 regarding Procurement Parties; No. 16/2018 regarding Procurement Agents; 
No. 17/2018 regarding Blacklist; No. 18/2018 regardi ng Contract Dispute Settlement Service; and 
No. 19/2018 regarding Development of Procurement Systems and Policies.  
3.193.   Other laws and regulations affecting government procurement are Law No. 3/2014 on 
Industry; Law No. 7/2014 on Trade; Law No. 2/2017 on Construction Services; Presidential 
 
procurement provisions relate to Indonesia's need to procure goods and services in country locations where 
there are Indonesian diplomatic representatives.  
280 Soemadipradja and Taher, Client Update: Proje cts and Infrastructure, April 2018 . Viewed at: 
https: //www.soemath.com/public/images/page/download1_373_Client%20Update%20 -
%20President%20Regulation%20No%2016%20of%202018%20(New%20Regulation%20on%20Public%20Proc
urement)%20(final).pdf . 
281 Ministry of SOEs Regulation No. PER-08/MBU/12/2019 on Ge neral Guidelines  on the Implementation 
by State Owned Enterprises of the Procurement of Goods and Services . In-house Community, Indonesia: New 
regulation on the procurement of goods and services in the state -owned enterprises sector . Viewed at: 
https://www.inhousecommunity.com/article/indonesia -new-regulation -procurement -goods -services -state-
owned -enterprises -sector/ . 
282 PR No. 16/2018 , Article 65.  WT/TPR/S/401 • Indonesia  
 
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  Instruction No. 7/2015 on the Prevention and Combatting of Corruption Act; and PR No. 95 of 2018 
concerning Electronic -Based Government Systems.  
3.3.6.3   Procurement methods  
3.194.   Procurement methods are set out in Table 3.2 6. PR No. 16/2018 provides a more simplified 
set of tender procedures than under the previous regulatory framework (PR  No. 54/2010) . The 
procuring entity is strongly encouraged to use e -purchasing for goods and services listed and 
available in the e -catalogue. For goods/services not available in the e -catalogue, procuring entities 
must use the other methods stipulated in PR No. 16/201 8, and select a method based on professional 
judgement. Evaluation of offers to select providers of goods/construction work/other services is 
based on value system, economic life -cycle cost evaluation, or lowest price. Under PR No. 16/2018, 
foreign compani es may bid for international tenders/selection over certain thresholds (IDR  1 trillion 
for construction services ; IDR 50 billion for goods and other services; and IDR 25 billion for 
consultancy services, increased from IDR 100 billion for construction ; IDR 20 billion for other 
goods/services ; and IDR  10 billion for consulting , under PR No. 54/2010. As indicated by the 
authorities, threshold changes are due to inflation, exchange rates , and the capacity of domestic 
suppliers. International tenders may be imp lemented for tenders below the threshold if no other 
national company has the ability to provide the goods or services requested; in such a case , 
companies must form partnerships, subcontracts or other forms of cooperation with domestic firms.  
Information was not available on the share of public procurement conducted through 
non-competitive procedures.  
3.195.   The tendering process for selection/tenders involves the following steps: implementation of 
qualifications; announcement and/or invitation; registration and collection of election documents; 
briefing; submission of bid documents; evaluation of bid documents; determination and 
announcement of winners; and objections . For the selection of providers for construction works , 
there is an additional appeal stage.283  
3.196.   For "quick tenders" , tender participants which are already qualified under the Provider 
Performance Information System may submit an offer price; the determination of winners is based 
on the lowest price proposal.  
Table 3.26 Procurement methods  
Type of 
procurement  Procurement 
methods 
permitted  Criteria and thresholds  
Procurement of 
consultancy services  Selection 
(open for 
public)  Procurements above IDR 100 million.  
 
 Direct 
procurement  Procurements with a maximum value of IDR  100 million . 
 Direct 
appointment  - Where there is one capable business actor;  
- Where there is one registered copyright holder from whom 
parties have received permission;  
- Legal consultancy/ad vocacy services or procurement of 
arbitrators which was unplanned, in the face of lawsuits from a 
certain party , and the nature of the work implementation and/or 
their defence must be immediate and cannot be postponed;  or 
- Repeat requests for providers (m aximum two) of the same 
consulting services.  
Procurement of 
goods/construction 
work/other services  E-purchasing  Goods/construction works and other services listed in the 
e-catalogue.  
 Direct 
procurement  Goods/services with a maximum value of IDR 200 million , that 
areundertaken directly with contractors . 
 
283 Objections are pleas from selection participants to the procurement working unit if they consider 
they have been unfairly treated by the results of the tender. The appeal stage is conducted when the provider 
feels the result of the objectio ns is insufficient.  WT/TPR/S/401 • Indonesia  
 
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  Type of 
procurement  Procurement 
methods 
permitted  Criteria and thresholds  
 Direct 
appointment  - Sudden preparation of activities to follow  up on international 
commitments taken by the President/Vice President ; 
- Goods/services that are for the confidential use of the State 
(including relating to intelligence, witness protection, and 
security of current and former Presidents and Vice Presidents ; 
- Building construction work which constitutes one construction 
system , and where the overall rise of building failure cannot be 
calculated beforehand;  
- Other construction services that only one business actor is 
capable of providing;  
- Procurement and distribution of superior seeds , including rice, 
corn, and soybeans , and fertilizer to domestic farmers to ensure 
the availability of seeds and fertilizers quickly to increase food 
security;  
- Infrastructure, facilities and utilities in residential environments 
for low -income communities;  
- Other goods/construction work/s ervices that are specific and can 
only be carried out by a patent holder or a party who has 
permission from the patent holder of the party who wins the 
tender to get permission from the Government;  or 
- Other construction services/services following repeated tendering 
failure.  
 Quick tender  When the specifications and volume of work have been specified in 
detail , and business actors are already qualified in the Provider 
Performance Information System.  
 Tender (open 
for public)  Used if othe r methods cannot be used.  
 
Source:  PR No. 16/2018.  
3.197.   E-purchasing must be made for the goods/services related to the fulfilment of national 
and/or strategic needs determined by the minister, head of institution, or head of region.  
3.198.   Direct procurement is conducted using  the following methods: ( i) direct purchase/payment 
to the  provider for the procurement of goods/services using proof of purchase or receipts; or 
(ii) request for  a proposal , along with a clarification and technical and price negotiation , from the 
economic operator for direct procurement using a work order.  
3.199.   Direct appointment involves the appointment of one selected business actor , and involves 
technical and price negotiations.  
3.3.6.4   Contract -related dispute settlement and bid -rigging cases  
3.200.   As mandated by  PR No. 16/2018, a new service for contract dispute resolution (L PSKP) was 
established under the NPPA, as one of the methods to settle contract -related disputes through 
mediation, conciliation or arbitration outside the court. The purpose of the system is to remove the 
immediate necessity for the government agency and p rovider to go to court to settle the dispute , 
since this can be costly, lengthy , and result in contract delays.284 Contract disputes commence upon 
request  of the provider or procuring entity. The steps t ot follow are: preliminary evaluation; 
appointment of mediator, conciliator or arbiter; trial; and result.285  
3.201.   The Indonesia Competition Commission (KPPU) remains responsible for addressing tender 
conspiracies (bid -rigging) which are prohibited under Article 22 of the Competition Law. As noted in 
Section 3.3.4.1, these continue to account for around 80% of the KPPU's case load. In carrying out 
its mandate, the KPPU regularly cooperates , and exchanges information , with the Anti -Corruption 
Commission (KPK) on cases that arise. The KPPU handle s the co llusion aspects of the case, leaving 
the corruption aspects to the KPK.  
 
284 TPP Rating, Assessing Public Procurement Practice in Indonesia - 2017. Viewed at: https://www.tpp -
rating.org/public/uploads/data/29/AOIL/5d1f4ba97f728Implementation_Assessment_Indonesia.pdf . 
285 Time-frames for each pr ocedure (mediation, conciliation and arbitration) as well as further 
information on the LPSKP were viewed at https://jdih.lkpp.go.id/regulation/peraturan -lkpp/peraturan -lkpp-
nomor -18-tahun -2018. WT/TPR/S/401 • Indonesia  
 
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  3.3.6.5   RTA procurement provisions  
3.202.   Government procurement chapters are contained only in the Chile -Indonesia Comprehensive 
Economic Partnership Agreement and the Indonesia -Japan Economic Part nership Agreement , which 
provide for cooperation on procurement -related matters of mutual interest and benefit , as well as 
for transparency with respect to elements such as laws, regulations, policies, practices and reforms 
(Section 2.3.2). The Japan -Indon esia RTA provides for the establishment of a Sub -Committee on 
Government Procurement to review and monitor the implementation and operation of the 
procurement chapter, exchange views, and discuss ways to facilitate cooperation.286 
3.3.7   Intellectual property righ ts  
3.203.   Indonesia remains a net importer of intellectual property right ( IPR)-intensive goods. In 
2018, imports of these goods were estimated at USD 19.9 billion, representing 10.6%  of total 
imports (compared with USD 16.4 billion and 9.2% in 2011). The respec tive value of exports for the 
same year was estimated at USD 6.6  billion and  3.7% of total exports (compared with 
USD 5.8 billion and 2.5% in 2011).287 Over the review period , IP revenue has been generally on an 
increasing trend (Chart 3.6 ). 
Chart 3.6 IP revenue, 2014 -19 
(IDR billion)  
 
Note:  IP revenue figures are based on the revenue from IP applications received by the Directorate -
General  of Intellectual Property. This does not include revenue receive d by the IP R holder.  
Source:  Information  provided by the authorities . 
3.204.   Indonesia rank ed 85th out of 129 economies in the 2019 Global Innovation Index, which 
ranks economies based on their innovation capabilities. It ranked 11th among the group of 
26 lower -middle income economies , and 14th out of the 15 economies in South East Asia, East Asia 
and Oceania. The report considers that , relative to GDP, Indonesia is performing at its expected 
level of development , and the level of its innovation outputs is commen surate with its innovation 
investments. Its best rankings are for market sophistication, infrastructure and creative outputs, 
while its poorest rankings are for institutions, business sophistication , and human capital and 
research.288 
 
286 WTO document WT/REG241/1, 6 July 2009.  
287 For these purposes, IPR -intensive goods include : (i) Information Technology Agreement  goods listed 
in WTO document WT/LET/157 . Viewed at : https://www.wto.org/english/tratop_e/inftec_e/itscheds_e.htm . In 
this regard, no adjustment was made for partial subheadings (ex -lines) and , as such , there is a risk that the 
overall figures for both imports and ex ports are slightly over -estimated. HS codes in document WT/LET/157 are 
in the HS1996 nomenclature. Concordance to HS2017 is done to the best possible  extent ; (ii) HS Chapter 30 
goods (pharmaceutical products ); (iii) HS Chapter 22  goods  (beverages and spiri ts, excluding HS subheading  
2209 (vinegar); ( iv) HS Chapter  49 goods (books and other printed media); (v) HS subheading 3706  goods  
(cinematographic films); and (vi) HS subheading 3705 goods (other developed films).  
288 Global Innovation Index 2019 . Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019/id.pdf . This Index is co -published by Cornell 
University, INSEAD and WIPO.  
2014 2015 2016 2017 2018 20190100200300400500600700Chart 3. [IDN] IP revenue, 2014 -2019 (IDR billion)
Source: Information provided by the authorities.WT/TPR/S/401 • Indonesia  
 
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  3.205.   Over the review period, there were several legislative and regulatory developments , 
including in the areas of copyright; trademarks; patents; and enforcement (see below). The 
authorities indicated that they are preparing to notify these to the WTO. Accordi ng to the authorities, 
the Directorate -General of Intellectual Property ( DGIP) is preparing the amendment of several 
regulations. Indonesia accepted the amendment to the TRIPS Agreement in October 2011.  
3.206.   The Ministry of Law and Human Rights (MLHR) continues to have overall responsibility for IP 
policy formulation; while IP administra tion is carried out by its DGIP, which is Indonesia's contact 
point under the TRIPs Agreement.  The Director -General of Customs and Excise , within the MoF, is 
responsible for border enforcement of IPRs. The DGIP has 33 regional offices responsible for 
receiving IP applications. In response to the COVID -19 pandemic, the DGIP has taken steps to 
provide more services online or remotely, including the operationalization of a website 
(https://loketvirtual.dgip.go.id ) to enable post -filing applications for industrial designs and patents.  
3.207.   As indicated by the authorities, the DGIP's objective is to "build an intellectual property 
ecosystem offering expediency value of social and economy for Indonesia". A strategic aim i s to 
increase Indonesia's competitiveness in IP protection. To achieve this , it set out four target 
programmes: ( i) increasing IP protection and utilization , as measured by the percentage of 
registered IP; (ii) establishing knowledge management and IP empo werment, as  measured  by the 
level of IP awareness and understanding of stakeholders , and the percentage of use of registered 
IP; (iii) increasing the effectiveness of IP dispute settlement , as measured by the percentage of 
resolved IP disputes; and ( iv) realizing advanced administration of the DGIP. A draft National IP 
Strategy was prepared , and is under review. Indonesia is a member of the ASEAN, which put in 
place the Intellectual Property Rights Action Plan 2016 -25 and the IPR Enforcement Action Plan; 
these have the overall objective of transforming ASEAN into a highly innovative and competitive 
region, with the collaboration of its members. According the authorities, a notable trend over the 
review period was a big increase in IP applications through the DGIP online IP application system. 
This system was upgraded several times over the review period in order to improve the service for 
users, including by introducing copyright online recordation with cryptography technology. The DGIP 
IP Database continues to allow IP examiners, IP applicants, and the general public to search for 
information on IP applications and protection granted.  
3.208.   Over the review period, Indonesia acceded to the following WIPO -administered treaties: the 
Beijing Treaty on Audiovisual Perf ormances (April 2020); the Marrakesh Treaty to Facilitate Access 
to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled 
(April  2020); and the Protocol Relating to the Madrid Agreement Concerning the International 
Regist ration of Marks (January 2018). With respect to IP -related multilateral treaties, over the 
review period, it acceded to the Nagoya Protocol on Access to Genetic Resources and the Fair and 
Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity 
(in 2014). Indonesia is signatory to the WIPO Performances and Phonograms Treaty (acceded in 
2005); the WIPO Copyright Treaty (2002); the Berne Convention for the Protection of Literary and 
Artistic Works (1997); the Pate nt Cooperation Treaty (PCT) (1997); the Trademark Law Treaty 
(1997); and the Paris Convention for the Protection of Industrial Property  (1950) .289 Over the review 
period, significantly fewer applications were made under the PCT system than during the previous 
review period, while applications under the Madrid System have increased dramatically since 
2018.290 Indonesia is in the process of acceding to the Budapest Treaty on the International 
Recognition of the Deposit of Microorganisms.  
3.3.7.1   Industrial prope rty 
3.3.7.1.1   Patents  
3.209.   In 2016, new patent legislation was enacted through Law No. 13 of 2016 on Patent.291 This 
replaces Law No. 14 of 2001. As reported by the authorities, the overall objectives of the new Law 
are to: optimize the role of the State by providing the best IP services  possible ; align IP protection 
with Indonesia's interests without violating international principles; drive domestic strategic 
 
289 WIPO , IP Portal . Viewed at: https://www.wipo.int/treaties/en/ShowResults.jsp?country_id=77C . 
290 WIPO , Statistical Country Profiles - Indonesia . Viewed at: 
https://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=ID . 
291 WIPO, Law No. 13 of 2016 on Patents . Viewe d at: 
https://wipolex.wipo.int/en/legislation/details/16392 . WT/TPR/S/401 • Indonesia  
 
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  economic sectors by encouraging national invention in technology; and establish a national patent 
platform throug h the Pragmatic Legal Realis approach. The Patent Law administers provisions on: 
the scope of patent protection; inventions, rights and obligations of the patent holder; procedures 
and requirements of patent application s; publication and substantive examin ation; granting or 
refusal of application s; the Patent Appeal Commission; appeal s; transfer of rights; licensing; patent s 
as collateral object s of fiducia; government use of patent s; simple patent s; settlement and 
investigation of disputes; and criminal pr ovisions. Under the Law, the period of patent protection is 
20 years from the filing date. For simple patents, it is 10 years from the filing date. Article 20  of the 
Patent Law maintains the controversial provision that the patent holder is obliged to make  products 
or use processes in Indonesia; this must support the transfer of technology, the absorption of 
investment , and/or the creation  of employment.  
3.210.   Key changes introduced by the Patent Law are: ( i) adjustment to the automation system of 
IP administrati on, to enable electronic applications for patent registration; ( ii) revised provisions on 
government use of patents ; (iii) revisions to the granting of patent compulsory licences (see below); 
(iv) exceptions to criminal and civil lawsuits for parallel impo rts and the B olar provision, as well as 
the extension of the Bolar provision from two to five years292; (v) invention of second -use and 
second -medical -use of patents in the public domain is not allowed; ( vi) remuneration for government 
inventors for their c ommercializ ed patent s293; (vii) revision of publication provisions related to 
novelty and inventive steps; ( viii) patent s may be used as collateral object s of fiducia; (i x) expansion 
of the term "simple patents" to include all types of invention (under the previous Law, the simple 
patent was limited to tangible inventions)294; (x) modifications to exclusions from inventions295; 
(xi) new provisions requir ing that inventions re lated to genetic resources and/or derived from 
traditional knowledge clearly specify the origin of the genetic resource and/or traditional knowledge 
in the patent; and (xii) amendments to the substantive examination process , involving short ening 
the examin ation time for patent application s to 30 months (from 36 months) and for simple patents 
to 12 months (from 24 months) , as well as the ability of the Minister of Law and Human Rights to 
engage independent experts as patent examiners to conduct substantive e xamination. Concerns 
were expressed about Indonesia's patent legislation , particularly in relation to patentability criteria 
and compulsory licensing.296 
3.211.   Four implementing regulations were issued under the new Law: 
• MLHR  Regulation No. 15 of 2018 administers  provisions on the obligations of the patent 
holder , and suspension of the patent working requirement ;297  
• MLHR Regulation No. 38 of 2018 administers provisions on: procedures and requirements 
to file an application; applications using priority rights; PCT applications; procedures 
relating to amendment s and divisional application; procedures to withdraw applications; 
procedures and requirements regarding  substantive examination;  and certification , and 
procedures and requirements for recording data changes. This Regulation reportedly serves 
to provide clarity on a number of procedures and requirements , and should improve patent 
practice and prosecution . For example , it introduces detailed steps for patent applications 
 
292 With respect to the extended Bolar provision, patented pharmaceutical products can be produced by 
third parties up to five years be fore the expiry of the patent protection, provided that the manufacturing is 
undertaken for the purpose of licensing and marketing after the patent protection expires. Leks & Co, New 
Features in Patent Law 2016 . Viewed at: https://www.lekslawyer.com/indonesia -law-new-features -in-patent -
law-2016/ . 
293 An inventor working as a civil servant is entitled to receive compensation from non -state tax 
revenue, after the patent ha s been commercially exploited. S/he may also exploit the patent through a third 
party and obtain royalties, provided that s/he obtains prior approval from the Government. Leks & Co, New 
Features in Patent Law 2016 . Viewed at: https://www.lekslawyer.com/indonesia -law-new-features -in-patent -
law-2016/ . 
294 Patent Law No. 13 of 2016, Article 2.  
295 Under the 2016 Law, inventions do not cover a discovery in the form of new use  of existing 
inventions, new forms of existing compounds, and methods only containing computer programs.  
296 Office of the USTR , 2020 Special 301 Report . Viewed at: 
https://ustr.gov/sites/default/files/2020_Special_301_Report.pdf . Indonesia remains on the USTR Priority 
Watch List , due to concerns about a reported lack of adequate and effect ive IP protection and enforcement.  
297 MLHRRegulation No. 15 of 2018. Viewed (in Bahasa Indonesia ) at: 
https://www.dgip.go.id/images/ki -images/pdf -files/uu -pp/permenkumham -paten -15-2018.pdf . WT/TPR/S/401 • Indonesia  
 
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  filed under the PCT , and it stipulates steps for the deposit of microorganism s and the 
submission of information on microorganisms298; 
• MLHR Regulation No. 30 of 2019 administers provisions on: procedures  for granting patent 
compulsory licence s; terms and conditions to grant a compulsory licence; and forms to 
apply for a compulsory licence.299 This replaces Regulation No. 39 of 2018 and the 
controversial MLHR Regulation No. 15 of 2018 on the Penalties for Non-working or 
Implementing Patents in Indonesia; under the latter, a patent holder was required to 
manufacture products or implement the process in Indonesia, and failure to do so would 
result in the deletion of the patent.300 As noted by the authorities, A rticle 40 of Regulation 
No. 30 of 2019 addresses this concern, by stating that , in the event that the patent holder 
has not been able to implement his patent in Indonesia, he may suspend the manufacture 
of the patented products or  the use of the patented p rocesses in Indonesia. According to 
an external source, this Regulation marks a positive development in establishing 
procedures for compulsory licences , and addressing a number of concerns included in the 
previous Regulation ;301 and  
• MLHR Regulation No. 3 of 2019 administers provisions on: the structure, duties, functions 
and authority of the Patent Appeal Commission; procedures to file appeal petitions; 
financial entitlement for members of the Commission; and funding.302 
3.212.   Provisions on compu lsory licensing are set out in Part Three of the Patent  Law and in MLHR 
Regulation No. 30 of 2019. As set out in Article 33 of the Regulation, the Minister of Law and Human 
Rights may grant a compulsory licence to produce, import or export pharmaceutical p roducts having  
patents in Indonesia , for the purpose of curing human disease. Compulsory licences to implement a 
patent may be granted by ministerial decree if: ( i) the patent holder does not manufacture the 
patented product or use the patent ed process within 36 months of being granted a patent; ( ii) the 
patent is implemented in a form or manner that is detrimental to the interest s of society; or ( iii) the 
patent is the result of  the improvement of a prior patent that cannot be implemented witho ut using 
another patented invention.303 Compulsory licence applicants must show they can and will use the 
patents , and they have previously tried to obtain a licence. To be  grant ed, a compulsory licence 
must be economically feasible , and must benefit the ge neral public. Limits may be placed on the 
compulsory licence,  to avoid harming the public interest. There are special provisions for 
semiconductors, apparently reflecting concerns from the smartphone supplier industry.304 After 
grant ing the compulsory licen ce, royalties must be paid to the patent owner. The main changes 
introduced by the Patent Law and Regulation No. 30/2019 compared to  the previous Regulation are 
that: ( i) there is more detail about how and why a decision to grant a compulsory licence is made; 
and ( ii) there is a requirement of public benefit in Indonesia.305 Indonesia did not initiate new 
compulsory licensing measures over the review period. As noted in the previous Review, Indonesia 
 
298 Zico, New Provisions on Patent Regulations in Indonesia . Viewed a t: https://zico.group/blog/new -
provisions -on-patent -regulations -in-indonesia/ ; and MLRH Regulation No. 38 of 2018. Viewed at: 
https://www.dgip.go.id/images/ki -images /pdf-files/paten/uu_pp/PERMEN%20PERMOHONAN%20PATEN.pdf . 
299 MLHR Regulation No. 30 of 2019. Viewed (in Bahasa Indonesia ) at: 
https://www.dgip.go.id/images/ki -images/pdf -files/paten/uu_pp/BN%201570 -2019.pdf . 
300 Rouse Consultanc y, Compulsory licensing procedures in Indonesia revised (again).  Viewed at: 
https://www.rouse.com/magazine/news/compulsory -licensing -procedures -in-indonesia -revised -again/ ; IP 
Komodo , Indonesia's controversial patent implementation rules are enacted . Viewed at: 
https://ipkomododragon.blogspot.com/2018/07/indonesias -controversial -patent.html ; and Zico, New 
Provisions on Patent Regulations in Indonesia . Viewed at: https://zico.group/blog/new -provisions -on-patent -
regulations -in-indonesia/ . 
301 USTR , 2020 Special 301 Report . Viewed at: 
https://ustr.gov/sites/default/files/2020_Special_301_Report.pdf . 
302 MLHR Regulation No. 3 of 2019. Viewed (in Bahasa Indonesia ) at: https://www.dgip.go.id/images/ki -
images/pdf -files/paten/uu_pp/PERMEN%20KOMISI%20BANDING%20PATEN.new.pdf . 
303 Leks & Co, New Features in Patent Law 2016 . Viewed at: https://www.lekslawyer.com/indonesia -
law-new-features -in-patent -law-2016/ . As indicated by the authorities, compared with Patent Law No. 14 of 
2001, Law No. 13 of 2016 (Article 20) has more detailed provisions on patent implementation in Indonesia. 
There is also an additional provision regarding patents resulting from the developme nt of a granted patent that 
cannot be implemented without using the other party's protected patent.  
304 Provisions on compulsory licences related to semiconductor technology are contained in Article 100 
of Patent Law No. 13 of 2016 and MLHR Regulation No. 30  of 2019, Article 5, Paragraph 2.  
305 Rouse Consultancy, Compulsory licensing procedures in Indonesia revised (again) . Viewed at: 
https://www.rous e.com/magazine/news/compulsory -licensing -procedures -in-indonesia -revised -again/ . WT/TPR/S/401 • Indonesia  
 
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  had used compulsory licensing in 2007 and in 2012 to permi t government use of pharmaceutical 
patents in order to produce certain antiviral and antiretroviral drugs. Since 2014, the Government 
has charged  PT. Kimia Farma with produc ing antiretroviral medicines , such as Efavirenz and 
Tenofovir.  
3.213.   Under the 2016 Law, parties are required first to settle patent infringement disputes through 
mediation with the Patent Appeal Commission , prior to filing an appeal with the Commercial Court. 
The Law extends the Commission's authorit y to include the rejection of a patent app lication;  the 
correction of a description, claim and/or drawing after the granting of patent; and decision s on the 
granting of a patent . Previously , appeals were limited to the rejection of a patent application . 
3.214.   The number of p atents applied for and granted increased over the review period (Chart 3.7). 
As noted by WIPO, they are overwhelmingly filed by, and granted to , non-residents.306  
Chart 3.7 Patent applications and grants, 2013 -19 
 
Source:  Informati on provided by the DGIP; and the MLHR.  
3.3.7.1.2   Industrial designs and layout designs of integrated circuits  
3.215.   There were no changes to the laws in this area: Law No. 30 of 2000 on Layout Designs of 
Integrated Circuits , and Law No. 31 of 2000 on Industrial Design. A description of the features of 
these Laws is contained in the previous Review.307 A new industrial design law is being drafted. The 
regulations which implement these laws are: GR No. 36 of 2018 on Recording Licensing Agreement s 
of Intellectual Property308; GR No. 9 of 2006 regarding the Procedure of Application for Registration 
of Layout Designs of Integrated Circuits (State Gazette No.  26 of 2006) , and GR No. 1 of 2005 
regarding the Implementation of Law No.  31 of 2000 regarding Industrial Design.309  
3.216.   Under L aw No. 30 of 2000 , protection for layout designs of integrated circuits is granted for 
ten years from the date of filing or first  commercial exploitation; protection is granted for ten years 
for new industrial designs.  
 
306 WIPO, Statistical Country Profiles - Indonesia . Viewed at:  
https://www.wipo.in t/ipstats/en/statistics/country_profile/profile.jsp?code=ID . 
307 WTO document WT/TPR/S/117, 28 May 2003.  
308 This Regulation includes provisions on IP licensing and the transfer of rights, including for layout 
designs of integrated circuits.  
309 These laws and r egulations are available on the WIPO website. Viewed at: 
https://wipolex.wipo.int/en/legislation/profile/ID . 
2013 2014 2015 2016 2017 2018 201902,0004,0006,0008,00010,00012,00014,000
Simple patent PatentApplications GrantsChart 3. [IDN] Patent applications and grants, 2013 -19
Source: Information provided by DGIP, Ministry of Law and Human Rights.02,0004,0006,0008,00010,00012,00014,000
2013 2014 2015 2016 2017 2018 2019WT/TPR/S/401 • Indonesia  
 
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  3.217.   Industrial design applications and registrations fluctuated over the review period, showing 
no clear trends (Chart 3.8). As indicated by WIPO, Indonesian residents are the main sources of 
industrial design applications and registrations.310   
Chart 3.8 Industrial design applications and registrations, 2013 -19 
 
Source:  Information provided by the DGIP; and the MLHR.  
3.3.7.1.3   Trademarks and geographical indications  
3.218.   A new law on marks and geographical indications (GIs) entered into force in  2016 (Law 
No. 20 of 2016), replacing Law No. 15 of 2001 on Trademarks.311 It contains provisions on: 
procedures and requirements for trademark applications; trademark registration; marks ineligible 
for registration and refused marks; transferring rights and licensing; collective marks; international 
registration of marks; GI registration; revocation and invalidation of marks; and settlement and 
investigation of disputes on marks and GIs.  
3.219.   The main changes introduced by the new Law are: ( i) regulation of the mechanism for 
international trademark registration, based on the Madrid Protocol, as one of the systems beneficial 
for protecting trademarks globally; ( ii) protection of non -traditional trademarks, namely sounds, 
three -dimensional trademarks , and holograms; ( iii) revision/streamlining of the application 
procedures for trademar k registration ; when minimum requirements are fulfilled , applications are 
given a filing date; ( iv) revision to the workflow of trademark registration , to expedite procedures 
for trademark registration (publication is conducted before substantive examinati on, to enable 
examination without doing re -examination); ( v) changes to the application for trademark renewal , 
whereby  the trademark owner may be given  trademark renewal up to six months after the expiry 
terms of the protection of the trademark registratio n (this provision is intended to prevent a 
registered trademark owner from losing his/her rights because s/he is late in filing trademark 
registration renewal ; (vi) more severe criminal sanctions , to provide protection for registered 
trademark owners from trademark infringement, particularly infringement endangering human 
health  or the  environment , or causing death; and ( vii) regulation of GIs.  
3.220.   No changes to provisions on GIs were introduced by the new Law. Concerns were expressed 
that GI provisions raise "questions about the effect of new GI registrations on pre -existing trademark 
rights and the ability to use common food names ".312 As explained by the authorities , under new 
 
310 WIPO, Statistical Country Profiles - Indonesia . Viewed at:  
https://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=ID . 
311 Law No. 20 of 2016 (in Bahasa Indonesia ). Viewed at: http://en.dgip.go.id/peraturan -perundang -
undangan -terkait -merek . Previously, rules on GIs were contained in GR No. 51/2007, which implemented 
Article 56(9) of the Trade Mark Act.  
312 USTR , 2020 Special 301 Report . Viewed at: 
https://ustr.gov/sites/default/files/2020_Special_301_Report.pdf . 
Chart 3. [IDN] Industrial design applications and registrations, 2013 -19
Source: Information provided by DGIP, Ministry of Law and Human Rights.05001,0001,5002,0002,5003,0003,5004,0004,500
2013 2014 2015 2016 2017 2018 2019
Applications RegistrationsWT/TPR/S/401 • Indonesia  
 
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  provisions introduced in MLHR Regulation No. 12 of 2019 (see below) , Indonesia allows coexistence 
between pre -existing trademarks and GIs.313 They also confirmed that GIs cannot be registered 
using a generic name.  
3.221.   Three implementing regulations were issued under the new Law: 
• GR No. 22 of 2018 on Interna tional Registration of Trademark Based on Protocol Relating 
to Madrid Agreement on International Registration of Marks was issued to implement 
Article 52(4) of Law No. 20/2016. It has provisions on: procedures, requirements and 
examination of international  applications; notification s; international registration; legal 
protection for trademarks based on international registrations; and transformation and 
modification s314; 
• MLHR Regulation No. 67 of 2016 was issued to implement various articles of Law 
No. 20/20 16 relating to the procedures for trademark application.315 It, inter alia , contains 
provisions on: class of goods and services; refusal s; correction of registered trademark 
certificate s; procedures and requirements for trademark renewal; procedures and 
requirements for recording changes in name and/or address; requirements and 
procedures for recording  the transfer of trademark rights;  and application s for the 
registration of collective mark s; and 
• MLHR Regulation No. 12 of 2019 was issued to implement Articl es 55(2), 60 and 71(5) of 
Law 20/2016. It regulate s: application requirements and procedures; substantive 
examination; registration of foreign GIs; the expert team of GIs; and GI supervision.316  
3.222.   The review period saw a drop in trademark applications between 2013 and 2014 , and then 
a steady rise thereafter. Trademark registrations over the same period show a different trend, with 
registrations rising over the period 2013 -15, dominated by resident filings, followed by a drop -off in 
2017, and then  an increase in 2018. Notable in 2018 was the parity in filings by residents and 
non-residents (Chart 3.9).  
3.223.   As at May 2020, Indonesia had 93 registered GIs, of which 84 were domestic. The new GIs 
that were registered since January 2013 include variou s coffees, fruits, vegetables, oil, smoked fish, 
tobacco, nuts, palm sugar, rice, tea, spices, alcoholic beverages, cheese, textiles , and handicrafts.317 
3.3.7.1.4   Plant varieties  
3.224.   There were no changes to legislation governing the protection of plant varieties (Law 
No. 29/2000 on Plant Variety Protection). Similarly, there were no changes to the regulations 
implementing this Law: GR No. 14 of 2004 regarding the Requirements and Procedure of the Transfer 
of Protection of Plant Variety and the Use of Variety Protected b y the Government; and GR No. 13 
of 2004 regarding the Naming, Registration and Use of Original Variet ies for the Making of Essential 
Derivative Variet ies.318 This Law is administered by the MoA. Indonesia has not ratified the UPOV 
Convention.  
 
313 The authorities noted that, while Law No. 20 of 2016 states that if a sign has been registered a s a 
trademark, the minister can cancel and cross off the registration of the mark for all or part of the same type of 
goods after a period of two years from the date the mark is registered as a GI, an additional clause in 
Regulation No. 12 of 2019 explains  that the cancellation and deletion of trademark registration as referred to in 
the Law may only be made for trademarks registered for less than five years, unless approval is obtained from 
the owner of the GI.  
314 GR No. 22 of 2018. Viewed at: https://dgip.go.id/peraturan -perundang -undangan -terkait -merek . 
315 MLHR Regulation No. 67/2016 implements provisions under Article s 6(3), 8, 21(4) , 27(3) , 39(3) , 
40(4) , 41(9) , and 51 of Law 20/ 2016.  Viewed at: https://dgip.go.id/peraturan -perundang -undangan -terkait -
merek . 
316 MLHR Regulation 12 of 2019. Viewed at: https://dgip.go.id/images/ki -images/pdf -
files/indikasi_geografis/PERMEN%20INDIKASI%20GEOGRAFIS.pdf . 
317 More information on registered GIs may be viewed at: http://ig.dgip.go.id/ . 
318 Law No. 29/2000 and its implementing regulations. Viewed (in Bahasa Indonesia ) at: 
http://pvtpp.setjen.pertanian.go.id/cms2017/download/uu -29-00; 
http://pvtpp.setjen.pertanian.go.id/cms2017/download/pp -14-04; and 
http://pvtpp.setjen.pertanian.go.id/cms2 017/download/pp -13-04. WT/TPR/S/401 • Indonesia  
 
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  Chart 3.9 Number of classes specified in trademark applications and registrations, 
2013 -18 
 
Note:  Given that , in the international trademark system and at certain national and regional offices, an 
applicant can file a trad emark application that specifies one or more of the 45 goods and services 
classes of the Nice Classification, this table presents application class counts.  
Source:  WIPO , Statistical Country Profiles - Indonesia . Viewed at: 
https://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=ID . 
3.3.7.1.5   Trade secrets  
3.225.   The law governing trade secrets remains Law No. 30 of 2000. Trade secrets cover methods 
of production, processing, sale or other information in the area of technology and/or business. 
No time limitation is set, and protection remains in force as long as the trade secret is maintained 
and not disclosed to the public . Protection is afforded to information that is secret in nature and of 
economic value. GR No. 36 of 2018 on Recording IP Licensing Agreement s implements provisions 
on IP licensing and transfer of rights, including trade secrets.  
3.3.7.2   Copyright  
3.226.   The new Law No.  28 of 2014 on Copyright  entered into force in October 2014.319 It 
administers provisions on copyright and related rights, and incorporates the following subject 
matter: moral rights and economic rights entailing copyright , consisting of the economic right of the 
author or copyright holder to obtain economic benefit from his/her works; moral and economic and 
related rights , consisting of economic rights of performers, phonogram producers, and broadcasting 
organizations; and traditional cultural expression an d protected works, unprotected works and 
copyright exceptions and limitations. Under the Law, collective management organizations (CMOs) 
collect reasonable compensation from users for using copyright ed works and related rights 
commercially. Indonesia has n ine CMOs; eight for music and song and one for books, all of which 
were established over the review period. Disputes between authors of music and songs and CMOs 
regarding the amount of royalties to be received must be resolved in mediation by the National 
Collective Management Organization.  
3.227.   The substantive changes to the Copyright Law include: ( i) definitional changes , to prevent 
and/or avoid multiple perceptions or legal interpretations320; (ii) clarification of provisions related to 
exclusive rights of authors, copyright holders and related rights owners ; exceptions and limitations 
to these exclusive rights are also administered; ( iii) revisions to the object of protected works , 
 
319 Law No. 28 of 2014 on Copyright. Viewed at:  https://wipolex.wipo.int/en/legislation/details/15600 . 
320 These definitional changes relate to the following terminolo gy: copyright, works, author, copyright 
holder, publication, publishing, reproduction, communication to public, distribution to public, computer 
program, rights related to copyright, performer, phonogram, and fixation.  
2013 2014 2015 2016 2017 2018010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000
Resident Non-resident AbroadApplications RegistrationsChart 3. [IDN] Number of classes specified in trademark applications and registrations, 2013 -2018
Source: WIPO. Viewed at: https://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=ID010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000
2013 2014 2015 2016 2017 2018
Note: Given that in the international trademark system and at certain national and regional offices, an
applicant can file a trademark application that specifies one or more of the 45 goods and services
classes of the Nice Classification, the charts above present application class counts.WT/TPR/S/401 • Indonesia  
 
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  exceptions , and terms of protection for applied art; ( iv) revisions to provisio ns on licensing; 
(v) provisions on moral rights of performers, economic rights of performers, terms of protection for 
related rights , and technology protection measures in accordance with the Beijing Treaty; 
(vi) provisions on court injunctions to ensure t he "applicable" principle is satisfied; ( vii) provisions 
on the establishment of CMOs,  ensuring management or exploitation of copyright and related rights 
by users in accordance with prevailing legal norms/principles ; (viii) electronic documents to be 
allowed to be used as admissible evidence in copyright disputes; (i x) provisions on corpor ations as 
perpetrators; and ( x) provisions on copyright in information and communication technology. 
Additionally, the term for copyright protection was extended from 50 to 70 years after the author 's 
death, criminal sanctions were increased, and the Law allows for the e-filing of copyright record ings.  
3.228.   Three new copyright -related regulations were issued over the review period:  
• GR No. 27/2019 on Facilitating Access to Works for Persons with Print Disabilities and 
Using Braille, Audio Books and Other Media c overs persons with disabilities who benefi t 
from access facilitation. This is an entirely new Regulation. The institution intending to 
facilitate access must obtain permission from the Government; the purpose of this 
measure is to ensure a balance is achie ved between enforcing the rights of the author and 
the interests of blind persons ; 
• MLHR Regulation No. 36/2018 on Procedures on Application and Issuance of Operational 
Permit and Evaluation of Collective Management Organization (CMOs) implements 
provisions  under Article 93 of Law No. 28/2018 (replacing  MLHR  Regulation No. 29/2014). 
It contains provisions on: procedures on the application for, and issuance of , operational 
permit s of CMOs; duties and functions of CMOs; the composition of the National CMO 
comm ission ; royalty collection and distribution; evaluation, financial report s and audit s; 
and revocation of operational permit s. As indicated by the authorities, the regulatory 
material is the same, but there are new elements , such as the inclusion of governm ent 
representatives as National Collective Management Organization (NCMO) commissioners. 
Additionally , to enhance transparency, accountability and good governance, the NCMO is 
audited annually , and the results are announced in the mass media ; and  
• Joint Re gulation s of Minister of Law and Human Rights and Minister of Communication and 
Information Technology No. 14/2015 and No. 26/2015 on Taking Down Content and/or 
User's Access Right Infringing Copyright and Related Rights in Electronic System 
implement prov isions under Article 56(2) of Law No. 28/2018. They c ontain provisions on: 
procedures of filing report s on copyright infringement; procedures for report verification; 
taking down content and/or access rights; re -opening content and/or user's access rights;  
and legal remedies.   
3.229.   Despite efforts made  at the time of Indonesia's previous Review, optical disc piracy 
reportedly continues in Indonesia. Concerns were also expressed about the absence of effective 
policies and procedures to ensure that government age ncies do not use unlicensed software.321 
Unlicensed software installation appears to be prevalent, with the Business Software Alliance 
estimating an 83% rate of unlicensed software installation, with a commercial value of over 
USD 1 billion.322  
3.3.7.3   Enforcement  
3.230.   IP enforcement is the responsibility of  the Attorney -General, the DGIP Directorate of 
Investigation and Dispute Settlement (established in 2012323), the DGIP Patent and Trademark 
Appeals Board, Police, Customs , and the courts. According to the authorities, Presidential Decree 
No. 4 of 2006 estab lishing a National Task Force on Tackling IPR Infringement remains valid; 
however , it is being reviewed with the aim of revitalizing the task force. Since 2019, IP infringements 
 
321 USTR , 2020 Special 301 Report . Viewed at: 
https://ustr.gov/sites/default/files/2020_Special_301_Report.pdf . 
322 Business Software Alliance, Global Software Survey 2018 . Viewed at: https://gss.bsa.org/wp -
content/uploads/2018/05/2018_BSA_GSS_Report_en.pdf . 
323 The DGIP's Directorate of Investigation and Dispute Settlement replaced the Directorate of 
Investigation. Its new responsibilities are to formulate and implement policies, provide technical guidance in 
the field of investigation, prevention, settlement of disputes, and evaluation of IP infringement.  WT/TPR/S/401 • Indonesia  
 
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  can be reported through the DGIP online. Concerns were expressed that counterf eiting and piracy 
continues to be pervasive , and IP enforcement remains weak.324  
3.231.   Provisions to combat IPR infringements did not change over the review period. They are as 
follows:  
• a request may be filed with the Commercial Court to issue a provisional deci sion in order 
to (i) prevent the entry of products allegedly infringing IPR or related rights; ( ii) secure 
evidence  of infringement  and its elimination by the infringer; ( iii) recall from distribution, 
confiscate, and store for permissible evidence in rela tion to IPR infringement or related 
rights; and/or ( iv) stop the infringement to prevent greater loss325; 
• a lawsuit may be filed with the Commercial Court against an IPR infringement. A request 
may be made to ( i) confiscate the infringing goods or the resul t of reproduction of the IP  
object ; (ii) issue an order for the delivery of all or part of the income generated from the 
infringement; and ( iii) issue an order to stop any activities or publishing and/or 
reproduction of works or goods that resulted from th e IPR infringement ; and  
• the infringement may be reported to the police and/or a DGIP civil servant investigator.  
3.232.   MLHR Decision No. M.HH -01.H1.07.02 of 2015 provides guidelines to civil servant 
investigators on the management of investigations related to IP criminal offenses. It has provisions 
on: taking and registering reports; admissible evidence in IP criminal offen ces; investigation 
procedures ; and mediation processes.326  
3.233.   Maximum penalties for IP infringements are set out in Table 3.2 7. 
Table 3.27 IP Penalties, 2020  
Legislation  Penalties  
Copyright Law (Article 113(4))  Maximum IDR 4 billion fine. Maximum ten -year prison sentence  
Patent Law (Article 163(2))  Maximum IDR 3.5 billion fine. Maximum ten-year prison sentence.  
 
Industrial Designs Law 
(Article  54(1))  Maximum IDR 300 million fine. Maximum four -year prison sentence  
Trademarks and Geographical 
Indications Law (Article 
100(3))  Maximum IDR 5 billion fine. Maximum ten -year prison sentence.  
 
Layout Designs of Integrated 
Circuits  Law Maximum IDR 300 million fine. Maximum three -year prison sentence.  
Trade Secrets  Law Maximum IDR 300 million fine. Maximum two -year prison sentence.  
Plant Varieties  Law Maximum IDR 2.5 billion fine. Ma ximum seven -year prison sentence.  
Source:  DGIP Viewed at: https://dgip.go.id/produk -hukum -ki. 
3.234.   In the context of this Review , the authorities indicated that , over the period January 2015 
to mid-April 2020, 227 original suits of IP cases were appealed to the Supreme Court ; of these, 
80 were subject to judicial review. The authorities indicated that recent IPR enforcement -related 
activity included: campaigns and  prevention measures; counterfeit production raids, seizures and 
fines; border enforcement (see below); and cases resolved through mediation. The authorities 
reported that , over the period 2014 -19, a total of 41 raids were undertaken, 32 of which involved 
seizures. Of these raids , 25 related to trademarks, 8 to industrial designs, 5 to copyright, and 3 to 
patents. Over the period 2016 -19, the DGIP mediated in 17 cases , 5 of which  were resolved. 
Additionally, in 2018, the DGI P's Directorate of Investigation and Dispute Settlement commenced 
the pre -emptive program me of IP, by issuing recommendations to the Ministry of Communication 
 
324 USTR, 2020 Special 301 Report . Viewed at: 
https://ustr.gov/sites/default/files/2020_Special_301_Report.pdf . 
325 Article 106 of the Copyright Law (No. 28 of 2014); Article 155 of the Patent Law (No. 13 of 20 16); 
and Article 94 of the Trademark and Geographical Indication Law (No. 20 of 2016).  
326 MLHR Decision No. M.HH -01.H1.07.02 of 2015. Viewed (in Bahasa Indonesia ) at: 
https://dgip.go.id/images/ki -images/pdf -files/kepmen/kepmenkumham -ttg-juklak -manajemen -penuidikan -
tindak -pidana -di-bidang -ki.pdf . WT/TPR/S/401 • Indonesia  
 
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  and Informatics to block access to websites infringing IP.327 From January 2018 to 
end-February  2020, it recommended closing 604 websites.  
3.235.   Chapter X of the Customs Law provides for border measures to be taken with respect to 
trademark and copyright violations, on imports (as required by TRIPS) and exports. At the request 
of the trademark or copyright h older, the Chairman of the Commercial Court may issue a warrant 
to Customs to temporarily suspend the release of imported goods into, or exported goods from, 
Indonesia, based on sufficient evidence of IPR violations. There were no amendments to these 
provisions over the review period. The DGCE  also has the authority to seize suspected infringing 
goods at the border , under  the Customs Law, GR No. 20 of 2017 , and MoF Regulation No. 40 of 
2018.  
3.236.   Over the review period, to implement provisions under the Customs  Law, GR No. 20 of 2017 
on Controlling Import or Export of Goods Suspected of Infringing or Derived from Intellectual 
Property Infringement was issued. It contains provisions on: procedures to control the import or 
export of goods suspected of infringing I PRs or derived from IPR infringement; IPR recordation; 
affirmative action; notice of suspension; exception of suspension; and termination of suspension.328 
In June 2018, MoF Regulation No. 40/2018 entered into force , to implement certain provisions of 
GR 20/2017, including recording IPR; affirmative action ; notice of suspension ; exception of 
suspension ; and termination of suspension.329 This allows Customs to suspend goods suspected of 
infringing IPRs through an ex officio  scheme based on IPR data recorded by  rights holders.330 
3.237.   The DGCE inaugurated a system (called CEISA HKI DJBC) to provide facilities for right 
holders recording their IPRs. It is interlinked between  the DGCE, the DGIP, the Supreme Court , and 
the Commercial Court , and its features include autom atic push notifications in terms of suspension 
of goods which infringe IPRs.  
3.238.   The authorities reported that , since 2013, the DGCE has suspended the release of 
two suspected IPR infringing goods with a value of IDR 1 billion: abrasive paper (in 2019) and 
ballpoint pens (2020).  
 
 
 
 
327 The regulatory basis for this action is Joint Regulations of the Mini ster of Law and Human Rights and 
Minister of Communication and Information Technology No. 14 of 2015 and No. 26 of 2015 on Closing Down 
Content and/or Access Rights of Users to Copyright and/or Related Rights Infringement in Electronic System.  
328 GR 20/2017 . Viewed at: 
https://peraturan.go.id/peraturan/view.html?id=11e75555ecff76f4a3aa303831353139 . 
329 MoF Regulation. No 40/OMK.04/2018 on Recordation, Affirmative Ac tion, Warranty, Temporary 
Suspension, Monitoring and Evaluation to Control Import and Export of Goods Suspected of Infringing or 
Resulting from Intellectual Property Infringement. Viewed at: 
http://peraturan.go.id/common/dokumen/bn/2018/bn521 -2018.pdf . 
330 Tilleke and Gibbins (2018), Indonesia Issues New Implementing Regulation for Customs Recordal . 
Viewed at: https://www.tilleke.com/resources/indonesia -issues -new-implementing -regulation -customs -
recordal . WT/TPR/S/401 • Indonesia  
 
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  4  TRADE POLICIES BY SECTOR  
4.1.  During the review period, various trade -related policy developments affected several activities, 
with government intervention in both border measures and domestic support. Agriculture continues 
to be centred on rice, palm oil, oil palm fruit , and palm kern els, and policy objectives include 
self-sufficiency in staple foods. Tariff protection for agricultural products rose , and restrictive import 
licensing requirements for several products remain in place. Export taxes, prohibitions, and licensing 
requirement s continue to affect certain unprocessed products. State involvement in agricultural 
activities persists , and tax and non -tax policy instruments continue to be used for raising agricultural 
output, productivity and competitiveness. Fisheries' GDP contribut ion increased , and non -tax 
incentives are mostly focused on small fishers , with virtually all involving grants; subsidized diesel 
is limited to boats of less than 30 gross tonnes ( GT). Action was taken, inter alia,  to address 
deforestation; the export of r oundwood and rough sawn timber for all species remains banned , to 
protect domestic wood -processing industries , and timber legality certification was improved.  
4.2.  Mining and energy continued to make relatively significant contributions to the economy. 
Export t axes and restrictions on minerals continued; a 2014 ban on exports of unprocessed minerals 
was relaxed , subject to certain conditions. Mineral and coal sales benchmark prices remain in place; 
coal was subject to special pricing, and transport/insurance (implementation pending)  requirements. 
A new form of production -sharing contract , based on gross production split , replaced the 2008 
cost-recovery scheme. Significant changes to the fuel subsidy policy allowed for considerable 
reduction in the entire energy s ubsidy bill. The scope of the electricity subsidy was also reduced, 
thus lowering the subsidy amount disbursed; electricity tariffs continue to differ , depending on the 
end-user, thus retaining a cross-subsidization element. Action was taken to address new and 
renewable energy source challenges , including electricity tariffs and pricing, and the mandatory 
biodiesel policy.  
4.3.  Manufacturing remains an important primary production -dependent activity; the Making 
Indonesia 4.0 policy seeks global competitiveness in five target industries. Tariff protection for 
manufacturing increased considerably. Several non -tariff measures continue to protect domestic 
producers , ensure supplies for domestic processing , and promote their exports. Tax and non -tax 
incentives , including tax allowances, tax holidays and subsidized credit , remain in place. The 
garment, textiles and footwear industry benefited from increased tariff protection , and an additional 
export performa nce-linked tax incentive. Similarly, tariff protection to the automotive sector was 
raised considerably , and incentives were introduced to facilitate consumers' shift to alternative -fuel 
vehicles and the establishment of an electric vehicle (EV) industry.  
4.4.  The contribution of services to GDP rose gradually over the review period, from 42.6% in 2013 
to 46.1% in 2019. While Indonesia saw positive services export growth in all but two  years during 
this period, it maintained a small trade deficit in services. T he main services activities are wholesale 
and retail trade; transport and storage; finance and insurance; and information and communication. 
In 2016, FDI restrictions in various services sectors were eased.  
4.5.  Indonesia maintained financial sector stability throughout the review period, including in the 
wake of the COVID -19 pandemic. Notable developments in the banking sector included the launch 
of an integrated electronic payment system network, a financial information services system, and 
increased bank tra nsparency provisions. Various regulations were also issued, to support the 
development of the Fintech segment. A new insurance law entered into force in 2014 which, together 
with its implementing regulations, inter alia , tightened restrictions on foreign o wnership and 
introduced a single -presence policy. In the telecommunications sector, the Government recently 
completed construction of a nationwide, high -speed, fibre -optic Internet network, the Palapa Ring. 
To support the transport sector, the Government i ntroduced new VAT facilities and import tax 
reductions. It also extended assistance to the airline sector, to mitigate the impact of the COVID -19 
pandemic. New developments in the tourism sector included efforts to develop the international 
medical tourism  segment; a major expansion in the number of countries eligible for visa -free travel 
to Indonesia; measures to encourage cruise -liner visits; efforts to increase the sustainability and 
quality of tourism businesses; and the announcement of support measures  specifically to mitigate 
the impact of COVID -19 on the tourism industry. The retail e -commerce segment grew rapidly over 
the review period, and a new regulation was issued in 2019 to govern the e -commerce marketplace 
and e -retail practices. In line with t he Government's E -Commerce Roadmap for the period 2017 -19, 
government measures to support SME e -commerce activities were initiated.  WT/TPR/S/401 • Indonesia  
 
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  4.1  Agriculture, Forestry, and Fisheries  
4.1.1   Features  
4.6.  Agriculture continues to play an important role in the economy . However,  its contribution to 
GDP (including forestry and fishing) declined slightly , from 13.7% in 2013 to 13.3% in 2019 
(Table  1.2). Its share in total employment is estimated to have dropped from 34.8% in 2013 to 
27.3% in 2019 (Table 1.2), suggesting some improvement in labour productivity due to agricultural 
mechanization but , according to the Asian Development Bank (ADB) , this may not entirely be the 
case.1 According to the ADB, growth in agricultural labour productivity appears to have been 
relatively slow because of limited value addition in agriculture, slow diversification in the agricultural 
export base, and inadequate employment creation in non -agricultural sectors.2 In addition, 
according to the authorities , poor infrastructure (damage of the irrigation netwo rk) and financing 
(lack of access to capital) also affected farmers' access to markets and inputs. Efforts are being 
undertaken to address these challenges , with increased investment to modernize and make more 
efficient the agriculture sector (Section 4.1. 4).  
4.7.  The agricultural sector consist s of large plantations (both state -owned and private) and 
smallholder production. Large plantations tend to focus on export commodities (palm oil and rubber), 
while smallholders produce rice, soybeans, corn, fruit and ve getables .3 Between 2013 and 2019 , the 
number of  large plantations increased from 1,601 to 2,165 for oil palm and from 315 to 329  for 
natural rubber , whereas those of sugar decreased from 97 to 86. Large plantations cultivated export 
crops on about 15% of the total agricultural area, but the majority of farmers (68%) were 
smallholders operating on less than 1 ha. Given the prevalence of several climatic zones, agriculture 
remains highly diversified.4 During the review period, achievements included the installation of new 
irrigation infrastructure and other farm techniques, as well as the expansion and rehabilitation of 
agricultural land. Increasing rates of fertilizer use boosted production, leading t o high values of food 
production per hectare and productivity per working day, highlighting a shift to more intensive crop 
farming. Export s of commercial crops considered to have market value and demand benefit from 
government support (Section 4.1.4) and a ttract private domestic and foreign investments. However, 
the value of annual crop production remains low , and only 10% of smallholders practice a high level 
of mechanization.5 As at 2015, the smallholders' main development constraints included a high sha re 
of income spent on food and agricultural inputs which , in turn , limited their potential to sustainably 
re-invest ; credit  limitations ; weak infrastructure; declining farm sizes due to demographic 
pressure s; and missing linkages between input and output m arkets.6 
4.8.  In terms of value of production  (Table 4.1 ), rice (Section 4.1.5) is the most important product , 
at USD  54.4 million in 2016 , representing over one third of the total value of agricultural production . 
Palm oil, oil palm fruit and palm kernels , together , were valued at USD 36 million , meaning that, 
along with rice, they accounted for nearly two  thirds of the total value of production. Other major 
crops include maize, chilies and peppers (green), cassava , and bananas. The main animal products 
are he n eggs and chicken meat. In global  terms, Indonesia is an important producer of several 
agricultural products. In 2018, it was the world's biggest producer of palm oil, oil palm fruit, and 
palm kernels , and first or second for several spic es, including clo ves, cinnamon, nutmeg and vanilla.7  
 
1 According to the ADB, excess agricultural labo ur remain s in the agriculture and rural sectors, often 
disguis ing unemployment.  ADB, Policies to Support Investment Requirements of Indonesia's Food and 
Agriculture Development During 2020 -45. Viewed at: 
https://www.adb.org/sites/default/files/publication/534336/indonesia -food-agri-development -2020-2045.pdf .  
2 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agricu lture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/files/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
3 Indonesia Investments, Agricultural Sector of Indonesia . Viewed at: https://www.indonesia -
investments.com/culture/economy/ge neral-economic -outline/agriculture/item378 . 
4 The humid , tropic al climate , with regular rainfall during the monsoon season , offers potential to 
produce rice, while the more temperate highland areas provide conditions for the growing of cash crops, such 
as coffee, tea, spices, palm oil, fruit and vegetables. Lowland and upland cropping are the two farming systems 
that are most commonly practiced by smallholders, while a third system, the perennial crop farming system, is 
mainly used by larger estates, growing export crops . FAO, Small Family Farms Country Factsheet . Viewed at: 
http://www.fao.org/3/i8881en/I8881EN.pdf . 
5 FAO, Small Family Farms Country Factsheet . Viewed at: http://www.fao.org/3/I8881EN/i8881en.pdf . 
6 FAO, Small Family Farms Country Factsheet . Viewed at:  http://www.fao.org/3/i8881en/I8881EN.pdf . 
7 FAO, Food and agriculture data . Viewed at: http://www.fao.org/faostat/en/#home . WT/TPR/S/401 • Indonesia  
 
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  Table 4.1 Agricultural production by main item, 2013 -18 
  2013  2014  2015  2016  2017  2018  
Total value of production   139,349  135,108  130,036   137,479  .. .. 
Rice, paddy  '000 ha  13,835  13,797  14,117  15.156  15,712  15,995  
 '000 tonnes  71,280  70,846  75,398  79,355  81,149  83,037  
 USD '000  52,690  49,576  51,924  54,359  .. .. 
Palm '000 ha  7,080  8,150  8,630  6.781  6,720  6,777  
Oil palm fruit  '000 tonnes  120,000  138,702  148,709  115,963  114,617  115,267  
 USD '000  14,750  17,273  15,100  17,775  .. .. 
Oil, palm  '000 tonnes  27,782  29,278  31,070  31,488  34,940  40,567  
 USD '000  16,529  18,068  14,829  16,249  ..  
Palm kernels  '000 tonnes  7,530  8,110  7,770  8,850  9,890  10,330  
 USD '000  2,491  2,505  2,238  2,305  .. .. 
Maize  '000 ha  3,822  3,837  3,787  4,444  5,533  5,680  
 '000 tonnes  18,512  19,008  19,612  23,578  28,924  30,254  
 USD million  6,168  5,880  5,534  6,267  .. .. 
Chilies and peppers, green  '000 ha  250 264 256 260 310 309 
 '000 tonnes  1,733  1,882  1,915  1,962  2,359  2,542  
 USD million  4,049  4,229  4,142  4,279  .. .. 
Eggs, hen, in shell  '000 tonnes  1,224  1,244  1,373  1,486  1,527  1,644  
 USD million  6,962  6,699  6,602  7,076  .. .. 
Chicken meat  '000 tonnes  1,878  1,989  2,031  2,301  2,258  2,544  
 USD million  6,937  6,536  6,101  6,919  .. .. 
.. Not available.  
Source:  FAO, Food and agriculture data . Viewed at: http://www.fao.org/faostat/en/#home .  
4.9.  During the review period, the share of agriculture (including food and agricultural raw material s 
under SITC Rev.3 definition) in total merchandise exports rose slightly , from 23.7% in 2012 to 
25.7% in 2019 (Table A1. 3). Palm oil is the main agricultural export , representing over 40% of total 
agricultural exports . However,  its share declined from 2012 to 2019, mainly due to increased exports 
of tobacco products and cocoa. Imports of agricultural products also increased , from 10.9% of total 
imports in 2012 to 1 3.4% in 2019 (Table A1. 4); imports are much more diverse than exports , 
although the top five  (wheat, oilcake, sugar, cotton , and soybeans) represent 35% of total imports.  
4.10.   Since 2008 , when the price of food commodities peaked, Indonesia has emphasized food 
security, self -sufficiency and food sovereignty; the authorities indicated that they maintain a 
commitment for 90% of the s upply of staple food and protein sources to be produced domestically. 
Under the Food Law of 2012 , priority was given to domestic production of staple foods , with 
self-sufficiency targets for rice, maize, soybeans, sugar , and beef. The programmes to achieve  this 
target have not changed since 2014 (Section 4.1.2). In 2015, it was reported that the dates by 
which self -sufficiency was to be achieved had been revised , to 2017 for rice, maize and soybeans 
and to 2019 for beef and sugar. According to the authoriti es, as at June 2020 , rice production had 
fulfilled the domestic consumption, whereas corn, soybean, sugar and beef self -sufficiencies had not 
been reached.  The effectiveness of the rice programme , in particular , has been questioned , as 
promoting production  through price support also results in high prices and exacerbate s 
undernourishment , while other elements of the programme do not compensate for these  effect s.8 
Furthermore, despite rising trends in food production and availability, and in household incom es, 
access to food remains unequal , and food insecurity remains  a problem for some households.9 During 
the review period, the authorities developed policies to address this issue (Section 4.1.2).  
4.1.2   Policy, regulatory and institutional developments  
Policy a nd institutional framework  
4.11.   During the review period, the wider agricultural policy framework was largely based on the 
2015–19 National Medium -Term Development Plan (RPJMN). Its policy objectives included food 
 
8 OECD, Indonesia . Viewed at: www.oecd.org/indonesia ; and OECD (2015), Indonesia Policy Brief – 
Agriculture , March https://www.oecd.org/policy -briefs/indonesia -agriculture -improving -food-security.pdf . 
9 In 2018, Indonesia rank ed 65th among 113 countries in the Global Food  Security Index , below its 
ASEAN peers , such as Singapore (1st), Malaysia (40th), Thailand (54th), and Viet Nam (62nd). In addition, in 
2018, t he poverty level  was still high by ASEAN standards, with nearly 26 million people (9.8%) below the 
poverty line.  ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture 
Development During 2020 -45. Viewed at: 
https://www .adb.org/sites/default/files/publication/534336/indonesia -food-agri-development -2020-2045.pdf . WT/TPR/S/401 • Indonesia  
 
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  sovereignty; self -sufficiency in the staple fo ods of rice and maize; and increased production of other 
staple food products (soybeans, sugar and beef).10 The 2015 –19 RPJMN promoted: the rehabilitation 
of 3 million ha of irrigated land; development of 1 million ha of new irrigation systems; adoption of  
sustainable approaches to farming on displaced and marginal land; development of farm roads; 
increased adoption of environmentally friendly technologies for food crops; improved  farmer welfare; 
farmer protection through agricultural insurance; increas ed productivity; increased quality of 
agricultural products for exports; development of the processing industry, especially in rural areas; 
and increase d exports of agricultural products. Water security was also a central pillar of the Plan, 
focusing on : impro ving land -use planning and management; rehabilitatin g degraded land; increasing 
water storage, including the construction of 49 new dams; reducing flood area s by 200,000 ha; and 
improving water quality. The Medium -Term Development Plan is the third phase o f the Long -Term 
Development Plan (RPJPN) 2005 -25 (Section 2.2.2); it indicated that outlays of approximately 
IDR 3,596.2 trillion would be required from the State Budget to finance the RPJMN 2015 -19.11 The 
RPJMN 2020 -24 setting the latest policy objectives  has been  in place since January 2020 ; as at 
July 2020, its full version  was available in  the Bahasa  Indonesia  language only (Section 2.2.2).  
4.12.   On a strictly sectoral basis, Indonesia's first long -term agricultural development plan, the 
Grand Stra tegy of Agricultural Development 2013 –45, is aimed at promoting a sustainable 
agriculture industry.12 In the medium -term, and in line with the RPJMN, the Strategic Plan of the 
Ministry of Agriculture (MoA) 2015 –19 had the overall objective of achiev ing food sovereignty and 
enhanc ing the welfare of farmers. Accordingly, the MoA (see below) focused on extensive investment 
in infrastructure, extension services , and adaptation to environmental risks.  Under  the 2020 -24 
development agenda, the authorities aim to shift from supply -driven to more demand -driven 
agriculture development. Agricultural production would be determined by consumption needs , to 
fulfil a Desirable Dietary Pattern (DDP score 95.2 in 2024), build a resilien t food system, and 
encompass  the susta inable development goal  (SDG) target in the national target. It is to focus on 
five major program mes, consisting of: increas ed food security by considering eco -friendly agriculture 
and food safety; increased production focus on rice, corn, soybean s, meat, chilis, and shallots; 
increased productivity, improved welfare of agricultural human resources; increas ed sustainability 
of the productivity of agricultural resources; and development of farming enterprise corporations, 
complete with digital -based supply c hains.  
4.13.   Under the Upsus Pajale  2015-17 special effort programme for food self -sufficiency on 
three  commodities (rice, maize and soybeans), the authorities aimed to raise production and 
productivity by increasing the amount of fertilizer and seed subsidies; providing pre - and 
post-harve st machinery; and improving irrigation infrastructure by building new dams, and 
maintaining existing dams and irrigation canals.13 The MoA has been  implementing the programme 
with the help of provincial and local governments, and monitor s additional plante d areas of rice and 
maize weekly and monthly. The Government assigned the SOE Perum BULOG to improve rice 
procurement systems in this area.  In 2015, IDR  41.2 trillion was allocated to this item, of which 
IDR 16.9 trillion came from funds saved from cutting  fuel subsidies (Section 4.2.2. 1.2 and 4.2.2.3 ). 
In 2016 , budgetary outlays stood at around IDR 38.9 trillion ; in 2017 , around IDR  42.2 trillion ; and, 
in 2018 , around IDR 47.1 trillion. Since  2016, the MoA has been also implementing the Upsus Siwab 
Program  (Special Effort of Mandatory Breeding Cattle) , with free services to cattle breeders , 
including artificial insemination, and monitoring schemes with the objective of achieving livestock 
self-sufficiency.14 Budgetary outlays for th is Program stood at IDR 5 22.0 million in 2017, 
IDR 429.8  million in 2018 , and IDR 328.4 million in 2019. In 2020, the Directorate General of 
 
10 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/files/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
11 Presidential Decree No. 2/2015 on National Medium -Term Development Planning 2015 -19. Viewed at:  
https://www.bappenas.go.id/id/data -dan-informasi -utama/dokumen -perencanaan -dan-pelaksanaan/dokumen -
rencana -pembangunan -nasional/rpjp -2005-2025/rpjmn -2015-2019/ ; Ministry of Industry , Facts and Figures , 
2017. Viewed at: https://kemenperin.go.id/majalah/11/facts -and-figures -industri -indonesia . 
12 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/files/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
13 Investor Daily.  Viewed (in Bahasa Indonesia) at: https://investor.id/agribusiness/upsus -pajale -
program -swasembada -pangan -tiga-komoditas ; ADB , Policies to Support Investment Requirements of 
Indonesia's Food and Agriculture Development During 2020 -45. Viewed at: 
https://www.adb.org/sites/default/fi les/publication/534336/indonesia -food-agri-development -2020-2045.pdf . 
14 MoA. Viewed (in Bahasa Indonesia) at:  
https://www.pertanian.go.id/home/?show=news&act=view&id=1775 . WT/TPR/S/401 • Indonesia  
 
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  Livestock and Animal Health launched the Mainstay Commodity Buffalo Cow Sikomandan policy , to 
intensify breeding program me for cattle and bu ffalo; the target of cattle births due to artificial 
insemination and natural breeding processes is 4.1 million  calves in 2020.  
4.14.   Since  2016, a government assistance program me, Registration for Growing Young Agricultural 
Entrepreneurs ( Penumbuhan Wirausahawan Muda Petani  (PWMP )), monitored by the MoA, aimed at 
increas ing production, productivity, and quality of food crops to advance agriculture and food 
self-sufficiency , has been in place.15 The assistance provided under the programme  is in the form of 
agriculture "award s" (money); other financial aid; grants  for agricult ure extension; agricultur al 
machinery; and infrastructure/material s to establish farming area s. The PWMP is run by the 
Indonesian Agency for Agricultural Extension and Human Resources Development  (Badan PPSDM 
Pertanian ). 
4.15.   During the review period, policy fo cus also included food and nutrition concerns. The 
third National Plan of Action on Food and Nutrition (2011 –15) recognized stunting as a significant 
nutritional problem. Its three main objectives were as follows: reduce the number  of undernourished 
childr en under five  years of age  to 15.5%; decrease the number  of short children under five  years 
of age  to 32%; and achieve food consumption of 2,000 Kcal/person/day. Indonesia joined the 
Scaling -Up Nutrition (SUN) Movement , and developed the SUN Framework to s trengthen food 
sovereignty and self -reliance. The fourth National Plan of Action on Food and Nutrition (2017 –19) 
included the attainment of SDGs (see below) and the outcomes of the second International 
Conference on Nutrition.16 Its main objective was to a chieve an educated, healthy, productive, and 
competitive community , through five main pillars of action: improvement of community nutrition; 
increased food accessibility; improvement of food quality and safety; increased hygiene and healthy 
life behaviour;  and coordination of food and nutrition development.  
4.16.   Indonesia is a n FAO priority country for support. It benefits from policy support , specifically 
in the development of an integrated approach to agriculture and food security to reach the SDGs.17 
The foc us is to develop an agricultural policy , based on a coordinated approach, to avoid overlap 
and conflict among the policies of different ministries and institutions that can result from the use 
of different definitions, measurements and methodologies.  The M oA, with the assistance of the FAO, 
has committed to integrat ing agricultural data in provinces and districts , in collaboration with 
Statistic Indonesia. The objective is to increase  the availability of accurate data , based on  the facts 
on the ground , so as to  develop appropriate agricultural development programmes and policies to 
achieve national targets as set out in the RPJMN.  
4.17.   In line with its commitment under the United Nations Convention of Biological Diversity, the 
Indone sia Biodiversity Strategy and Action Plan for 2015 -20 addresses biodiversity management , 
with a focus on strengthening productivity, national competitiveness and economic self -sufficiency.18 
To make agriculture, forestry and fisheries more productive and s ustainable , the Plan proposes : 
expansion and sustainable management of lands for agriculture, plantations and animal husbandry; 
improvement of production and productivity of environmentally friendly agricultural products; 
increased production and productiv ity of sustainable plantation crops; development of a n 
environmentally  friendly horticultural plant protection system; improvement of the quarantine 
system and its quality for agricultural, animal, and fisheries products ; security of biodiversity; 
developm ent of a forestry plan and improvement of forestry areas; and sustainable management of 
protected forest s. In order to enable more inclusive and efficient agricultural and food systems , 
actions are directed to wards  support ing the biodivers e trading system , by developing a standard on 
the sustainable trading of biodivers e products; set ting up a cooperative model among stakeholders , 
taking into  consider ation the existential security and identity of Indonesian biodiversity and the 
utilization of all resources;  and improv ing human resources and science and technology that support 
the utilization of biodiversity as a source of people's welfare.  
 
15 The PWMP is regulated by the MoA Act. No. 46 of 2017 . 
16 FAO, Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
17 FAO, Indonesia is moving forward for integra ted agricultural and food security statistics to end 
hunger . Viewed at: http://www.fao.org/indonesia/news/detail -events/en/c/1259895/ . 
18 FAO, Indonesia Biodiversity Strategy and Action Plan . Viewed at: 
http://www.fao.org/faolex/results/details/en/c/LEX -FAOC176625 . WT/TPR/S/401 • Indonesia  
 
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  4.18.   The MoA and its departments remain responsible for policy formulation and implementation , 
in coordination with other ins titutions and relevant stakeholders , and the  develop ment and 
improve ment of  production so as to ensure food security. Its mandate includes taking primary 
responsibility for coordinating and facilitating agricultural production by smallholder producers , and 
working with agribusiness associations.19 The MoA's National Food Security Agency , set up in 2005, 
inter  alia, deals with the development of food availability and the handling of food insecurity; 
food-price, distribution and stability systems; diversity in consumption , and food safety; and 
management  of, and technical support to , the food security agency.20 The Cooperative Farmers, a 
profit -oriented organization developed by the MoA in 2018, aims to encourage  small -scale farmer 
productivity and mak e them self -sufficient; they are assisted in the  formation of  farmer groups , with 
members having different capabilities, technologies, and levels.21 The initiative to set up Cooperative 
Farmers was enacted by MoA Regulation No. 18/2018 , with some areas designated as the pilot 
project (Demak  - rice, Indramayu – rice, Bandung – coffee and vegetables, and Subang – rice); 
according to the RPJMN 2020 -24, 350 Corporate Farmers will be established by 2024.   
Regulatory frame work  
4.19.   During the review period, the regulatory framework governing agriculture was updated in 
several areas (see below). In line with the provisions of Presidential Regulation (PR) No. 91 of 2017 
concerning the Acceleration of Business Enforcement Deregulat ion undertaken by the MoA , 
15 regulations were streamlined into one, and 140 MoA regulations were revoked. In addition, 
regulatory initiatives to speed up agricultural business permit services were also carried out.22 PR 
No. 91 of 2017 also mandates the Mo A to formulate and implement broader agricultural development 
strategies; produce agricultural products that have higher economic value; and protect farmers and 
provide options (crops) to increase their income. MoA Regulation No. 45 of 2019, which elaborat es 
PR No. 91 of 2017, streamlined (50 regulations revoked) and integrated agricultural business permit 
services , with the online single submission system (Section 2.4).  
4.20.   Under Law No. 19 of 2013 on the Protection and Empowerment of Farmers , requirements fo r 
agricultur al activities to benefit from financial assistance were set out.23 The Law, inter alia,  covers 
agricultural infrastructure and facilities needed to develop a farm enterprise; protects farmers from 
price fluctuations, high -cost economic practice s, and crop failures; improves the capacity of farmers 
and farmers' institutions in running a productive, advanced, modern and sustainable farming 
enterprise; and develops an agricultural financing institution that serves the interests of farming 
enterpris es.24 In addition, it provides for marketing guarantees for agricultural products to farmers 
operating farming enterprises under government programmes; land and tax relief for productive 
agricultural lands cultivated on an ongoing basis; and realization of  agricultural market support 
facilities. The authorities indicated that , to comply with WTO -relevant provisions, they were drafting 
a revision of the Law; as at June 2020 , it was in the consultation process in Parliament.   
4.21.   PR No. 86 of 2018 on Agrarian Reform was issued to reduce inequality in land tenure and 
ownership , in order to create equitable justice; deal with agrarian disputes and conflicts; create a 
source of agricultural prosperity through land tenure, ownership, use  and utilization arrangements; 
create income -generating activities to reduce poverty; improve community access to economic 
resources; increase food security and sovereignty; and improve and maintain the quality of the 
environment.25 Regulations governing n ational food security were also issued , including PR No. 83 
of 2017 concerning the Strategic Policy for Food and Nutrition; Government Regulation (GR) No. 17 
 
19 Center  for International Forestry Research (CIFOR), Forest and land -use governance in a 
decentralized Indonesia . Viewed at: http://www.cifor.org/publications/pdf_files/OccPapers/OP -132.pdf . 
20 Food and Fertilizer Technology Centre for the Asian and Pacific Region  (FFTC -AP), Analysis of 
Indonesian Government Strategies to Food Security: Harnessing the Potential of Natural and Human 
Resources . Viewed at: http://ap.fftc.agnet.org/ap_db.php?id=1027 . 
21 FFTC-AP, FFTC Agricultural Policy Platform . Viewed at: http://ap.fftc.agnet.org/ap_db.php?id=949 . 
22 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/fi les/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
23 FAO, Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
24 FAO, Law No. 19 of 2013 on the Protection and Empowerment of Farmers . Viewed at: 
http://www.fao.org/faolex/results/details/en/c/LEX -FAOC16949 7. 
25 FAO, PR No. 86 on Agrarian Reform . Viewed at: http://www.fao.org/faolex/results/details/en/c/LEX -
FAOC188694 . WT/TPR/S/401 • Indonesia  
 
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  of 2015 concerning Food and Nutrition Resilience; and MoA Decree No. 11 of 2016 concerning 
Technic al Guidelines for Strengthening Community Food Distribution Institutions.26  
4.1.3   Border measures  
4.22.   During the review period, tariff protection for agricultural products rose; it remains slightly 
higher than the overall applied MFN average (10.1%, 2020) and the average for manufacturing. In 
2020, the simple average stood at 10.2% (9.5% in 2012) and 11.2% (10.5% in 2012) at HS and 
WTO-definition levels, respectively (Tables  3.2 and A3.1). In 2020, there was an average gap of 
37.6 (HS) or 38.6  (WTO -definition) perc entage points between bound rates in agriculture and the 
average MFN applied. Peak tariff rates up to 150% on some alcoholic beverages and odoriferous 
substances used in the food or drink industries continue to be applied (Table  A3.1). During the 
review pe riod, Indonesia did not open tariff quotas for full-fat milk and cream and their products , or 
for rice , as applied MFN tariffs remained below the bound in -quota tariff rates.27 Duty and tax 
concessions for imports of goods, seeds and seedling s for the construction/development of 
agriculture  and animal husbandry remain in place (Section 3.1.3.6).  
4.23.   VPTI inspection requirements continued to affect some agricultural products , including rice, 
sugar, horticultural products, food and beverages , and tobacco (Section  3.1.1.1). Restrictive import 
licensing requirements for animals and animal products, fishery products, feed corn, rice, sugar, 
horticultural products, cloves (until 2015), alcoholic beverages , and forestry products, inter alia,  
aimed at promoting self-sufficiency remain in place ; and WTO Members rais ed concerns thereon 
(Sections 2.3.1.1 and 3.1.5 , and Tables 2.4 and A3.4). It seems that an import quota of 
100,000  tonnes of water buffalo meat was issued for 2019, and BULOG has used 80% of it; no data 
on this measure was available from the authorities. A "5:1 feeder to breeder " requirement, which 
obliges importers to import one breeder for every five feeder cattle, c ame into effect in 
October  2016. Wheat flour was temporarily subject to safeguard action in 2014. Although Indonesia 
has reserved the right to use the special agricultural safeguard for 12 tariff lines (all dairy products) , 
it was not invoked for any produ ct in the period 2013 -18 (the most recent year of notifications) 
(Sections 2.3.1.3 and 3.1.6.2).  
4.24.   Export taxes on palm oil, crude palm oil and its derivative products, raw cocoa,  and leather 
remain in place (Section 3.2.2); changes involving the types and level of rates , including their 
implementation criteria , were made . Export prohibitions on fish eggs and fry, raw rubber , and certain 
wood products remain in place (Section 3.2.3.1). Export licensing requirements apply to: coffee; 
rice; palm oil ; crude pal m oil; banana s and pineapple s to Japan in the context of the IJ-EPA; animals 
and animal products; and forestry industry products (Section 3.2.3.2).  
4.25.   As at 2018, seven SOEs (e.g. BULOG, BUMN and BUMD) were involved in agricultural , forestry 
and fishing acti vities , including trading (e.g. feed corn, alcoholic beverages , and fertilizers 
(Section  3.3.5, Chart 3.5 and Table A3.4)); during the review period, BULOG continued its rice 
import operations to maintain a buffer stock (Sections 3.3.5.1  and 4.1.5).  
4.1.4   Domestic support measures  
4.26.   The authorities use tax and non -tax policy instruments to raise agricultural output, 
productivity and competitiveness. According to the most recent WTO notification on domestic 
support commitments, dated  October 2019 and covering  the calendar year 2018, the current total 
aggregate measurement of support (AMS) was zero.28 During the review period, rice remained the 
only item subject to market price support; this support increased from IDR 282,698 in 2013 to 
IDR 3.7 million in 2018.29 Total development programmes subject to special and differential 
treatment , involving investment and input subsidies (credit for purchase of , and subsidies for , feed 
and fertilizer , available to low -income or resource -poor producers of estate crops, foo d crops, 
horticulture , and livestock) , stood at IDR 44.9 million in 2018 (IDR 21.2 million in 2013); input 
subsidies accounted for 87.8% of this amount. Green box support stood at IDR 25.8 million in 2018 
 
26 FFTC-AP, Analysis of Indonesian Government Strategies to Food Security: Harnessing the Potential of 
Natural and Human Resources . Viewed at: http://ap.fftc.agnet.org/ap_db.php?id=1027 . 
27 WTO document G/AG/N/IDN/64, 15 October 2019.  
28 WTO doc ument G/AG/N/IDN/67, 17 October 2019 . 
29 WTO documents G/AG/N/IDN/67, 17 Oct ober 2019; and G/AG/N/IDN/53, 21 September 2018.  WT/TPR/S/401 • Indonesia  
 
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  (IDR 25.2 million in 2013); it consisted of infrast ructural services, domestic food aid, research, pest 
and disease control , and extension and advisory services.  
4.27.   According to OECD data, between 2011 and 2015 , Indonesia's producer support estimate, 
representing transfers to producers, increased from an est imated USD 19 billion to about 
USD 36 billion , equivalent to 4.2% of GDP (Table 1.2). Nearly all assistance was through market 
price support, much of which was the result of higher domestic prices compared to international 
prices for some agricultural prod ucts.30  
Tax incentives  
4.28.   GR No. 78 of 2019 increased the number of sectors in which businesses are eligible to apply 
for the corporate income tax allowance scheme (Section 3.3.1.1.1.1).31 Agriculture is among the 
sectors included in the expanded Regulation , with producers of selected commodities such as corn, 
soybeans, and fish being eligible for the tax incentives. VAT exemptions remain in place , and include:  
livestock; seeds from agriculture, plantations and forestr y; and animal and fish feed (and their 
ingredients) (Section 3.3.1.1.1.2 and Table 3.13). VAT is not levied  on various basic necessities 
(rice, grain, maize, sago, soybean s, salt, meat, eggs, milk,  fruit, and vegetables).  
Land concessions  
4.29.   The granting of land concessions to agribusiness investors remains an important policy 
mechanism for promoting agribusiness development. MoA Regulation No.  98 of 2013 offers guidance 
for investors to help smooth o ut the process for obtaining licences for plantation developments. It 
covers aspects of the process for acquiring permits , and other important aspects for plantation 
development , such as the area of land, and the type of management and processing capacity.32 
Indonesia's current forest and land governance systems allocate various responsibilities to district, 
provincial and national governments (Section 4.1.7). These include aspects of spatial planning, 
allocating licences for land concessions (such as for l ogging and mining activities, and oil palm and 
timber plantations), environmental safeguards, and budgets for environmental management.33  
4.30.   Under a Presidential Instruction, since 19 September 2018 , a three -year moratorium on new 
licences for oil palm plant ations has been in place.34 It explicitly applies not just to new requests for 
licences but also to projects that have obtained some , but not all , of the permits needed to begin 
operating. It also evaluates the operating plantations that do not meet some s tandards, including 
areas whose status was changed from forest land to other land uses and is to be reconstituted to 
forest land again , or constituted to high conservation -value forest (wherever the timber volume 
estimate is considerably high). The policy constitutes not just a freeze on new licences, but an order 
for the relevant central government ministries and regional governments to review oil palm licensing 
data.  
Inputs and irrigation  
4.31.   The authorities consider that , in addition to fertilizers and fee d, suitable and modern 
agricultural tools and machinery are necessary to improve the productivity of agricultural production. 
Budgetary outlays for subsidies for seeds and fertilizers increased , and were as follows: 
IDR 20.27 0 trillion (2013), IDR 22.635 t rillion (2014), IDR 35.278 trillion (2015), IDR 29.525 trillion 
(2016), IDR 33.306 trillion (2017), and IDR 37.721 trillion (2018). Around 15% -20% of the 
subsidized seeds were distributed by the state -owned PT Pertani and PT Shang Hyang Seri ; they 
mass-produce improved open -pollinated varieties, hybrid maize seed , and certified rice seeds for 
distribution to farmers. Around 50% of seed used by farmers is produced by large private companies. 
 
30 OECD. Viewed at: https://www.oecd -ilibrary.org/agriculture -and-food/data/oecd -agriculture -
statistics/agricultural -support -estimates -edition -2016_83ff9179 -en. 
31 GR No. 78 of 2019 on Income Tax Facility for Investments in Certain Business Lines and/or in Certain  
Regions . 
32 CIFOR, Forest and land -use governance in a decentralized Indonesia . Viewed at: 
http://www.cifor.org/publi cations/pdf_files/OccPapers/OP -132.pdf . 
33 Asia Foundation, Improving Indonesia's Forest and Land Governance . Viewed at: 
https://asiafoundation.org/resources/pdfs /ImprovingLandGovernanceIndonesia.pdf . 
34 Mongabay, Indonesian president signs 3 -year freeze on new oil palm licenses. Viewed at:  
https://ne ws.mongabay.com/2018/09/indonesian -president -signs-3-year-freeze -on-new-oil-palm-licenses/ . WT/TPR/S/401 • Indonesia  
 
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  The rest is produced by small growers , and distributed among themse lves. The SOE PT Pupuk 
Indonesia (Persero) and its 10 subsidiaries , spread across the islands of Java, Sumatra and 
Kalimantan , are the largest fertilizer producers in Asia , and produce subsidized and non -subsidized 
fertilizers. Budgetary outlays for agricu ltural equipment and machinery also rose , and were: 
IDR 322.239 billion (2013), IDR 288.705 billion (2014), IDR 3.108 trillion (2015), IDR  2.235 trillion 
(2016), IDR 3.766 trillion (2017), and IDR 5.487 trillion (2018).  
4.32.   To foster self -sufficiency and incr ease yields, fertilizer subsidies remain available to producers. 
In the mid -2010s, in terms of budgetary outlays, they were the largest farm -support programme , 
and accounted for around half of the agriculture budget.35 Budgetary outlays for fertilizer subs idies 
rose, and were as follows: IDR 17.620 trillion (2013), IDR  21.050  trillion (2014), IDR 31.320 trillion 
(2015), IDR 26.850 trillion (2016), IDR 28.840 trillion (2017), and IDR  34.009 trillion (2018) . These 
subsidies allow small -scale farmers with 2 ha or less of land to buy government -supported fertilizer 
at around 50% to 75% of the market price.  
4.33.   Upgrading and transforming irrigation systems remains a policy priority (Section 4.1.2).36 In 
2017, the au thorities allocated a budget of IDR 33.26 trillion for water resource development and 
management, a significant increase from the IDR 28.29 trillion allocated in 2016.37 In 2019, priorities 
included : building five new dams under central government jurisdic tion; improving the surface or 
gravity irrigation infrastructure under central government jurisdiction of 472.4 km; constructing 
nine other dams; and constructing groundwater irrigation infrastructure of 147 km. Furthermore, 
specific targets included 384,0 00 ha of irrigated land, swamp irrigation of 165,000 ha, and 
brackish -water irrigation of 29,000 ha; 970 km of irrigation canals and rivers normalized; and 
1,560  units of new water catchment built across the country. IDR 4 trillion was allocated to special  
allocation funds for irrigation infrastructure , via direct transfers to local governments , to support the 
national irrigation targets set out in the RPJMN for 2015 –19. These targets include d rehabilitating 
3 million  ha of irrigated land through the Irriga tion Improvement Program; developing new 
irrigation; and rehabilitating the irrigation infrastructure.  
4.34.   The 2011-16 Water Resources and Irrigation Sector Management Project –Phase II , under the 
Ministry of Public Works and Housing (MPWH), with a budget of I DR 253 billion supported by World 
Bank grants, intends to improve capacity -building and human resources for water resources 
management along the watersheds and irrigated areas, and to increase production and productivity 
in some regional rice production ce ntres.38 In addition, the Government set key performance 
indicators for irrigation systems in the MoA portfolio. In 2017, the MoA's irrigation targets consisted 
of: building tertiary irrigation to cover 100,000 ha of rice fields; expanding rice fields by 8 0,000 ha ; 
and providing direct subsid ies for 63,693 units of agricultural machinery and equipment. These 
targets were set to support specific programmes to optimiz e agricultural land and increas e the 
planted and harvested area for rice.  
Concessional loans  
4.35.   Indonesia continues to provide subsidized credit to low -income or resource -poor producers 
for the purchase of inputs (see above) and for cattle breeding , as well as KUR loans 
(Section  3.3.1.2).39 Kredit Usaha Pembibitan Sapi credit , with subsidized interes t rates , was 
provided by implementing banks to cattle -breeding businesses until 2015; the budgetary outlays for 
these subsidies were IDR 25.413 billion in 2013 and IDR 31.721 billion in 2014. According to the 
authorities, in 2015, a new credit lined under the KUR, was seemingly introduced, targeting farmers, 
livestock groups and livestock cooperatives breeding cows and buffalo. It allows for concessional 
loans, with: 3% annual interest rate; credit ceiling of IDR 2 billion; maximum duration of 10 years; 
 
35 FAO, Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
36 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www. adb.org/sites/default/files/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
37 ADB, Policies to Support Investment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/files/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
38 ADB, Policies to Support In vestment Requirements of Indonesia's Food and Agriculture Development 
During 2020 -45. Viewed at: https://www.adb.org/sites/default/file s/publication/534336/indonesia -food-agri-
development -2020-2045.pdf . 
39 WTO document G/AG/N/IDN/67, 17 October 2019.  WT/TPR/S/401 • Indonesia  
 
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  and a grace period of three years. In 2020 (until 3 March),  loans amounted to IDR 0.45 trillion 
(4.99% of the target of KUR Livestock Sub sector budget of IDR 9.01 trillion) and were accessed by 
13,573 debtors for productive business es in cattle breeding, dair y farming, dairy cattle, goats/sheep, 
poultry , and a combination of agriculture/plantation with livestock.  
Minimum prices  
4.36.   Price controls are in place for rice as well as some other basic necessities  (Sections 3.3.4.2 
and 4.1.5).   
4.1.5   Rice 
4.37.   Rice remains a strategic crop in terms of employment, cropland area allocated and food 
consumption, making it a top policy priority. It also generates important economic spill -over effects, 
supporting jobs in the millin g, trading, and food -catering sectors nationwide. Rice production is 
dominated by smallholder farmers , which  account for around 90% of total rice production, with an 
average land area per farmer of less than 0.8 ha.40 Around 85% of rice production comes fr om 
irrigated paddy fields.41 
4.38.   Indonesia remains the world's third largest rice producer and consumer (2019) and its 
thirteenth biggest importer.42 During the review period, domestic production ranged from 
35.5 million tonnes (2014) to 37 .0 million tonnes (2 017), consumption from 37.7 million tonnes 
(2019) to 38.5 million tonnes (2013) , and imports from 350,000 tonnes (2016) to 2.35 million 
tonnes (2018). Reportedly, import dependence is due to the use of non -optimal production 
techniques in combination with large, albeit declining, per capita consumption and climatic 
conditions.43 Per capita rice consumption was nearly 150 kg in 2017 ; it decreased to an estimated 
128 kg in 2018/19 due to an ongoing switch to wheat -based products.44 Production costs are the 
highest compared to some peers in Asia.45  
4.39.   The state -owned Perum BULOG continues to manage the Government's rice policy. It, 
inter alia, manages the Government rice reserve, maintaining a buffer stock of between one to 
one-and-a-half million metric tonnes pe r year, through purchases of domestically produced rice as 
well as imports. This reserve is used for: rice distribution to low income groups; market operations 
to maintain price stability at the producer and consumer levels; and emergency purposes, ASEAN 
reserves, and international cooperation and assistance.  
4.40.   In 2016, the authorities instructed the Central Bureau of Statistics (BPS) to collect and release 
rice-production data. The BPS, together with the Agency for Assessment and Application of 
Technology a nd other agencies, improved the calculation and collection of data on various stages of 
the rice production. The technology -based measurement is aimed at enhancing transparency, 
accuracy, and accountability of rice production data, to further help policyma kers and the private 
sector make better decisions concerning domestic supply, to minimize rice price volatility and 
shocks.46 According to the authorities, data is collected monthly, with GPS -enabled, 
geospatial -coordinated accuracy. This enables the manag ement of regional distribution of rice, 
 
40 Indonesia Investments , Rice. Viewed at: https://ww w.indonesia -
investments.com/business/commodities/rice/item183 . 
41 USDA, GAIN Report No. 1904 (2019) . Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Grain%20and%20Feed
%20Annual_Jakarta_Indonesia_3 -26-2019.pdf . 
42 Index mundi, Milled Rice. Viewe d at: https://www.indexmundi.com/agriculture/?commodity=milled -
rice&graph=total -supply . 
43 Indonesia Investments , Rice. Viewed at: https://www.indonesia -
investments.com/business/commodities/rice/item183 . 
44 USDA , GAIN Report No. 1904 (2019) . Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Grain%20and%20Feed
%20Annual_Jakarta_Indonesia_3 -26-2019.pdf . 
45 Muhammad Firdaus (2018), The Value Chain and Rice Price Policy in Indonesia , Department of 
Economics, Bogor Agricultural University. Viewed at: http://ap.fftc.agnet.org/ap_db.php?id=881&print= 1. 
46 World Bank. Viewed at: https://blogs.worldbank.org/eastasiapacific/uncooked -how-indonesia -
instituted -reforms -produce -reliable -rice-production -data. WT/TPR/S/401 • Indonesia  
 
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  production forecasting and import needs, and the early mitigation of pest attacks, floods, and 
drought.   
4.41.   During the review period, the main thrust of the rice policy remained virtually unchanged. 
Government intervent ion continues through border measures and domestic support measures.  
Border measures  
4.42.   Nominal tariff protection on rice items (HS1006) remained unchanged; in 2020, the MFN 
applied rate for all lines  is at IDR 450 per kg , with AVEs ranging from to 0.4% (hu sked rice) to 7.7% 
(broken rice) (30% in 2012) , and bound at 160% (Table A3.2).47  
4.43.   Restrictive import licensing requirements were reinforced in 2018; importers of rice to be 
used as a raw material were not allowed to import some forms of rice (HS codes 100 6.30.30, 
1006.30.40, and 1006.30.99) , as these products may only be imported by SOEs (Sections 3.1.5.1 
and 4.1.3). Furthermore, rice imports are restricted one month prior  to, during, and two months 
after the main harvest period.  
4.44.   BULOG is only allowed to import medium -quality rice, while private companies can import 
specialty rice (e.g. jasmine and basmati rice).48 The resale prices of the imported product are 
determined by considering the domestic rice price , in order to avoid market disruption. BULOG 
accounted for 69.4% (2012), nil (2013), 50.3% (2014), 94.8% (2015), 52.7% (2016) , and 0% 
(2017) of total rice imports.49  
Domestic support measures  
4.45.   Rice production continues to receive significant market price su pport , and fertilizer and other 
input subsidies, inter alia,  to address its  low competitiveness, ensure price stabilization , and maintain 
it in line with self -sufficiency objectives (Sections 4.1.2 and 4.1.4).50  
4.46.   As at the time of Indonesia's previous Revi ew, the SOE Perum BULOG ensures procurement 
by the Indonesian Government of domestic rice at prices set higher than international market prices 
(Section 4.1.4). BULOG can only buy paddy or rice from farmers when the market price is lower 
than, or equal to , the government purchasing price ( Harga Pembelian Pemerintah , HPP). The HPP 
reference prices for paddy and rice, and associated quality criteria are contained in MoT Regulation 
No. 24 of 2020.51 BULOG and government purchase prices are set out in Table 4.2 . BULOG's domestic 
purchases accounted for 9.3% (2012), 8.8% (2013), 5.9% (2014), 6.3% (2015), 6.5% (2016) and 
4.6% (2017) of total national domestic rice production.52 Domestic sales accounted for 10.9% 
(2012), 10.5% (2013), 9.9% (2014), 11.3% (2015), 8.2% (2016) and 6.8% (2017) of total national 
rice consumption.53  
 
47 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
48 FAO, Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
49 WTO documents G/STR/N/13/IDN; G/STR/N/14/IDN; and G/STR/N/15/IDN, 24 November 2014; 
G/STR/N/16/IDN, 1 November 2016; and G/STR/N/17/IDN, 19 September 2018.  
50 OECD, Indonesia . Viewed at: www.oecd.org/indonesia ; (2015) Indonesia Policy Brief – Agriculture , 
March . Viewed at: https://www.oecd.org/policy -briefs/indonesia -agriculture -improving -food-security.pdf . FAO, 
Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -i7696e.pdf . 
51 MoT Regulation No. 24 of 2020. Viewed at http://jdih.kemendag.go.id/peraturan/detail/1974/2 , 
replaces Presidential Instruction No. 5 of 2015. Viewed at: 
https://peraturan.bpk.go.id/Home/Details/77363/inp res-no-5-tahun -2015. 
52 WTO documents G/STR/N/13/IDN; G/STR/N/14/IDN; and G/STR/N/15/IDN, 24 November 2014; 
G/STR/N/16/IDN, 1 November 2016; and G/STR/N/17/IDN, 19 September 2018.  
53 WTO documents G/STR/N/13/IDN; G/STR/N/14/IDN; and G/STR/N/15/IDN, 24 November 2014; 
G/STR/N/16/ID N, 1 November 2016; and G/STR/N/17/IDN, 19 September 2018.  WT/TPR/S/401 • Indonesia  
 
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  Table 4.2 Rice price data, 2013 -19 
Year  Month(s)  Government 
purchase price 
at BULOG's 
Warehousea 
(IDR/kg)  Average retail 
price (IDR/kg)  Government 
purchase price 
to BULOGb 
(IDR/kg)  Benefit/  
losses  
2013 Jan-Dec 6,600  7,202  7,572  352 
2014 Jan-Dec 6,600  8,404  8,048  742.74  
2015 Jan-Feb 
Mar-Dec 6,600  
7,300  8,959  8,325  1,150.01  
2016 Jan-Dec 7,300  9,107  8,865  2,686.47  
2017 Jan-Dec 7,300  8,960  9,220  535.7  
2018 Jan 
Feb-Mar 
Mar-Dec 7,300  
8,760  
8,030  9,509  9,583  5,220.08  
2019 Jan-Dec 8,030  9,414  9,583  5,454.97  
a The government purchase price at BULOG's warehouse is the purchase price of rice by Perum 
BULOG to producers (farmers) across Indonesia in accordance with Presidential Instruction 5/2015.  
b  The government purchase price to BULOG is the government purchase pric e at BULOG's warehouse 
plus transportation, maintenance and storage costs, bank interest and company margins.  
Source:  Information provided by the authorities.  
4.47.   According to an external source, the average domestic price of medium quality rice exceeded 
the a verage world price over the period 2010 to mid -2018 by a big gap, inter alia , driven by 
restrictions on imports, increasing production costs including labour costs and land rental, and the 
high costs of transportation and marketing; this is considered to p ose a serious challenge to food 
price stability and food security in Indonesia.54 
4.48.   The decision on the level of rice imports by BULOG for public need is decided at the ministerial 
level coordination meeting led by the Coordinating Minister of Economic Affai rs. BULOG imports rice 
based on an import approval from the Ministry of Trade and a recommendation from the Minister of 
Agriculture. The mark -up (average import price minus average representative domestic sales price, 
in value and percentage) was estimated  to stand at USD  117/tonne or 18.4% (2012), 
USD 135/tonne or 24.2% (2013), USD  139/tonne or 27.6% (2014), USD  174/tonne or 38.4% 
(2015), USD  116/tonne or 23.7% (2016) and USD  115/tonne or 23.3% (2017).55  
4.49.   Until relatively recently consumer market prices fo r rice were determined by market forces, 
with the MoT instructing Perum BULOG to release stock to decrease prices (either release of domestic 
stock or foreign procurement) when consumer market prices increased by 10% or more. However, 
from August 2017, max imum retail prices (MRP) capping the retail price of rice have been enforced; 
reportedly, this measure led to market distortions in the rice market until 2018, when prices were 
stabilized.56 Since 2018, those for medium -quality rice have been capped at IDR  9,450/kg (for Java, 
Southern Sumatera, Sulawesi, and Western Lesser Sunda Isles), IDR 9,950/kg (for Kalimantan, the 
rest of Sumatera, and Eastern Lesser Sunda Isles), and IDR 10,250/kg (for Maluku and Papua), 
while those for premium -quality rice have been  capped at IDR 12,800/kg (for Java, 
Southern  Sumatera, Sulawesi, and Western Lesser Sunda Isles), IDR 13,300/kg (for Kalimantan, 
the rest of Sumatera, and Eastern Lesser Sunda Isles), and IDR 13,600/kg (for Maluku and Papua).   
4.50.   In 2018, BULOG distributed a total of 1.2  million tonnes of rice under the Rice for the Poor 
Programme (Rastra, formerly the Subsidized Rice for the Poor Programme ( Beras untuk Rakyat 
Miskin  (RASKIN))), and the Non -Cash Food Aid programme ( Bantuan Pangan Non Tunai  (BPNT) ) 
which started in 2017, initially targeting 1.28 million underprivileged families and then expanding to 
 
54 ADB (2019), Policies to support Investment Requirements of Indonesia's Food and Agricultural 
Development During 2020 -2024. Viewed at: https://www.adb.org/publications/indonesia -food-agriculture -
development -2020-2045.  
55 WTO document G/STR/N/17/IDN, 19 September 2018.  
56 MoT Regulation No. 127/2018 expanded the scope of market interventions to "large distributors" 
and/or BULOG's partners, to ensure the price stabilization for rice on the domestic mar ket; previously, this 
authority was given only to BULOG. MoT Regulations No. 57/2017 on Maximum Retail Prices (MRP) of Rice of 
24 August 2017, and No. 96/2018. USDA, GAIN Report No. 1904 . Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Grain%20and%20Feed
%20Annual_Jakarta_Indonesia_3 -26-2019.pdf .  WT/TPR/S/401 • Indonesia  
 
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  15.6 million families in 2019. Each targeted family under the regular Rastra programme receives 
10 kg of rice for free; until August 2019, RASKIN provi ded every poor household with 15 kg per 
month at 20% –30% of the market price.57 On average, the programme receives 30% of the social 
protection budget.58 Under the BPNT, the authorities deposit a total value of IDR  110,000 (USD  8.20) 
per month onto a purch asing card that can be used to buy rice and eggs commercially; the card 
recipients residing in 44 pilot project cities, expanded to 514 regencies/cities in 2019, can swipe the 
card at selected stores and receive rice and eggs to the sum of the given amount . In 2020, the BNPT 
was transformed into the Nine Basic Food Items Subsidy Program; this gives additional benefits for 
the targeted beneficiaries, in the form of increased amount of assistance (IDR 150,000/USD 10.58 
per month) and access to diverse nutriti ous food in addition to rice and eggs. Furthermore, a number 
of provincial and district/municipal governments allocate additional spending from the Regional 
Budget, to increase the number of targeted beneficiaries and to add items to the food package (othe r 
commonly consumed foods, protein, and vegetables/fruits).   
4.1.6   Fisheries  
4.51.   During the review period, fisheries' GDP contribution increased slightly , from 2.3% in 2013 to 
2.8% in 2019 (Table 1.2). According to the authorities, fisheries production (including aquaculture) 
grew from 20.8 million  tonnes in 2014 to 23.1 million  tonnes in 2018. In 2017, capture fisheries 
accounted for 30.5% and 51.3% of tot al fisheries output in volume and value terms , respectively, 
and the rest was supplied by aquaculture whose share is increasing; in 2018, Indonesia was the 
world's largest archipelagic state, the second largest for aquaculture (see below) after China , and a 
leading tuna producer.59 According to the authorities, the number of fish stocks potential yield 
categorized by group of species also increased from 7.31 million tonnes in 2013 to 12.54 million 
tonnes in 2017.  
4.52.   The sector remains an important contributor  to national food security and employment. The 
wild capture fisheries employed approximately 2.6 million workers in 2016 and 2 .0 million in 2018, 
and aquaculture 3.8 million in 2016 and 4.3 million in 2018; additionally, over 1  million workers are 
involved  in the processing and marketing of fisheries products.60  
4.53.   The majority of Indonesian fishers are small -scale fishers , with vessels under 10 GT (88%) 
but, in 2016, they represented just over 20% of total power, while medium -sized vessels between 
20 GT and 100 GT represent approximately 30% of the capture power of the motorized fleet.61  
 
57 FAO, Country Fact Sheet on Food and Agriculture Policy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
58 FAO, Country Fact Sheet on Food and Agriculture P olicy Trends . Viewed at: http://www.fao.org/3/a -
i7696e.pdf . 
59 According to the authorities, by 2016, i t was estimated that Indonesia supplie d about 1 million  tonnes 
of saltwater finfish per year , or 16 % of the world's total tuna supply . Statistics Indonesia (2019), Statistical 
Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id /publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html ; 
Statista, Leading aquaculture producers worldwide as of 2018, by country.  Viewed at: 
https://www.statista.com/statistics/755857/major -aquaculture -producers -worldwide/ ; Indonesia Investments, 
Fishing Industry Indonesia: Leading Tuna Producer, Concern about Overfishing.  Viewed at: 
https://www.indonesia -investments.com/news/todays -headlines/fishing -industry -indonesia -leading -tuna-
producer -concern -about -overfishing/item6835 ; California Environmental Associates/The David and Lucile 
Packard Foundation (2018), Trends in Marine Resources and Fisheries Management in Indonesia - A 2018 
Review . 
60 ResearchGate,  Pomeroy, R.S. (2019) , Review of national laws and regulation in Indonesia in relation 
to an ecosystem approach to fisheries management , January 2019. Viewed at:  
https://www.researchgate.net/publication/330133371_Review_of_national_laws_and_regulation_in_Indones ia
_in_relation_to_an_ecosystem_approach_to_fisheries_management ; California Environmental Associates/The 
David and Lucile Packard Foundation (2018), Trends in Marine Resources and Fisheries Management in 
Indonesia - A 2018 Review . 
61 California Environmenta l Associates/The David and Lucile Packard Foundation (2018), Trends in 
Marine Resources and Fisheries Management in Indonesia - A 2018 Review . WT/TPR/S/401 • Indonesia  
 
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  4.54.   Fish and seafood are the leading source of animal protein for Indonesians (about 54% of their 
total animal protein intake); per capita national fish consumption increased st eadily , from 
33.89  kg/year in 2012 to 50.69 kg/year in 2018.62  
4.55.   Indonesia is an important exporter of fish and fish products , with exports valued at 
USD 4.1 billion  in 2018 (2.5% of total merchandise exports)  (Table 4. 3), while imports were 
USD 344 million  (0.2% of merchandise imports ). The main exports are: frozen shrimp; cuttle fish 
and squid; and prepared tuna.  
4.56.   Indonesia's rich marine biodiversity and resources remain threatened by illegal, unreported 
and unregulated (IUU) fishing; efforts are being made  to address this (see below) . Reportedly, 
overfishing occurred due to the activities of illegal foreign vessels, and due to an insufficiently robust 
regulatory framework for domestic fishing activities ; this assessment is not accepted by the 
authoritie s.63 Pressure on fish stocks from the domestic fleet seemingly increased, with the number 
of small vessels growing with the encouragement of national policy (see below); the authorities are 
not of this opinion . The authorities seemingly placed high priorit y on aquaculture development , to 
drive increases in overall seafood production.   
Table 4.3 Exports of fish and fish products (WTO definition)a, 2012 -18 
HS 
2012  Description  2012  2013  2014  2015  2016  2017  2018  
 Total fish exports  3,682  3,934  4,355  3,656  3,937  4,247  4,504  
30617  Frozen, shrimp and prawns  917  1,181  1,531  1,190  1,260  1,404  1,346  
30749  Cuttle fish and squid  87  99  94  147  277  304  402  
160414  Fish preparations; tuna, 
etc., prepared or preserved  352  375  312  295  279  359  387  
160510  Crab, prepared or preserved  153  188  260  245  257  198  314  
a Fish and fish products are those in HS Chapter 03, 020840, 0508, 0509, 051191, 121229, 15, 16, 
and 230120.  
Source:  UNSD Comtrade Database. Viewed at: https://www.uncomtrade.com . 
Policy and institutional framework  
4.57.   The 2015 –19 RPJMN set the following priorities in the fisheries sector : community 
development and empowerment through p rogrammes for small -scale fishers and fish farmers in 
coastal and small island areas; mitigation and adaptation strategies regarding  climate change for 
the marine and fisheries sector; improvement of the quality and profitability of fish products for 
small -scale fishers; improvement of fishery -related infrastructure; strengthen ing of  monitoring, 
surveillance and enforcement systems to improve management and combat IUU fishing; and 
strengthening of human resource capacity.64 RPJMN 2020 -24 is in place since J anuary 2020 ; as at 
July 2020 , the latest policy objectives were only  available in the Bahasa Indonesia language 
(Section  2.2.2).  
4.58.   The Ministry of Marine Affairs and Fisheries (MMAF) implements the Marine and Fisheries 
Development Policy 2020 -24. The Policy has five main objectives , including improving 
communications with fishers (facilitat ing licensing , fisheries port development, fishing management 
in exclusive economic zone (EEZ) and high seas, fisheries protection , and empowerment to increase 
fishers inco me); improv ing and optimiz ing aquaculture (reduc ing unemployment and provid ing 
animal protein for human  consumption); developing the marine and fisheries industry (meeting 
demands for industrial raw material s, improving product quality and added value, and increas ing 
fisheries produce investment and exports); manag ing marine, coastal and small islands 
(strengthening surveillance of marine and fisheries resources and fish quarantine , in coordination 
 
62 FAO, Fishery and Aquaculture Country Profiles – The Republic of Indonesia . Viewed at: 
http://www.fao.org/fishery/facp/IDN/en ; California Environmental Associates/The David and Lucile Packard 
Foundation (2018), Trends in Marine Resources and Fisheries Management in Indonesia - A 2018 Review .  
63 World Bank (2019), Indonesia Economic Quarterly: Oceans of Opportunity - June 2019 , 1 July. 
Viewed at: https://www.worldbank.org/en/country/i ndonesia/publication/june -2019-indonesia -economic -
quarterly .  
64 FAO, Fishery and Aquaculture Country Profiles – The Republic of Indonesia . Viewed at: 
http://www.fao.org/fishery/facp/IDN/en . WT/TPR/S/401 • Indonesia  
 
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  with related institutions); and improving human r esources and research innovation in marine affairs 
and fisheries.65  
4.59.   In October  2019, under Article 4 of Presidential Decree No. 92 of 2019, the Coordinating 
Ministry for Maritime Affairs (CMMA) , established in 2014 , was replaced by the Coordinating Minist ry 
for Maritime and Investment Affairs (CMM IA).66 Its primary tasks and functions include: formulating, 
stipulating and implementing policies related to maritime and investment issues; overseeing the 
implementation of ministerial regulations related to mar itime and investment issues; managing and 
handling issues related to the maritime and investment sector; supervising the National Priority 
Program and other policies determined by the President in the Cabinet Meeting; settling strategic 
issues related to the maritime and investment sector that cannot be settled by other 
ministries/government institutions , and assuring the implementation of the settlement; and 
executing other functions assigned by the President. The CMMAI coordinates, synchronizes, and 
overs ees the policies and implementation thereof related to maritime and investment issues of the 
Ministry of Energy and Mineral Resources, the Ministry of Public Works and Public Housing, the 
Ministry of Transportation, the Ministry of the Environment and Fore stry, the MMAF , the Ministry of 
Tourism and Creative Economy, and the Investment Coordinating Board. The MMAF and its 
departments remain entrusted with fisheries policy formulation and implementation. Its strategic 
plan focuses on reinforcing the identity of a maritime nation, combating IUU fishing, accelerating 
economy growth and enhancing food sovereignty through the enhancement of fishery products, and 
developing the maritime and marine economy .67  
4.60.   The MMAF follows an ecosystem approach to fisheries management (EAFM) for the long -term 
sustainability of fisheries and the ecosystem services provided to society (food security, livelihood, 
economic security, coastal protection, and human health and well -being).68 Since 2010 , the Fishery 
Resources Directorate of the MMAF has been develop ing EAFM Performance Indicators to support 
regulations related to the fisheries sector. The roadmap s for the implementation of the EAFM is 
developed for five -year period s, i.e. the 2010-14 and 2015 -19. The outcome of the 2014 EAFM was 
the Technical Guidelines . In 2019 , the outcomes were: certification for fisheries product traceability 
and eco -labelling; expansion of protected marine areas; the Fisheries Management Plan for 
11 fisheries management areas (Wilayah Pengelolaan Perikanan  (WPPs) ), implemented by th e 
Fisheries Management Body; the implementation of the harvest strategy for specific commodities 
(tuna, snapper, and grouper); the traceability of fisheries product related to IUU fishing activit ies; 
and the implementation of digital technology for documen tation.  
Regulatory and operational framework  
4.61.   Fisheries management continues to be mandated under Law No. 45 of 2009. The Law 
regulates all matters concerning fisheries at the national level. It covers fisheries management; 
fisheries boats, gear and licen sing; fisheries value -added; fisheries research and development; 
fisheries fees; fishers' empowerment and prosperity; fisheries court s and arbitration; and fisheries 
enforcement and sanctions. During the review period, the regulatory framework governing fi sheries 
was updated in several areas.  
4.62.   Law No. 1/2014 amending Law No. 27/2007 on the Management of Coastal Area and Isles , 
which entered into force on 15 January 2014, is aimed at protecting, conserving, rehabilitating and 
 
65 Indonesia  has the 6th largest EEZ in the world . 
66 The CMMA is responsible for planning and policy coordination across the MMAF, the Ministry of Energy 
and Mineral Resources, the Ministry of Transportation, and the Ministry of Tourism. California Environmental 
Assoc iates/The David and Lucile Packard Foundation (2018), Trends in Marine Resources and Fisheries 
Management in Indonesia - A 2018 Review . 
67 Strategic Plan of the MMAF  2015–19. Viewed at: https://kkp.go.id/an -component/media/upload -
gambar -
pendukung/kkp/LAPORAN/Renstra%20dan%20Renja%20KKP/RENSTRA%20Peraturan%20Menteri%2063%20F
INAL%20(5).pdf . 
68 The EAFM offers means to manage fisheries more holistically ; it is a move away from fisheries 
management focuse d on target species, towards systems and decision -making processes that balance 
environmental, human and social well -being , within improved gover nance frameworks . Viewed at: 
http://eafmlearn.org/ ; and ResearchGate, Pomeroy , R.S.  (2019) , Review of national laws and regulation in 
Indonesia in relation to an ecosystem approach to fisheries management , January. Vie wed at:  
https://www.researchgate.net/publication/330133371_Review_of_nationa l_laws_and_regulation_in_Indonesia
_in_relation_to_an_ecosystem_approach_to_fisheries_management . WT/TPR/S/401 • Indonesia  
 
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  utilizing the resources of coast al areas and small islands in a sustainable manner. The Law provides 
for the use of zoning plans for marine resources and marine areas , and the obligation to conduct 
research and development in order to improve the quality of planning and management of coa stal 
areas and small islands.  
4.63.   The authorities' powers regarding  combating illegal fishing were strengthened (see below). A 
one-year moratorium on new licen ces for foreign -built vessels was imposed , and over 1,000 vessel 
and company licen ces were reviewed.  Ministerial Decree No. 26 of 2013 on the Fisheries Business 
in WPPs,  regulating large fishing vessels of 300 GT or more , requires vessel owners to apply for a 
fishing licence and a fishery business licence. In 2015, the MMAF increased the fees associated with 
the capture fishing sector; no information on these fees was available from the authorities.   
4.64.   Since  1 January 2017 , under MMAF  Regulation No. 2/2015 , all types of fishing trawl and seine 
nets ( cantrang ) are banned.69 Between 2015 and 2017, the authorities distributed approximately 
9,000 units of eco -friendly fishing gear to small -scale, artisanal, subsistence fisheries operating with 
vessels under 5 GT. To help ease concerns about the ban, in 2018, the MMAF was to dis tribute 
approximately 7,000 new pieces of fishing equipment to replace cantrang  (see below); boats under 
10 GT were to receive the equipment for free, while boats greater than 10 GT were to  receive 
subsidized loans from the state -owned Bank Rakyat Indonesi a and Bank Tabungan Negara (see 
below).  
4.65.   During the review period, Indonesia maintained total allowable catch (TAC) for small pelagics, 
big pelagics, demersal fish, reef fish, penaeid shrimp, lobster, blue swimming crab, 3 -spot swimming 
crab, and squid at all of its 11 WPPs (Table A4.1).70 The authorities indicated that TAC figures are 
not used as a basis for business quotas, meaning that TACs are not owned by individual businesses; 
Indonesia uses an input -control method, not a quota in the fisheries busine ss. In 2017, the potential 
catch and TAC for all WPPs and species combined was 12.5 million ton nes and 9.77  million ton nes, 
respectively . The average utilization rate stood at 0.90 , with overexploitation affecting lobster and 
squid (Table A4.1) . According to MMAF data, between 2015 and 2019 , capture fisheries production 
targets (marine and inland) rose from an overall 6.3 0 million ton nes to 10.47 million ton nes, and 
marine capture fisheries production rose from 6.2 0 million ton nes to 6.98 million ton nes. Reportedly, 
additional increases of these levels could have a significant impact on the future fisheries potential 
of the country , as nearly half of the wild capture fish stocks are overexploited, and at least seven 
WPPs show no opportunit y for immediate exp ansion of production.71 The authorities disagree with 
this view , and indicated that they continuously review fish stocks for better fisheries management.  
4.66.   Under the 2016 negative investment list, the fisheries sector areas to which FDI has access 
were revised , allowing 100% FDI for cold storage and processing ; wild-capture fishing was also 
added to the list (100% domestic capital ) (Section 2.4.2).72 Reported foreign and domestic private 
investment in the sector amounted to approximately USD 406.4 millio n in 2016 , of which 
USD 164.9  million was in new loans and USD  241.4 million in new equity investments; more than 
half of all investment was made in the processing industry (52%) , followed by aquaculture (14%), 
trade (14%) and wild -capture fishery (11%).73  
 
69 The use of trawl and cantrang  — a modified Danish seine or trawl with fine mesh nets that cover large 
tracts of nearshore waters — damage coral reefs and the  seabed ecosystem and, thus, represents an 
unsustainable fishing practice. California Environmental Associates/The David and Lucile Packard Foundation 
(2018), Trends in Marine Resources and Fisheries Management in Indonesia - A 2018 Review . 
70 Data on poten tial catch, TAC, and utilization rate as at 2017 are contained at Table 3. Stock Status by 
WPP, 2017  at California Environmental Associates/The David and Lucile Packard Foundation (2018), Trends in 
Marine Resources and Fisheries Management in Indonesia - A 2018 Review ; and MMAF  Decree No. 50/2017. 
Viewed at: http://jdih.kkp.go.id/peraturan/50%20KEPMEN -KP%202017.pdf . 
71 California Environmental Associates/The David and Lucile Packard Foundation (2018), Trends in 
Marine Resources and Fisheries Management in Indonesia - A 2018 Review . 
72 Not all fish -processing or preservation is open for 100% FDI ; some fish processing is reserved for 
SMEs or partnership s, e.g. fish salting/drying (KBLI 10211), smoking fish (KBLI 10212), fish preservation 
(KBLI 10214) , and yeasting/fermentation of fish (KBLI 10215) . 
73 California Environmental Associates/The David and Lucile Packard Foundation  (2018), Trends in 
Marine Resources and Fisheries Management in Indonesia - A 2018 Review . WT/TPR/S/401 • Indonesia  
 
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  Border measures  
4.67.   During the review period, tariff protection for fisheries increased slightly; in 2020, the simple 
average applied tariff was 6 .0% (5. 5% in 2012) (WTO definition , including  HS codes 03, 0508, 
150410,150420, 1603 -05, and 230120) , with a pea k rate of 20 .0%, thus remaining below the overall 
applied MFN average (10.1%, 2020) and the average for agriculture at HS - and 
WTO- (non-agricultural products) definition levels (Table A3.1).74 In 2020, there was an average 
gap of 34.4 (HS) or 34 (WTO defi nition) percentage points between bound rates in fishery products 
and the average MFN applied  rate. Duty and tax concessions for imports of goods for the 
establishment and development of fisheries and marine products caught by licen sed vessels as well 
as requirements for fishery products to pass through specified ports of entry remain in place 
(Sections 3.1.1.1, 3.1.3.6 and 3.3.1.1.1.2). Import licensing requirements for fishery products were 
issued in 2018 and 2019 (Table A3.4).  
Domestic support measures  
4.68.   Domestic support in different forms remains available to fisheries operators. Tax incentives 
in the form of corporate income tax allowance s or holiday s, similar to those for other activities , are 
in place (Sections 3.3.1.1.1.1 and 4.1 .4).75 Under MMAF Decree No. 17/PERMEN -KP/2015 , criteria 
and/or conditions for fisheries investment to benefit from corporate income tax holidays , depending 
on the activity (e.g. aquaculture, cold storage facility, processing , or preservation) consist of: 
minimum value of investment; minimum output to be exported (30% to 80%); minimum absorption 
of workforce (50 to 90 persons , and 90% Indonesian nationals).76 No data on tax expenditure 
relating to the implementation of tax incenti ves in fisheries were available from the authorities.  
4.69.   Non-tax incentives are mostly focused on small fishers. Law No. 7/2016 requires central and 
local authorities to provide education, incentives, insurance, and livelihood protection for fishers and 
salt farmers. According to Indonesia's two and only (since 1995) WTO full notifications pursuant to 
Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing 
Measures , submitted in 2019, four out of the six notified schemes  relate to fisheries . The authorities 
indicated that these schemes, run by the MMAF, are not related to international trade.  They consist 
of:  
• the National Fish Logistic System (since 2014, grant s for fishers in remote areas for 
cold-chain system facilitie s and infrastructure : IDR 413.5 billion for 2015 -18);  
• the Fishing Vessels Construction Program (since 2015, grant s for fishing vessel s, fishing 
vessel machines, and environmentally friendly fishing gear : IDR 550 billion for 2015 –18);  
• the Rural Business D evelopment Program (grants for purchasing facilities and developing 
infrastructure : IDR 1.37 trillion for 2011 -13); and  
• Fishers Insurance (payment of life insurance premium s for the first year of small -scale 
fishers (<10 GT) who have  valid fisher card s and do not use prohibited fishing gear (see 
above) : IDR 183 billion for 2016 –18, and IDR 21 billion for 2019).77  
4.70.   In addition, under the terminated Fishing Vessels Construction Program , the authorities seem 
to have been in the process of expanding the domestic fleet , by providing 2,515 new nearshore 
ocean -going vessels and over 18,000 sets of gear to replace foreign fishing boats and create local 
employment in remote areas. Reportedly, i n 2017 , the MMAF allocated USD 28.88 million to procure 
fishing vessels as follows: 243 units of <5 GT vessels; 384 units of 5 GT vessels; 134 units of 
10 GT vessels; 15 units of 20  GT vessels; and 6 units of 30 GT vessels. While only a small fraction 
had been delivered by November 2017, the MMAF had remained confident that it would reach its 
 
74 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
75 GR No. 9/2016; MoF  Regulation No. 150/2018 ; and GR No. 78 of 2019 on Income Tax Facility for 
Investments in Certai n Business Lines and/or in Certain Regions . 
76 Online information by t he Investment Coordinating Board of the Republic of Indonesia.  
77 WTO documents G/SCM/N/253/IDN ; G/SCM/N/284/IDN ; and G/SCM/N/315/IDN, 20 May 2019 ; and 
G/SCM/N/343/IDN, 2 August 2019 ; and World Bank (2019), Indonesia Economic Quarterly: Oceans of 
Opportunity - June 2019 , 1 July. Viewed at : 
https://www.worldbank.org/en/cou ntry/indonesia/publication/june -2019-indonesia -economic -quarterly . WT/TPR/S/401 • Indonesia  
 
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  target of disbursing 782 vessels by the end of 2017. Regarding the insurance scheme, compensation 
amounts include: USD 14,815 if a fisher dies in a fishing accident; U SD 7,407 for fishers who suffer 
permanent disabilities; USD 1,481 for fishers' medical treatment due to injuries; and USD  11,852 
for fishers killed in accident s unrelated to fishing activities. The scheme is only provided to fishers 
covered by the Social S ecurity Management Agency or other insurance schemes taken out  by ship 
owners.78 The authorities could not confirm the data contained in this paragraph.  
4.71.   Financing facilities to MSMEs in the fishery sector , through micro -financing agencies or 
non-banking f inancial institutions , with a maximum interest rate of 4% , remain in place 
(Section  3.3.1.2).   
4.72.   Subsidized diesel continues to be provided , but in a more focused manner. Since  2015, access 
to this subsidy was limited to boats of less than 30 GT.79 In response to attempts by larger boat 
owners to circumvent this change , the MMAF underwent a re -measuring and re -certifying exercise, 
thereby eliminating access to subsidies for boats that  are in reality greater than 30 GT. According to 
state-owned PT Pertamina oil and natural gas mining company (Section 4.2.2.1.1) data, 
1.2 million  kilolitres ( kL) of subsidized fuel was provided to fishers in 2016, down 19.46% from 
1.49 million k L in 2015.  No data on the budgetary outlays supporting this subsidy were available 
from the authorities. The authorities has considered the removal of all fuel subsidies for fishers , but 
this has not yet taken place.  
4.73.   Furthermore, in implementing the RJPMN 2015 -19 (see above) , the objectives of some priority 
program mes included:  
• Capture Fisheries Management Program ( total budget  for five years: 
IDR 15,103.06  billion);  
• Aquaculture Development Program ( total budget  for five years: IDR 13,640.22 billion), 
implementing:  fish seed production improvement, enhancement of the seagrass culture 
area, aquaculture certification, aqua feed development, and improvement of the capacity 
of aquaculture business;  
• strengthening the competitiveness of fishery products ( total budget  for five years: 
IDR 11,823.54  billion), through: fish logistic improvement, promoti on of Indonesian fish 
products, fish processing (capabilities and business) improvement, quality improvement , 
and standardization;  
• Marine Spatial Management Program ( total budget  for five years: IDR 8,185.15 billion), 
through several strategies , including: expansion of marine protected/conservation area s, 
improv ement of  community livelihood on small islands and in coastal area s, and coastal 
rehabilitation/restoration;  
• fisheries resources management surveillance ( total budget  for five years: 
IDR 10,482.85  billion), through: monitoring and surveillance operation (sea patrol and air 
patrol), develop ment of  surveillance system and technology, and improv ement of  law 
enforcement regarding  IUU fishing  (capability and regulation); and  
• human resources development and community empowerment ( total budget  for five years: 
IDR 8,603.07 billion), through: enabling education access for fisheries community, 
provision of  assistance for the fisheries community, and improv ement of  skills of fishermen 
and fish farmers.  
4.74.   During the review period, action was also taken to facilitate the growth of aquaculture, which 
is amongst the fastest -growing in the world . This took place through the development of  specialized 
zones to intensify production ; investment in private hatcheries ; distribution and marketing 
 
78 California Environmental Associates/The David and Lucile Packard Foundation (2018), Trends in 
Marine Resources and Fisheries Management in Indonesia - A 2018 Review . 
79 Presidential Decree  No. 15/2012 and MMAF Regulation No. 13/2015 , cited in California Environmental 
Associates/The David and Lucile Packard Foundation (2018), Trends in Marine Resources and Fisheries 
Management in Indonesia - A 2018 Review . WT/TPR/S/401 • Indonesia  
 
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  programmes ; training ; information systems ; and access to capital.80 Through the Director General 
of Aquaculture (DJ BP), the MMAF established programmes  for research and technology , aimed at 
optimizing aquaculture production, including the National Broodstock Center and Regional 
Broodstock Centers for shrimp, grouper, tilapia, and seaweed. The DJBP is also implementing a 
priority programme called Gerakan Pakan Mandiri  (Self-Suffic iency Fish Feed Movement) , which 
focuses on the utilization of local raw material s to produc e low-cost fish feed for freshwater fish. In 
2020, the MMAF supported the development of 13 Integrated Fisheries Centers , involving both 
capture fisheries and aquaculture production.  
4.75.   Indonesia's second proposal to the WTO Negotiating Group on Rules, submitted in June 2017 , 
states, inter alia,  that multilatera l action in fisheries is needed , and that the main contributors to 
overfishing are the enhanced capacity of fishing vessels due to subsidies and IUU fishing (see 
below).81 Indonesia supports disciplines relating to fisheries subsidies, especially those aff ecting 
overfishing and overcapacity , particularly of high -migratory species ; high-seas fisheries and distant 
water fishing ; and the elimination of subsidies that contribute to IUU fishing with special and 
differential treatment for developing countries and  least-developed countries. An initial step to be 
taken would be to eradicat e IUU fishing through deterrent measures.  
Illegal activities  
4.76.   During the review period, action in several areas was under taken to address IUU fishing 
concerns.82 A one -year prohibi tion (moratorium) from November  2014 to October 2015 was placed 
on foreign -owned and foreign -manufactured fishing vessels of more than 30 GT , as a large 
proportion of them was detected as engaging in illegal fishing activit ies in the national jurisdiction.83 
In the same year , under the second amendment of MMAF Decree No. 57/2014 , transhipment – the 
offloading of catch at sea  – was banned; the ban was applied to all fishing companies. Other areas 
of IUU -related action included : improving the governance of fi shery business licen ces; promoting 
transparency in capture fisheries; analysing and evaluating local fishing vessels to promote 
compliance and better governance; and closing foreign investment in the capture fishing sector in 
2016 to protect domestic natural resources (see above , and Section 2.4.2).  
4.77.   To address IUU fishing by foreign vessels, on 20 October 2015 , a Task Force on the Prevention 
and Eradication of IUU Fishing  was set up to, inter ali a, investigate IUU fishing, develop policy 
recommendations, and strengthen coordination among enforcement agencies . under Presidential 
Decree No. 115/2015 , the administrative level was raised , and it was renamed the Task Force on 
Eradication of IUU Fishing  (Task Force -115 - SATGAS -115). Additional aims were  to strengthen the 
enforcement capacity of the MMAF, the navy, the police, the coast guard, and public prosecutors. 
Furthermore, enforcement a ctions  were undertaken, through,  inter alia,  imposing administ rative 
 
80 While marine capture fisheries pr oduction grew slowly, from 5.0 million metric ton nes in 2010 to 
around 6.2 million in 2017, aquaculture production more than doubled over the same period, from 2.4 million 
to 6.1  million metric ton nes. California Environmental Associates/The David and Luci le Packard Foundation 
(2018), Trends in Marine Resources and Fisheries Management in Indonesia - A 2018 Review ; and World Bank 
(2019), Indonesia Economic Quarterly: Oceans of Opportunity - June 2019 , 1 July. Viewed at : 
https://www.worldbank.org/en/country/indonesia/publication/june -2019-indonesia -economic -quarterly . 
81 WTO documents TN/RL/GEN/150/Rev.2, 9 October 2007; and TN/RL/GEN/189, 6 June 2017.  
82 According to MMAF estimates, illegal fishing costs Indonesia USD 3 billion to USD 20 billion per year; 
however, reportedly, the actual monetary and non -monetary costs ma y be much higher should other crimes 
associated with IUU fishing, including money laundering, human trafficking, tax fraud, and smuggling of drugs, 
weapons, and endangered species,  be taken into account. California Environmental Associates/The David and 
Lucile Packard Foundation (2018), Trends in Marine Resources and Fisheries Management in Indonesia - A 
2018 Review ; and Mas Achmad Santosa (Coordinator of the Special Advisors of the Presidential Task Force to 
Combat Illegal Fishing (SATGAS 115)) presentatio n at the 4th International Symposium on Fisheries Crime, 
Copenhagen, 15 October 2018 . 
83 Under MMAF Decree No. 26B/2015, which governs the analysis and evaluation of ex -foreign fishing 
vessels, the MMAF audited 1,132 vessels across 33 ports, all of which were in violation of the law, with 769 in 
"severe violation " and 363 in "average violatio n". Consequently, the MMAF revoked 15 business licences, 
245 fishing licences, and 31 reefer licences. Furthermore, according to the authorities, between 
November  2014 and August 2018, the demolition of 488 illegal fishing vessels  (mainly from Viet Nam (27 6), 
the Philippines (90), Thailand (50), Malaysia (41), and Indonesia (26)) was undertaken,  to create a deterrent 
effect . Mas Achmad Santosa (Coordinator of the Special Advisors of the Presidential Task Force to Combat 
Illegal Fishing (SATGAS 115)) present ation at the 4th International Symposium on Fisheries Crime, 
Copenhagen, 15 October 2018 ; and MMAF Regulation No. 56/2014 cited in California Environmental 
Associates/The David and Lucile Packard Foundation (2018), Trends in Marine Resources and Fisheries 
Management in Indonesia - A 2018 Review . WT/TPR/S/401 • Indonesia  
 
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  sanctions ; applying corporate criminal liability and a multi-legal regime ; pursuing international 
cooperation (INTERPOL Multilateral Investigative Support Team, outreach, utilizing INTERPOL 
facilities, and capacity building) ; and forswearing  transna tional organized fisheries crime (in line with 
the UN Convention against Transnational Organized Crime (UNTOC)). In July 2017, through Global 
Fishing Watch (GFW) , Indonesia became the first country to share its vessel monitoring system 
(VMS) data.84  
4.1.7   Forestry  
4.78.   Forestry continues to play an important role by providing social, economic and environmental 
benefits in Indonesia , which accounts for the world's 8th largest forest area.85 During the review 
period, forestry's contribution to GDP increased from 0 .6% in 2013 to 0.7% in 2020. Forest is mostly 
owned by the State (86.9%) (Law No . 41 on Forestry of 1999) , and is classified into three categories: 
conservation forests, protection forests, and production forests. More than half of the total forest 
area is  production forest. Production forests consist of permanent production forest, limited 
production forest , and convertible production forest.86 In 2015, the total area of production forests 
rose from 56 million ha (2015) to 68 million ha (2018).87 These for est areas consist of various  types 
of land such as primary forests, secondary forests, forest plantations , and non -forested land 
(including endemic sand plain s, savanna, and alpine tundra within conservation area s). Indonesia 
also houses more than  30 milli on ha of forest concession area (see below) ; this consist s of 
three  types of concessions , comprising natural forest concession s, plantation forest concession s, and 
ecosystem restoration forest concession s. The natural forest and ecosystem restoration conce ssions 
are allocated to permanent production forest and limited production forest land ; plantation forest 
concession s are permissible only on permanent forest land. Additionally, Indonesia placed about 
45% of its total forest area aside for the conservatio n of biodiversity or the protection of ecolog y.88 
Forest is managed either directly by government agencies or by private corporations and institutions 
based on forest concessions ; the remainder is so -called titled forest.89 Fires to clear land to expand 
plantations for palm oil production remain a driver of deforestation , although action was taken to 
address this problem (Section 4.1.4).90  
 
84 VMS is a cost -effective tool for the successful monitoring, control and surveillance of fisheries 
activities . Since 2013, Indonesia requires VMS on all boats greater than 30 GT (MMAF Regulation 
No. 10/2013). While  the authorities have real -time access to the data, analysing and responding to it can take 
time (e.g. patrol boats may not be nearby). Data shared with the public is delayed for 72 hours. California 
Environmental Associates/The David and Lucile Packard Fo undation (2018), Trends in Marine Resources and 
Fisheries Management in Indonesia - A 2018 Review ; and Online information 
(http://www.fao.org/fishery/vms/en ). 
85 Worldometer, Forest Area by Country.  Viewed a t: https://www.worldometers.info/food -
agriculture/forest -by-country/ . 
86 GR No. 44 of 2004 on Forestry Planning. Viewed at: 
http://peraturan.go.id/peraturan/view.html?id=11e44c4f17513580ac76313231383530 .  
87 Forest Legality, Indonesia – Forest Management . Viewed at: https://forestlegality.org/risk -
tool/country/indonesia#tab -management . 
88 Timber Trade, Indonesia . Viewed at: https: //www.timbertradeportal.com/countries/indonesia/ . 
89 A titled forest is a forest located on land on which the land title is registered by private organizations 
or individuals.  
90 Between 1990 and 2010, the total area of oil palm plantations increased from 1. 1 million ha to 
7.8 million ha; in 2018, it stood at 14.3 million ha. The rapid development of oil palm plantations was 
facilitated by governmental policies and further enhanced by the decentrali zation policy that enabled local 
governments to issue plantat ion permits.  According to the World Bank, overall, the total damage and economic 
loss by fires in eight affected provinces throughout June -October 2019  was estimated at USD  5.2 billion, 
equivalent to 0.5 % of GDP, mainly through the agriculture, transportation, trade, industry, and environmental 
sectors. Furthermore, the destruction by fire of millions of hectares of virgin forest ma de Indonesia one of the 
world 's top contributors to the release into the ai r of carbon dioxide. Tacconi,  L., Rodrigues , R.J., Maryudi , A. 
(2019), Law enforcement and deforestation: Lessons for Indonesia from Brazil , Forest Policy and Economics , 
Vol. 108, November. Viewed at: https://www.sciencedirect.com/science/article/pii/S1389934118304623 ; 
Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html ; 
World Bank  (2019), December 2019 Indonesia Economic Quarterly: Investing in People , 11 December. Viewed 
at: https://www.worldbank.org/en/country/indonesia/publication/december -2019-indonesia -economic -
quarterly -investing -in-people; Asia Sentinel, Indonesia's Social Forestry Program.  Viewed at: 
https://www.asiasentinel.com/p/indonesia -social -forestry -program . WT/TPR/S/401 • Indonesia  
 
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  4.79.   Between 2013 and 2017 , logs, sawn wood an d plywood production rose to 43.2 million m3, 
2.8 million m3 and 3.8 million m3, respectively.91 High domestic consumption of logs is mainly due 
to use in the pulp and paper industry and tertiary industries , such as furniture production.92 Between 
2013 and  2019, exports of most forestry and related products increased , including wood charcoal 
(USD 118.8 million in 2013 to USD 297.8 million in 2018 , dropping to USD 279.9 million in 2019); 
semi-processed wood (USD 555.6 million in 2013 to 771.2 in 2018 , down t o USD 666.7 million in 
2019); pulp of wood (USD 1.8 million in 2013 to USD 2.8 million in 2019); and paper 
(USD  3.8 million in 2013 to USD 4.4 million in 2019).93 
Policy and institutional framework  
4.80.   During the review period, forest ry policy objectives incl uded: promotion of forest product 
exports and added value through foreign market penetration ; increase of production of timber and 
non-timber forest products, plants and wildlife ; new business configuration and industrial clusters; 
enhanc ement of  the manag ement of natural resources through rehabilitation of forests and lands, 
prevention of forest and land fires, reduction of the deforestation rate, promotion of waste 
management and reduction of plastic use ; circular economy ; reduction of mercury use ; 
environmental pollution control; improv ement of  sustainable forest management smart practices 
based on 4.0  technology; and improv ement of the  conservation management strategy by involving 
local community , including customary comm unity and stakeholder engagement.94 Since  2019, 
ministerial strategies have also included: strengthening protected areas; strengthening sustainable 
production forest management; accelerating the provision of local community access to land and 
forest s; prov iding entrepreneurship training and facilities for local communities; conserving water 
and the ecosystem; supporting the development of new capital; improving the environmental quality 
index; improving resilience to disaster and climate change; and impleme nting low -carbon 
development.  
4.81.   The Ministry of Environment and Ministry of Forestry were merged to  create  the Ministry of 
Environment and Forestry (MoEF) in 2015.95 Its responsibilities are to organize governmental affairs 
in the field of environment and f orestry; formulate policies in the field of sustainable forests and 
environmental conservation ; manage  the conservation of natural resources and their ecosystems ; 
enhance watershed support capacity and protect forests ; sustainabl y manage forestry productio n; 
enhance the competitiveness of the primary forest product industry ; manage the environment ; 
control pollution ; control  environmental damage ; control climate change impact ; control forest and 
land fire s; a social forestry programme (see below) ; create partnership s; reduc e damage ; and 
reduce threats  of forest destruction;  and reduce violations of environmental and forestry 
legislation.96 
Regulatory and operational framework  
4.82.   During the review period, the regulatory framework governing the forestry sector was 
enhanced in several areas. Changes included MoEF Regulation 
No. P.30/Menlhk/Setjen/PHPL.3/3/2016 on the Assessment for Performance of Forestry Sustainable 
Production Manag ement and Verification of Timber Legality to License Holders or Private Forests97; 
 
91 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e9070 6ee58a/statistik -indonesia -2019.html . 
92 Tacconi,  L. Rodrigues , R.J., Maryudi , A. (2019), Law enforcement and deforestation: Lessons for 
Indonesia from Brazil , Forest Policy and Economics , Vol. 108, November . Viewed at: 
https://www.sciencedirect.com/science/article/pii/S1389934118304623 . 
93 UNSD Comtrade Database.  
94 MoEF,  Welcoming New Year 2019: Minister of Environment and Forestry - Continue Corrective 
Actions . Viewed at: https://www.menlhk.go.id/site/single_post/1771 . 
95 PR No. 16 of 2015 concerning the Ministry of Environment and Forestry.  
96 FAO, PR No. 16 of 2015 concerning the Ministry of Environment and Forestry . Viewed at: 
http://www.fao.org/faolex/results/details/en/c/LEX -FAOC174324 . 
97 FAO, MOEF Regulation No. P.43/Menhut -II/2014 on the Assessment for Performance of Forestry 
Sustainable Production Management and Verification of Timber Legality to License Holders or Private Forests  
Viewed at: http://www.fao.org/faolex/results/details/fr/c/LEX -FAOC1743 29. WT/TPR/S/401 • Indonesia  
 
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  and MoEF Regulation No.  P.85/MENLHK/SETJEN/KUM.1/11/2016 on Transportation of Cultivated 
Timber Forest Product Originated from Private Forests.98  
4.83.   Any entity , either in a natural forest or a production/plantation forest, must possess a 
concession licence granted by the MoEF.99 In natural forest s, a permit for a logging concession is  
valid for  a maximum of 55 years , with a possible extension ; while ecosystem restoration and 
industrial plantation forest permit s are granted for 100 years maximum , without possibility of  
extension. Upon the granting of a permit , the beneficiary is required to develop a 10 -year Forest 
Management Plan , based on a Periodic Comprehensive Forest Invento ry and an Annual Operational 
Plan.  
4.84.   A temporary moratorium on granting permits to clear primary forests and peatlands for 
plantations or logging, introduced as part of wider efforts to reduce greenhouse gas emissions from 
deforestation in 2011, was accompa nied by a 2018 moratorium on new licences for oil palm 
plantations (Section 4.1.2) ; it was  made permanent on 5 August 2019. It prohibits the conversion 
of primary natural forests and peatlands to oil palm, pulpwood or logging concessions. According to 
MoEF  data, between 2011 and 2018 , the rate of deforestation in areas covered by the licensing ban, 
dropped by 38%; however , analysis of satellite imagery by Greenpeace , based on a different 
approach for defining the condition of primary forest and tree cover loss , showed the opposite.100  
4.85.   Concession licence holders operating in state forest s are subject to a licence fee , set in 2014 
(GR No. 12/2014).101 An additional fee p er licence per hectare and per year applies to plantations 
where the concession licence holder is converting natural forest to plantation with a clear -cut system 
with artificial regeneration. For timber production from state forest s, two fees , based on 
three different diameter classes of roundwood , must be paid: the Reforestation Fund fee ( Dana 
Reboisasi  - DR) and the Forest Resources Provision fee (Provisi Sumber Daya Hutan - PSDH). The 
fees vary per species group, such as Meranti (Shorea), Rimba Campur  (mixed timber species) and 
Kayu Indah  (beautiful  timber species) , and per region. The DR is set at a fixed price in US  dollars  
per cubic meter , while the PSDH is set at a benchmark price in rupiah plus 6%-10%. Forestry was 
estimated to contribute 1.2% to tot al non -tax revenue in 2019 , compared to 1.6% in 2017.102  
4.86.   Since 2014 , a social forestry programme  is underway , as part of agrarian reform for the 
forestry sector .103 It is aimed at, inter alia , reducing the deforestation rate and reducing illegal 
logging by improving the livelihood of slash -and-burn farmers, alleviating poverty, increasing 
employment, reducing social conflict , and promoting sustainable forest management. The 
program me remains in place with a cumulative target of 4 million ha in the  period 2020 -24. It 
represents a transfer of forest management responsibilities to user -groups across the archipelago , 
and offers forest -dependent farmers the opportunity to use designated forest plots legally for up to 
35 years . It targets the allocation of 12.7  million ha of land to be managed by people who live in 
and around the forests. As at 30 May 2020, the MoEF (see below) had distributed permits for 
6,622  groups , covering 4.2 million  ha for about 857,819 households.104 The Association of State 
Banks provided loans worth IDR 105 trillion (USD  7.53 billion) in 2017 , with the number expected 
to increase to IDR 120 trillion in 2018; no information on the modalities of these loans was available 
from the authorities. In addition,  in 2017 , the MoEF  and the P ublic Service Agency Center for Forest 
 
98 FAO, MoEF Regulation No. P.21/MenLHK -11/2015 on Administration of Forestry Products originating 
from Private Forests . Viewed at: http://www.fao.org/faolex/results/details/ en/c/LEX -FAOC174357/ . 
99 TimberTra de, Indonesia. Viewed at: 
https://www.timbertradeportal.com/countries/indonesia/#legality -profile . 
100 Mongabay, Indonesia forest -clearing ban is made permanent, but labelled 'propaganda'.  Viewed at: 
https://news.mongabay.com/2019/08/indonesia -forest -clearing -ban-is-made -permanent -but-labeled -
propaganda/ . 
101 This licen ce fee is calculated differently in three  regions (Sumatera and Sulawesi , Kalimantan and 
Maluku , and Nusa Tenggara and Papua) and is incurred per year per ha per licen ce by the concession licen ce 
holder. TimberTrade, Indonesia. Viewed at: https://www.timbertradeportal.com/countries/indonesia/#legality -
profile . 
102 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/sta tistik-indonesia -2019.html . 
103 Asia Sentinel, Indonesia's Social Forestry Program . Viewed at: 
https://www.asiasentinel.com/p/indonesia -social -forestry -program ; and MoEF. Viewed  at: 
https://www.menlhk.go.id/site/post/130 . 
104 CIFOR, Taking stock of Indonesia's social forestry program . Viewed at: 
https://forestsnews.cifor.org/58344/taking -stock-of-indonesias -social -forestry -program?fnl=en . WT/TPR/S/401 • Indonesia  
 
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  Development directed IDR  200.6  billion to 568 forest farmer groups.105 By 2017 , financing 
commitments had exceeded IDR  442.76 billion . These funds were used to facilitate production 
inputs, rehabilitat e ponds , and offtake crop production. Reportedly, deforestation dropped from 
1.09 million ha in 2015 to 0.479 million ha in 2017, and more than 2 million trees , including teak, 
mahogany, and sengon , were saved from illegal logging.106  
4.87.   Under the 2016 negative investment list, the upstream exploitation of timber forest products 
from natural forest s is entirely reserved for domestic capital (Section 2.4.2, Table 2.5).  
Border measures  
4.88.   During the review period, tariff protection for forestry increased significantly . In 2020, the 
simple average  rate on forest and forestry products (HS Section 9) rose to 5.1% (2.7% in 2012) . It 
remain s below the overall applied MFN average (10.1%, 2020) . It continued to range from zero (fuel 
wood, wood in chips or particl es, wood charcoal, wood in the rough, and wood sawn or chipped 
lengthwise) to 25%  (Table A3.1) , compared to a peak rate of 10% in 2012.107 In 2020, there was 
an average gap of 34.9 percentage points between the  bound rates in forestry products  and the  
avera ge MFN applied rates. 
4.89.   Exports of roundwood and rough sawn timber for all species remain banned , to protect 
domestic wood -processing industries, although reviewing this policy has seemingly been under 
consideration (Section 3.2.3.1 and Table 3.7).108 New imp ort and export (and pre-shipment 
inspection PSI ) licensing requirements were introduced on processed forestry products in 2015 and 
2018 (Section s 3.1.5.2, 3.2.1 and 3.2.3.2, and Tables 3.8 and A3.4). MoT Regulation 
No. 97/M-DAG/PER/12/2014 on Provisions on  the Export of Forestry Industry Products , in force since 
January 2015 , specified tariff lines of forestry products from timber , exporter registration/approval 
(registered exporter s of forestry industry products (ETPIK) ), timber legality certification 
requirements (see below), export documentation , and PSI requirements.109 In 2016, based on MoT 
Regulation No.  84/M-DAG/PER/12/2016, the term ETPIK was replaced by "registered exporters " 
recorded in the MoEF  Information System on Timber Legality  (SILK ). The number of registered 
exporters was: 777 (in 2013); 874  (in 2014); and 1,370 (in 2015). From January  to May 2020,  the 
SILK recorded 1,693 exporters.  
4.90.   Under the Timber Legality Verification System (SVLK) , the authorities continued to issue 
"V-legal" licences to accompany exports of processed wood products listed in Attachment I Group A 
of MoT Regulation No. 84/2016.110 Recent regulations were aimed at easing the procedures for 
smallholders and SMEs  to obtain S VLK certification. Regulation No . 43 of 2014 , as amended by 
Regulation No . 30 of 2016 , include s a new procedure called the Supplier's Declaration of Conformity 
(SDoC), which reduces the burden of certification for certain suppliers (household industries, p rivate 
forests, timber depots , and industries that source their timber entirely from private forests or 
SVLK-certified sources) by allowing them to self -assess their fulfilment of certain requirements for 
 
105 This funding is in the form of revolving funds. In 2008/09 , IDR 2,014 trillion was initially allocated. 
Until 2020 , the total commitment to finance debtors reache d IDR 2.4 trillion. The revolving fund is distributed 
through three schemes , namely: loan, profit sharing, and sharia patterns. The interest rate  refers to the BI 
rate, based on Regulation No . 112/PMK.05/2015 . For the community , it is the BI rate (max. 8%) ; for business 
entities , the BI rate plus 4% (max.  10%) ; for intermediary institutions , 50% of the BI rate (max. 4%) ; and for 
forestry businesses  in areas that have a protection function, the loan rate is 50% lower than the rate in 
production areas . From the total commitment of IDR 2.4 trillion, IDR 1.4 trillion were distributed to permit 
holders in industrial plantation forest s, community plantation forest s, village forest s, community forest s, and 
social forestry , as well as to  silviculture intensive and off -farm (forestry industry) business es. 
106 Asia Sentinel, Indonesia's Social Forestry Program.  Viewed at: 
https://www.asiasentinel.com/p/indonesia -social -forestry -program . 
107 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
108 MoT Regulation No. 45/2019 ; TimberTrade, Indonesia.  Viewed at: 
https://www.timbertradeportal.com/countries/indonesia/#legality -profile ; and WTO document 
WT/TPR/S/278/Rev.1, 16 July 2013.  
109 FAO, MoT Regulation No. 97/M-DAG/PER/12/2014 on Provisions on th e Export of Forestry Industry 
Products.  Viewed at: http://www.fao.org/faolex/results/details/en/c/LEX -FAOC149319 . 
110 MoEF  Decree s No. P38/Menhut -II/2009 of 12 June 2009;  No. P68/Menhut -II/2011 on Changes to 
MoFR No. P.38/2009; P. 45/Menhut -II/2012 on Second Revisions to MoFR No.  P.38/2009; P. 42/Menhut -
II/2013 on Third Revisions to MoFR No. P.38/2009 ; and P. 43/Menhut -II/2014 on Performance Assessment of 
Management of Sustainable Production Forests and Timber Legality Verification for Permit Holders and Forest 
Owners.   WT/TPR/S/401 • Indonesia  
 
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  obtaining the SVLK.111 No data regarding  the number of SDoC beneficiaries out of the total V -licence 
users were available from the authorities.  
4.91.   On 15 November 2016 , following the signature in September 2013 and ratification in 
April 2014 of the Voluntary Partnership Agreement (VPA) with the European Union ,  Indonesia issued 
the world's first Forest Law Enforcement, Governance and Trade (FLEGT) timber export licences , 
certifying that the timber was harvested, transported, processed and traded according to Indonesian 
law.112 FLEGT licen ces provide an economic i ncentive to producers, ensuring their shipments a green 
lane into major EU timber markets, and exempting them from the due diligence procedures for 
non-licensed timber imports.113  
Enforcement and illegal activities  
4.92.   During the review period, forest law enforcement in Indonesia was updated. Law No. 41/1999  
on Forestry and Law No.  5/1990  on Conservation of Living Resources and their Ecosystems define a 
range of forest crimes and the associated penalties, from fines to prison terms.114 Law No. 18/2013  
on the  Prevention and Eradication of Forest Destruction was aimed at strengthening forest law 
enforcement by: targeting organi zed forest crime; expanding the scope of the Law on Forestry to 
include oil palm plantations and mining in forested areas; and allowing the utili zation of corporate 
criminal liabilities. In line with the Law, in 2015 , the MoEF established the Directorate General of 
Law Enforcement (DGLE).115 Forest law enforcement adopted a so -called multi -door strategy, a 
multi-agency coordination framewor k for investigation that respond s to forest crimes with a broader 
range of offen ces; enforcement  involv es the MoEF, the MoF, the Attorney General, the National 
Police, and the Indonesian Transaction Reporting and Analysis Center.116 Enforcement operations 
target three types of illegal forest activities: forest area encroachment; illegal logging; and illegal 
wildlife trade. In 2018, the MoEF indicated that  enforcement operations are undertaken  after 
receiving reports from field officers, communities or non-government organizations . Between 
January 2015 and June 2020, 424 forest area encroachment cases, 373 illegal logging cases , and 
264 illegal wildlife trad ing cases were being handled. The MoEF also conducted 4 licence revocation s, 
21 licence suspension s, 231  government -mandated corrective actions, 23 written reprimands, and 
115 written warnings.117  
4.93.   According to the authorities, illegal logging and timber trade persist on a small scale , and 
occur sporadically. A relatively small number of officers located at site level means there is  an 
unbalanced ratio between the number of officers and the size of the forest area to be supervised. 
Illegal logging often occurs in forest areas with tenure co nflict and small -scale illegal sawmill 
industry, thus making it more difficult to trace timber circulation.  
 
111 Forest Legality Initiative, Indonesia . Viewed at: https://forestlegal ity.org/risk -tool/country/indonesia . 
112 The VPA  was a consequence of the European Union Timber Regulation , where only legal timber can 
enter  the EU market.  Forest Legality Initiative, Indonesia. Viewed at: 
https://www.timbertradeportal.com/countries/indonesia/#legality -profile . 
113 World Resources Institute, Indonesia Has a Carrot to End Illegal Logging; Now It Needs a Stick . 
Viewed at: https://www.wri.org/blog/2018/01/indonesia -has-carrot -end-illegal -logging -now-it-needs -stick. 
114 Tacconi , L., Rodrigues , R.J., Maryudi , A. (2019), Law enforcement and deforestation : Lessons for 
Indonesia from Brazil , Forest Policy and Economics , Vol. 108, November . Viewed at: 
https://www.sciencedirect.com/science/article/pii/S1389934118304623 . 
115 The DGLE won the 2019 Asia Environmental Enforcement Awards, which was organized by UNEP, 
UNODC, UNDP, INTERPOL, the Secretariat of CITES and the Norwegian Government.  
116 The multi -door approach seeks to establish coherence between the inquiry, the investigation and the 
prosecution of forestry crimes , by using a combination of various laws related to enviro nment, forestry, mining, 
taxation, money laundering, corruption, agriculture , and taxation . It targets crimes committed by corporations 
or corporate actors. The approach applies a follow -the-money approach in dealing with forest -related crime, in 
which law  enforcers track the assets and bank accounts of the suspects, and perpetrators found guilty are 
obliged to pay the costs of the rehabilitation of damaged areas and return lost state revenues.  Reportedly, as 
at 2015, coordination among institutions remain ed a significant challenge , as criminal cases are still handled by 
the respective law enforcement agencies . Tacconi , L., Rodrigues , R.J., Maryudi , A. (2019), Law enforcement 
and deforestation: Lessons for Indonesia from Brazil , Forest Policy and Economics V olume 108, November. 
Viewed at: https://www.sciencedirect.com/science/article/pii/S1389934118304623 . 
117 MoEF , The State of Indonesia 's Forests 2018 . Viewed at: 
https://www.menlhk.go.id/site/download?start=10 ; Tacconi,  L., Rodrigues , R.J., Maryudi , A. (2019), Law 
enforcement and deforestation: Lessons for Indonesia from Brazil , Forest Policy and Economi cs Vol . 108, 
November. Viewed at: https://www.sciencedirect.com/science/article/pii/S1389934118304623 . WT/TPR/S/401 • Indonesia  
 
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  4.94.   Indonesia remains committed to reducing its emissions from deforestation and forest 
degradation through the REDD+ mechanism.118 A substantial amount  of its carbon emissions is 
caused by deforestation and forest degradation resulting from land conversion activities, forest fires 
and illegal logging, a driver of deforestation (see above). Therefore, initiatives to curb illegal logging 
have formed a cent ral part of any emission reduction strategy. Since  2017, upon the issue of MoEF 
Regulation No. 70/2017 concerning the Procedures for REDD+ Implementation, the authorities have 
implemented REDD+ to help reduce illegal logging activities by creating financia l incentives to 
encourage compliance with the law, changes in behaviour and wider governance reforms.  Under PR 
No. 77/2018 concerning the Management of Environmental Funds, the Funds Management Agency 
was set  up. Financial incentives from the REDD+ Result s-Based Payment s scheme come from grants, 
donors, domestic income, and the private sector. So far, Indonesia has received grants from 
RI-Norway cooperation, the Green Climate Fund (at the proposal stage), and donor countries 
managed by the World Bank.  
4.2  Mining and Energy  
4.95.   Mining and energy continue to make relatively significant contributions to GDP, exports, 
government revenue , and the development of remote regions ; therefore , they  attract ed numerous 
policy and regulatory developments over the review period. The Ministry of Energy and Mineral 
Resources (MoEMR) remains in charge of policy making and implementation , through its directorates 
with specific responsibilities, including the Directorate General of Mineral and Coal (DGMC), the 
Directorate General of Oi l and Gas (DG OG), Directorate General of Electricity (DGE), and the 
Directorate General of New and Renewable Energy and Energy Conservation (DGNREEC).119 Other 
ministries and agencies , including the MoF, BAPPENAS, the Ministry of SOEs, and the MoEF, remain 
involved in various areas of the sector. The MoEMR also manages relevant activities of the 
state-owned utilities and energy service companies, and conducts research relevant to mandated 
energy goals. The Coordinating Ministry of Economic Affairs and the Co ordinating Ministry for 
Maritime Affairs (CMMA) also have jurisdiction over mining and coal energy projects.  
4.2.1   Mining  
4.96.   Mining remains an important activity contributing to economic growth. Indonesia continues 
to be a major player in the global mining industry; it is the world's leading producer of nickel (2018) , 
2nd of tin (2016), 4th of coal (2018), 7th of gold (2018), 10th of copper (2017) , and 14th of bauxite 
(2017).120 The mining sector's (excluding oil and gas extraction) contribution to GDP declined from 
5.7% in 2013 to 4.3% in 2016 , and recovered to 5.2% in 2018, inter alia,  due to the increase in 
both commodity prices and export quotas for coal ; it then  dropp ed to 4.7% in 2019 (Table 1.2).121 
Its share in total employment decreased slightly , from 1.3% in 2013 to 1.1% in 2019 (Table 1.2); 
this ratio suggests possibl e higher labour productivity as compared to agriculture. Mining operators 
include large (e.g. BHP Billito n, Freeport -McMoRan and Vale), small and medium -sized firms , as well 
as SOEs (e.g. PT Indonesia Asahan Aluminium (Persero) Inalum, the energy company PT Pertamina , 
and the coal producer Tambang Batubara Bukit Asam); in 2016, there were plans for Inalum and  
Pertamina to become the holding companies for all SOEs active in the mining and oil and gas 
sectors.122 During the review period, total FDI inflows in mining dropped from USD 2.5 billion  in 
2013 to negative inflows (2017, 2018) , as a result of the foreign ownership divestment rules and 
regulatory uncertainty (see below , and Section 1.3.2) ; these then  recover ed partly , to 
 
118 CIFOR, Lessons for REDD+ from measures to control illegal logging i n Indonesia . Viewed at: 
https://www.cifor.org/library/3505/ . 
119 MoEMR. Viewed at: https://www.esdm.go.id/en/ ; and ADB, Summary of Indonesia's Energy Sector 
Assessment . Viewed at: https://www.adb.org/sites/default/files/publication/178039/ino -paper -09-2015.pdf . 
120 USGS, Nickel Statistics and Information. Viewed at: https://www.usgs.gov/centers/nmic/nickel -
statistics -and-information ; World Coal Association, Coal mining.  Viewed at: 
https://www.worldcoal.org/coal/coal -mining ; and Enerdata, Coal and lignite production.  Viewed at:  
https://yearbook.enerdata.net/coal -lignite/coal -production -data.html . 
121 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
122 Indonesia Investments, Holding Company for Indonesia's State -Owned Miners Ready in Q1 -2017. 
Viewed at: https://www.indonesia -investments.com/news/todays -headlines/holding -company -for-indonesia -s-
state-owned -miners -ready -in-q1-2017/item7541 ; and  Deloitte , 2019-20 Investm ent Window into Indonesia 
(IWI) . Viewed at: https://www2.deloitte.com/conten t/dam/Deloitte/cn/Documents/international -business -
support/deloitte -cn-ibs-investment -window -into-indonesia -2019-2020-en-200116.pdf . WT/TPR/S/401 • Indonesia  
 
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  USD 1.7 billion  in 2019.123 Coal production bottomed to 461 million tonnes in 2015 due to weakening 
global supply and demand, and rose to 5 57 million tonnes in 2018 , of which 63% was destined to 
meet domestic demand and the rest export ed.124 Mining (excluding oil and gas) continued to 
represent a high proportion of exports, particularly as mining products are generally priced in 
US dollars; it s share of total exports dropped from 22% in 2013 to 19% in 2019 , due the 
implementation of the ban on exports of unprocessed (or not -sufficiently processed) minerals in 
January 2014 and the introduction of a significant export duty on mineral concentrates ; it then  
recovered to 20% in 2019 (of which 13.2 percentage points  were coal and lignite) upon the ban's 
easing (see below).125  
Policy framework  
4.97.   The main policy framework for mining remains unchanged. Under the 2009 Mining Law , the 
policy objective is to support sustainable national development by, inter alia,  setting the following 
requirements on stakeholders in mining activities: good mining practices; increasing the value -
added of mining products; improving society; being cautious with regard to environ mental impact; 
and maintaining good governance and bookkeeping.126 The implementation of the first phase 
(2015 -19) of the Master Plan of National Industry Development 2015 -35 included the objective of 
increasing the value -added of mineral and oil processing  (Section 2.2.2).   
4.98.   Both the central and regional governments play vital roles in setting mining policies, 
standards, guidelines, and criteria, as well as deciding on mining authorization procedures.127 
Reportedly, global mining companies rank Indonesia highly in terms of its prospective minerals, but 
poorly in terms of its mineral policies and investment climate.128 
Regulatory framework  
4.99.   During the review period, the main legislation governing mining acti vities, Law No. 4 on 
Mineral and Coal Mining of 2009 (the Mining Law), remained unchanged but implementing 
regulations were issued in several areas.129 By November 2019, 32 regulations and 64  requirements 
for certifications, recommendations, and permits had  been revoked , to reduce bureaucracy and 
duplication so as to simplify business activities and improve the economic competitiveness of the 
 
123 Reportedly, despite its geological potential, Indonesia has yet to capture a fair proportion of the 
global corporate mini ng exploration spending; it consistently received less than 2.5% of the global exploration 
budget during the period 2006 -14, and only around 1% from 2015 to 2018, which appears extraordinarily low 
when compared to its mineral potential.  PWC (2019), Mining in Indonesia , Investment and Taxation Guide , 
June 2019 . Viewed at: https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -
2019.pdf . 
124 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html ; 
and Secretariat General of the National E nergy Council,  Indonesia Energy Outlook (IEO) 2019 . Viewed at:  
https://www.esdm.go.id/assets/media/content/content -indonesia -energy -outloo k-2019-english -version.pdf . 
125 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities-mining/assets/mining/mining -guide -2019.pdf . 
126 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.c om/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf .  
127 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
128 According to the 2018 Fraser Institute Annual Mining Survey, the gl obal perception of the Indonesian 
mining sector slightly improved, despite still ranking among the worst. In terms of the policy perception index, 
which appraises the friendliness of government policy to the mining sector, Indonesia ranked 70th (out of 
83 economies) , a slight improvement from 84th (out of 91 economies)  in 2017. It appears that the taxation 
regime, uncertainty concerning disputed land claims, socio -economic agreements, and community 
development conditions continue to be deterrents to investm ent. However, in terms of the mineral potential 
index, representing the perceived geologic attractiveness, Indonesia dropped quite significantly from 1st out of 
the 91 countries surveyed in 2017 to 25th out of the 83 countries surveyed in 2018 , possibly partly due to the 
limited exploration performed over the previous  10 years . PWC (2019), Mining in Indonesia , Investment and 
Taxation Guide , June 2019 . Viewed at: https://www.pwc.com/id/en/energy -utilities -
mining/assets/mining/mining -guide -2019.pdf . 
129 The Mining Law is dependent upon a significant number of implementing regulations that provide 
detailed guidelines about how it will be administered. Most of the fundamental implementing regulations have 
been issued, although some clarifications seem to still be required.  PWC (2019), Mining in Indonesia , 
Investment and Taxation Guide , June 2019 . Viewed at: https://www.pwc.com/id/en/energy -utilities -
mining/a ssets/mining/mining -guide -2019.pdf . WT/TPR/S/401 • Indonesia  
 
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  sector.130 At the same time, policy uncertainty in certain areas resulted from amending regulations 
on the same measur e in a short period of time (e.g. maximum foreign  shareholding , and export 
taxes). A revision to the Mining Law is under consideration since 2016; by mid -2019, the draft of a 
new Mining Law was being reviewed by the House of Representatives , and the next s tep was to be 
a discussion with the MoEMR and the DGMC but , by June 2020 , there had been no progress. MoEMR 
Regulation  No. 25 of 2018 on Minerals and Coal Business , which comprehensively covers operations 
of both the upstream and downstream mining activiti es, was issued in an attempt to improve the 
mining investment climate until the revision of the Mining Law is finalized; it was amended by MoEMR 
Regulation No. 50/2018.  
4.100.   Under the Mining Law, the central Government determines the areas that can be mined , 
except in certain exceptional circumstances for pre -determined areas where regional governments 
have the authority to grant mining business licences.131 Several types of mining areas , as defined 
under the Mining Law , remain in place . They are: Mining Area (W P), a potential area for minerals 
and/or coal not bound by governmental administrative boundaries as part of the national spatial 
planning; Mining Business Area (WUP), part of a mining area already completed , with data, geology 
potential, and/or informatio n about geology; Mining Business Licence Area (WIUP), an area 
authorized for use by a  Mining Business Licence (IUP) holder; People's Mining Area (WPR), part of a 
mining area where small -scale mining activities are carried out; State Reserve Area (WPN), par t of 
a mining area reserved for the national strategic interest; Special Mining Business Area, part of a 
WPN that may be commerciali zed; Special Mining Business Licence Area (WIUPK), an area authorized 
for use by a Special Mining Business Licence holder (s ee below). In 2018 and 2019, 7 WIUPKs were 
auctioned by the central Government , and 19 by regional government s.  
4.101.   Under the Mining Law , the long -standing Contracts of Work (CoW) framework for foreign 
investment  was replaced with a new area -based licensing system , that is applicable to both foreign 
and domestic investors and incorporates tendering procedures for granting licences, with the 
involvement of local and provincial governments, as well as the central Government.132 The following 
types of m ining licence may be issued to one or more parties within the designated WPs: a n IUP, a 
general licence for mining business activities in a WUP area; a Special Mining Business Licence 
(IUPK) , for mining activities in a specific WPN area; and a People's Min ing Licence (IPR) , for mining 
business in a WPR area of limited size and investment. IPRs are not available to foreign investors. 
MoEMR Regulation No. 11 of 2018 on Procedure for the Granting of Area, Licensing and Reporting 
in the Business Activity of Min eral and Coal Mining evidenced the Government's attempt to remove 
obstacles to foreign investment (see below), by allowing foreign investors to participate in tenders 
for WIUP s of over 500 ha.133 A privately held company can only hold one licence (i.e. one IUP/IUPK), 
and only the companies that are listed on the Indonesian Stock Exchange  (IDX) and the companies 
that have been granted non -metal mineral and/or rock WIUPs are entitled to hold more than one 
licence. Under the Mining Law, the transfer of an IUP/I UPK to another party is generally prohibited; 
however, GR No.  24/2012 provides an exception, whereby IUPs/IUPKs can be transferred if the 
transferee is at least 51% held by a company that already holds an IUP/IUPK.134 Under PerMen 
11/2018 (as amended by Per Men 22/2018 and PerMen 51/2018), IUPs are issued for periods ranging 
from 3  to 30 years (IUP -OP Specifically for Processing and/or Refining) , and extended unlimited 
times by 20-year period s, depending on the type of licence.  
4.102.   Under the Mining Law, which re moved some of the distinctions between domestic and foreign 
investors, and the 2016 negative investment l ist (Section 2.4.2, Table 2. 6, which does not refer to 
mining (except for oil and gas), it appears that less than 100% foreign investment in the mining  
sector is allowed , subject to the foreign share ownership divestment rules on the transition from the 
pre-2009 licensing regime to the current one (i.e. conversion of CoW s and Coal Contract s of Work 
 
130 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/ener gy-utilities -mining/assets/mining/mining -guide -2019.pdf . 
131 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://w ww.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
132 The transition from the previous regime, inter alia , requiring foreign ownership divestment  has not 
been completed yet. PWC (2019), Mining in Indonesia , Investment and Taxation  Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
133 Under the previous MoEMR Regulation No. 28 of 2013, foreign investors could only participate in 
tenders for WIUP s of over 5,000 ha.  
134 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . WT/TPR/S/401 • Indonesia  
 
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  (CCoW s) to the new licensing system).135 Since the enactm ent of the Mining Law , numerous changes 
in the foreign ownership divestment rules were implemented.136 The foreign divestment requirement 
has reverted to the position whereby foreign shareholders must divest their interest in stages, 
currently commencing from the fifth year of production, so that foreign shareholders have a 
maximum shareholding of 49% by t he tenth year of production. Divestment may be carried out 
through an initial public offering (IPO) on the IDX, if nobody  among the central Government, 
provincial government, regency/municipal government, a national state -owned company (Badan 
Usaha Milik N egara, or BUMN), a regional state -owned company (Badan Usaha Milik Daerah,  or 
BUMD) or a national private business entity is interested in taking the divestment shares.   
Border measures  
4.103.   During the review period, tariff protection remained below the overal l applied MFN average 
(10.1%, 2020) and the average for agriculture and manufacturing. In 2020, the simple average 
stood at 8.4% (7.1% in 2012) and 3.7% (3.8% in 2012) at WTO -definition (excluding petroleum, 
including gas) and ISIC 2 levels (including crud e oil and natural gas) , respectively (Tables  3.2 
and A3.1).137 Thus, in 2020, there was an average gap of 30.2 percentage points and 36 percentage 
points at WTO -definition and ISIC levels , respectively , between the average MFN applied and bound 
rates. Tariff rates range from zero to 30% (WTO definition) or 10% (ISIC)  (Table  A3.1). Since  August 
2019, imports of taxable goods for coal mining entrepreneurs benefit from exemption from , or relief 
on, import duty under certain conditions (Section 3.1.3.6).138  
4.104.   Export taxes and restrictions to support the development of domes tic downstream 
processing facilities were continued. Export taxes, currently ranging from zero to 60% (unprocessed 
minerals), continue to be levied on mineral ores , depending on their stage of processing. They were 
first put in place in 2017 , and were changed in 2018 (Section 3.2.2, and Table 3.6); lower rates 
benefit mining companies committed to develop ing processing or refining facilities.139 A ban on 
exports of unprocessed (or not -sufficiently processed) minerals was imposed in January 2014 but 
was relax ed on 11 January 2017 (the end of the three -year transition period) for a period of 
five years (i.e. 2022) , allowing mining companies to continue exporting semi -processed products 
provided that they pay export taxes under the applicable laws and regulation s on the minimum 
domestic processing and refining requirements.140 Reportedly, the validity of certain documents 
necessary to export low -concentration nickel ore were to expire on 31 December 2019, thereby 
effectively reinstating the total export prohibitio n of nickel ore as of 1 January 2020 
(Section  3.2.3.2). In the context of the WTO dispute settlement mechanism , on 22  November  2019, 
the European Union requested consultations with Indonesia regarding various measures concerning 
 
135 WTO document  WT/TPR/S/278/Rev.1, 16 July 2013; and PWC (2019), Mining in Indonesia , 
Investment and Taxation Guide , June 2019 . Viewed at: https://www.pwc.com/id/en/ene rgy-utilities -
mining/assets/mining/mining -guide -2019.pdf . 
136 GR No. 1 of 2017, MoEMR Regulation No. 9 of 2017, and MoEMR  Regulation No. 43 of 2018. 
137 Under the WTO definition, the m inerals and metals category has a much wider scope, as it contains 
1,554 tariff lines under the following HS codes: HS Chapter 25, HS2601-2621; HS2701-04, HS2706-08, 
HS2711-15, HS Chapter 31 ; HS3403; HS Chapters 68 to 71 (except HS6807, HS701911 -19, HS701940 -59); 
HS Chapter s 72-76 (except HS7321-22); HS Chapters 78 -83 (except HS8304-HS8305) ; and HS 911310 -20. 
Under ISIC 2 Rev.2, mining activities cover energy -producing materials (coal, lignite and peat, hydrocarbons, 
and uranium ore) and non -energy -producing materials (metal o res, various minerals, and quarry products).  
138 MoF Regulation No. 116/PMK.04/2019 (PMK -116), 13 August 2019; and ITR, Indonesia: Indonesia 
issues a flurry of tax -related regulations.  Viewed at: 
https://www.internationaltaxreview.com/article/b1hlmyxmjb4msb/indonesia -indonesia -issues -a-flurry -of-tax-
related -regulations . 
139 Between 2013 and June  2020, 17 smelters were operating . In December 2018 , the MoF  issued PMK 
No. 164/PMK.010/2018, to amend PMK No.  13/PMK.010/2017. PMK No. 164/PMK.010/2018, which was 
effective 30 days from the date of its promulgation, amended the physical progress stages of the refining 
facility's development, from the previous four  stages to three stages (Table 3.6).  
140 This relaxation was  an attempt to alleviate the impact on miners and on the country 's export 
revenues from the ban . According to the BI, the relaxation of the ban on nickel ore provided for additional 
exports of USD 155 million and US D 628 million in 2017 and 2018, respectively, and bauxite exports posted a n 
increase of US D 66 million and US D 265 million in 2017 and 2018, respectively, from only US D 430,000 in 
2016. The BI noted that the export of nickel and bauxite or es in 2018 amounted to  19.8 million tonnes and 
8.7 million tonnes, respectively, which were less than half of the quota capacity given by the MoEMR, indicating 
the potential for a revenue increase from the export of both commodities in the future.  GR No. 1 /2017 (the 
fourth amendment to GR No. 23/2010), cited in PWC (2019), Mining in Indonesia , Investment and Taxation 
Guide , June 2019 . Viewed at: https://www .pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -
2019.pdf . WT/TPR/S/401 • Indonesia  
 
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  certain raw materials neces sary for the production of stainless  steel, including restrictions 
(Sections  2.3.1.1, 3.1.3.6 and 3.2.3.2) on exports of nickel.  
Domestic  production measures  
4.105.   All IUP/IUPK holders are required to pay production royalties at varying rates, depending on 
the mining scale, the production level, and the mining commodity price. Currently, the range of 
percentages on sale proceeds is as follows: coal open pit 3% -7%, and coal underground 2% -6%; 
nickel 4% -5%; iron, zinc and tin 3%; copper 4%; iron sand, bauxite, and  gold 3.75%; and silver 
3.25%.141 Between 2017 and 2019, general mining revenues rose by 40.7% to IDR 24,961 billion , 
and accounted for 7% (2017), 6.5% (2018) and 6.6% (2019) of total non -tax revenue.142  
4.106.   Mineral and coal sales benchmark prices,  and the floo r price for royalty calculation, have 
been in place since December 2017.143 If the actual sales price is higher than the benchmark price, 
then the royalty calculation  is based on the actual sales price; if below, the benchmark price is used. 
Benchmark price s for metal minerals and coal are based on the benchmark price formula, which 
takes certain factors into account.144 The benchmark price is updated monthly , and is determined in 
accordance with market prices (based on a basket of recogni zed global and Indon esian coal indices, 
in the case of coal).   
4.107.   Under MoEMR Regulation No. 34 of 2009, effective since 31 December 2009, on Prioriti zing 
Mineral and Coal Resources for Domestic Usage, i.e. the domestic market obligation (DMO), 
producers of minerals (seemingly until 2018) and coal (see below) have been required to allocate a 
minimum percentage of their total production to the domestic market.145 The Regulation includes 
strict sancti ons for failure to comply with the DMO requirement, including a cut of up to 50% in 
quotas for mining production (for the mining company) or trading volume (for the trading company) 
in any relevant year. No data on compliance with DMO requirements for each  mineral other than 
coal were available from the authorities. Since April 2010 , holders of mineral or coal IUPs or IUPKs 
have been required to carry out domestic processing in order to increase the value that is added to 
the mineral or coal that they produ ce, either directly or in cooperation with other companies, or 
IUP/IUPK  holders. Minimum in -country processing and refining requirements, as set out in PerMen 
No. 25/2018, are not applicable if the products are directly used for the domestic interest, or the 
minerals are exported for research and development purposes, provided that a recommendation 
from the DGMC, on behalf of the MoEMR, and export approval from the M oT's DGFT  are obtained.  
4.108.   Mining (upstream and downstream) activities are supported by severa l tax allowances and 
incentives (Section 3.3.1). The tax allowances consist of: a reduction in net taxable corporate income 
of up to 30% of the amount that has been invested, in the form of qualifying fixed assets (including 
land), pro -rated at 5% for six years; accelerated depreciation and amorti zation; 10% withholding 
tax on the dividends paid to non -residents; and an increased loss carry -forward period, from 
five years to a maximum of ten years.146 Mining sector tax incentives are subject to certain crite ria, 
 
141 MoEMR Decree No. 1823 K/30/MEM/2018 concerning the Guidelines on the Implementation of the 
Imposition, Collection, and Payment of Mineral and Coal Non -Tax State Revenue, cited in  PWC (2019), Mining 
in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: https://www.pwc.com/id/en/energy -
utilities -mining/assets/mining/mining -guide -2019.pdf . 
142 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html . 
143 GR No. 23/2010 ( amended by GR No. 1/2017), as further implemented by PerMen No. 7/2017 and 
PerMen No. 25/2018.  
144 For metal minerals, these factors include, but are not limited to, the value/content of the metal 
mineral; the mineral reference price; corrective factors; tr eatment costs; and refining charges. For the 
determination of the coal benchmark prices, examples of these factors include: calorific value of the coal; the 
coal reference price ( Harga Batubara Acuan , HBA); moisture content; sulphur content; and ash conten t. Where 
coal is sold on a term basis, the HBA that is used as the reference for determining the price of coal in the sales 
contract is based on the formula of 50% of the HBA in the month of the signing of the contract, plus 30% of 
the HBA in the month pri or to the signing of the contract, plus 20% of the HBA two months prior to the signing 
of the contract. PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
145 Global Trade A lert, Indonesia: Domestic market obligation (DMO) for mineral and coal producers.  
Viewed at: https://www.globaltradealert.org/intervention/13775/export -quota/indonesia -domestic -market -
obligation -dmo-for-mineral -and-coal-producers ). 
146 Tax allowances  are contained in GR No. 18/2015 and MoF Regulation No.  89/PMK.010/2015. 
GR No. 18/2015 was amended by GR No. 9/2016  but it did not change the criteria for the eligible mining WT/TPR/S/401 • Indonesia  
 
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  for: basic iron and steel manufacturing; gold and silver processing and refining; certain brass, iron 
ore, uranium, thorium, tin, lead, copper, aluminium, zinc, manganese and nickel processing and 
refining activities; coal gasification; and the use of  coal for energy liquefaction. Apart from the 
processing and refining of copper, silver, and gold, these income tax incentives are generally only 
applicable to activities undertaken outside Java. Tax expenditure for the mining sector was estimated 
at IDR  2.584 billion (2106), IDR 2.543 billion (2017) and IDR 2.850 billion (2018).147  
Coal 
4.109.   During the review period, in addition to other measures discussed above, coal has been 
subject to special pricing  (Section 3.3.4.2) , DMO, and transport/insurance (implement ation pending) 
requirements, in an attempt to support the state -owned electricity company PT Perusahaan Listrik 
Negara (Persero) PLN and national shipping and insurance industries. In March 2020, the MoEMR 
set the selling price of coal (with a calorific va lue of 6,322 kcal/kg Gross as Received, a total moisture 
of 8%, etc.) (HBA) procured for electricity generation for public use at a maximum of USD 67.08/mt 
compared to USD  90.57/mt in March 2019.148 The HBA for coal is set on a monthly basis; the annual 
HBA was USD 95.5/tonne (2012), USD 82.9/tonne (2013), USD  72.6/tonne (2014), USD 60.1/tonne 
(2015), USD 61.8/tonne (2016), USD 85.9/tonne (2017), USD 66.3/tonne (2019), and 
USD 52.98/tonne (2020).149 Since April 2010, CCoWs, IUP -OPs and IUPK -OPs holders have been 
required to meet the minimum coal DMO of 25% of their annual production plan, as approved by 
the MoEMR in 2018, the coal DMO was set at 25% of the production volume (of which 80% 
designated for  the state -owned electricity company PLN (Section 4.2.3.2)), with the coal reference 
price, capped at a maximum of USD 70/mt, where the HBA exceeds USD 70/mt.150 A mining 
company unable to meet its DMO obligation may purchase DMO credits from mining compani es that 
have exceeded their DMO obligations. Between 2013 and 2019, in practice , the DMO ratio rose 
progressively from 15.2% to 22.5% of the actual coal output , which also increased steadily from 
474.00 tonnes to 616.16 tonnes. Under MoT Regulation No.  82/2017, coal exporters are required to 
use Indonesian -owned sea transportation companies, and insurance from domestically  owned 
insurance companies, except when no national provider is available or when an exemption has been 
approved by the Minister of Trade ; following strong reaction from the coal industry relating to the 
readiness of the national shipping to support coal exports and the fact that most coal is exported 
free-on-board with the buyer bearing the cost of insurance and freight, implementation was  delayed 
until May 2019 for insurance and May 2020 for shipping.151  
4.2.2   Energy  
4.110.   During the review period, Indonesia remained dependent on energy imports to cover its 
consumption needs. Total primary energy supply rose by 20% , from 1.2 million  barrel s of oil 
equivalent (BOE s) (2013) to 1.5 million  BOEs (2018), and its mix (excluding bi omass) changed , with 
oil, gas and hydropower being overtaken by coal, renewables and biofuels.152 As at 2018, it consisted 
of oil (38.81%), coal (32.97%), gas (19.67%), hydropower (2.74%), geothermal (1.78%), solar 
(0.02%), wind (0.03%), other renewables (2 .03%), biofuel (1.94%) and biogas (0.01%) , compared 
to 2013 figures of oil (48.13%), coal (24.79%), gas (22.12%), hydropower (3.15%), geothermal 
 
sectors. PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
147 MoF, Tax Expenditure Report 2019 . Viewed a t: https://fiskal.kemenkeu.go.id/publikasi/ta x-
expenditure -report  
148 GR No. 8/2018, MoEMR Regulation No. 19/2018, and MoEMR Decree No. 1395 K/30/MEM/2018.  
149 The HBA is a monthly average price , based on 25% of each of the following:  Platts Kalimantan 
5,900  kcal/kg GAR assessments ; Argus -Indonesia Coal Index 1 (6,500 kcal/kg GAR) ; Newcastle Export Index 
(6,322 kcal/kg GAR) ; and globalCOAL Newcastle (6,000 kcal/kg NAR). Indonesia Investments, Domestic 
Market Obligation Indonesia: Coal Price Capped at $70 per Ton . Viewed at: https://www.indonesia -
investments.com/business/business -columns/domestic -market -obligation -indonesia -coal-price-capped -at-70-
per-ton/item8653 ; and S&P Global Platts, Listen: When it comes to crude, Chinese buyers are spoilt for choice. 
Viewed at: https://www.spglobal.com/platts/en/market -insights/podcasts/oil/043020 -china -crude -buyers . 
150 Reportedly, t he special price and DMO requirements were to  signifi cantly ease the burden of PLN, 
since its production costs ha d increased significantly after coal prices spiked in late 2016.  MoEMR Decree 
No. 78 K/30/MEM/2019, concerning the Determination of Minimum Coal Sales for the Domestic Market 
Obligation for the Ye ar 2019 ; and PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 
2019. Viewed at: https://www.pwc.com/id/en/energy -utilities -mining/asset s/mining/mining -guide -2019.pdf . 
151 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
152 MoEMR  (2019), 2018 Handbook of Energy & Economic Statistics of Indonesia . WT/TPR/S/401 • Indonesia  
 
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  (1.25%), and biofuel (0.56%). Final energy consumption continued to considerably outstrip  supply , 
and rose by 1 0.9% from 844,527 BOEs (2013) to 936,332 BOEs (2018); in 2018 , its allocation by 
type of energy mainly consisted of fuel (38.8%), electricity (18.7%), biodiesel (13.1%) , and coal 
(11.6%) , whereas by type of consumer it mainly was transportation (45.06%), i ndustry (33.51%) 
and households (14.76%). To meet its 2018 energy consumption needs , Indonesia imported 
349,201 BOEs , of which 47.4% was petroleum fuel, 32.4% crude oil, 13.6% liquefied natural gas 
(LNG), and 6.6% coal and electricity (Section 4.2.2.2).  
4.111.   Under the 2014 National Energy Policy ( Kebijakan Energi Nasional , KEN), a comprehensive 
policy covering both the supply and demand sides, the authorities aimed at achieving security of the 
domestic energy supply by reducing  gasoline dependency and increasing the use of renewable 
energy. It also addresses: the availability of energy to meet the nation's requirements; energy 
development priorities; the utilization of national energy resources; and national energy buffer 
reserv es. The KEN  sets a clear target of the share of each type of primary energy , from 2025 to 
2050, as follows: new and renewable energy (NRE) at least 23% in 2025 and 31% in 2050; oil less 
than 25% in 2025 and 20% in 2050; coal at least 30% in 2025 and 25% in  2050; and gas at least 
22% in 2025 and 24% in 2050.153 The RPJMN  2015-19 was, inter alia,  aimed at achieving energy 
sovereignty by utilizing domestically available energy resources (gas, coal and hydropower) , as well 
as fulfilling energy demand by prioriti zing the development of renewable energy (Section 2.2.2).154 
The National General Energy Plan ( Rencana Umum Energi Nasional , RUEN) , consisting of a 
cross-sectorial strategy and an implementation plan to achieve the 2014 KEN objectives , was issued 
in March 2 017.155 The RUEN sets out the results of the energy demand -supply modelling until 2050 , 
and the policies and strategies to be undertaken to achieve those targets. Under the RUEN , the 
Government seeks to re -emphasi ze energy use as a driver of the national ec onomy. The RUEN's 
objectives include ensuring universal access to affordable, reliable and modern energy services; 
increasing the electrification ratio to 100% by 2020; construction of biogas infrastructure (prepar ing 
a roadmap to achieve biogas production  of 47.4 million standard cubic feet per day by 2025 for the 
household sector); accelerating the substitution of oil fuel with gas in the household sector; and 
developing a city gas network for 4.7  million household connections by 2025.156 It also serves as  a 
reference for central  and local governments, SOEs and other stakeholders to contribute to improving 
national energy security and equitable access to energy.157 The RUEN, which is coordinated by the 
National Energy Council, is to be reviewed every five ye ars, or whenever there are changes to the 
fundamentals of the KEN or strategic energy policies.  
4.2.2.1   Hydrocarbons  
4.112.   The DG OG under the MoEMR remains responsible for the preparation, implementation, 
direction, supervision and implementation of various policies in  the oil and gas industry, including: 
the lifting calculation formula and its division between the local and central governments; the policy 
on the gradual reduction of the fuel subsidy (Section 4.2.2.1.2); the offering of new exploration and 
production bl ocks; and the preparation of other policies for the oil and gas industry.158 
4.2.2.1.1   Upstream  
4.113.   During the review period, the contribution of oil, gas and geothermal extraction to GDP 
dropped drastically , from 5.6% (2013) to 2.9% (2019) (Table 1.2). In 2019, Indonesia was the 
 
153 GR No. 79 of 2014 on the National Energy Policy (NEP) . IAEA, Countr y Nuclear Power Profiles, 2018 
Edition.  Viewed at: https://www -
pub.iaea.org/MTCD/Publications/PDF/cnpp2018/countryprofiles/Indonesia/Indonesia.htm . 
154 FAO, National Medium -Term Developm ent Plan 2015 -19. Viewed at: 
http://www.fao.org/faolex/results/details/en/c/LEX -FAOC183392/ . 
155 PR No. 22/2017 , cited in PWC (2018), Power in Indonesia , Investment and Taxation G uide, 
November 2018 , 6th edition .  
156 UNESCAP, National Energy Policy in Indonesia . Viewed at: 
https://www.unescap.org/sites/default/files/UN%20ESCAP%20Workshop%20Indonesia%20Mr.%20Budi%20C
ahyono.pdf . 
157 USAID , Indonesia's National Energy Plan Signed . Viewed at: http://w ww.iced.or.id/en/indonesias -
national -energy -plan-signed/ ; and Purnomo Yusgiantoro Center, A Brief Review on I ndonesia's National Energy 
Policy. Viewed at: https://publication -pyc.org/wp -content/uploads/2018/12/A -Brief-Review -on-Indonesias -
National -Energy -Policy.pdf . 
158 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . WT/TPR/S/401 • Indonesia  
 
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  world's 23rd largest oil producer; it held proved oil reserves of 3.2 billion barrels at end -2018.159 
Between 2013 and 2018, crude oil production ranged from 772,252 barrels of oil per  day (2018) to 
831,000 barrels per day (2016); the declining production was due , inter alia,  to few significant oil 
discoveries , and reliance upon mature oil fields that continue to decline in production. In the same 
period , the share of oil in total expor ts dropped from 5.6% to 2.8% and to 1% (2019) alongside oil 
price developments (Table A1. 3).  
4.114.   In 2018 , Indonesia ranked 11th in terms of global gas production , and its proven reserves 
stood at 96  trillion cubic feet.160 Gas production represents 60% of tota l oil and gas production in 
thousand BOE per day , and this portion is estimated to increase to 70% in 2020 and 86% in 2050. 
Between 2013 and 2018, gas production ranged from 6.8 billion  standard cubic feet per day (2013) 
to 8.2 billion  standard cubic feet per day (2016).161 In the same period , the shares of natural gas in 
gaseous state and liquefied natural gas in total exports dropped from 2.8% to 2 .0% and from 7.1% 
to 3.9%, respectively (Table A1. 3). 
4.115.   Between 2013 and 2018, upstream oil and gas investment d ropped progressively by about 
47%, from USD 19.3 billion  (2013) to USD 10.3 billion  (2017) , before recovering slightly to 
USD 10.9 billion .162 In order to boost production, the Government declared several new upstream 
oil and gas strategic projects , such as  the Jangkrik field development; the Tangguh Train -3; the 
Indonesia Deepwater Development Project; and Inpex's Abadi field development. Betwee n 2013 and 
2018, the oil and gas non -tax contribution to total state revenue peaked at 14.1% in 2014, and 
bottomed  at 2.8% in 2016, before recovering to 4.9% in 2017 and 7.4% in 2018 due to rising oil 
prices.163 According to Statistics Indonesia data, between 2017 and 2019 , the shares of oil and 
natural gas revenue to total non -tax revenue rose from 20% to 31.3% and from 5.4% to 10.9% , 
respectively.164 Furthermore, the share of corporate income tax from oil and gas in total tax revenue 
dropped considerably , from 8. 2% in 2013 to 3.8% in 201 9 (Table 3.10) , reflecting, inter alia , world 
price and domestic sectoral policy developments.  
4.116.   Most oil and gas production is carried out by international contractors under 
production -sharing contract (PSC) arrangements (see below).165 The st ate-owned limited liability 
company PT Pertamina (Persero) ensured 23.59% and 30.41% of oil and gas production , 
respectively , in 2018; in recent years , it has expanded its scope to include gas, renewables and 
upstream operations , both within Indonesia and abroad (Section 4.2.2.1.2 and 4.2.2.3).166 The 
subsidiaries of the state -owned PT Perusahaan Gas Negara (PGN) (Section 4.2.3.1.2) also operate 
in upstream activities. Under GR No. 6 of 2018, a n SOE holding company in the oil and gas sector 
was established, which combin ed the business of PGN with Pertamina , and appoint ed Pertamina as 
the holding company of SOEs serving the oil and gas industry.167 In April 2018, Pertamina became 
the major shareholder of PGN, by acquiring the Government's controlling 56.96% sta ke, while PGN 
continues to be a publicly listed company. Thereafter , the PGN acquired 51% of the Pertamina shares  
 
159 PWC (2019), Oil and Gas in  Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
160 PWC (2019), Mining in Indonesia , Investment and Taxation Guide , June 2019 . Viewed at: 
https://www.pwc.com/id/en/energy -utilities -mining/assets/mining/mining -guide -2019.pdf . 
161 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/in dustries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
162 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
163 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , Septembe r 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
164 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html . 
165 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
166 Pertamina entered into several joint operations within Indonesia, including taking over the operation 
of expiring PSCs from international oil and gas companies . It has upstream operations in Viet Nam, Malaysia, 
Sudan, Qatar and Libya, an d provides aviation fuel services at ten international airports.  
167 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . WT/TPR/S/401 • Indonesia  
 
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  in Pertagas, thus becoming the majority shareholder of Pertagas. Under GR No. 23/2020 on the 
National Economic Recovery Program me, which took effect on 11 May 2020, as with  the state -owned 
electricity company PT Perusahaan Listrik Negara (Persero) (PLN) (Section 4.2.2.2), Pertamina  is to 
receive IDR 45 trillion in the form of accelerated compensation payments , representing the retail 
price difference for certain type s of fuel.168  
Institutional and regulatory framework  
4.117.   In 2013, BPMIGAS was replaced by the Special Task Force for Upstream Oil and Gas Business 
Activities (SKK Migas ), an autonomous agency.169 SKK Migas controls upstream activities and 
manages oil and gas contractors on behalf of the Government , so that the ex traction of natural oil 
and gas resources provide maximum benefits and revenues for the State. Its role consists of: 
advising the MoEMR on the preparation and offering of the bidding round of work areas and joint 
cooperation contracts (JCCs, see below); ac ting as a party to JCCs; assessing first field development 
plans in a given work area , and submitting evaluations to the MoEMR for approval; approving 
development plans; approving work plans and budgets; reporting to the MoEMR , and monitoring the 
implement ation of JCCs; and appointing sellers of the State's portion of petroleum and/or natural 
gas to the Government's best advantage. A member of OPEC since 1961, Indonesia suspended its 
membership in 2009 after years of declining production, re -joined in Janua ry 2016, but suspended 
its membership again in November  2016, seemingly due to OPEC requests to cut production.    
4.118.   During  the review period, regulatory reform benefited upstream activities. Aside from the 
changes in the PSC system (see below), the Governme nt revoke d, in March  2018,  18 regulations 
and 23  requirements for certifications, recommendations, and permits, in an attempt to reduce 
duplication in certification, shorten bureaucracy , and simplify business.170  
4.119.   The main legislation governing upstream and  downstream oil and gas activities, Law No. 22 
of 23 November 2001, remains unchanged but several new regulations were issued over the review 
period; a draft amendment of the Law became publicly available in 2018 for comments from relevant 
stakeholders , and was still with Parliament as at July 2020.  
4.120.   Upstream activities (i.e. exploration and exploitation) continue to be conducted in regions 
known as work areas.171 Work areas are formalized upon approval from the MoEMR , in consultation 
with SKK Migas and the relevant local authorities, and then specified in a JCC (see below). A work 
area can be offered either through a tender or a direct offer. The first 2019 oil and gas tender 
resulted in two new oil and gas work areas, while the second 2019 tender , with four  working areas 
offered, was still ongoing at the end of July 2020.  
4.121.   During the review period, a major change in upstream contracting was made . Activities 
remain controlled through JCC s (predominantly PSCs, Service Contract s, or Joint Operation 
Agreement s) between the contractor (i.e. business entity or permanent establishment) and the 
executing agency (i.e. SKK Migas).172 In 2017, to revive deteriorating investment in the oil and gas 
industry, the MoEMR introduced a new form of PSC based on gross production split (Gross Split 
 
168 This funding is aimed at strengthen ing the capital structure of the companies or their subsidiaries 
affected by the outbreak , and increas ing SOEs' and their subsidiaries ' capacity in carrying out economic 
recovery program mes mandated by the Government. Viewed at: 
https://www.thejakartapost.com,SSL+government -issues -regulation -on-economic -recovery -program -focuses -
on-soes-msmes.html . 
169 BPMIGAS was dissolved by the Con stitutional Court on 13 November 2012 because it was considered 
to be in conflict with the 1945 Constitution. PR No. 9 of 2013 concerning Management of Upstream Oil and Gas  
Business Activities , cited in  PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 
2019, 10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --
utilities ---mining -publications/oil -gas-guide -2019.html . 
170 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
171 PWC (2019), Oil and Ga s in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications /energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
172 Indonesia is an international pioneer in many areas  of oil and gas production , including the 
development of the PSC model . Article 6 of Law No. 22, cited in PWC (2019), Oil and Gas in Indo nesia, 
Investment and Taxation Guide , September 2019 , 10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -
publications/industries -publications/energy --utilities ---mining -publications/oil -gas-guide -2019.html . WT/TPR/S/401 • Indonesia  
 
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  PSC), replacing the cost-recovery scheme in place since 2008.173 Under MoEMR Regulation 
No. 26/2017 (amended by MoEMR  Regulations No. 47/2017, No. 24/2018, and No. 46/2018): for 
(conventional) PSC s, unrecovered investment costs can be carried forward to the extended 
(conventional) PSC; and for the new Gross Split PSC , unrecovered investment costs should be 
considered as an additional split/take for the existing contractor. Every contractor can hold only 
one work area (the "ring -fencing" principle) and must return it, in stages or in its entirety. JCCs 
remain valid for a maximum of 30 years from the date of approval. After  this time, the contractor 
can apply to the MoEMR for an extension of a maximum 20-year period per extension, which can be 
submitted no earlier than 10 years and no later than 2 years before the JCC expires. According to 
the DG OG's 2018 Annual Report, betw een 2017 and 2018, 11 new contracts were signed compared 
to 27 in 2013 -16; this reduction may partly be a consequence of investors taking time to consider 
the change in the PSC system , which has possibly also had an impact on reduced oil and gas non -tax 
state revenue.  
4.122.   Upstre am and downstream activities (Section 4.2. 2.1.2) may be carried out by SOEs, 
regional administration -owned companies, cooperatives, small -scale businesses or private -business 
entities. Upstream activities may include branches of foreign  incorporated enterprises as a 
permanent establishment . However, upstream entities are prohibited from engaging in downstream 
activities, and vice versa , except where an upstream entity must build transport, storage or 
processing facilities or other downst ream activities that are integral to supporting its exploitation 
activities.174 
4.123.   Under the 2016 negative investment list, which  replac ed the 2014 list (Section 2.4.2, 
Table  2.6), foreign investment companies: may no longer engage in onshore drilling; the max imum 
foreign shareholding for offshore drilling is 75%; may no longer engage in oil and gas construction 
services for onshore pipe installations, production installations, horizontal/vertical tanks or storage 
installations; the maximum foreign shareholding  for oil and gas construction services for offshore 
pipe installations and spherical tanks is 49%, while for construction of oil and gas platforms it is 
75%; may no longer engage in the operation and maintenance of wells, design and engineering 
support ser vices, or technical inspections; and, for oil and gas survey services , the maximum foreign 
shareholding is 49%.175    
Border measures  
4.124.   During the review period, tariff protection for upstream and downstream (Section 4.2. 2.1.2) 
hydrocarbons (several HS27 sub -headings) remained unchanged , and remained below both the 
overall applied MFN average (10.1%, 2020) and the average for agriculture and manufacturing . The 
MFN applied rates remain at zero (e.g.  crude oil) and 5% , depending on the product , and tariffs are 
bound at a single rate of 40% ; this suggest s an average gap of either 35 percentage points or 
40 percentage points.  
4.125.   Imports for use in upstream oil and gas exploitation activities are exempt from import duties, 
VAT and the luxury -goods sales tax . In 2017,  this exemption represented tax expenditure estimated 
at IDR  194 billion for PSC -related imports (Section 3.1.3.6). Imports require appropriate approvals 
from the MoEMR, the MoF and other minister(s) , and can be im ported only if they are not available 
domestically and /or meet requirements in terms of quality/grade, efficiency, guaranteed delivery 
time and after -sales service. Import restrictive licensing on oil and gas seems to remain in place 
(Section 3.1.5.2, and Table  A3.4). Quantitative export restrictions based on DMO requirements for 
 
173 Reportedly, the Gross Split regime, under MoEMR Regulation No. 8/2017  as amended by MoEMR 
Regulation No. 52/2017 , has fundamentally "shifted " the key principles and regulatory framework of the 
(conventional) cost -recovery model in the upstream sector, which had been in place for more than 40 years.  
The PSC with a cost -recovery mechanism , introduced  in 2008, was the fifth -generation PSC; while t he after -tax 
equity split was negotiable, it limited the spending available for cost recovery  (via a negative list, as regulated) 
and offered incentives in other areas such as via investment credits. PWC (2019), Oil and Gas in Indonesia , 
Investment and Tax ation Guide , September 2019 , 10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -
publications/industries -publications/energy --utilities ---mining -public ations/oil -gas-guide -2019.html . 
174 Article 10 of Law No. 22, cited in PWC (2019), Oil and Gas in Indonesia , Investment and Taxation 
Guide , September 2019 , 10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -
publications/energy --utilities ---mining -publications/oil -gas-guide -2019.html . 
175 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . WT/TPR/S/401 • Indonesia  
 
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  oil and gas seemingly continue to apply (Section 3.2.3.2, and Table 3.8). No  data on annual import 
and export quotas were available from the authorities.  
Domestic production measur es 
4.126.   Under Law No. 22 , entities carrying out oil and natural gas business activities must give 
priority to the use of local manpower, and domestic goods , services, and engineering and design 
capabilities , in a transparent and competitive manner.176 Local-content requirements on 
procurement for oil and gas projects were to be raised from 61% in 2012 to 64% by 2024 
(Section  3.1.7).  
4.127.   Since  2013, procurement of goods and services by oil and gas contractors has remained 
subject to preference requirements in favour of domestic suppliers of goods, services , technology , 
and design and engineering capabilities , as long as they are of comparable quality, price and 
availability to foreign ones (Section 3.3.6).177 Local goods and services must be given preference if 
their p rices are within a margin of 15% and 7.5% compared to the lowest tender, respectively. For 
purchases in excess of USD 5 million , detailed procedures , including the calling of tenders and 
approval by SKK Migas , must be followed. All goods and equipment purc hased by contractors in the 
context of petroleum operations become state -owned goods ; they are administered by SKK Migas 
as stipulated in the PSC.  
4.128.   During the review period, DMOs for both oil and gas required under Law No. 22 and relevant 
implementing regu lations remained in place. The contractor is responsible for meeting demand for 
crude oil and/or natural gas for domestic needs. Since  2017, the DMO has been at 25% of the 
produced petroleum and/or natural gas; previously , it was set at a maximum of 25% of the 
contractor's share of production.178 In 2017 , an incentive in the form of a DMO holiday (for oil) , 
issued by the MoEMR upon MoF ap proval , was introduced. Since  2018, the state -owned Pertamina 
(see above) is required to prioriti ze the procurement of crude oil from domestic sources prior to 
importing, with PSC contractors being obliged to offer their portion of crude oil to Pertamina, before 
exporting, pursuant to business -to-business negotiations (presumably meaning that the crude need 
not be sold under "market" value); there has reportedly been concern over this measure possibly 
resulting in lowering of oil export revenue.179  
4.129.   Upstream activities are supported by several tax allowances and incentives (Sections 3.3.1 
and 4.2.2.3). Tax incentives include: duty -free import of goods under PSC s for oil and gas; land and 
building tax deduction s for the oil and gas sector in the  explor ation phase; land and building tax 
deduction s for geothermal mining in the  exploration phase (Section 4.2.2.3); and income tax borne 
by the Government for geothermal enterprises . 
4.2.2.1.2   Downstream  
4.130.   During the review period, the contribution of oil and gas manufact uring industries to GDP 
dropped from 3.4% (2013) to 2.2% (2019) (Table 1.2). With a refining capacity of just over 
1.151  million barrels per day in 2018 , and a  domestic product demand of 1.5 -1.6 million barrels per 
day, Pertamina must import more than a th ird of its fuel requirements, instead of bringing in crude 
for processing.180  
 
176 MoEMR Regulation No. 15/2013 on the Use of Domestic Products for Upstream Business of Oil and 
Natural Gas implements the relevant provisions of Law No. 22.  
177 MoEMR Regulation No. 15 of 2013 o f 22 February 2013 . 
178 GRs No. 35 and No. 79/2010, as amended by G R No. 27/2017, cited in PWC (2019), Oil and Gas in 
Indonesia , Investment and Taxation Guide , September 2019 , 10th Edition . Viewed at: 
https://www.pwc.com/ id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/oil -gas-guide -2019.html . 
179 MoEMR Regulation No. 42/2018, cited in PWC (2019), Oil and Gas in Indonesia , Investment and 
Taxation Guide , September 2019 , 10th Edition . View ed at: https://www.pwc.com/id/en/pwc -
publications/industries -publications/energy --utilities ---mining -publications/oil -gas-guide -2019.html . 
180 Nikkei Asian Review, Pulling Indonesian oil refining out of decline. Viewed at: 
https://asia.nikkei.com/Opinion/Pulling -Indonesian -oil-refining -out-of-decline ; Reuters, Indon esia's Pertamina 
plans investment increase to double refinery capacity. Viewed at: 
https://af.reuters.com/article/commoditiesNews/idAFL3N20H2ZP ; and MoEMR  (2019), 2018 Handbook of 
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  4.131.   As at 2013 , Pertamina owned six oil refineries , which had a total combined capacity of around 
1 million barrels (160 ,000 cubic metres) of oil per day; in addition, it was respons ible for another 
four smaller capacity refineries. The authorities indicated that Pertamina has no de jure  monopoly 
rights regarding  fuel import s or oil refining (see below). Pertamina plans to double its refining 
capacity to 2 million barrels per day by 2 026; as at February 2019, it was working on at least seven 
refinery projects. Pertamina continues to operate the largest distribution network of petroleum 
products (gas stations, etc.) in the country. It has invested in two operating companies , which 
manag e output from liquefied  natural gas (LNG) plants (PT Badak LNG, and PT Donggi Senoro LNG).  
4.132.   PGN, which is partly owned by Pertamina  since 2018 (Section 4.2.2.1.1), continues to 
operate a natural gas distribution pipeline network and a natural gas transmission pipeline 
network.181 Following the acquisition, Pertamina and PGN agreed to integrate and streamline the 
gas distribution busine ss previously held by PGN and PT Pertamina Gas (Pertagas), a wholly -owned 
subsidiary of Pertamina. In December 2018, PGN acquired Pertamina's 51% controlling interest in 
Pertagas, and became the sub -holding entity for gas operations.   
Policy and institutio nal framework  
4.133.   Phase VIII of the 16 Economic Policy Packages (EPP), introduced in 2015, focused on 
intensifying domestic oil production through incentives for the development of oil refineries by the 
private sector (Section 2.2.2, and Table 2.2).182  
4.134.   BPH Mig as, an autonomous agency, remains the regulatory agency charged with ensuring 
sufficient natural gas and domestic fuel supplies , and the safe operation of refining, storage, 
transportation and distribution of gas and petroleum products via business licence s.183 It remains 
responsible for the supervision of fuel oil distribution and the transportation of gas through pipelines 
operated by Indonesian -incorporated entities (PT  companies ). 
Regulatory framework  
4.135.   Similar to upstream activities , Law No. 22 remains th e main legal framework governing 
downstream operations.184 Businesses are required to operate through a PT company , and to have 
a business licence (issued by the BKPM and the MoEMR, with input from BPH Migas). To guarantee 
the availability and distribution of certain types of fuel oil, the MoEMR has the authority to designate 
areas of trading of certain types of fuel oil. Transportation of gas by pipelines via a transmission 
segment or a distribution network area is permitted only with the approval of BPH  Migas, with 
licences being granted only for specific pipelines/commercial regions.  
4.136.   Downstream activities remain open to domestic and foreign private investment. Law No. 22 
formally liberalized the downstream market by opening the sector (processing, transpo rtation, 
storage , and trading) to FDI, and ending the former de jure  monopoly of Pertamina.185  
 
181 PGN subsidiaries and affiliated companies are involved in upstream activities, downstream activities, 
telecommunications, construction, and a floating storage and regasification terminal. PWC (2019),  Oil and Gas 
in Indonesia , Investment and Taxation Guide , September 2019 , 10th Edition . Viewed at: 
https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/oil -gas-guide -2019.html . 
182 Indonesia Investments, 16th Economic Policy Package Indonesia: Investment, Tax Holiday & Export 
Earnings. Viewed at:  https://www.indonesia -investments.com/news/todays -headlines/16th -economic -policy -
package -indonesia -investment -tax-holiday -export -earnings/item9035 . 
183 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition.  Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
184 PWC (2019), Oil and Ga s in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition.  Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications /energy --utilities --
-mining -publications/oil -gas-guide -2019.html . 
185 PWC (2019), Oil and Gas in Indonesia , Investment and Taxation Guide , September 2019 , 
10th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities --
-mining -publications/oil -gas-guide -2019.html . WT/TPR/S/401 • Indonesia  
 
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  Border and domestic production measures  
4.137.   During the review period, tariff protection and non -tariff measures on downstream activities 
remained unchanged (Section 4.2.2.1.1).  
4.138.   To reduce the increasing volume of liquefied petroleum gas (LPG) imports, a programme to 
substitute LPG for dimethyl ether from coal , and to substitute LPG stoves for  induction stove s, was 
being  prepar ed as at July 2020.  
4.139.   PT companies continue to pay a royalty to BPH Migas for: carrying out the supply and 
distribution of fuel oil and/or transmission of natural gas via pipeline; or  operating  the n atural gas 
distribution network facilities in the distribution network area and/or transmission section. The 
royalty is settled monthly , and is volume -based ( GR No. 48/2019); as at 2019, the rates for fuel oil 
sales were 0.25% (sales volume <25 million kL), 0.175% (sales volume >25 and <50 million kL) 
and 0.075% (sales volume >50 million kL) of the selling price , depending on the volume sold , and 
gas transmission rates were 1.5% (volume >100 million  kL) and 2.5% (volume <100 million  kL) 
transmission tariff per 1,000  standard cubic feet. For natural gas sales by pipe line the royalty rates 
were 0.25%.  
4.140.   During the review period, downstream activities benefited from expanded tax incentives , in 
the form of tax holidays for pioneer industries ( since 2018) and tax allowances available on a 
sector -specific basis for national priority activities with  specific potential development areas 
(GR No. 78/2019) (Sections 2.4. 4 and 3.3.1.1.1.1).  
4.141.   During the review period, very significant changes to Indonesia's fuel subsidy policy were 
made.186 Under reforms undertaken in 2015 , changes were as follows: the gaso line subsidy in the 
Java-Madura -Bali (Jamali) area, in central Indonesia, was entirely removed , and gasoline sold 
outside this region still received a 2% subsidy, in compensation for higher distribution costs; a fixed 
subsidy for diesel , set at IDR  1,000 ( USD 0.08) per litre below market prices , was introduced , and 
was then reduced to IDR 500 per litre in July 2016; and the retail price of kerosene across the 
country was fixed at IDR 2,500 (USD  0.20) per litre. Under the new pricing system, which aims to 
limit volatility and equalize fuel prices across the country, gasoline and diesel prices are adjusted on 
a regular basis , according to a published pricing formula.187 In a renewed effort to even -out fuel -price 
disparities across the country, a Single Fuel P rice policy was introduced on 17  October  2016 to align 
retail fuel prices in 150 remote regions with prices in the Jamali region (IDR 6,450 for gasoline and 
IDR 5,500 for diesel as at June 2017). As at April  2018, subsidies kept three fuel retail prices be low 
world market prices: gasoline (distribution cost compensation); diesel (fixed subsidy); and kerosene 
(fixed price). Since  2014, falling energy prices and substantial reforms have allowed significant 
reduction in the entire energy subsidy bill.188 No rec ent data on the budgetary outlays to support 
the fuel subsidy policy were available from the authorities.  
 
186 Indonesia has a long history of keeping the domestic prices of its fossil fuels artificially low. 
Indonesia 's effort to phase out and rationalise its fossil -fuel subsidies - A report on the G20 peer -review of 
inefficient fossil -fuel subsidies that encourage wasteful consumption in Indonesia , prepared by the members of 
the peer -review team: China, Germa ny, Italy, Mexico, New Zealand, World Bank, IEA, IISD – GSI, GIZ 
Indonesia and OECD (Chair of the peer -review), April 2019.  
187 The price-setting formula  takes the average international oil price index as a reference (Indonesia 
uses the Mean of Platts Singap ore), adjusted for the USD/IDR exchange rate, storage and distribution costs, 
10% VAT, 5% vehicle fuel tax, and a margin for distributors (ranging from 5% to 10%). Indonesia 's effort to 
phase out and rationalise its fossil -fuel subsidies - A report on the G20 peer -review of inefficient fossil -fuel 
subsidies that encourage wasteful consumption in Indonesia , prepared by the members of the peer -review 
team: China, Germany, Italy, Mexico, New Zealand, World Bank, IEA, IISD – GSI, GIZ Indonesia and OECD 
(Chair o f the peer -review), April 2019.  
188 Between 2014 and 2015, the Government saved IDR 120 trillion (USD 9 billion), as fossil fuel 
subsidy outlays dropped from IDR 240 trillion (USD 20 billion) to IDR 60 trillion (USD 4.5 billion). The share of 
fossil fuel an d electricity (Section 4.2.2.2 ) subsidies in total government expenditure fell by 12.5 percentage 
points, while their share in GDP decreased from 4% to 1.5%; this important cut enabled the reallocation of 
spending towards productive sectors. In 2015, more than 60% of fossil -fuel subsidy savings were invested in 
infrastructure and rural and regional development projects. Indonesia 's effort to phase out and rationalise its 
fossil-fuel subsidies - A report on the G20 peer -review of inefficient fossil -fuel subs idies that encourage 
wasteful consumption in Indonesia , prepared by the members of the peer -review team: China, Germany, Italy, 
Mexico, New Zealand, World Bank, IEA, IISD – GSI, GIZ Indonesia and OECD (Chair of the peer -review), 
April 2019.  WT/TPR/S/401 • Indonesia  
 
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  4.2.2.2   Electricity  
4.142.   During the review period, on -grid installed power plant (PP) capacity increased by 22% , from 
about 51 .0 GW (2013) to 62.2 GW (or 64.9 GW off -grid, 2018); in 2018, the fuel mix consisted of 
coal/steam PPs (50.7%), combined cycle (gas and steam turbine) PPs (18%), gas PPs (8.6%), hydro 
PPs (7.1%), diesel PPs (6.8%), gas engine PPs (3.8%), and other renewable energy PPs (1.2%) 
(Section 4.2.2.3), reflecting Indonesia's natural abundance of coal and hydrocarbons.189 Between 
2013 and 2018 , off-grid PP production increased by 31.3% , to 283,815.24 GWh. As at end -2017, 
through its over 600 isolated grids and eight maj or networks, the state -owned PLN (see below) 
served 67.5  million customers (53.9 million in 2013) , through a transmission network comprised of 
48,901 kilometre circuits (kmc) (39,395 kmc in 2013)  of transmission lines, 113,791  Megavolt 
Amperes (81,345 MVA in 2013) of transmission transformer capacity , and 946,101  kmc 
(798,944  kmc in 2013) of electric distribution lines.190 In 2019, the PLN served 75.7  million 
customers , and operated 58,959 kmc of transmission network, substations producing 144,408 MVA , 
and 9 79,855 kmc of distribution network. The national average electrification rate rose from 80.51% 
(2013) to 98.89% (end -2019); however , electricity distribution remains uneven , with higher ratios 
in more industrialized areas , such as the western part of Java.191 Electricity consumption per capita 
on a national basis rose significantly , from 77 4 kWh in 2013 to 1,021 kWh in 2017 , but it is still 
relatively low compared to most neighbouring countries.192 The structure of domestic sales remained 
virtually unchanged and , in 2018, on -grid electricity was supplied as follows: 97,800  GWh (42%) for 
household s; 76,900  GWh (33%) for industry; 59,500  GWh (25%) for the commercial sector, and 
274 GWh (0.12%) for tra nsportation, especially commuter train s.193 In 2019, electricity sales of 
245,518 GWh consisted of : household customers 103,733 GWh (42.2%) ; industry 77,879 GWh 
(31.7%) ; business 46,901 GWh (19.1%) ; and others 17,005 GWh (6.93%). To meet demand, 
electricity  imports from Malaysia increased from 3 GWh in 2013 to 1,49 6 GWh in 2018 and 
1,682  GWh in 2019 , due to a shortage of power in West Kalimantan and an interconnection that 
became operational in January 2016; they are carried out under a 20 -year agreement , signed on 
5 September 2012 , between PLN (see below) and the Malaysian Sarawak Energy Supply 
Corporation.194  
4.143.   The PLN remains responsible for the majority of power generation, with de facto  exclusive 
powers over the transmission, distribution and supply of ele ctricity to the public; it is also the 
electricity provider of last resort.195 The PLN is regulated and supervised by the MoEMR, the Ministry 
of SOEs, and the MoF. Private -sector participation is allowed through independent power producer 
 
189 Increasing oil prices drove  the energy mix away from diesel PPs. The PLN aims to significantly reduce 
the use of oil in future energy generation , from 5.8% in 2017 to 0.4% by 2023 ; in 2013, its share stood at 
11.6%. PWC (2018), Power In Indonesia , Investme nt and Taxation Guide , November  2018, 6th Edition . Viewed 
at: https://www.pwc.com/id/en/pwc -publications/indust ries-publications/energy --utilities ---mining -
publications/power -guide -2018.html ; MoEMR  (2019), 2018 Handbook of Energy & Economic Statistics of 
Indonesia . 
190 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed a t: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/p ower-guide -2018.html ; MoEMR, Country Report – Electricity Sector in Indonesia . Viewed at: 
https://eneken.ieej.or.jp/data/7390.pdf . 
191 Statista, Electrification rate in Indonesia from 2010 to Q3 2019. Viewed at:  
https://www.statista.com/statistics/865133/indonesia -electrification -rate/. 
192 PWC (2018), Power In  Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
193 MoEMR  (2019), 2018 Handbook of Energy & Economic Statistics of Indonesia ; and Secretariat 
General of the National Energy Council (2019),  Indonesia Energy  Outlook 2019 . Viewed at:  
https://www.esdm.go.id/assets/media/content/content -indonesia -energy -outlook -2019-english -version.pdf . 
194 The Sarawak -West Kalimantan link is the first Indonesian leg of the ASEAN Power Grid project ; 
connections already exist between a number of ASEAN countries , including Thailand, Lao  PDR, Malaysia, 
Singapore, Viet  Nam and Cambodi a. PWC (2018), Power In Indonesia , Investment and Taxation Guide , 
November 2018 , 6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -
publications/ene rgy--utilities ---mining -publications/power -guide -2018.html ; and MoEMR  (2019), 2018 
Handbook of Energy & Economic Statistics of Indonesia . 
195 The private sector is legally permitted to operate transmission and distribution  grids. Certain 
transmission lines are built by IPPs, particularly those for PPs in remote areas, in order to connect the m to the 
closest PLN substation. However, ownership of these transmission lines is typically transferred to  the PLN upon 
completion of construction.  PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 
6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---
mining -publications/power -guide -2018.html . WT/TPR/S/401 • Indonesia  
 
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  (IPP) or public -private partnership (PPP) arrangements; appointments are most often granted 
through competitive tenders, although IPPs can be directly selected or directly appointed in certain 
circumstances.196 Since 2013, the PLN has made power purchase agreements with 26 I PP 
fossil-fuelled projects, with a total capacity of 15.3 GW. Operators generating electricity for their 
own use rather than for sale to the PLN, known as private power utility (PPUs), may sell their excess 
power under a power purchase agreement (PPA) of l ess or more than one year, depending on local 
power needs, at a maximum benchmark price equal to 90% of the regional electricity generation 
cost ( Biaya Pokok Pembangkitan , BPP).197 IPPs can design, finance, and construct special facilities 
(transmission lin es/switchyard/any facilities that have been agreed to in the PPAs ); these are taken 
over by the PLN upon the completion of the construction. Upon being taking over by the PLN, this 
latter shall own, operate, and maintain the special facilities; since 2013,  25 fossil -powered IPPs built 
special facilities in agreement with the PLN. Whenever the PLN needs to work with a foreign business 
entity, priority must be given to entities owned by the related foreign government (i.e. a foreign 
SOE).198 The 2017 strategy of assigning many fossil fuel -based projects to PLN subsidiaries is now 
being applied to some renewables projects too; the PLN generally expects its subsidiary to take a 
51% shareholding in a project's special purpose vehicle.199 The majority of the power -generating 
assets remain controlled by the PLN, including its subsidiaries (e.g. Indonesia Power, Pembangkitan 
Jawa Bali, and PLN Batam). In 2013, the total installed capacity consisted of PLN power plants and 
subsidiaries of 34,206 GW (71%), IPP plants of 9,687 GW (20%), and rental plants of 4,296 GW 
(9%); in 2019, it was 42,832 GW (68%), 18,161 GW (29%) and 1,840 GW (3%), respectively. 
Under GR No. 23/2020 on the National Economic Recovery Program, which took effect on 
11 May 2020, as with Pertamina, the P LN is to receive IDR 45.42 trillion in the form of accelerated 
compensation payments.200  
Policy and institutional framework  
4.144.   During the review period, power policy objectives were set out in different documents. Under 
the 2014 KEN (see above) , the key points directly related to the sector include: reaching installed 
capacity for power generation of 115 GW by 2025 and 430 GW by 2050; achieving per capita 
electricity consumption of 2,500 kWh by 2025 and 7,000 kWh by 2050; and attaining an 
electri fication ratio of close to 100% by 2020.201 
4.145.   The National Electricity Plan (RUKN) develops the framework for the electricity supply system 
to meet domestic demand , and is reviewed at least every three years.202 It provides guidance on 
investment and funding , and targets for increasing the use of NRE resources and electrification 
coverage. The RUKN, inter alia,  sets: a 20 -year projection of electricity demand and supply; the 
investment and funding policy; and the approach to the utili zation of NRE resources 
(Section 4.2.2.3). The draft 2015 -34 RUKN was developed based on the KEN and RUEN (see above) , 
which are stipulated under GR No. 79/2014 and PR No. 22/2017 , respectively.  
4.146.   The 2016-25 Electricity Supply Business Plan (RUPTL), a 10-year electricity development  
plan for operating areas that is reviewed annually, includes demand forecasts, future expansion 
plans, electricity production forecasts, and fuel requirements.203 It indicates the projects to be 
developed by  the PLN, and those available to IPPs. Direct sel ection or direct appointments for IPPs 
to build PPs are based on the RUPTL. To achieve an electrification ratio of 99.7% by 2025, the RUPTL 
indicates that at least 80.5  GW of PPs will need to be constructed by 2025, with 18.2  GW of plants 
 
196 GR No. 14/2012 (as amended by GR No. 23/2014) , and PR  No. 38/2015 and its implementing LKPP 
Regulation No. 19/2015  on Government Procurement of Goods and Services Policy Board Regulation . 
197 MoEMR Regulation No. 19/2017 . 
198 PR No. 4/2016 , as amended by PR No. 14/2017 . 
199 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
200 Viewed at:  https://www.thejakartapost.com,SSL+government -issues -regulation -on-economic -
recovery -program -focuses -on-soes-msmes.html . 
201 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/publications/assets/eumpublications/utilities/power -guide -2018.pdf . 
202 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
203 PWC (2018), Power in Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . WT/TPR/S/401 • Indonesia  
 
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  to be constructed  by the PLN and 45.7  GW by IPPs; the remaining 16.6  GW has not yet been 
allocated between the PLN and IPPs.  According to the RUPTL , the construction of this level of power 
generation would require investment of at least USD  31.9 billion by the PLN, and USD  78.2 billion 
by IPPs. A five -year 35 GW Programme 2015 -19, announced in late 2014 , was aimed at improving 
the overall power systems , by completing generation projects of this capacity , as well as 46,000 km 
of transmission lines.204 As a result of changes i n both demand forecasts and planned capacity 
targets at the 2018 RUPTL, the PLN and IPP investors are now expected to construct about 56 GW 
of generating capacity by 2027 , with 16.6 GW by the PLN and 32 GW by IPPs, and 7.4 GW yet to be 
allocated. Furthermo re, the deployment of 35 GW of new generating capacity by 2019 was officially 
delayed until 2024. Under  the RUPTL 2019 -28, the electrification ratio targeted is set at 100%, with 
PP total capacity planned to  be built of 56.395 GW , consist ing of 16.243 GW built by the PLN, 
33.666  GW by IPPs, 300 GW by cooperation between  operators in  Wilayah Usaha s, and 6.185 GW 
unallocated; to meet these targets , investment of USD 36.9 million by the PLN and USD  58.8 million 
by IPPs is required.  
4.147.   Phase IX (Jan uary 2016) of the EPP also focused on accelerating electricity generation 
(Section 2.2.2, and Table 2.2).  
4.148.   The MoEMR and its sub -agencies, i.e. the DGE and the DGNREEC (see above), continue to 
oversee the management of all electricity -related activities. I t is responsible for developing policies 
and strategies, supervising electricity company businesses, and implementing laws and regulations.  
Regulatory framework  
4.149.   During the review period, the main legislation governing electricity, Law No. 30/2009, 
remain ed unchanged but several new or amended implementing regulations were issued. They 
included: GR No.  23 of 2014 on Business Activities of Electricity Provision; PR No. 4 of 2016 
(Article  14) on Electricity Infrastructure Acceleration (Section  4.2.2.3); MoEM R Regulation 
No. 38/2016 on the Acceleration of Electrification in the Least Developed Rural, Isolated, Border and 
Populated Small Island Areas through Small -Scale Electricity Supply Businesses; MoEMR Regulation 
No. 35/2013 on Electricity Business Provisio n, amended by MoEMR Regulation No. 12/2016; 
PR No. 4/2016 on Infrastructure Development Acceleration Development amended by 
PR No. 14/2017, last amended by MoEMR Regulation No. 10/2019 on Electricity Business Plan 
Preparation; MoEMR Regulation No. 19/2017 on Coal Utilization for Power Generation and Excess 
Power Purchase; MoEMR Regulation No. 27/2018 on Compensation on Land, Building, and/or Plants 
under Transmission Line-Free Space; and MoEMR Regulation No. 2/2019 on amendment of MoEMR 
Regulation No. 18/20 15 on Minimum Free Space and Minimum Free Distance on High Voltage Line, 
Extra High Voltage Line and High Voltage Line DC for Electricity Transmission.  
4.150.   Under the 2009 Electricity Law and GR No. 14/2012 (as amended by GR No. 23/2014) , 
private participation in the supply of power for public use and for transmission and distribution is 
allowed, although  it is de facto  limited to the power -generation sector (see above). Under MoEMR 
Regulation No. 1/2015 on Power Wheeling , which aims to al low IPPs and PPUs to use the PLN's 
existing transmission and distribution networks, it seems that there may be a change upon the 
release of implementing regulations on the detailed technical procedures and financial charges for 
access to the networks.205 So far, no IPP PP or power utility has used the power wheeling mechanism.  
4.151.   Under the Electricity Law , electricity supply for public use can only be carried out in an 
integrated manner by one business entity within one operating area , or Wilayah Usaha .206 To obtain 
a Wilayah Usaha , SOEs, private enterprises, cooperatives and self -reliant community institutions can 
make a request to the MoEMR through the DGE. As at end -2017, the authorities had issued 
 
204 PR No. 4/2016 (as amended by PR No. 14/2017)  and MoF Regulation No.  130/2016 . PWC (2018), 
Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . Viewed at: 
https://www.pwc.com/id/en/pwc -publications/in dustries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
205 Power wheeling is the joint use of networks to optimi ze their value and to speed up the supply of 
additional generating capacity.  PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 
2018, 6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --
utilities ---mining -publications/power -guide -2018.html . 
206 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . WT/TPR/S/401 • Indonesia  
 
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  52 Wilayah Usaha s, including that of the PLN, with 27 Wilayah Usaha s already in operation and 
15 not yet operating.  
4.152.   Holders  of an Electricity Supply Business Licence or an Electricity Supporting Services Licence 
continue to be required to prioritize the use of domestic products and services (Section 3.1.7). Un der 
MoI Regulation No. 54/M -IND/PER/3/2012 (as amended by MoI Regulation 
No. 5/M-IND/PER/2/2017) , the minimum local content requirement for different sources of power 
generation for goods and services combine s ranges: from 28.9 6% (geothermal) to 70.79% 
(coal-fired); and from 17.39% (Extra -High Voltage GIS) to 76.17% (High -Voltage Aerial Network) 
for transmission.207 
4.153.   Under the 2016 negative investment list, replacing the 2014 list (Section 2.4.2, Table 2. 6), 
FDI limitations in the power sector are as follows: micro PPs (<1 MW) closed to foreign investment; 
small PPs (1 MW–10 MW) open to foreign ownership of up to 49%; small geothermal PPs (≤10 MW) 
open to foreign ownership of up to 67%; PPs with a capacity of mor e than 10 MW open to foreign 
ownership of up to 95% or 100% for PPP projects; electrical power transmission and distribution 
open to foreign ownership of up to 95% or 100% for PPP projects; power supply construction and 
installation (including consultancy)  projects and the operation and management of electrical power 
installations open to foreign ownership of up to 95%; construction and installation of high -/extra -
high-voltage electric power utilization open to foreign ownership of up to 49%; construction a nd 
installation of low -/medium -voltage electric power utilization closed to foreign investment; 
examination and testing on installations of high -/extra -high-voltage electrical power supply or 
utilities open to foreign ownership of up to 49%; examination an d testing on installations of 
low-/medium -voltage electrical power utility installations closed to foreign investment; and 
geothermal operation and maintenance services open to foreign ownership of up to 90%, and drilling 
and surveying services of up to 95 %. 
Domestic support and tariffs  
4.154.   During the review period, the special price and DMO requirements in place for coal seem to 
have significantly eased the burden of the PLN, since its production costs had increased after coal 
prices spiked in late 2016 (Secti on 4.2.1). Import duties and excise tax expenditure estimates for 
capital goods for the construction/development of the PP  industry in the interest s of the public stood 
at IDR 4 billion (2016) and IDR 3 billion (2017) (Section 3.1.3.6).  
4.155.   During the review p eriod, reforms were undertaken to reduce electricity tariff subsidization 
and cross -subsidization. Retail tariffs remained below production cost, the gap being covered by a 
subsidy (Table 4. 4). Since 2013, the electricity subsidy has stabilized , due to the  stabilization of the 
average cost of electricity supply and the  PLN's ability to pass on increases in inflation, the price of 
oil and the USD/IDR exchange rate to non -subsidi zed consumers (see below) through the automatic 
tariff adjustment mechanism in pl ace since 2014.208 This subsidy includes a public service obligation 
(PSO) margin, originally set in 2009 at 5% above the cost of electricity supplied , increased to 8% 
for 2010 and 2011 , and reduced to 7% from 2012 onwards. Electricity tariffs under the adj ustment 
mechanism were reviewed in 2014, 2016, 2017 (twice), 2018, 2019 and 2020.209  
4.156.   Since  2017, the electricity subsidy has applied to customer categories whose electricity tariff 
is lower than the average cost of electricity supply (Table 4. 4); however, it does not apply to 
customers subject to the adjustment mechanism or customers not charged by the PLN (e.g. tenants 
 
207 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
208 Prior to the 1997 Asian financial crisis , the PLN was not subsidized,  and tariffs were automatically 
adjusted.  The automatic tariff adjustment mechanism was suspended in 1998 and, in the following 14 years, 
tariffs were adjusted only once (in 2003). This crippled the PLN financially, and the Government was forced  to 
provide financial support to it. In 2014 ( Permen ESDM 31/2014 ), the automatic tariff adjustment mechanism  
was reintroduced. It is applied monthly to 12 tariff classes. In 2015, Permen ESDM 9/2015 extend ed this 
treatment to residential consumers with R -1 1,300 VA and 2,200 VA connections. The automatic tariff 
adjustment mechanism adjusts tariffs based on the USD/IDR exchange rate, the Indonesian crude oil price, 
and inflation.  ADB (2016), Achieving universal electricity access in Indonesia ; and MoEMR Reg ulation 
No. 31/2014, as amended by MoEMR Regulation No. 9/2015 . 
209 MoEMR Regulation s No. 31/2014, No. 28/2016, No. 18/2017, No. 41/2017, No. 32/2018, 
No. 19/2019, and No. 3/2020 . WT/TPR/S/401 • Indonesia  
 
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  in industrial estates).210 Since  January 2017, the authorities began to revoke the electricity subsidy 
for 900 VA customers , classified as high-income households. This followed the previous subsidy 
removal , on 1 January 2015 , for 1,300 -6,600 VA household customers, 6,600 VA up to >200 kV A 
business and government offices customers, >200 kVA industrial customers , public street lighting , 
and special services. As at 2018, except for 450 VA and some 900 VA customers (which are not 
classified as high -income households) , all customers pay market  price for electricity and , in 2019 , 
budgetary outlays for electricity tariff subsidization were 49.95% less than in 2012 (Table 4. 4, and 
Section 4.2.2.1.2). According to data from the authorities, during the review period , the average 
market electricity t ariff represented from 58.47% (2013) to 83.84% (2017) of power production, 
transmission, and distribution cost.   
Table 4.4 Average cost, average tariff, and subsidies, 2012 -19 
Year Average cost (IDR/kWh)  Aver age tariff (IDR/kWh)  Subsidy (IDR trillion)  
2012 1,374  728 103.3  
2013 1,399  818 101.2  
2014 1,420  940 99.3 
2015 1,300  1,035  56.6 
2016 1,265  991 58.0 
2017 1,318  1,105  45.7 
2018 1,406  1,123  48.1 
2019 1,379  1,126  51.7 
Source:   2017 PLN Statistics in PWC (2018), Power in Indonesia , Investment and Taxation Guide , 
November  2018, 6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -
publications/energy --utilities ---mining -publications/power -guide -2018.html . 
4.157.   Under the Electricity Law, although electricity tariffs do not need to be uniform throughout 
the country, they differentiate depending on the end -user group, and thus involv e 
cross-subsidization support among consumer categories.211 In gene ral, they are set by taking into 
account the customer's purchasing power and installed power capacity. The higher the installed 
power  capacity,  the higher the tariff imposed. The higher the electricity consumption , the higher the 
multiplier used to determi ne the tariff imposed , in order to encourage customers to use electricity 
wisely. Different tariffs are subject to different subsidy arrangements. For example, in 2017 , tariffs 
for low -income households were heavily subsidi zed, at IDR 415/kWh , which was  less than a third  of 
the average electricity supply cost , of IDR 1,318/kWh. As at September 2019, Indonesia's average 
electricity price for households was IDR 1,099 (USD 0.0785) per kWh, lower than the tariffs  of the 
Philippines, Cambodia, Thailand and Viet Nam, but higher than  Malaysia; furthermore, it was the 
second lowest after Malaysia within the ASEAN group.212  
4.2.2.3   Renewable energy  
4.158.   Despite its enormous potential in NRE resources, Indonesia has been relatively slow to 
develop renewable energy. Fuel subsidies , low electricity tariffs, high NRE PP production cost s, 
complex regulations, legal uncertainties, lack of domestic support, lack of low -interest financing, 
difficulties in accessing reliable and efficient technology, logistical challenges , and extensive cheap 
coal resources have seemingly deterred potential renewables investments (Sections  4.2.2, 4.2.2.1.2 
and 4.2. 2.3).213 Consequently, production of renewable energy remains modest compared to fossil 
energy production. Three classes of NRE sources are in place: sources already being widely used in 
commercial operations (e.g. geothermal, hydro and biomass); sources being dev eloped 
commercially but with some residual concerns over the regulatory and commercial aspects (e.g. 
 
210 MoF Regulation No. 44/2017 , as amended by MoF Regulation No. 162/2017 , conce rning the 
Procedures for the Provision, Calculation, Payment and Accountability for Electricity Subsidy . 
211 PWC (2018), Power in Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
212 GlobalPetrolPrices.com, Indonesia electricity prices. Viewed at:  
https://www.globalpetrolprices.com/Indonesia/electricity_prices/ . 
213 Secretariat General of the National Energy Council (2019),  Indonesia Energy Outlook 2019 . Viewed 
at: https://www.esdm.go.id/assets/media/content/content -indonesi a-energy -outlook -2019-english -
version.pdf ; and PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 
6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---
mining -publications/power -guide -2018.html . WT/TPR/S/401 • Indonesia  
 
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  solar and wind); and sources at the research stage only (e.g. ocean energy).214 Hydropower remains 
the largest single source of renewable power (Section 4.2 .2.3). Despite naturally high solar 
penetration across most parts of the country , solar photovoltaic panel  deployment currently remains 
limited (estimated at 109 Mega Watt peaks ). With Indonesia possessing one of the largest 
geothermal resources in the wor ld (total resources of 23 .9 GW) , its share in the country's fuel mix 
is expected to grow almost fourfold , from 2,130.7 MW (2020) to 8 GW in 2030.215 Although wind 
has not played an important role in the fuel mix so far, progress has been observed , with the 75 MW 
Sidrap wind farm in South Sulawesi becoming operational in March 2018.  
4.159.   During the review period, the contribution of NRE sources to total primary energy supply 
rose considerably; as at 2019 , they accounted for 9.15% of total primary energy supply co mpared 
to 4.96% in 2013.216 The share of NRE sources in the total on -grid installed PP capacity dropped 
from 12.8% (2013) to 11.4% (2018). Between 2013 and 2018, NRE PP production increased by 
20.3% , to 31.7 GWh; the PLN's share dropped from 65.5% to 46.5% of the total NRE power output 
by all operators (Section 4.2.2 .3). Since the introduction of the B20 Mandatory Program in 
January  2018, the number of biodiesel plants increased; in 2019, the production capacity of the 
26 biodiesel plants reached 12.06 milli on kL. Over the review period , palm-oil based biodiesel 
production ranged from 1.65  million kL in 2015 to 6.17 million kL in 2018 , of which 60.8% was sold 
domestically, and 8.4 million kL in 2019 , of which 76.1% was sold domestically ; biogas supply stood 
at 25,700 m3 in 2018. Following the implementation of the Biogas Development Program , in 2019 , 
47,414 biogas units were producing 74,885 m3 of gas  per day, or 26.96 million m3 per year.  
Policy fra mework  
4.160.   The overall primary policy objectives in expanding the use of NRE are: to improve energy 
security by diversifying the feedstocks used by the PLN and IPPs to generate power and encourage 
the use of renewable energy as an ancillary source where it is readily available and untapped; to 
accelerate improvements to the electrification ratio and access to  the energy infrastructure , 
particularly for areas without grid access (i.e. rural, remote and border areas, and islands); and to 
contribute towards the at tainment of greenhouse gas (GHG) emissions targets , and encourage the 
green economy , so as to cut GHG emissions by 29% by 2030.217  
4.161.   The 2014 KEN and the 2017 RUEN set a target of at least 23% renewable energy of the 
primary energy mix by 2025 (and 31% by 20 50); an energy -efficiency target of reducing primary 
energy intensity by 1% per year until 2025 is set in the RUEN.218 In the 2018 RUPTL , the target for 
renewable energy deployment in the fuel mix was revised , and was estimated to increase from 
12.5% in 201 8 to 20.4% by 2027 , which is to be  mainly supported by geothermal energy (9.8%) 
and hydropower (9.3%). The 2018 biofuels program me remains a key component of the KEN for 
meeting the NRE targets; it has taken on national importance as a means to reduce impo rts, to 
improve the balance of payments, become energy self -sufficient, and support the palm oil sector.219 
The 2017 Low Carbon Development Plan focuses on using the agriculture, forestry, waste, transport 
and marine sectors to reduce GHG emissions.220 As at 2018, the road map for the development of 
nuclear power plants was under preparation , with the involvement of the MoEMR, the PLN, the 
 
214 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publicatio ns/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
215 Indonesia has a geothermal potential of almost 24,000  MW across 3 51 locations. As at 2020,  only 
14 working areas (or concessions) were operating , out of 75 identifi ed potential working areas. The total 
installed capacity was is 2,130.7 MW (as at June 2020)  (1,344 .0 MW in 2013) equivalent to only 8.89% of the 
total estimated geothermal  resources.  PWC (2018), Power In Indonesia , Investment and Taxation Guide , 
November 2018 , 6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -publicatio ns/industries -
publications/energy --utilities ---mining -publications/power -guide -2018.html . 
216 MoEMR  (2019), 2018 Handbook of Energy & Economic Statistics of Indonesia . 
217 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Editio n. 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
218 National Energy Policy in Indonesia and it 's Alignment to Sustainable Development Goals 7 (SDG7) 
and Paris Agreement (NDC) , presentation at the Workshop of National Expert SDG Tool for Energy Planning 
(NEXSTEP) UNESCAP, Bangkok, 19 March 2019.  
219 USDA Foreign Agricultural Service (2019), Indonesia Biofuels Annual Report 2019 , GAIN Report 
Number: ID1915, 15 July.  
220 OECD (2018), OECD Economic Surveys  Indonesia , October.  WT/TPR/S/401 • Indonesia  
 
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  National Nuclear Energy Agency, the Nuclear Energy Regulatory Agency , and the Indonesia Nuclear 
Professional Associatio n.221  
Regulatory framework  
4.162.   During the review period, the regulatory framework in this area was updated with new or 
amended general or NRE -specific regulations (Section 4.2.2. 3).222 Law No.30 of 2007 sets the 
priority of supplying and utilizing NRE, includi ng biofuels. GR No. 79/2014 on the KEN requires that 
the development of renewable energy resources consider economic viability; however, the potential 
renewable energy resources are based on a technical assessment by the MoEMR only , and do not 
necessarily consider the financial/economic viability of individual projects. Regulations regarding  
solar power systems include MoEMR Regulation No.  49 of 2018 on the Utilization of Roof Top Solar 
PV by PT Perusahaan Listrik Negara (PLN) Consumer , and MoI Regulation N o. 5/M-IND/PER/2/2017 
setting the level of domestic components for solar modules at at least 50% by 2018 and 60% by 
2019 compared to the previous 30% for solar home system modules and 2 6% for communal solar 
system modules.  
Domestic support and tariffs  
4.163.   Under PR No. 4 of 2016 on Electricity Infrastructure Acceleration (as amended by 
PR No. 14/2017), domestic support to NRE sources is prioritized , in order to achieve the targeted 
energy mix under the KEN. Central and/or local government support may take the f orm of: fiscal 
incentives; licensing and non -licensing relief; electricity tariffs for NRE sources (see below); the 
establishment of a separate business entity to generate energy from NRE sources for sale to the 
PLN; and specific incentives for NREs. Hydro , geothermal and wind power projects, including 
transmission lines, can be developed in Natural Reserve Areas and Natural Conservation Areas , in 
accordance with prevailing laws and regulations.  
4.164.   During the review period, NRE projects benefited from expanded  tax incentives , in form of 
tax holidays for pioneer industries ( since 2018), including electricity infrastructure, and tax 
allowances available on a sector -specific basis for national priority activities and with specific 
potential development areas ( GR No. 78/2019) (Sections 2.4. 4, 3.3.1.1.1.1 and 4.2.2.1.2).223 Tax 
holidays include a holiday from the payment of corporate income tax , for a period of up to 20 years. 
Tax allowances involve corporate income tax incentives as follows: a reduction in taxable income of 
up to 30% of qualifying expenditure on fixed assets (including land); an extended tax loss 
carry-forward period of up to 10 years; accelerated depreciation and amorti zation rates; and a 
maximum dividend withholding tax rate of 10% for IPPs involved in renewable energy. Furthermore, 
customs duty and VAT exemption benefit imports of goods used in geothermal business activities 
(MoF Regulation s No. 177/2007, and No. 142/2015); imports by IPPs involved in renewable energy 
are exempt from withholding tax (MoF Regulation No. 21/2010).  
4.165.   Action was taken to address issues relating to the regulatory framework on tariffs and 
pricing, one  of the most sensitive issues in renewable energy investment and development. MoEMR 
Regulation No. 50/2017 on Renewable Energy Utilization for Electricity Supply to Create a Better 
Investment Climate by Promoting Fairness, Efficiency and Affordable Electricity Price (revoking 
MoEMR Regulation No. 12/2017 , as amended by MoEMR Regulation No. 43/2017) established a new 
mechanism to determine tariffs , based on electricity generated by renewable energy PPs and 
purchased by the PLN from IPPs. The tariff is now de termined by benchmarking against the 
applicable of either the Regional Electricity Generation Cost (BPP ) (Section 4.2.2.2) in the area where 
the power is generated , or B2B negotiations between the PLN and the IPP s.224 PR No. 35/2018 
 
221 IAEA, Country Nuclear Power Profiles, 2018 Edition, Indonesia. Viewed at:  https://www -
pub.iaea.org/MTCD/Publications/PDF/ cnpp2018/countryprofiles/Indonesia/Indonesia.htm . 
222 PWC (2018), Power In Indonesia , Investment and Taxation Guide , November 2018 , 6th Edition . 
Viewed at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
223 PwC (2018), Power In  Indonesia Investment and Taxation Guide November 2018 , 6th Edition . Viewed 
at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
224 Until 2016 , the regulations on tariffs were designed with private investors in mind. MoEMR 
Regulation No. 12/2017 (as amended by MoEMR Regulation No. 43/20 17) on the Utilisation of Renewable 
Energy Resources for Electricity seemingly caused concern due to its poor incentiv es for new  investments 
especially in low -cost areas  (e.g. Java and Sumatera ). PwC (2018), Power In Indonesia Investment and WT/TPR/S/401 • Indonesia  
 
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  provide s a separate pric e for electricity from waste -to-energy PPs, that is higher than that in MoEMR 
Regulation No. 50/2017.225 In March 2018, the PLN's Board of Directors issued a new policy , based 
on Decree No. 0022P/DIR/2018 , regarding power purchases from renewables as an imp lementing 
regulation of MoEMR Regulation No. 50/2017; this internal regulation was aimed at providing 
guidance for power purchases from IPPs , in order to equalize, simplify and accelerate the power 
purchase process.226  
4.166.   Indonesia considers biodiesel as an e fficient way to develop more environmental ly friendly 
solutions to fulfil current energy demand ; increase energy security and reliability ; reduce the 
consumption and import of fossil fuel ; increase economic added value by downstream biofuel 
industry; and support the domestic agriculture -based economy. During the review period, the 2008 
Biodiesel Mandatory Program , aiming for a mixture of diesel oil with fatty acid methyl ester (FAME) 
from p alm oil, a chief deforestation driver (Section 4.1.7),  intensified.227 Since  2016, the B20 
Mandatory Program has been in place ; it requir es the  use of 20% FAME in biodiesel for the PSO 
transport sector or those activities carried out by state -owned companie s to serve public needs. To 
address increasing economic pressures related to the current account deficit and weakening rupiah, 
save on foreign exchange reserves , and increase consumption of domestic biodiesel, in September 
2018, the B20 Mandatory Program w as expanded , at short notice , from the PSO to the non-PSO 
transport sector. The Program  received government support as , in general , the price of biodiesel is 
higher than the diesel oil price.  Between 2008 and 2015, a subsidy from the State Budget covered 
the gap between the Market Price Index of Biodiesel and the Market Price Index of Diesel Oil, both 
defined by the Government. In August 2015 , the subsidies scheme was replaced , with support from 
the Crude Palm Oil (CPO) Fund, which collects a levy on crude and refined palm oil exports to , inter 
alia, compensate biodiesel producers from price spreads between biodiesel and fossil diesel, thus 
avoid ing losses (Section s 3.2.2 and 4.1.3).228 Initially , the incentives were only available to the PSO 
sector but , on 1 September 2018 , their scope was expanded to non -PSO sectors. The B30 Mandatory 
Program , with 18 biodiesel producers committed to it, became effective nationwide on 
1 January  2020. Pertamina (Section  4.2.2.1) and PT AKR , one of Indonesia 's largest private sector 
distributors of basic chemicals, petroleum, logistics, and supply chain solutions , were entrusted with 
the B30 distribution. B30 is expected to further increase energy security and independence through 
renewable sources ; stabilize CPO prices ; support the downstream palm oil industry ; meet renewable 
energy targets ; reduce diesel consumption by up to 9.59 million kL per year ; lead to foreign 
exchange savings of up to USD  4.4 billion ; and reduce GHG emission s by up to 14.34 million  tonne s 
of CO2.229 On 16 December 2019, Indonesia requested WTO dispute consultations with the 
 
Taxation Guide  November 2018 , 6th Edition . Viewed at: https://www.pwc.com/id/en/pwc -
publications/industries -publications/ener gy--utilities ---mining -publications/power -guide -2018.html . 
225 MoEMR Regulation No. 50/2017 regulates the tariff regimes for renewable electricity generation with 
tariffs still benchmarked to PLN 's average electricity generation cost.  It provides new mechani sms for 
determining the tariffs of renewable energy for electricity generation including Solar PV, wind, hydro, biomass, 
biogas, waste -to-energy and ocean energy. The purchase of electricity generated using these technologies will 
now be determined by benc hmarking against the BPP or based on negotiations between IPP and PLN. 
Additionally, Component E of a PPA which reimburses investors for transmission line spending from the power 
plant to the PLN grid is to be conducted through B2B negotiations between PLN  and IPPs. PwC (2018), Power 
In Indonesia Investment and Taxation Guide November 2018 , 6th Edition . Viewed at: 
https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
226 PwC (2018), Power In  Indonesia Investment and Taxation Guide November 2018 , 6th Edition . Viewed 
at: https://www.pwc.com/id/en/pwc -publications/industries -publications/energy --utilities ---mining -
publications/power -guide -2018.html . 
227 Minister of Energy and Mineral Resource regulation No.32 of 2008; Fitriani Tupa R. Silalahi, Togar M. 
Simatupang and Manahan  P. Siallagan (2019), Biodiesel produced from palm oil in Indonesia: Current status and 
opportunities , published at Volume 8, Issue 1, 81 –101 of AIMS Energy, 19 January; USDA Foreign Agricultural 
Service (2019), Indonesia Biofuels Annual Report 2019 , GAIN Report Number: ID1915, 15 July.  
228 The Indonesian Oil Palm Plantation Fund Management Agency (BPDPKS), was establish ed in 2015 to 
accelerate the implementation of the biodiesel program me. It was assigned to manage the fully private -
sourced CPO F und. Indones ian biodiesel producers sell their biodiesel primarily to Pertamina . As, generally , the 
price of biodiesel is higher than that of fossil diesel, Pertamina purchase s biodiesel at the price of the latter . 
The BPDPKS , through the CPO Fund, covers the price difference by paying it to biodiesel producers through a 
strict administrative process where an independent surveyor is closely involved. The authorities indicated that, 
as the CPO Fund collected and managed by the BPDPKS is purely generated from the private  sector , this 
program me does not involve any government  subsid ies. CPO funding is also available for broad usages , 
including replanting and research.  
229 The Insider Stories. Viewed at:  https://theinsiderstories.com/b30 -will-absorbs -additional -3mt-of-cpo-
in-2020-says-vp/ and https://theinsiderstories.com/indonesia -appoints -18-producers -to-run-b30-program/ . WT/TPR/S/401 • Indonesia  
 
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  European  Union, regarding measures adopted by the E uropean Union and its member States in the 
renewable energy sector relating to biofuels (Section 2 .3.1 and Table 2.4 ).230 As at June 2020, 
Indonesia was preparing for the implementation of the B50 Mandatory Program by the end of same 
year; several challenges , such as proper technology, technical specification s, financial requirements , 
and feedstock sustainability, still rema in to be addressed. Additional support was provided by luxury 
goods sales tax holidays for vehicles with biofuel engines (Section  3.3.1.1.1.3).  
4.3  Manufacturing  
4.3.1   Features  
4.167.   Manufacturing, a primary production -dependent sector, remains an important activity in 
terms of its contribution s to the economy, employment and merchandise exports.  While  its share in 
GDP dropped slightly from 21.6% in 2013 to 20.5% in 2019, its share in total employment rose from 
13.8% to 15 .0% (Table 1.2), suggesting a deterioration of labour productivity , which remains higher 
than in agriculture but much lower  than in services. In addition, the deterioration of manufacturing's 
competitiveness, about to be addressed by the authorities (see below), was reflected in the co untry's 
diminished attractiveness as a destination for export -oriented FDI.231 In GDP terms , in 2019 , the 
main manufacturing activities related to: food products and beverages (6.7%) ; oil and gas (2.2%) ; 
chemicals (1.8%); and transport equipment (1.7%) (Tab le 1.2). The share of manufactured products  
in total merchandise exports rose from 37.2% in 2013 to 45.8% in 2019; in 2019 , the main items 
included iron and steel with a share of 4.7% (0.9% in 2013), chemicals with 6.2% (6 .0%), other 
semi-manufactures (e.g . paper and paperboard, and plywood) with 6.8% (6.3%), and machinery 
and transport equipment (e.g. automotive products, office machines and telecommunication 
equipment and electrical machines) with 13.4% (12.1) (Table A1. 3). During the review period, FDI 
inflows in manufacturing remained volatile; they bottomed at USD 3.7 billion in 2015, peaked at 
USD 11.3 billion in 2018 , and dropped to an estimated USD 10.2 billion in 2019 (Section 1.3.2).  As 
at 2014, manufacturing FDI seemed to be increasingly oriented to serve the domestic market.232  
4.168.   The bulk of manufacturing firms continue to be micro and small firms (99.3%), with only a 
small and diminishing percentage accounted for by medium and large firms (less than 1%); SMEs 
are not linked to GVCs,  and face numero us obstacles to growth.233 In 2018, 30,754  large and 
medium manufacturing firms employed 6 million workers (35,163  firms,  and 6.4  million  workers in 
2013) ; in 2017, 4.1 million  micro firms employed 7.7 million workers ( 3.2 million  and 6 million in 
2014) ; and 358,791 small firms employed 3.1 million workers in 2014).234 The food manufacturing 
activity has the largest number of firms, employment share, and value added.235 However, 
high--tech manufacturing sectors , such as chemical s and chemical products, motor v ehicles, and 
electrical equipment, although relatively small , also generate a substantial share of total 
manufacturing value added. Large firms and joint ventures appear to be the most productive. 
 
230 The EU biodiesel market is worth an estimated EUR 9 billion a year, with imports from Indonesia 
reaching some EUR 400 million. According to  the European Commission's investigation, Indonesian biodiesel 
producers benefit from grants, tax benefits and access to raw materials below market prices. European 
Commission, Commission imposes countervailing duties on Indonesian biodiesel. Viewed at: 
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2057 . 
231 According to the World Bank , high logistics costs , due to inefficiencies , have long been an issue ; they 
are estimated to ac count for some 25 % of manufacturing costs – significantly higher than the 15 % in Thailand 
and 13 % in Malaysia.  Furthermore, higher barriers in services (Sections 2.4.2 and 4.4) stifle competitiveness 
in manufacturing industries that use these services more intensively in production ; restrictions on investments 
also appear to worsen the competitiveness of the manufacturing sector.  ADB/BAPPENAS (2019), Policies to 
Support the Development of Indonesia 's Manufacturing Sector during 2020 –24 - A Join t ADB–BAPPENAS 
Report , January; and World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - 
Unlocking the Dynamism of the Indonesian Private Sector: A Country Private Sector Diagnostic , October.  
232 In 2014, only 35 % of new forei gn manufacturing plants were export -oriented, a significant drop from 
the 58 % in 1996 ; this drop is even more marked when considering a historically export -oriented industry  like 
electronics, where the share of export -oriented plants of total new foreign p lants fell from 67 % to 17%. World 
Bank Group (2018), Indonesia Economic Quarterly - Strengthening competitiveness , December . 
233 ADB/BAPPENAS (2019), Policies to Support the Development of Indonesia 's Manufacturing Sector 
during 2020 –24 - A Joint ADB –BAPPENA S Report , January.  
234 Statistics Indonesia (2019), Statistical Yearbook of Indonesia 2019 , 4 July. Viewed at: 
https://www.bps.go.id/publication/2019/07/04/daac1ba18cae1e90706ee58a/statistik -indonesia -2019.html . 
235 ADB/BAPPENAS (2019), Policies to Suppor t the Development of Indonesia 's Manufacturing Sector 
during 2020 –24 - A Joint ADB –BAPPENAS Report , January.  WT/TPR/S/401 • Indonesia  
 
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  Foreign -owned manufacturing plants seem to produce about ha lf of manufacturing exports.236 A 
concentration of SOEs in relatively capital -intensive activities, including steel, cement, fertilizers, 
pharmaceuticals, telecom equipment, aircraft, ships and railways,  seems to persist.237  
4.3.2   Policy, institutional and regulatory framework  
4.169.   During the review period, policy initiatives were undertaken to, inter alia,  support a shift 
from a commodity -reliant economy to a manufacturing -powered one , and diversify manufacturing, 
a seemingly difficult task so far.238 Improving industrial competitiveness has been a priority 
objective , set at Phase I (September 2015) of the 16 Economic Policy Packages (Section  2.2.2, and 
Table 2.2). To support industrial growth, the Master Plan of National Industry Development 201 5-35 
focuses on developing upstream and intermediate industries , based on natural resources, and on 
improving the use of industrial technology and the quality of human resources. It, inter alia,  targets 
raising the contribution of the industrial sector to GDP from 20% in 2018 to 30% by 2035 , and 
reducing dependency on imported raw materials and capital goods to address the trade deficit 
(Section 2.2.2).  
4.170.   The Master Plan is supported by the 2018 Ma king Indonesia 4.0 strategy, which followed the 
Industry 3.0 built around the use of electronics and information technology to further automate 
production.  It is aimed at: expanding the manufacturing sector , raising labour productivity , and 
using n ew technology to achieve higher growth through export promotion and 
"reindustrialization".239 Making Indonesia 4.0 seeks global competitiveness in the five target 
industries : food and beverages, textiles and garments, automotive, electronics, and chemicals. By 
2030, Indonesia aims to become globally competitive in new advanced technologies , such as artificial 
intelligence, robotics and genetics research. The authorities have laid out 10  national priorities to 
help the manufacturing sector reap the benefits of Making Indonesia 4.0 (Section 2.2.2). Moreover, 
they plan to enhance domestic production of inputs, revamp industrial zones under a single 
nationwide industry -zoning roadmap, embrace green growth opportunities, and build more coherent 
policies/regulations through cross -ministry collaborations.  
4.171.   The MoI remain responsible for policy formulation and implementation , and for providing 
supervision and administrative support. In addition, the Indonesian Chamber of Commerce and 
Industry, an umbrella organi zation w ith 34 regional chambers and over 500 district branches, is a 
key entity representing private -sector interests (Section 2.2).240  
4.172.   During the review period, several trade and trade -related regulatory developments were 
undertaken which directly affect investm ent, production and trade of manufacturing products 
(Sections 2.4, 3.1, 3.2 and 3.3).   
4.3.3   Border measures  
4.173.   During the review period, the MFN average tariff for manufacturing (HS 25 -97) increased 
considerably , from 7.5% in 2012 to 10.1% in 2020 (Tables 3. 2 and A3.1); it is equivalent to the 
overall applied MFN average (10.1%, 2020) and slightly below the average for agriculture. In 2020, 
 
236 World Bank/International Finance Corporation (2019), Creating Markets in Indonesia - Unlocking the 
Dynamism of the Indonesian Private Sector: A C ountry Private Sector Diagnostic , October.  
237 They include: PT Bio Farma ( pharmacy manufacture ); PT Industri Kereta Api ( railway manufacture); 
PT Pupuk Indonesia ( fertilizer ); PT Krakatau Steel ( steel manufacture); PT Barata Indonesia , PT Boma Bisma 
Indra , PT Dahana , PT Dirgantara Indonesia , PT Dok dan Perkapalan Surabaya , PT Garam , PT Industri Gelas , PT 
Industri Nuklir Indonesia , PT Industri Sandang Nusantara , PT Kertas Kraft Aceh , PT Kertas Leces , PT Len 
Industri , PT Primissima , PT Pupuk  Indonesia Holding Company , PT Semen Baturaja , PT Semen Indonesia , and 
PT Semen Kupang (processing manufacture ); PTDI or Indonesian Aerospace (IAe) (aircraft manufacture ); PT 
Dok dan Perkapalan Kodja Bahari , PT Industri Kapal Indonesia , and PT PAL Indonesi a (shipyard s); and PT 
Industri Telekomunikasi Indonesia  (telecoms). World Bank/International Finance Corporation (2019), Creating 
Markets in Indonesia - Unlocking the Dynamism of the Indonesian Private Sector: A Country Private Sector 
Diagnostic , October.  
238 OECD (2018), OECD Economic Surveys Indonesia , October.  
239 OECD (2018), OECD Economic Surveys Indonesia , October; and ADB/BAPPENAS (2019), Policies to 
Support the Development of Indonesia 's Manufacturing Sector during 2020 –24 - A Joint ADB–BAPPENAS 
Report , January.  
240 Oxford Business Group , New policy and incentives encourage tech innovation and manufacturing in 
Indonesia . Viewed at: https://oxfordbusinessgroup.com/overview/powering -production -new-policy -and-
incentives -encourage -technological -innovation -and-local. WT/TPR/S/401 • Indonesia  
 
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  there was an average gap of 25.6 percentage points between the average MFN applied and the 
bound rates in manufacturing; the MFN applied rates on certain machinery and apparatus exceeded 
their bound rate s (Table A3.3). Tariff escalation became more pronounced for virtually all industries 
(Section 3.1.3.3). Peak rates continue to be applied on transport equipment at 50% (40% in 2 012) 
and 150% on certain chemicals and photographic supplies (Table A3.1 and Section 4.3.6). Duty and 
tax concession continue to apply to equipment not produced domestically (Section 3.1.3.6); since 
2017, the Import Tax Waiver for Materials for Export Orie nted Goods, an incentive programme for 
SMEs to reduce costs related to the import of materials, has included import duty and import VAT 
exemptions on imported raw materials to be processed, assembled, or installed into export goods.241 
In September  2018, In donesia raised the withholding tax rates for certain imported (and exported) 
goods , involving, inter alia,  consumer goods (e.g. audiovisual equipment,  and textiles) and daily 
necessities (e.g. shampoos,  and cosmetics) (Section 3.1.4).  
4.174.   Import licensing requirements for certain manufactures (e.g. cell phones, handheld 
computers and tablets ; certain textiles and textile products ; LPG and LPG gas containers; used 
capital goods; oil and gas; sodium triopoly phos phate ; and fertilizer) raised concern among  some 
WTO Members (Section 3.1.5.2). During the review period, most anti -dumping action affected steel 
and chemical products , while safeguards affected a variety of manufactures (e.g. metal s, and 
textiles) (Sectio n 3.1.6). Local -content requirements embodied in duty and tax concessions , 
government procurement preferences , and specific activities (e.g. mining and energy projects) 
continue to support domestic manufacturing (Sections 3.1.3.6, 3.1.4, 3.3.6, 4.2.2.1.1 a nd 4.2.2.2). 
Export taxes on certain commodities (e.g. palm oil, CPO and its derivative products, leather and 
wood, raw cocoa , and mineral ore s) continued to ensure domestic supplies for local processing, and 
tax (including corporate income tax) and non -tax incentives under zone -designated schemes (e.g. 
FTZs, bonded zones, EPTEs and SEZs) remained in place to support domestic processing of 
manufactures for export (Sections 3.2.2 and 3.2.4.2). Since  2017, the  Export -Oriented People's 
Business Credit has been  provided by the Indonesia Eximbank to export -oriented MSMEs (78% of 
loans in manufacturing, 2019) directly involved in export activities , with 9% interest rates on loans 
(Sections  3.2.5 and 3.3.1.2).  As part of Phase XI of the EEPs (Section  2.2.2, and Table 2.2) , this 
measure aims to diversify Indonesia's exports , and encourage investment in higher -value processed 
goods, automotive, and electronics.242  
4.3.4   Domestic support measures  
4.175.   Similar to other activities, tax and non -tax incentives , including tax allowanc es, tax holidays 
(involving corporate income tax) and subsidized credit (see below) , remain available to 
manufacturing firms. During the review period, tax incentives were expanded for certain industries. 
In April 2018, the Government widened the eligibili ty for tax holidays to 17 specified "pioneer" 
industries (including machinery manufacturing and economic infrastructure) , and simplified the 
application process (Section 3.3.1.1.1.1).243 The holidays range from 5 to 20 years, depending on 
investment size. There are also tax holidays and other incentives in designated zones , and tax 
allowances for 145 business segments (Sections  3.3.1.1.1.1 and 3.2.4.2). Tax holidays are generous 
but have almost no takers — nine firms in 2018, zero firms in 2016 and 2017, and only one in 
2015.244 Reportedly, the tax allowance has very few recipients, which are mostly large, high -tech 
firms in the chemical and automotive industries; between 2015 and 2017, onl y 50 investors took 
advantage of the tax allowance incentive. These numbers seem low, given the number of medium 
and large firms operational in manufacturing.  According to the OECD, under specific assumptions, 
tax incentives would reduce the effective aver age tax rate that a manufacturing firm could face by 
13 percentage points.245 
4.176.   During the review period, various subsidized loans under the KUR programme  
(Section  3.3.1.2) , the SOE corporate social responsibility programme , and the Kredit Cinta Rakyat 
progra mme, were used to support MSMEs, including those involved in manufacturing 
(Section  3.3.1.2). Reportedly, the use of the KUR in the manufacturing sector is very small, at 
 
241 ADB/BAPPENAS (2019), Policies to Support the Development of Indonesia 's Manufa cturing Sector 
during 2020 –24 - A Joint ADB –BAPPENAS Report , January.  
242 ADB/BAPPENAS (2019), Policies to Support the Development of Indonesia 's Manufacturing Sector 
during 2020 –24 - A Joint ADB –BAPPENAS Report , January.  
243 OECD (2018), OECD Economic Surveys  Indonesia , October.  
244 ADB/BAPPENAS (2019), Policies to Support the Development of Indonesia 's Manufacturing Sector 
during 2020 –24 - A Joint ADB –BAPPENAS Report , January.  
245 OECD (2018), OECD Economic Surveys Indonesia , October.  WT/TPR/S/401 • Indonesia  
 
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  around 4% to 5% of the amount available  per year , possibly due to the fact that  the majority of 
manufacturing firms are small and medium -sized rather than micro -sized.246 
4.3.5   Garments, textiles and footwear  
4.177.   The garment, textile and footwear (GTF) industry remains an important, albeit slightly 
declining, activity. It was estimated to account for  around 7% of total manufacturing gross 
value -added (GVA) in 2016 , equivalent to around 1.4% of GDP, a slight decrease compared to 7.5% 
and 1.6%, respectively, in 2012.247 As at 2016 , the GTF employed 4.2 million people (about 
4.3 million in 2013) , representing 3.6% (3.8% in 2013) of total employment. In 2013 , labour 
productivity (GVA per person employed) in the GTF industry was estimated to be higher than in 
some regional counterparts, including Viet Nam and Cambodia, but lower than in Thailand and  the 
Philippines.248 In 2016, the GTF seemed to attract more FDI than domestic direct investment (DDI); 
its share in total FDI was 1.6% (2 .0% in 2015), and 1.5% of total DDI in both 2015 and 2016.  In 
terms of DDI, in 2016 , USD 241 million was invested in 28 4 different projects in the textile industry , 
and USD 5.1 million into 21 projects in the leather goods and footwear industry; and, regarding  FDI, 
USD 321 million was invested in 886 textile industry projects , and USD 144 million in 279 leather 
goods and f ootwear industry projects .249 In 2018, the share of total merchandise exports of textiles 
decreased slightly to 2.2% (2.5 in 2013) , whereas those of clothing and sports footwear rose to 5% 
(4.2% in 2013) and 1.6% (1.2% in 2013) , respectively (Table A1. 3).  
4.178.   Under the Making Indonesia 4.0 roadmap, textiles is among the five sectors that are 
identified  in promoting FDI and DDI  (Sections 2.2.2 and 4.3.2). Whereas GTF activities are eligible 
for all general tax and non -tax incentives , they are not part of the 17  pioneer industries benefiting 
from corporate tax holidays (Sections 2.4.4, 3.3.1.1.1.1 and 4.3.4).  
4.179.   During the review period, MFN average tariff protection for textiles and textile articles 
(HS Section 11) and footwear, headgear, etc. (HS Section 12) and p eak rates were raised 
significantly to 15.3% , with a peak of 35% (10.8%, peak rate 15% in 2012) and 16.4% with a peak 
30% (13.9%, peak rate 25% in 2012), respectively (Section 3.1.3.2, and Tables 3. 2 and A3.1); 
these rates considerably exceed both the over all applied MFN average (10.1%, 2020) and the 
average for manufacturing. In 2020, there was an average gap of 14.1 percentage points and 
22.7 percentage points between the average MFN applied and the bound rates in textiles and textile 
articles, and footwe ar, headgear, etc. , respectively.  
4.180.   Special importer identity number s for certain imports , including footwear and textiles , were 
abolished in 2016 (Section 3.1.1.1). Import -restrictive licensing requirements for textiles were a 
matter of concern to some  WTO Members over the review period (Table A3.4, and Section 4.3.3). 
Registration requirements for TBT reasons remain especially prevalent for certain items , including 
textiles and clothing , and footwear (Section 3.3.2.3). Less onerous labelling requirements on various 
textiles and clothing products, leather articles, and footwear were introduced in 2019 
(Section  3.3.2.5).  
4.181.   To enhance competitiveness of , and job creation in, export -oriented GT F companies 
employing at least 2,000 workers and exporting 50% of their total sales, since July 2016 , a 50% 
discount on the income tax rate (i.e. 2.5% instead of 5%) has been applied  to workers earning a 
 
246 ADB/BAPPENAS (2019), Policies to Support the Development of Indonesia 's Manufacturing Sector 
during 2020 –24 - A Joint ADB –BAPPENAS Report , January.  
247 The garment industry  remain s implicated in almost every activity  of the textile supply chain , 
including y arn production, weaving, knitting, dyeing, printing and finishing , and clothing manufacture , including 
a large man -made fibre industry.  ILO, Indonesia Garment and Footwear Sector Bulleting, Issue I, 
September  2017. Viewed at: https://www.ilo.org/wcmsp5/groups/public/ ---asia/---ro-bangkok/ ---ilo-
jakarta/documents/publication/wcms_625195.pdf . 
248 ILO, Indonesia Garment and Footwear  Sector Bulleting, Issue I, September 2017 . Viewed at: 
https://www.ilo.org/wcmsp5/groups/public/ ---asia/---ro-bangkok/ ---ilo-
jakarta/documents/publication/wcms_625195.pdf . 
249 ILO, Indonesia Garment and Footwear Sector Bulleting, Issue I, September 2017 . Viewed at: 
https://www.ilo.org/wcmsp5/groups/public/ ---asia/---ro-bangkok/ ---ilo-
jakarta/documents/publication/wcms_625195.pdf . WT/TPR/S/401 • Indonesia  
 
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  maximum of IDR  50 million (approx. USD 3,850) per ye ar.250 The United States remains the main 
destination for Indonesia's garment/clothing exports, accounting for around 52.6% of its total 
exports in 2018; it is followed by the European Union (15.54%) and Japan (10.1%).251  
4.3.6   Automotive  
4.182.   In 2019, Indonesia was t he world's 17th (15th in 2013) and Asia's 6th largest motor vehicle 
producer, and ASEAN's largest vehicle market . Output stood at 1.3 million  units ( 1.0 million  cars, 
and 0.2 million  commercial vehicles) compared to 1.2 million  units ( 0.9 million  cars, and 0.3 million  
commercial vehicles) in 2013, and domestic market sales at 1.0 million  units.252 Although the share 
of transport equipment in GDP dropped from 2.1% in 2013 to 1.7% in 2019 (Table 1.2), the share 
of automotive products and other transport equipm ent in total merchandise exports increased to 
3.9% (2.3% in 2013) and 2.0% (1.3% in 2012), respectively , in 201 9 (Table A1. 3); at the same 
time, the share of motor vehicles for the transport of persons rose from to 1.2% to 2.4% . Indonesia 
exported 346,000 vehicles in 2018, of which 264,000 were completely built up , and the rest 
completely knocked down.253 Automotive products ' share of total merchandise imports remained 
relatively stable , at 4.1% in 2013 and 4. 0% in 201 9 (Table A1. 4). As at 2018, domestic sales were 
dominated by Japanese brands.254 Domestic car sales registered a 9.6% plunge in 2019; as at 
December 2019, 1.04 million cars were sold, compared to 1.15 million units at the corresponding 
period in 2018.255 As at 2019, Indonesia's annual vehicle production capacity stood at 2.3 million  
units.256  
4.183.   Under the National Industry Development 2015 -35 (Section 4.3.2), Indonesia envisions 
becoming a major player in the global automotive industry and , therefore, needs to develop a 
reliable, competiti ve and sustainable industry.257  
4.184.   During the review period, the MFN average tariff and peak rates for transport equipment 
(HS Section 17) , including automotive , were raised significantly to 26.3% , with a peak of 50 .0% 
(HS 8702 motor vehicles for the transpor t of 10 or more persons , including the driver, HS 8703 
motor cars and other motor vehicles principally designed for the transport of person (other than 
those of HS heading 8702), and HS 8704 motor vehicles for the transport of goods) compared to 
16.9% , with a peak of 40 .0% (same as for 2020 plus HS 8706 and 8707 chassis and bodies for 
motor vehicles of HS8701 to 8705, and HS871610 trailers and semi -trailers of the caravan type, for 
housing or camping) in 2012 (Tables 3. 2 and A3.1); this average is more than  double of both the 
overall applied MFN average (10.1%, 2020) and the average for manufacturing.258 In 2020, there 
was an average gap of 13.2 percentage points between the average MFN applied and the bound 
rates in transport equipment.259 
 
250 Indonesia Investments, Government of Indonesia Offers 50% Discount on Income Tax. Viewed at: 
https://www.indonesia -investments.com/news/todays -headlines/government -of-indonesia -offers -50-discount -
on-income -tax/item7320 . 
251 As a beneficiary of the US GSP, Indonesia enjoys low tariffs on textile and garment exports to the 
United States, which remains the largest market for Indonesian shipments in this sector.  UNSD Comtrade 
Database.  
252 International Organization of  Motor Vehicle Manufacturers, 2019 Production Statistics . Viewed at: 
http://www.oica.net/category/production -statistics/2019 -statistics/ ; and Statista, Number of motor vehi cles 
sold in the ASEAN region 2019, by country. Viewed at: https://www.statista.com/statistics/583382/asean -
motor -vehicle -sales-by-country/ . 
253 Jakarta Post , Indonesia to welcome US$900m in automotive industry: Minister . Viewed at: 
https://www.thejakartapost.com/news/2019/02/13/indonesia -to-welcome -us900m -in-automotive -industry -
minister.html . 
254 Automotive Industry Portal, Indonesia – Flash report, Sales volume, 2018. Viewed at: 
https://www.marklines.com/en/statistics/flash_sales/salesfig_indonesia_2018 . 
255 Jakarta Globe, Indonesia's Automotive Industry Won't Hit the Brakes Anytime Soon. Viewed at:  
https://jakartaglobe.id/opinion/indonesias -automotive -industry -wont-hit-the-brakes -anytime -soon. 
256 Director General for Metal Machinery Transportation Equipment and Electronic Industry  presentation 
titled Government Policy on Future Automotive Technology  at the 14th Gaikindo International Automotive 
Conference, 24 July 2019.  
257 Director General for Metal Machinery Transportation Equipment an d Electronic Industry  presentation 
titled Government Policy on Future Automotive Technology  at the 14th Gaikindo International Automotive 
Conference, 24 July 2019.  
258 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
259 Rates on 81.8% of tariff lines under HS Section 17, including HS heading 8703, are unbound; for 
those that are bound, the highest bound rate is 40%.  WT/TPR/S/401 • Indonesia  
 
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  4.185.   Automotive activities remain eligible for all general tax and non -tax incentives 
(Sections  2.4.4, 3.3.1.1.1.1 and 4.3.4). Since  2019, to reduce petrol consumption and GHG, support 
has been provided through luxury goods sales tax (LGST) holidays for alterna tive-fuel vehicles 
(Section 3.3.1.1.1.3). In addition , other support include s: special credit for electric vehicles with an 
interest rate of 3.8% per year and a tenor of six years by the state -owned bank PT BRI Persero 
(Table 3.2 6); and provid ing a 100% di scount for the electricity upgrade for owner s of electric cars , 
and a 75% discount for owner s of electric motorcycle s, by the state -owned PT PLN Persero 
(Section  4.2.2.2).260  
4.186.   During the review period, action was taken to promote the electric vehicle (EV) i ndustry; the 
target is for the EV industry to begin domestic production by 2021 or 2022 , and export 
200,000  electric cars (20% of the overall 1 million car export target) by 2025.261 PR No.  55/2019 , 
encouraging local content requirements (see below) and fiscal and non -fiscal incentives to promote 
the EV industry , came into force on 12 August 2019.262 The implementing regulations to be 
introduced by the respective ministries to enforce this PR were to be issued no later than one year 
after its entry into force; as at July 2020, they were still under discussion.  
4.187.   Under PR No.  55/2019 , the possible fiscal and non -fiscal incentives for the EV industry 
include: import duty incentives for importing KBL b attery-based completely knocked down EVs, KBL 
battery -based incompletely knocked down EVs, or major components for the number and for certain 
period of time; sales tax incentives for luxury goods; incentives for central or regional tax exemption 
or reduction; incentives regarding  import duty on the importation of machinery, goods and materials 
in the context of investment; suspension of import duties in the framework of export s; incentives 
for import duties borne by the Government (Section 3.1.3.6) for the impo rtation of raw materials 
and/or supporting materials used in the framework of the production process; incentives for making 
electric battery -charging station equipment; fiscal incentives for research, development and 
technological innovation activities as well as vocational components of the battery -based KBL; 
parking fees at locations determined by the regional government; reduction of electricity charging 
fees at electric battery -charging stations; financial support for electric battery -charging station 
infrastructure development; professional competency certification for the human resource 
development related to battery -based EVs; and product certification and/or technical standards for 
the battery -based EV industrial company and the related component ind ustry.  
4.188.   Under PR No.  55/2019 , a minimum local content of 40% for two -wheeled or three -wheeled 
EVs manufactured between 2019 and 2023 is required.263 The local content requirement is to be 
raised to a minimum of 60% if the EVs are produced between 2024 and 2 025, and to a minimum of 
80% if they are manufactured after 2026. At the same time, four -wheeled or more EVs produced 
between 2019 and 2021 are required to have a minimum local content of 35%, a minimum of 40% 
if they are manufactured during the period 202 2-23, a minimum of 60% in 2024-29, and a minimum 
of 80% from 2030 onwards.  
4.4  Services  
4.4.1   Features  
4.189.   The contribution of services to GDP rose gradually over the review period, from 42.6% in 
2013 to 46.1% in 2019. The main services activities are: wholesale and retail trade, car and 
motorcycle reparation s (13.6% of GDP in 2019, compared with 13.5% in 2013); transport and 
storage (5.8% in 2019, 4 .0% in 2013); finance and insurance (4.4% in 2019, 4.0% in 2013) and 
information and communication (4.1% in 2019, 3.7% in 2013)  (Table 1.2). In 2019, the services 
 
260 Director General for Metal Machinery Transportation Equipment and Electronic Industry  presentation 
titled Government Policy on Future Automotive Technology  at the 14th Gaikindo International Automotive 
Conference, 24 July 2019.  
261 PWC, Indonesia's Automotive Industry Won't Hit the Brakes Anytime Soon. Viewed at: 
https://www.pwc.com/id/en/media -centre/pwc -in-news/2020/english/indonesias -automotive -industry -wont-
hit-the-brakes -anytime -soon.html . 
262 Global Trade Alert,  Indonesia: 2019 presidential regulation to promote local EV industry.  Viewed at:  
https:/ /www.globaltradealert.org/intervention/73881/tax -or-social -insurance -relief/indonesia -2019-
presidential -regulation -to-promote -local-ev-industry . 
263 PWC, Indonesia's Automotive Industry Won't Hit the Brakes Anytime Soon. 
https://www.pwc.com/id/en/media -centre/pwc -in-news/2020/english/indonesias -automotive -industry -wont-
hit-the-brakes -anytime -soon.html . WT/TPR/S/401 • Indonesia  
 
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  sector accounted for 49.2% of employment, the main sectors being: wholesale and retail trade,  car 
and motorcycle reparations  (18.8% of employment in 2019 and 18.6% in 2013); accommodation, 
food and beverage service activities (6.7% in 2019, compared with 3.8% in 2013); education (5.0% 
in 2019, 4.5% in 2013); and transport and storage (4.4% in 2019 , 4.1% in 2013) (Table 1.2). The 
services sectors that have seen the biggest FDI inflows over the review period were trade and repair, 
transport, storage and communications , and financial intermediation  (Table 1.5).  
4.190.   Over the period 2013 -19, Indonesia maint ained a small trade deficit in services, ranging 
from -1.3% of GDP in 2013 to -0.6% of GDP in 2018. Over this period, Indonesia saw a growth in 
services exports in all years except 2013 and 2015 (Table 1.1). In 2018, Indonesia was ranked the 
41st largest e xporter and the 34th largest importer of commercial services in the world (including 
intra-EU trade).264  
4.4.2   Overall commitments under the General Agreement on Trade in Services (GATS) 
and RTAs  
4.191.   Indonesia's schedule of WTO GATS specific commitments continues to  cover business 
services; communication services; construction and related engineering services; financial services; 
tourism and travel -related services; and transport services. MFN exemptions remain in relation to 
movement of personnel; construction and r elated engineering services ; and financial services.265 
RTAs to which Indonesia is a signatory which contain services commitments are ASEAN -Australia -
New Zealand; ASEAN -China; ASEAN -Hong Kong, China; ASEAN -India; and ASEAN -Republic of Korea 
(Table  2.5). Ove r the review period, Indonesia expanded its services commitments under the AFAS , 
and the RTA between ASEAN and India was expanded to cover trade in services (Section 2.3.2).  
4.4.3   Financial services  
4.192.   As at December 2019, the total assets of the financial sector s tood at  the equivalent of  just 
over 77% of GDP (compared with 66% in 2012).  In terms of assets, banking dominates the financial 
services sector, followed by insurance , mutual funds , and finance companies (Table 4. 5). 
Table 4.5 Structure of the financial sector, December 2019  
Type of institution and year  Assets  
(IDR trillion)  Assets (%)  % of GDPa 
Banks  8,712.59  70.71  55.02  
Insuranceb 913.81  7.42 5.77 
   - Health care and Social Security Agency  15.15  0.12 0.10 
Finance companies  518.14  4.20 3.27 
Pension funds  295.62  2.40 1.87 
    - Workers Social Security Agency  442.20  3.59 2.79 
Pawnshops  65.66  0.53 0.41 
Microfinance institutions  1.07 0.01 0.01 
Venture capital companies  18.65  0.15 0.12 
Guarantee companies  21.91  0.18 0.14 
Securities firms  55.50c 0.45 0.35 
Mutual funds  816.85  6.63 5.16 
Outstanding corporate bonds  445.10  3.61 2.81 
Total 12,322.25  100.0  77.82  
a  Indonesia's 2019 nominal GDP was IDR 15,833.9 trillion.  
b  Data on insurance assets consist of life and non -life insurance assets (conventional and sharia 
insurance), reinsurance assets, mandatory insurance, and social insurance.  
c This data covers the tot al assets of 118 of the total 123 securities firms, as 5  securities companies 
did not submit their financial reports due to their inactive status. Two of the 118 securities 
companies had not yet submitted their 2019 financial reports, therefore the number of total assets 
from their 2018 financial reports was used.  
Source:  Information provided by the OJK.  
4.193.   The financial services authority ( Otoritas Jasa Keuangan , (OJK)) is the sole regulatory 
authority for all financial services institutions (banks, securities companies, insurance companies, 
 
264 WTO, Trade Profile, Indonesia (2018) . Viewed at: 
https://www.wto.org/english/res_e/statis_e/daily_update_e/trade_profiles/ID_e.pdf . 
265 WTO, World Bank i -TIP D atabase . Viewed at: http://i -tip.wto.org/services/default.aspx . WT/TPR/S/401 • Indonesia  
 
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  pension funds, and multi -finance companies). The OJK was established in 2011, assuming non -bank 
and capital market supervis ory responsibilities of the MoF (Capital Market and Financial Institutions 
Supervisory Agency) , and taking over the banking sector supervisory responsibilities of the central 
bank (Bank Indonesia  - BI), commencing in January 2014. The OJK coordinates with  the BI in setting 
banking policies related to the capital adequacy ratio for banks; receiving foreign exchange; offshore 
funding and commercial loans; banking products; derivative transactions; and other banking 
activities. The BI  may also conduct special investigations on banks after informing the OJK; the 
results of these investigations must be conveyed to the OJK. The Indonesia Deposit Insurance 
Corporation  (IDIC)  manages the deposit insurance system; all banks operating within the Indonesian 
territory m ust become a member of, and take out insurance under, this system. The banks pay an 
insurance premium of 0.1% from the average monthly balance of total deposits in each semester, 
which is paid twice a year.  
4.194.   The OJK's "master policies" objectives for the period 2017 -22 are: ( i) developing and 
conducting IT -based supervision of the financial services sector; ( ii) reinforcing regulation, licensing 
and integrated supervision of financial conglomerates; ( iii) implementing international prudential 
standards  that best fit national interests; ( iv) reforming the non -bank financial industry into a 
stronger and more competitive one; ( v) increasing efficiency in the financial services industry, to 
transform the industry into a competitive one; ( vi) revitalizing th e capital market to promote 
long-term development financing; ( vii) optimizing financial technology roles by means of proper 
regulation, licensing and supervision; ( viii) reducing disparity by providing financial access; 
(ix) increasing consumer education a nd protection activities' effectiveness; and ( x) promoting 
Islamic finance's increased contribution in providing funding sources for development.266  
4.195.   In 2016, the Government issued the National Strategy for Financial Inclusion. It has 
five pillars: financia l education, public property rights, financial distribution channels and 
intermediary facilities, financial services in government sectors, and consumer protection. The pillars 
are supported by three foundations: favourable policies and regulations, suppor tive financial 
information technology and infrastructure, and effective implementation mechanisms and 
organization. Its aim is to increase the population's access to banking services , and it was expected 
to increase the proportion of citizens with bank acc ounts from 36% in 2014 to 75% by 2019.267 
Based on an OJK survey, Indonesia's financial inclusion index reached 76.19% in 2019. To further 
advance financial inclusion in Indonesia, the President instructed the following actions in the next 
few years: furthe r expansion of the usage of formal financial products and services; further 
development of digital financial services; and improved consumer protection in financial 
institutions.268 The Government 's target is now to achieve 90% financial inclusion by 2024.  
4.196.   Furthermore, in 2019, the BI  issued the Indonesia 2025 Payment System Vision , which 
contains five elements: ( i) supporting the integration of national digital economy and finance; 
(ii) supporting banking digitalization; ( iii) guaranteeing the interlink bet ween fintech and banking; 
(iv) ensuring the balance between innovation, consumer protection and healthy business 
competition; and ( v) safeguarding national interests in cross -border digital economy and finance. It 
was followed up by the issuance of the Ind onesia Payment Systems Blueprint (IPSB) , which contains 
five initiatives to achieve the Vision, namely : (i) open banking; (ii) retail payment systems; 
(iii) financial market infrastructure; (iv) data ; and (v)  regulatory, licensing and supervision 
elements.  These initiatives are to be implemented simultaneously by five working groups under the 
BI.269 The IPSB 2025 set the course for the development of the digital economy and finance, seeking 
to ensure continuity in the functions performed by the BI and in sup port of economic and financial 
inclusion. As indicated by the authorities, one initiative that has already been implemented was the 
launch , in August 2019 , of the Quick Response Code standard (the QR Code Indonesian Standard 
(QRIS)) for payments through se rver-based e -money applications, electronic wallets and mobile 
 
266 OJK, Press Release: OJK Sets 10 Master Policies for 2017 – 2022 Period . Viewed at: 
https://www.ojk.go.id/en/berita -dan-kegiatan/siaran -pers/Pages/Press -Release -OJK-Sets-10-Master -Policies -
for-2017-%e2%80%93 -2022-Period.aspx . 
267 PR No. 82/2016 on National Strategy for Financial Inclusion. Viewed at: 
https://peraturan.go.id/peraturan/view.html?id=11e6b61dc065aea0a831313032323337 . 
268 Ministry  of State Secretariat. Viewed at: https://www.presidenri.go.id/transkrip/rapat -terbatas -
tentang -strategi -nasional -keuangan -inklusif/ . 
269 The Jakarta Post, Indonesia promotes financial inclusion with new strategy. Viewed at:  
https://www.thejakartapost.com/news/2016/11 /18/indonesia -promotes -financial -inclusion -with-new-
strategy.html ; and Baker Mackenzie, Bank Indonesia Issues Blueprint for 2025 Payment System . 
https://www.bakermckenzie.com/en/insight/publications/2019/11/bank -indonesia -2025-payment -system . WT/TPR/S/401 • Indonesia  
 
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  banking; this has been fully implemented since January 2020.  The QRIS aims to enhance transaction 
efficiency, accelerate financial inclusion , and advance MSMEs . It was constructed using EMV Co. 
international standards to support broader payment system instrument interconnectedness and 
accommodate the specific needs of Indonesia, thus providing interoperability between providers, 
instruments and countries.  
4.197.   Over the review period, the only legi slative changes in the financial services sector related 
to insurance (see below). Additionally, several regulations were circulated by the OJK in the 
insurance, banking and securities sectors. According to the authorities, most regulations are 
prudential measures relating to business activities, presence, licensing, and the management of 
foreign workers. Additionally, regulations were issued on consumer protection in the financial 
services sector; alternative dispute resolution agencies in the financial se rvices sector270; and the 
implementation of an Anti -Money Laundering Program and Prevention of Terrorism Financing 
Program in the financial services sector.271  
4.198.   Investment restrictions in the financial services sector remain unchanged (Table 4. 6). As 
indicat ed by the authorities, under current regulations, national treatment is applied to investors 
wishing to obtain a licence to establish a commercial conventional bank or a commercial sharia bank. 
In general, the same set of prudential regulations (such as mi nimum capital requirements, and 
activities permitted) apply to both foreign -owned and domestically owned banks. However, domestic 
banks falling in the BUKU 1 and BUKU 2 categor ies (banks with Tier 1 capital of up to IDR 5 trillion) 
are exempted from liquid ity buffer requirements (liquidity coverage ratio and net stable funding 
ratio), while these buffers apply to all foreign -owned banks regardless of their Tier 1 capital.  
Table 4.6 Limitations on foreign parti cipation in financial services, 2020  
Services  Ownership  
Conventional bank; sharia bank; money market broker company  Subject to a special licence from the 
Financial Services Authority  
Conventional rural bank; sharia rural bank  Domestic capital: 100%  
Investment finance company; working capital finance company; 
multi-purpose finance company; venture capital  Foreign capital ownership : max. 85% 
Life insurance company; reinsurance company; general insurance 
company; insurance loss adjuster company; insurance agent 
company; insurance broker company; reinsurance broker 
company; actuarial consultant service company  Foreign capital ownership : max. 80% 
Guarantee company  Foreign capital ownership : max. 30% 
Non-bank foreign exchange trader  Domesti c capital: 100%  
Non-bank electronic money issuer; money broker company; 
central counterparty for over -the-counter interest rate s; electronic 
trading platform s Foreign capital ownership : max. 49% 
Principal, switching provider, clearing provider, and/or settlement 
provider; switching agency of national payment gateway operator  Foreign capital ownership : max. 20% 
Source:  Law No. 44 of 2016 concerning List s of Business Fields that are Closed to and Business Fields that 
are Open with Conditions to Investment. Viewed at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_uplo ad/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf ; and BI. 
4.199.   IMF's most recent Article IV Report on Indonesia (in 2019), inter alia , commended Indonesia 
for protecting financial stability, highlighting strong bank balance sh eets. Some concerns remained 
about Indonesia's shallow financial markets , and it was pointed out that financial deepening would 
help mobilize domestic resources to finance the economy and lessen reliance on volatile external 
financing.272 
 
270 OJK Regulation No. 1/POJK.07/2014 concerning  Alternative Dispute Resolution Agencies in the 
Financial Services Sector was issued in order to create a rapi d, inexpensive, fair and efficient dispute resolution 
mechanism. The Regulation stipulates the requirements for alternative dispute resolution agencies to register 
at the OJK. These must have a dispute resolution mechanism that contains at least mediation,  adjudication and 
arbitration; and they must apply principles of accessibility, independence, fairness, efficiency and effectiveness.  
271 These OJK regulations are respectively: No. 1/POJK.07/2013 ; No. 1/POJK.07/2014 ; and 
No. 12/POJK.01/2017.  
272 IMF (2019), Indonesia: 2019 Article IV Consultation -Press Release; Staff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed  at: WT/TPR/S/401 • Indonesia  
 
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  4.4.3.1   Banking  
4.200.   Legislation governing the banking sector remains Law No. 7 of 1992 on Banking, as last 
amended by Law No. 10 of 1998 and Act No. 21 of 2008 on Islamic Banking. The Banking Law 
distinguishes commercial banks from rural banks by the scope of their services. Commercial banks 
may provide an extensive range of financial services, including raising funds from the public in order 
to offer loans, trading negotiable instruments, providing bank guarantees, issuing credit cards, and 
settling and receiving foreign curr ency payments. In contrast , rural banks have a very limited scope 
of services. They may raise funds from the public, provide loans , and extend credit, but may not be 
involved in foreign currency transactions or in direct clearing settlements. Neither type of bank may 
engage in the insurance business, except through a bank insurance arrangement with a licensed 
insurance company. Commercial banks may establish a separate sharia business unit to provide 
financial services based on Islamic banking principles. R ural banks may also operate as sharia 
banks.273  
4.201.   As at the time of the previous Review, foreign banks seeking to establish operations, 
including opening a branch in the country, must be rated "A" by  a leading international rating 
agency; rank among the 200 largest banks in the world, by total assets; have paid -up operating 
funds of at least IDR 3 trillion; and have permission from their home market regulator. Foreign 
banks may establish branches and sub -branches in 12 major cities in Indonesia. However, in l ine 
with the banking consolidation policy, the OJK imposed a moratorium on new banking licences for 
both domestic and foreign investors. Instead , investors are directed to invest in existing banks , in 
accordance with relevant regulations.274 In order to sup port these initiatives, banks are exempt from 
both the Single Presence Policy , and limitations on commercial bank share ownership.  
4.202.   Key developments in the banking sector over the review period included:  
• the launch of the Financial Information Services Sys tem (SLIK) in 2017; this is a tool for  
exchanging financing or credit information among institutions in the financial field, 
inter alia, to help reduce non -performing loans and increase funds provided. It replaces 
the Debtor Information System275;  
• the laun ch, also in 2017, of the BI's  integrated electronic payment system network, the 
National Payment Gateway (NPG) , which aims to provide a secure, efficient payment 
system for Indonesian banking customers. Since  June 2018, all domestic payment 
transactions ma de within Indonesia (excluding credit cards) are processed through the 
NPG. The advantage of the system is that consumers may conduct payment transactions 
in all electronic data capture machines and automated teller machines in Indonesia , 
regardless of whi ch bank issues their cards. As indicated by the authorities, global players 
participated in the making of the NPG Standard through the Association of Indonesian 
Payment System. Foreign/global companies (for example credit card companies) may 
participate in  NPG switching through  either of  two avenues: ( i) they can create a n NPG 
switching agency through a joint venture with a domestic partner , to provide the 
infrastructure for local switching/domestic transactions; maximum foreign equity 
participation is 20%,  and foreign/global companies can focus on the cross -border 
transactions without having to adjust their current foreign equity participation; or ( ii) they 
can have a business arrangement with one of the NPG switching agencies; this can be in 
the form of providing the handling process technology, transaction security, or any 
value -added services that are required by the NPG switching agency. The authorities also 
indicated that the BI  continues to modernize retail payment systems through more 
efficient and secure infrastructure , including by creating  BI-FAST, a new fast payment 
infrastructure for card -based instruments, electronic money and direct to account (debit 
 
https://www.imf.org/en/Publications/CR/Issues/201 9/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
273 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
274 These Regulations are POJK No. 41/POJK.03/2019 concerning the Merger, Consolidation, Acquisition, 
Integ ration and Conversion of Commercial Banks, and POJK No. 12/POJK.03/2020 on Commercial Banks 
Consolidation.  
275 OJK, Press Release: OJK Launches Financial Information Services System (SLIK) to Enhance Debtor 
Information System . Viewed at: https://www.ojk.go.id/en/berita -dan-kegiatan/siaran -pers/Pages/Press -
Release -OJK-Launches -Financial -Information -Services -System -(SLIK) -to-Enhance -Debtor -Information -
System.aspx . WT/TPR/S/401 • Indonesia  
 
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  and credit ) transfers. The existing NPG will collaborate with BI -FAST and the existing BI 
clearing system to perform the backbone function of switching, clearing and settlement of 
domestic retail transactions. The interface connections will make various mobile -based 
services easier and cheaper ; 
• in 2017, the issuance of a regulation allowing the Dir ectorate General of Taxation to access 
bank accounts without having to obtain permits from the Minister of Finance or the 
Governor of the BI  (as previously required). This applies to customers of both Indonesian 
banks and foreign banks . Previous regulation s in force only applied to customers of foreign 
banks.276 This step was taken in the context of Indonesia's pledge to join the OECD -led 
Automatic Exchange of Information initiative277; 
• the Government's banking sector -related response to the COVID -19 pandemic in 2020 
(Section 1). Under GR No. 23/2020 on the National Economic Recovery Plan, the State 
allocated IDR 35 trillion of funding to be distributed to domestic banks , at certain intere st 
rates, to give them more liquidity to undertake loan restructuring and disburse additional 
loans to businesses. Participating banks must meet certain requirements: they must be 
commercial banks ; be at least 51% owned by Indonesian individuals or entitie s; be 
categorized by the OJK as sound; and be one of the country's 15 largest banks in asset 
value. It is foreseen that these banks will also lend to secondary banks to enable them to 
undertake similar loan activities278; and 
• additionally, in response to CO VID-19, the OJK provided stimulus through the issuance of 
new regulations for banking, capital markets, and the non -banking financial industry.279 
These stipulate, inter alia , provisions on financ e restructuring for debtors affected by 
COVID -19; the conduct  of relaxation policies for credit quality assessment ; written orders 
for handling bank and non -bank financial institution problems ; banning short -sell 
transactions ; allowing buy -back without prior approval from the Shareholders General 
Meeting , for issuers and public companies ; implementing trading halts; and modifying the 
auto rejection threshold .  
4.203.   The banking sector remains dominated by majority -state-owned banks , which accounted for 
around 50% of total banking assets. Four majority -state-owne d banks dominate the market : Bank 
Mandiri (government share is 60%), Bank Rakyat (56.75%), Bank Negara Indonesia (60%) and 
Bank Tabungan Negara (60%). Three of these are "category four" , which is the highest level of 
banking structure; these banks have ver y flexible operations , in that they can provide any services 
and there is no limitation on the number of branches that can be operated, subject to the approval 
of the OJK. There is one state -owned bank at level three. Majority -state-owned banks and domesti c 
banks together account for 72.7% of total banking assets. The majority of foreign -owned banks are 
incorporated in Indonesia (Table s 4.7 and 4. 8). The review period saw a decrease in the total number 
of banks (from 120 in December 2013 to 110 in December  2019), no change in the number of 
foreign -controlled banks (30), and a reduction in the number of branches of foreign banks, from 
10 to 8. Over the review period, there were several bank mergers and acquisitions. Concerns were 
expressed that the small size  of most banks prevents them from leveraging economies of scale , 
which contributes to high intermediation costs and increas es the administrative cost of financial 
regulation.280  
 
276 The Jakarta Post , Government issues regulation to end bank secrecy . Viewed at: 
https://www.thejakartapost.com/news/2017/05/17/government -issues -regulation -to-end-bank-secrecy.html . 
277 Economist Intelligence Unit , Financial Services Industry Report, 2nd Quarter 2019 . Viewed at : 
www.eiu.com . 
278 The Jakarta Post , Government issues regulation on economic recovery program, focuses on SOEs, 
MSMEs . Viewed at: https://www.thejakartapost.com/news/2020/05/12/government -issues -regulation -on-
economic -recovery -program -focuses -on-soes-msmes.html . 
279 Some of the regulations were issued to implement GR in Lieu of Law No . 1 of 2020 regarding State 
Financial Regulation and Financial System Stability, issued in response to the COVID -19 pandemic, which was 
passed into Law No. 2 of 2020 in May 2020.  
280 World Bank Group, (October 2019), Creating Markets in Indonesia, Unlocking the Dynamism of the 
Indonesian Private Sector . Viewed at: https://www.ifc.org/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-
dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJPERES&CVID=m.8RZD6 . WT/TPR/S/401 • Indonesia  
 
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  Table 4.7 Share of commercial b ank ownership (both conventional and sharia), 
December 2019  
 Number of banks  Total assets  
(IDR million ) % of total 
banking industry  
Government  31 4,291,647,423  50.12  
Domestic  41 1,931,532,496  22.56  
Foreign  38 2,339,794,378  27.32  
Foreign bank branch  8 451,513,981  5.27 
Foreign -owned locally incorporated bank  30 1,888,280,397  22.05  
Total  110 8,562,974,297  100 
Source:  Information provided by the OJK. 
Table 4.8 Leading commercial banks (both conventional and sharia), ranked by assets, 
December 2019  
 Assets  (IDR trillion)  Market share (%)  
Leading domestic banks   
Bank Rakyat Indonesia  1,344.5  15.7 
Bank Mandiri  1,134.8  13.3 
Bank Central Asia  905.6  10.6 
Bank Negara Indonesia  780.6  9.1 
Bank Tabungan Negara  314.2  3.7 
Leading foreign -controlled banks    
Bank CIMB Niaga  273.1  3.2 
Bank OCBC NISP  180.8  2.1 
Bank Danamon Indonesia  170.2  2.0 
Bank BTPN  168.2  2.0 
MUFG Bank  163.7  1.9 
Bank Permata  161.2  1.9 
Bank Maybank Indonesia  155.2  1.8 
Bank HSBC Indonesia  111.4  1.3 
Bank UOB Indonesia  105.5  1.2 
Bank DBS Indonesia  90.1 1.1 
Total  8,562.9  100.0  
Source:  Information provided by the OJK. 
4.204.   In 2019, the sharia banking industry comprised 14 sharia banks, 20 sharia bank units , and 
164 sharia rural banks. Total assets of sharia banks increased from IDR 248.11 trillion in 2013 to 
IDR 538.32 trillion in December 2019.281 
4.205.   As reported by the authorities, Indonesia  has fully implemented the Basel III capital, 
leverage ratio and liquidity standards , and the OJK published new regulations in these areas.282 The 
Basel Committee's Regulatory Consistency Assessment Program (RCAP) assessment of 2016 gave a 
"compliant " grading for the liquidity coverage ratio and "largely compliant " for the capital standard. 
Indonesia also implemented other Basel III standards , compris ing the standardized approach for 
measuring counterparty credit risk exposures; revisions to the securitization framework; interest 
rate risk in the banking book; the framework for dealing with domestic systemically important banks; 
and large exposures framework.283 In early 2020, Indonesia completed the RCAP process for Large 
Exposures and Net Sta ble Funding Ratio , with both standards resulting in a "compliant " grade from 
the Basel Committee.  
4.206.   There were no bank failures over the period January 2013 to end -May 2020 . During the 
review period , domestic banks posted stable and strong capital and profi tability.  As reported by the 
 
281 OJK. Viewed at: https://www.ojk.go.id/id/kanal/syariah/data -dan-statistik/statistik -perbankan -
syariah/Pages/Statistik -Perbankan -Syariah ---Desember -2019.aspx . 
282 OJK Regulation No. 11/POJK.03/2016 implements the minimum capital requirement for Common 
Equity Tier 1 (CET 1), Additional Tier 1 (AT 1), Tier 2, Capital Conservation Buffer (CCB), Countercyclical Buffer 
(CCyB) and Capital Loss Absorption at the Point of Non-Viability (PONV). POJK Regulation 
No. 31/POJK.03/2019 implements ration leverage requirements; and liquidity standards are implemented by 
POJK Regulation No. 42/POJK.03/2015 concerning the Liquidity Coverage Ratio and POJK Regulation 
No. 50/POJK.03/201 7 concerning the Net Stable Funding Ratio.  
283 These are contained in the following regulations, respectively: SEOJK Regulation 
No. 48/SEOJK.03/2017; POJK Regulation No. 11/POJK.03/2019; SEOJK Regulation No. 12/SEOJK.03/2018; 
POJK Regulation No. 2/POJK.03/2 018; and POJK Regulation No. 32/POJK.03/2018.  WT/TPR/S/401 • Indonesia  
 
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  BI, Indonesian banks are well -capitalized, as indicated by a capital adequacy ratio (CAR) above 20% 
up to May 2020 (time of writing). Non-performing loans (NPLs) remained low, and were 3.0% (gross) 
and 1.17% (net) in May 2020 . Over the review period, the highest NPL rates were 3.22% in 
August  and October 2016 , and the lowest were 1.73% in December 2013. Payment system 
availability, both cash and non -cash, remained uninterrupted. Nevertheless, the BI indicated that 
potential risk s associated with the COVID -19 impact on financial system stability must still be 
anticipated.284 Potential weakness es in the banking sector identified by the IMF have been banks' 
high exposure to the corporate sector and the vulnerability of some non -systemic banks to liquidity 
shocks, including foreign exchange liquidity shortfalls.285 The IMF advised the OJK to continue efforts 
to strengthen enforcement of prudential regulations, including on credit and risk management , and 
supervision of financial conglom erates. Moreover, it suggested that stronger coordination between 
the IDIC  and the OJK on bank recovery and resolution would strengthen the crisis management 
framework , and that the corporate prudential FX regulation should be further improved by extending  
its coverage to all FX liabilities of systemic corporates.286  
4.207.   The World Bank Group drew attention to constraints faced by Indonesian companies in 
accessing credit, citing a 2015 study which found that around 60% of Indonesian firms that require 
a loan do not request one, representing a larger share than in comparator countries. The main 
reasons include: financial -market inefficiencies, high interest rates, high collateral requirements and 
complex procedures. It points out that these credit constraints unde rmine the competitiveness of 
firms, as they are associated with lower rates of productivity and employment growth.287 Over the 
review period, lending rates ranged from 10.34% to 12.84% , and interest spreads ranged from 
3.33 percentage points to 5.8 percenta ge points , representing variations in banks ' profit margins 
(Chart 4.1 ).  
Chart 4.1 Interest rate spread (%), January 2013 to January 2020  
 
Source:  IMF, IFS online information.  
 
284 BI, Monetary Policy Review April 2020 . Viewed at: https://www.bi.go.id/en/publikas i/kebijakan -
moneter/tinjauan/Pages/Tinjauan -Kebijakan -Moneter -April-2020.aspx . 
285 At the time of writing, the IMF reported that 52% of bank loans were extended to the corporate 
sector.  
286 IMF (2019),  Indonesia: 2019 Article IV Consultation -Press Release; Sta ff Report; and Statement by 
the Executive Director for Indonesia , 31 July. Viewed 
at: https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . 
287 World Bank Group (October 2019), Creating Markets in Indonesia, Unlocking the Dynamism of the 
Indonesian Private Sector . Viewed at: https://www.ifc.org/wps/wcm/connect/8f1d3b14 -66c2-4452-a70c-
dbe79e7544f5/201910 -CPSD -Indonesia -v2.pdf?MOD=AJPERES&CVID=m.8RZD6 . 
0%2%4%6%8%10%12%14%
Jan-13
July-13
Jan-14
July-14
Jan-15
July-15
Jan-16
July-16
Jan-17
July-17
Jan-18
July-18
Jan-19
July-19
Jan-20Lending rate
Deposit rate
Interest spread
Source:     International Monetary Fund, IFS online information.Chart 4.[IDN]   Interest rate spread (%), January 2013 to January 2020WT/TPR/S/401 • Indonesia  
 
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  4.4.3.2   Fintech  
4.208.   As at December 2019, a total of 164 registered/licensed fintech companies were operating 
in Indonesia , of which 152 were conventional, and 12 were sharia fintech companies. 113 of these 
companies were locally owned, while 39 were foreign -owned.  
4.209.   Over the re view period, several regulations were issued to govern the fintech segment 
(Table  4.9). The IMF indicated that pursuing the Bali Fintech agenda, as developed by the World 
Bank and the IMF, including enhancing foundational infrastructures such as broadband Internet, 
mobile data services, data repositories, and payment and settlement services, will support financial 
inclusion, higher productivity and exports. However, to mitigate any resulting possible risks to 
financial stability and integrity, particularly exposure to cyberattacks, supervisors should include 
cybersecurity in the regular monitoring and audits of financial institutions.288 
Table 4.9 Fintech regulations, May 2020  
OJK Regulation  Summary of provisions  
No. 77/POJK.01/2016 on 
Information Technology -
based Lending  Designed to support the growth of fintech peer -to-peer (P2P) lending platforms 
as new financing alternatives for communities that have yet to enjoy optimal 
services from incumbent financial service institutions. P2P platforms are 
classified as other financ ial services institutions. The Regulation also mandates 
customer protection.  
No. 12/POJK.03/2018 on 
Implementation of 
Digital Services by 
Commercial Banks Regulates the use of information technology for digital banking. All banks that 
wish to issue electr onic/digital products must request permission from the OJK. 
Banks must emphasize product innovation, co -operation with partners, and 
digital processes to ensure better services for custom ers and effective risk 
management.  
No. 13/POJK.02/2018 on 
Digital Financial 
Innovation in the 
Financial Services Sector This is an umbrella regulation for fintech. Any fintech companies that are not yet 
regulated by other authorities must apply to the OJK to go through the 
regulatory sandbox process and get registered. The  key dimension of this 
Regulation is responsible finance innovation, adoption of a robust security 
system and good governance, and compliance with customer protection and 
anti-money laundering/combatting the finance of terrorism rules.  
No. 37/ POJK.04/2018  on 
Equity Crowd Ffunding  This Regulation focuses on regulating equity crowdfunding. It is aimed at 
boosting economic growth in Indonesia by providing access to start -up 
companies and SMEs to raise funds electronically for the development of their 
business . 
PBI No. 19/12/PBI/2017 
on Implementation of 
Financial Technology  This Regulation stipulates the obligation for fintech to be registered with the BI. 
It is designed to support the growth of payment -related fintech while 
safeguarding consumer protection, risk management and financial stability.  
PADG No. 
19/14/PADG/2017 
regarding Regulatory 
Sandbox  Designed to support the growth of fintech , which involves payment system 
elements . 
Source:  BI. 
4.4.3.3   Insurance  
4.210.   In 2018, the assets of  the insurance sector were the equivalent of  8.2% of GDP (compared 
with 7.6% in 2014).289 The sector remains small and fragmented. The insurance penetration rate, 
while gr owing, remains low, rising from 2.24% in 2014 to 2.91% in 2019. Over the review period, 
there was a steady increase in the number of life insurance companies operating in Indonesia , from 
49 in 2013 to 60 in 2019; there was a reduction in the number of gene ral insurance companies (from 
82 in 2014 to 78 in 2019). The number of reinsurance companies grew from four in 2014 to seven  in 
2019.290 Table 4. 10 sets out ownership and market share of insurance companies. The life insurance 
industry is dominated by forei gn equity, while the general insurance industry is dominated by 
domestic companies. Export credit insurance for all products except oil and gas is available from the 
state-owned Asuransi Ekspor Indonesia (Section 3.2.5).  
 
288 For more details, IMF, Bali Fintech Agenda . Viewed at: https://www.imf.org/en/Publications/Policy -
Papers/Issues/2018/10/11/pp101118 -bali-fintech -agenda . 
289 General Insurance Association of Indonesia, Indonesia General Insurance Market Update 2019 . 
Viewed at: http://aaui.or.id/wp -content/uploads/2019/10/INDONESIA -MARKET -UPDATE -y-2018-2019-1.pdf. 
290 These  figures include both sharia and conventional insurance companies.  WT/TPR/S/401 • Indonesia  
 
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  Table 4.10 Insurance sector market structure and market share, 2019  
 State -owned  
(market share)  Private  
(market share)  Joint venture  
(market share)  
Life 
insurance 
companies  1 company  
PT Jiwasraya, Persero 
(3.89%)  
 36 companies, of which the 
3 largest are:  
PT Asuransi Simas Jiwa 
(6.22%)  
PT Indolife Pensiontama 
(5.91%)  
AJB Bumiputera 1912 (4.07%)  23 companies, of which the 
3 largest are:  
PT Prudential Life Assurance 
(12.98%)  
PT Asuransi Jiwa Manulife 
Indonesia (9.16%)  
PT AIA Financial (9.06%)  
General 
insurance 
companies  2 companies  
PT Asuransi Jasa Indonesia 
(16.04%)  
PT Asuransi Kredit 
Indonesia (Persero) 
(19.16% ) 
 54 companies, of which the 
3 largest are:  
PT Asuransi Astra Buana 
(8.40%)  
PT Tugu Pratama  Indonesia 
(8.21%)  
PT Asuransi Central Asia 
(6.59%)  22 companies, of which the 
3 largest are:  
PT Chubb General Insurance 
Indonesia (1.31%)  
PT Asuransi Allianz Utama 
Indonesia (1.51%)  
PT AIG Insurance Indonesia 
(0.80%)  
Reinsurance 
companies  1 company  
PT Re asuransi Indonesia 
Utama (32.94% ) 
 6 companies, of which the 
3 largest are:  
PT Reasuransi Nasional 
Indonesia (24.89)  
PT Tugu Reasuransi Indonesia 
(18.11%)  
PT Maskapai Reasuransi 
Indonesia Tbk (13.38%)  No companies  
Source:  Information provided by  the OJK. 
4.211.   Since 2013, six insurance companies have had their licences revoked due to bankruptcies, 
eight insurance/reinsurance companies have had their licences revoked due to merger activities , 
and six insurance companies have been changed into public compani es. As indicated by the 
authorities, the COVID -19 pandemic has had a significant impact on the life insurance sector, which 
was highly invested in the capital market and hence affected by falling yields (Section 4.4.3.4). More 
generally, the insurance sect or has suffered from COVID -19-related changes to consumption 
patterns , with consumers prioritizing primary needs over the purchase of insurance policies; this has 
led to falling insurance premiums.  
4.212.   A new insurance law entered into force in 2014 (Law No. 40 of 2014) and was followed by 
53 implementing regulations . The Law applies to all insurance business companies (insurers, 
reinsurers, brokers, agents , and loss adjusters). Among the main changes introduced compared with 
previous law (Law No. 2 of 1992) a re the tightening of restrictions on foreign ownership and the 
introduction of a single presence policy. Minimum paid -up capital requirements are set out in OJK 
Regulation No. 67/POJK.05/2016 . These are: IDR 150 billion for conventional insurance companies  
and IDR 100 billion for sharia insurance companies. Under the previous Regulation ( GR No. 39 of 
2008), the paid -up capital requirement for conventional insurance was IDR  100 billion , and 
IDR 50 billion for sharia insurance. As indicated by the authorities , the requirements for sharia 
insurance are more lenient than conventional insurance because the exposure of sharia insurance 
business is not as big as conventional insurance. Additionally, they aim to help sharia insurance grow 
rapidly and to attract inve stment in this area.   
4.213.   With respect to foreign ownership rules, while , under both the 1992 and the 2014 Insurance 
Laws, there was/is a requirement for Indonesian shareholders to hold at least 20% of the issued 
capital of any joint venture insurance busines s company, the old Law specified that Indonesian 
shareholders could be Indonesian citizens and/or Indonesian legal entities fully -owned by Indonesian 
citizens and/or legal entities. The new Law removed the reference to "and/or Indonesian legal 
entities" , which mean s that an Indonesian corporate shareholder must be fully -owned by Indonesian 
citizens to qualify; the so -called dual -layer PMA structure which foreign entities had used to 
ultimately own 100% of an IBC has been made unlawful.291 Insurance companies  were given 
 
291 As noted by the following source, the dual -layer PMA structure relied on Article 8(1)(a) of the old 
Insurance Law. The rationale is that (i) being a limited liability company incorporated  in Indonesia, a PMA 
company is recognized as an Indonesian legal entity under Indonesia's Constitution and Company Law; and 
(ii) a dual -layer PMA (i.e. joint venture) structure satisfies the requirement of an "Indonesian legal entity fully WT/TPR/S/401 • Indonesia  
 
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  five years to ( i) transfer the foreign -owned shares to Indonesians ; or (ii) go public, since publicly 
owned companies are exempt from the 80% foreign -ownership threshold. Since then, GR No. 3 of 
2020 was issued , which stipulates that , if foreig n ownership in an insurance company, which is not 
a public company, exceed ed 80% at the time that the Regulation enter ed into force, the insurance 
company was excluded from the foreign ownership ceiling but may not increase its foreign ownership 
share.  
4.214.   Single presence for the insurance sector , introduced by the 2014 Insurance Law, requires 
that a person or other legal entity can only be a controlling shareholder at one time in: one life 
insurance company; one general insurance company; one reinsurance company; one sharia life 
insurance company; one sharia general insurance company;  and/or one sharia reinsurance 
company. These restrictions do not apply to SOEs. Non -compliant companies had three years to 
comply.292  
4.215.   As noted by an external source, other key developments from the 2014 Insurance Law are: 
(i) insurance and reinsurance com panies must separate into a stand -alone entity all sharia divisions 
within 10 years of the enactment of the Law, or when the sharia component exceeds 50%, whichever 
is earlier; ( ii) the insurance for any asset or risk located in Indonesia must be placed wi th a local 
insurer, irrespective of ownership of that asset or responsibility for the risk, unless no local insurer 
is able or willing to underwrite the risk (apparently this removes the previous concession that allowed 
foreign entities to purchase insuran ce from offshore insurers); ( iii) a new policy assurance 
programme replaces the existing mandatory guarantee fund, with the aim of providing protection to 
policyholders if their insurer is liquidated or has its licence revoked; and ( iv) insurance and 
reinsurance companies must optimize domestic capacity (i.e. they must provide local reinsurance 
coverage "as far as possible"); apparently the idea is to encourage all insurers and reinsurers to 
assist in the expansion of the local market.293  
4.216.   In 2014, the Gover nment launched a compulsory national health insurance system , which is 
managed  by BPJS Kesehatan, a government public agency. As at May 2020, nearly 85% of the 
population was covered, with premiums being automatically deducted from salaries of formal 
worke rs. Informal workers pay a certain nominal amount according to the class of the health 
services. However, the system has suffered deficits since its inception, which has led the BPJS to 
increase premiums and to seek financing from the Government to fill th is gap; collection of premiums 
from informal workers has also been a challenge.294 It has been suggested that private health 
insurance will play a role in the system , by providing for excess additional coverage of services not 
included in the national healt h insurance system.295 Statutory tariffs are required for motor vehicles 
and the property line of business and , since 2014 , commissions may not exceed 25% and 15% of 
premiums , respectively.296  
4.4.3.4   Securities  
4.217.   The legal foundation for the capital market is Law No . 8 of 1995 on the Capital Market.297 
The capital market grew steadily  over the review period, albeit from a relatively low base, in terms 
of listed entities, number of investors , and value of trades. The number of equities -listed companies 
increased by 37% , from 506 companies in 2014 to 691 on 29 May 2020; of these , 17 companies 
(15 of which are fully or partially state -owned) accounted for around 20% of the total market 
 
owned by an Ind onesian legal entity" (i.e. another PMA company). Accordingly, a dual -layer PMA structure was 
adequate to qualify as an Indonesian shareholder of an insurance company. Mondaq, Australia: Asia Pacific – 
focus on insurance: Indonesia . Viewed at: https://www.mondaq.com/australia/Insurance/353188/Asia -Pacific --
focus -on-insurance -Indonesia . 
292 Mondaq , Australia: Asia Pacific – focus on insurance: Indonesia . Viewed at: 
https://www.mondaq.com/australia/Insurance/353188/Asia -Pacific --focus -on-insurance -Indonesia . 
293 Mondaq , Australia: Asia Pacific – focus on insurance: Indonesia . Viewed at: 
https://www.mondaq.com/australia/Insurance/353188/Asia -Pacific --focus -on-insurance -Indonesia . 
294 Nikkei As ian Review, Indonesia struggles to pay for huge universal health care program . Viewed at: 
https://asia.nikkei.com/Economy/Indonesia -struggles -to-pay-for-huge-universal -health -care-program . 
295 Economist Intelligence Unit, Industry Report on Financial Services Q2 2019 . Viewed at: 
www.eiu.com . 
296 Tariff and commissions are regulated by OJK Circular Letter No. 6/SEOJ K.05/2017. KPMG (2016), 
Insurance in Indonesia: Opportunities in a Dynamic Market , April. Viewed at: 
https://home.kpmg/id/en/home/i nsights/2016/04/insurance -in-iindonesia -opportunities -in-a-dynamic -
market.html . 
297 IDX, Capital Market Act . Viewed at: https://www.idx.co.id/en -us/regulation/capital -market -act/. WT/TPR/S/401 • Indonesia  
 
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  capitalization at May 2020. The number of equity and bond investors inc reased from 364,645  in 
2014 to 1,198,207 at end -May 2020. The period 2013 -19 saw a significant increase in trading 
activities (both average daily trading volume and average daily number of trades) and an increase 
in market capitalization from IDR 4,219 tri llion in 2013 to IDR 7,163 trillion in 2019; due to the 
impact of COVID -19, market capitalization fell to IDR 5,664 trillion at end -May 2020. Data on IDX 
listings and values are set out in Table  4.11. 
Table 4.11 Indonesia Stock Exchange (IDX) listed entities, May 2020  
Product  Number of listed 
companies/entities  
Number of 
series/contracts of 
product instruments  Value  
Equities  691 companies  Market capitalization: USD 373 billion  
Bonds  117 companies  Outstanding value:  
Government: USD 207.5 billion  
Corporate: USD 29.6 billion  
Exchange traded funds 43 series  Assets under management: USD 819 million  
Asset backed securities  14 series  Outstanding value: USD 623.5 million  
Real estate investment trusts  3 series  Assets under management: USD 789 million  
Infrastructure investment funds 1 series  Assets under management: USD 71 million  
Futures  9 contracts  - 
Note:  USD as at 29 May 2020 was IDR 14,733 . 
Source:  Information provided by the IDX.  
4.218.   Since 2013, key developments have included: various technical improvements/adjustments 
(including an upgraded trading system and new data center; adjustments to lot and tick sizes; and 
shorten ed transaction settlement cycles , from three  days to two); the l aunching of the IDX Channel 
(the official TV of the Indonesia Stock Exchange); margin trading regulatory easing; efforts to assist 
companies in making their IPOs (including the "go public information center" and the establishment 
of the IDX Incubator which  helps digital -based startups that want to IPO298); and the launch of new 
instruments (LQ45 Index Futures, Indonesia Government Bond Futures, and Real Estate Investment 
Trust).299 In response to the COVID -19 pandemic , the IDX took various steps to help slow down the 
impact on , and maintain stability in , the capital market.300 
4.219.   Foreign corporations and individuals may invest in Indonesian securities on the IDX or the 
over-the-counter market. Foreign investors own about 50% of the equity market, while , in the bond 
market, foreign investors own 30.54% of government bonds and 7.41% of corporate bonds. The 
benchmark Jakarta Composite Index (JCI), which covers all stocks , posted long -term growth over 
the period 2009 -19, with downturns witnessed in 2013, 2015 and 2018; for these years , recovery 
was achieved within a year. In the wake of the COVID -19 pandemic, as global markets started 
weakening caused by a high level of uncertainty, the JCI witnessed a steep decline , starting in 
January 2020 , which was followed by a modest recovery from 20 March 2020. Up until 
end-May 2020, it was down by 24.54%.  
4.4.4   Telecommunications  
4.220.   Over the review period, fixed -line subscriptions saw a steep decline. Mobile cellular 
subscriptions increased year -on-year, up until 2018, when there was  a significant drop; this may be 
due to the issuance of a government regulation requiring all sim card holders of prepaid mobile 
phone subscriptions to re -register their cards. The objective of this measure was for reasons of 
consumer and operator safety a nd protection , and it led to the blocking of over 120 million SIM cards 
 
298 IDX Incubator , Beyond Incubator . Viewed at: http://idxincubator.com/ . 
299 IDX, History & Milestone . Viewed at: https://www.idx.co.id/en -us/abou t-idx/history -milestone/ ; and 
information provided by the authorities.  
300 The IDX removed shortsell -eligible securities; implemented asymmetric auto rejection; implemented 
a three -level circuit -breaker; removed pre -opening securities, and shortened its trad ing hours to adjust to the 
work-from-home policy . The OJK and the IDX also issued relaxation policies related to reporting obligations by 
listed companies and issuers.  WT/TPR/S/401 • Indonesia  
 
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  that were not re -registered.301 Both Internet usage by individuals and fixed broadband subscriptions 
more than  doubled over the period 2013 -19, albeit from a very low base with respect to the latter 
(Table  4.12). 
Table 4.12 Telecommunications indicators, 2013 -19 
 2013  2014  2015  2016  2017  2018  2019  
Fixed telephone subscriptions per 
100 inhabitants  12.20  10.28  4.02 4.11 4.18 3.10 3.55 
Mobile -cellular telephone 
subscriptions per 100 inhabitants  124.39  127.62  131.18  147.42  164.44  119.34  127.3  
Percentage of individuals using 
the Internet  14.94  17.14  21.98  25.45  32.29  39.90  .. 
Fixed -broadband subscriptions 
per 100 inhabitants  1.29 1.33 1.54 2.00 2.35 3.32 3.84 
..  Not available . 
Source : ITU, Statistics . Viewed at: https://www.itu.int/en/ITU -D/Statistics/Pages/stat/default.aspx ; and 
information provided by the authorities.  
4.221.   As at May 2020 , there were seven cellular operators, compared with eight in 2013; this is 
due to the merger between PT Axis Telecom and PT XL Axiata Tbk in 2013. The market is dominated 
by PT Telekomunikasi, a largely domestically  owned  company (Table 4. 13). There has been foreign 
investment in five cellular operators, with foreign equity shares ranging from 35% to nearly 67%. 
The State has an ownership share in PT Indosat Tbk (20.71%) and PT XL Axiata, Tbk (33.64%).  
4.222.   There are four fixed -line operators in Indonesia; the market is overwhelmingly dominated 
by Telekom unikasi  Indonesia (Table 4. 14). The State has a minority equity share in two operators, 
Telekomunikasi Indonesia (36.93%) and PT Indosat Tbk (20.71%). There has been foreign 
investment (65% of equity) in one company (PT Indosat, Tbk). As at June 2020 , there were 
429 Internet service providers.  
Table 4.13 Market share of cellular operators, 2013 -19 
(%) 
Operator  Market share  
2013  2014  2015  2016  2017  2018  2019  
PT Telekomunikasi Selular  41.99  43.18  45.03  45.11  45.11  51.02  50.14  
PT Indosat, Tbk  19.02  19.42  20.57  22.21  25.32  18.18  17.41  
PT XL Axiata, Tbk  19.33  18.31  12.36  12.05  12.30  16.90  16.60  
PT Smartfren Telecom Tbk  1.91 1.40 1.24 0.90 0.97 0.90 2.01 
PT Smart Telecom  1.71 2.26 2.02 1.96 1.67 2.93 4.85 
PT Hutchison 3 Indonesia  12.10  15.41  18.75  17.75  14.62  10.06  8.94 
PT Sampoerna 
Telekomunikasi Indonesia  0.04 0.02 0.02 0.01 0.01 0.01 0.06 
PT Axis Telecom  3.91 - - - - - - 
Note:  PT Axis Telecom was merged with PT XL Axiata Tbk in 2013 . 
Source:  Information provided by the authorities.  
Table 4.14 Market share of fixed -line operators, 2016 -19 
(%) 
Operator  Market share  
2016  2017  2018  2019  
PT. Telekomunikasi Indonesia  98.43  98.90  98.42  98.49  
PT Indosat Tbk  0.83 0.87 1.17 1.15 
PT Smartfren Telecom Tbk  0.74 0.23 0.39 0.34 
Batam Bintan Telekomunikisi  0.002  0.003  0.014  0.019  
Source:  Information provided by the authorities.  
 
301 Minister  of Communication and Information Technology Regulation No. 12 of 2016 regardi ng the 
Telecommunication Services Customer Registration , as amended by Regulation s No. 14 of 2017 and No. 21 of 
2017.  WT/TPR/S/401 • Indonesia  
 
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  4.223.   A key development over the review period was the completion of the construction of a 
high-speed, fib re-optic nationwide Internet network , called the Palapa Ring, in October 2019. It  is a 
strategic national project consisting of two schemes: ( i) the PPP Palapa Ring , which was deployed  
by MCI/BAKTI in 57 regencies and cities; and ( ii) the Non-PPP Palapa Ring , which was completed by 
Telekomunikasi Indonesia in 447 regencies and cities. Telekomunikasi Indonesia holds the right to 
set the tariff for the Non-PPP Palapa Ring Project, while tariffs for the PPP Palapa Ring Project are 
regulated by the Government.302 With respec t to Palapa Ring utilization for each region, the "West 
Package" is operating at 33% of total capacity, the "Central Package" at 15%, and the "East Package" 
at 23%.  
4.224.   The telecommunications sector remains governed primarily by Law No. 36/1999 
(Telecommunicat ions Law), which sets guidelines for industry reforms, including liberalization, 
facilitation of new entrants, and enhanced transparency and competition. The Law is implemented 
through numerous government and ministerial regulations. Proposed amendments to  the Law are 
contained in the Omnibus Law on Job Creation (Section 2). Reportedly, notable provisions under the 
draft would: allow telecommunications operators to share and transfer spectrum with prior approval 
of the central Government; encourage telecomm unications operators to share passive infrastructure, 
such as towers, ducting and poles , with other telecommunications operators; authorize the 
Government to determine upper and lower pricing limits for telecommunications networks and 
services; and elimina te the existing requirement that telecommunications equipment/devices that 
are made in, imported into, or used in Indonesia must go through a certification process  – the only 
requirement would be for government technical standards to be fulfilled.303 Regula tory developments 
over the review period  related to , inter alia , telecommunication network licensing processes, 
certification of telecommunication tools/devices; business licensing; registration of 
telecommunication service subscribers; and universal servi ce. As indicated by the authorities, 
consideration is being given to issuing a regulation on mobile -communication airwaves , in order to 
encourage consolidation in the telecommunications sector.304 
4.225.   The regulator remains the Indonesian Telecommunication Regul atory Body ( Badan Regulasi 
Telekomunikasi Indonesia  (BRTI)). Its duty is to foster information and communication technology, 
which includes regulating, supervising and monitoring the operations of telecommunication networks 
and services, broadcasting infra structure, resources of telecommunications and broadcasting, digital 
economy , and the Internet. The BRTI reports directly to the Minister of Communications and 
Informatics (MCI). As indicated by the authorities, the BRTI developed and implemented strategie s 
over the review period on pricing in telecommunications services, cellular subscription registration 
using biometrics , and development of regulations on "over the top" services.  The 
Telecommunications and Information Accessibility Agency (BAKATI) is resp onsible for implementing 
the universal telecommunications service programme , as regulated by MCI Regulation 
No. 10/2018.305 This Regulation replaces MCI Regulation No. 25 of 2015. Changes include: an 
expanded scope of universal service implementation to include digital economy provisions; changes 
related to the service area of universal service (this can now be based on a top -down decision , rather 
than being limited to frontier, outermost and least -developed regions ); and procedural issu es 
relating to BAKATI's managerial process and the Strategic Plan. Funding to fulfil universal service 
requirements is based on contributions of telecommunication network s or service operators.  As set 
out in Law No. 44 of 2016 concerning List of Business F ields that are Closed to and Business Fields 
that are Open with Conditions to Investment, the following activities are closed to investment: 
management and operation of radio -frequency spectrum , and satellite orbit monitoring stations 
 
302 MoF Regulation No. 85/2018 on Service Tariff for Public Service Agency for Office for 
Telecommunication and Informatics Provider and Fu nds Management (BP3TI) under MCI  and Decision of 
President Director of BAKTI No. 27 of 2020 concerning Service Tariff for Palapa Ring Fiber Optic Network of 
BAKTI . 
303 Global Compliance News , Indonesia: Draft Omnibus Law: Sharing Among Telecommunications 
Players . Viewed at: https://globalcompliancenews.com/indonesia -draft-omnibus -law-sharing -among -
telecommunications -players/. 
304 Bloomberg, It's Not Just Regulation Hampering Indonesian Telco Deals . Viewed at: 
https://www.bloomberg.com/news/article s/2019 -02-26/it-s-not-just-regulation -plenty -hampers -indonesian -
telcos -m-a. 
305 MCI Regulation No. 10 of 2018 governs universal service provision . Viewed  (as an unofficial En glish 
translation) at: 
https://jdih.kominfo.go.id/produk_hukum/view/id/616/t/peraturan+menteri+ko munikasi+dan+informatika+no
mor+10+tahun+2018+tanggal+30+agustus+2018 . WT/TPR/S/401 • Indonesia  
 
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  (Section 2.4.2). Home  and building cable installation are reserved for MSMEs. Limitations on foreign 
participation in telecom and Internet services are set out in Table 4.1 5.  
Table 4.15 Limitations on foreign participation in tel ecom and Internet services, 2020  
Services  Ownership  
Network operation:   
Provider, operator (operation and renting) and construction service provider for 
telecommunication tower  Domestic capital 
100%  
Fixed telecommunication network services  Maximum foreign 
ownership 67%  Mobile telecommunication network services  
Telecommunication network provider integrated with  telecommunication services  
Content telecommunication services (ringtone, premium  short message services, etc .) 
Call cent res and other added -value telephony service s 
Internet service providers  
Data communication system services  
Public Internet telephony services  
Internet interconnection services (Network Access Point),  and other multimedia services  
Electronic commerce transaction providers (platform -based marketplace, daily deals, 
price-grabber s, online classified advertising) with an investment value of less than 
IDR 100,000,000,000  Maximum foreign 
ownership 49%  
Source:  Law No. 44 of 2016 concerning List of Business Fields that are Closed to and Business Fields that are 
Open with Conditions to Investment. Viewed at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . 
4.226.   Changes introduced by the 2016 negative investment list are as follows: ( i) the FD I limitation 
on telecommunication equipment certification was increased to 100% (from 95% in 2014); ( ii) 100% 
FDI is permitted in certain e -commerce activities involving investments of more than IDR 100 billion 
and, for these activities under the IDR 100 b illion threshold, FDI is capped at 49% (these thresholds 
were not stipulated in the 2014 list); ( iii) there was a slight increase in the FDI threshold (from 65% 
in 2014 to 67% in 2018 ) for fixed and mobile telecommunication networks and telecommunication 
networks integrated with telecommunication services; and ( iv) there was an increase in the FDI 
threshold , from 49% in 2014 to 67% in 2016 , for telecommunication services (e.g. Internet services 
providers).306 Ongoing discussions to revise the negative invest ment list to open certain activities to 
100% foreign investment are , inter alia , considering provision of fixed and mobile 
telecommunications networks and Internet access services (Section 2.4.2).  
4.227.   Mobile number portability is not permitted, because each telecommunications operator is 
granted its own unique network access code that cannot be shared between operators.307 Fixed 
number portability is not permitted either. Certain local -content requirements are in place 
(Section  3.1.7).  
4.228.   As indicated by the  ITU, the price of mobile data in Indonesia appears to be particularly 
affordable; in 2019, the price of a mobile -data basket cost 0.7 % of GNI per capita, putting Indonesia 
among the 40 economies with the lowest prices for this segment.308 Tariffs for telecommunications 
services are set by the telecommunications operators , based on a formula set by the Government. 
The intense competition in this area has generated calls by some parties for the Government to 
implement a tariff restriction po licy (floor price) on data communications services.309  
4.229.   As reported in the previous Review, despite the termination of exclusive rights, the 
Government does not prohibit or discourage operators from attaining a dominant position in 
telecommunications servic es. However, it does prohibit operators from abusing a dominant 
 
306 White and Case, Indonesia's New 2016 Negative List . Viewed at: 
https://www.whitecase.com/sites/whitecase/files/files/download/publications/indonesias -new-2016-negative -
list.pdf . 
307 Lexology, Telecoms and Media 2019 . Viewed at: https://files.simmons -simmons.com/api/get -
asset/LexGTDT_Telecoms_Media_2019_Author_PDF.pdf?id=blte70d57efad22fbc8 . 
308 ITU (2019),  Measuring digital development – ICT Price Trends  - 2019. Viewed at: 
https://www.itu.int/en/ITU -D/Statistics/Documents/publications/prices 2019/ITU_ICTpriceTrends_2019.pdf . 
309 KPPU, Anticipating floor price in data communication service . Viewed at: 
http://eng.kppu.go.id/anticipating -floor-price-in-data-communication -service/ . WT/TPR/S/401 • Indonesia  
 
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  position.310 MCI Decree No. 33/2004 sets forth measures to prohibit the abuse of dominant position 
by network and service providers. Specifically, the Decree prohibits a dominant provider from 
engaging in practices such as dumping, predatory pricing, cross -subsidies, compelling consumers to 
use that provider's services (to the exclusion of competitors) , and hampering mandatory 
interconnection.311 Competition cases involving the telecommunications  sector fall solely within the  
Indonesia Competition Commission's  remit. Over the review period, two telecommunications -related 
competition cases were addressed by the KPPU. One related to suspected violation by 
Telekomunikasi Indonesia regarding  rules on tying agreements, monopoly and abuse of dominance 
provisions in the Competition Law (No. 5 of 1999); in this instance , the KPPU found no such violation , 
and the case was closed.312 The other related to exclusive dealing between PT Angkasa Pura II and 
Teleco munikasi Indonesia in administering telecommunications and implementing the electronic 
payment online system at Soekarno -Hatta Airport. The reported parties were found guilty , and 
sanctioned to pay administrative fines amounting to IDR 3.4 billion (PT Angk asa Pura II) and 
IDR 2.1 billion (Telecomunikasi Indonesia).   
4.4.5   Transport  
4.230.   The Ministry of Transport (M oT) has overall responsibility for the transportation sector in 
Indonesia. As at the time of the previous Review, the M oT's main strategy being implemente d is the 
Sistranas Plan (as set out in M oT Regulation No. KM49/2005 on the National Transport System). The 
MoT is also implementing its five -year strategic plan for the period 2015 -19, which covers air, sea, 
land and railway transport313; this is in the pro cess of being updated. Improving maritime and marine 
management is one of seven development agendas contained in the National Medium -term 
Development Plan 2020 -24, and improvements to transport infrastructure are identified as national 
priority projects (S ection 2.2.2).  
4.231.   In 2019, 307.8 million  tonnes of cargo was loaded onto, and 97.7 million  tonnes unloaded 
from, vessels on international voyages in Indonesia's ports.314 With respect to international visitor 
arrivals, over the period 2014 -19, most entered Ind onesia through airports (Table 4.1 6). According 
to the authorities, over the period January to mid -June 2020, covering the initial period of the 
COVID -19 pandemic, 3.3 million  people  arrived in Indonesia on international flights.  
Table 4.16 International visitor arrivals to Indonesia, by port of entry, 2014 -19 
 2014  2015  2016  2017  2018  2019  
Airport s 6,944,587  7,165,033  8,545,300  9,657,816  10,088,78
1 9,834,706  
Seaport s 2,435,534  3,022,519  2,389,138  2,869,821  3,214,420  4,160,632  
Landport s 55,290  43,223  584,837  1,512,162  2,507,104  2,111,616  
Source:  Statistics Indonesia, Statistical Yearbook of Indonesia 2020 . Viewed at: 
https://www.bps.go.id/publication/2020/04/29/e9011b3155d45d70823c141f/statistik -indonesia -
2020.html . 
4.232.   The main laws governing the transportatio n sector are the Road and Toll Road Law No. 38 
of 2004; the Railway Law No. 23 of 2007; the Law No . 17 of 2008  on Shipping; the Civil Aviation 
Law No. 1 of 2009; and the Land Transport Law No. 22 of 2009. There were no amendments to 
these Laws over the rev iew period. As indicated by the authorities in the context of this Review, 
there were efforts to reform and simplify the licensing and permit requirements set out in Indonesia's 
transport laws and implementing regulations; permits and licences may now be a pplied for and 
delivered online.  
 
310 The definition of "dominant operators" is referred to in MCI Regulation No. 8 of 2006 concerning 
Interconnection. Its common regulation is regulated in Law No. 5 of 1999 concerning Anti -Monopoly Practices 
and Unfair Business Com petition.  
311 WTO document WT/TPR/S/278/Rev.1, 16 July 2013.  
312 KPPU, PT Telkom free from the suspected tying agreement in Indihome case . Viewed at: 
http://eng.kppu.go.id/pt -telkom -free-from-the-suspected -tying-agreement -in-indihome -case/ . 
313 MoT Decree No. KP 881 of 2018. Viewed at: 
http://jdih.dephub.go.id/produk_hukum/view/UzFBZ09EZ3hJRlJCU0ZWT0lESXdNVGc9 . 
314 Statistics Indonesia, Statistical Yearbook of Indonesia 2020. Viewed at: 
https://www.bps.go.id/publication/2020/04/29/e9011b3155d45d70823c141f/statistik -indonesia -2020.html . WT/TPR/S/401 • Indonesia  
 
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  4.233.   Investment restrictions in the transportation sector are set out in Law No. 44 of 2016 
concerning List of Business Fields Closed to and Business Fields Open with Conditions to Investment 
(Section 2.4.2). Under this Law, th e following activities are closed to investment: organization and 
operation of terminals for passenger land transport; organization and operation of weigh stations; 
telecommunication/aids to shipping navigation and vessel traffic information; provision of air 
navigation services; and administration and testing of types of motor vehicles. Investment in various 
transport -related activities are subject to conditions, largely consisting of FDI restrictions 
(Table  4.17). 
Table 4.17 Transport -related activities open to investment, with conditions, 2020  
Services  Ownership  
Cargo land transportation; special cargo land transportation; 
passenger land transportation on scheduled routes (intercity and 
inter-provincial transport , suburban/rural transport , in-province 
intercity transport, urban/suburban/rural transport, and cross -
border transport); passenger land transportation on non -
scheduled routes (taxi transport, tourism transport, specific 
destination tran sport, specific area transport); domestic sea 
transportation; international sea transportation; inter -provincial 
general inland water transportation; inter -provincial pioneering 
inland water transportation; inter -district/intercity general inland 
water tra nsportation; inter -district/intercity pioneering inland 
water transportation; inner district/city general inland water 
transportation; river and lake transportation for passengers with 
fixed schedule s and regular route s; river and lake transportation 
for passengers with non -fixed schedule s and irregular route s; 
river and lake transportation for tourism with non -fixed 
schedule s and irregular route s; river and lake transportation for 
general freight and/or animal s; river and lake transportation for 
special fr eight; river and lake transportation for hazardous 
freight; provision of harbour facilities i.e, waste reception 
facilities; airport services; provision and operation of 
transportation for  crossing harbours; provision and operation for 
transportation on  rivers and lake harbours; performance of 
periodic testing of motor vehicles; operation of passenger land 
transport terminal facilities (public facilities and general cargo 
terminals only); and multimode transportation  Foreign capital ownership: max. 49% 
Provision of harbour facilities (jetties, buildings, tugs at cargo 
container terminals, at liquid -bulk terminals, at dry -bulk 
terminals, and at Roll -on Roll -off (Ro -Ro) terminals  (i) Foreign capital ownership: 
max. 49%; ( ii) subject to a special 
permit from t he MoT for the minimum 
capital requirement  
Domestic scheduled commercial air transportation; international 
scheduled commercial air transportation; non -scheduled 
commercial air transportation; non -commercial air transportation  (i) Foreign capital ownershi p: max. 49% 
(ii) National capital must outnumber the 
whole foreign capital (single majority)  
Supporting transport business in terminals; air transportation 
support service s (computer -based reservation system , passenger 
and cargo ground handling , and aircraft leasing); airport -related 
services; freight -forwarding services; air freight -forwarding 
services; airline general sales agents  Foreign capital ownership : max 67% 
Loading and unloading of good s services (maritime cargo 
handling services)  (i) Foreign capital ownership : max 67% 
(ii) Foreign capital ownership by ASEAN 
countries' investors: max. 70% 
(iii) Applicable only for ASEAN countries 
in 4 ports (Bitung Seaport; Ambon 
Seaport; Kupang Seaport ; and Sorong 
Seaport)  
International passenger transportation (excluding cabotage); 
international freight overseas transportation (excluding 
cabotage)  Foreign capital ownership by ASEAN 
countries' investors: max. 70% 
Public shipping  Domestic capital 100%  
Salvage and/or underwater works service  Subject to a special permit from the 
MoT 
Source:  Law No. 44 of 2016 concerning List of Business Fields that are Closed to and Business Fields that are 
Open with Conditions to Investment. Viewed at: 
https://www2.bkpm.go.id/images/uploads/pro sedur_investasi/file_upload/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . WT/TPR/S/401 • Indonesia  
 
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  4.234.   The 2016 amendments to the negative  investment  list introduced various changes to 
investment conditions and FDI thresholds. Permitted FDI was increased for various transport 
services. Under the 2014 list, (i) passenger land transportation (inter -city and inter -province 
transport, rural transport, urban transport, in -province intercity transport, and cross -border 
transport) and non-scheduled land tra nsportation (taxis, tourism transport, and certain 
area/destination transport) were previously closed to FDI but, under the 2016 list , they are now 
capped at 49%; ( ii) certain air transport services for which FDI was capped at 49% under the 2014 
list are n ow capped at 67%; these are: supporting services for transport terminals; air transport 
supporting services (computer reservation system s, ground handling , and aircraft leasing); services 
activities related to airports; freight -forwarding services; air cargo expedition services; and general 
sales agencies for foreign airlines); and (iii) FDI in maritime cargo handling services was previously 
capped at 49% (or up to 60% for ASEAN investors) ; however, under the 2014 list, the limit was 
increa sed to 67% (or up to 70% for ASEAN investors in specific ports).  
4.4.5.1   Maritime transport  
4.235.   In 2019, Indonesia was the world's 20th biggest ship -owning country. It had a fleet of 
2,145  vessels (of which 2,063 were nationally flagged and 82 were foreign flagged). T he total 
dead-weight tonnage (DWT) of these vessels was 22.3 million  DWT (with foreign -flagged vessels 
accounting for nearly 7% of the DWT total). This represents a significant increase in the fleet size 
since 2012 , as well as a decrease in the share of fo reign-flagged vessels in the fleet.315 In 2012, 
Indonesia ranked as the world's 13th biggest flag of registration by DWT.316 In 2018, it ranked 7th in 
the world in terms of the highest number of port calls.317 
4.236.   The M oT's Directorate General of Sea Transport co ntinues to have overall responsibility for 
sea transportation, which includes : (i) issuance of licences for ships and maritime services; 
(ii) management and operation of navigation equipment; and (iii) responsibility for maritime safety 
and training of sea farers. It is also the regulator of port activities , whether publicly or privately 
operated.  
4.237.   Vessels of at least 7 GT may be registered under the Indonesian flag (this includes offshore 
drilling rigs and mobile offshore drilling units). Vessels may be reg istered by an Indonesian 
individual, a wholly Indonesian -owned company , or a joint venture company, with at least 51% of 
the shares owned by wholly Indonesian -owned companies or Indonesian individuals (or both). Joint 
venture companies must own at least on e vessel of at least 5,000 GT. Indonesia does not have a 
separate international shipping registry.318 
4.238.   Under the Law on Shipping319, domestic sea transportation is to be carried out by national 
shipping companies, using Indonesian -flagged vessels manned by an  Indonesian crew. Exemptions 
to the cabotage restriction are set out in MoT Regulation No. 92 of 2018, as amended by MoT 
Regulation No. 46 of 2019.320 Under this Regulation, certain types of foreign -flagged vessels for 
specific activities (not passenger or cargo vessels) may be exempt from cabotage rules . In such 
cases, vessels must be operated in Indonesia by a holder of a Shipping Company Business Licence 
that also  meets the stipulated requirements. In 2018, the value of domestic maritime freight was 
 
315 In 2012, Indonesia had a fleet of 1,042 vessels, comprising 951 na tionally flagged and 91 foreign -
flagged vessels. The total DWT of these vessels was 11.6 million DWT (national fleet: 9.3 million DWT and 
foreign fleet 2.3 million DWT, the latter representing nearly 20% of the DWT total). UNCTAD, Review of 
Maritime Transp ort 2012 . Viewed at: https://unctad.org/en/PublicationsLibrary/rmt2012_en.pdf . 
316 UNCTAD, Review of Maritime Transport 2019 . Viewed at: 
https://unctad.org/en/PublicationsLibrary/rmt2019_en.pdf . 
317 UNCTAD, Review of Maritime Transport 2019 . Viewed at: 
https://unctad.org/en/PublicationsLibrary/rm t2019_en.pdf . 
318 Global Business Guide, Registration of Vessels in Indonesia . Viewed at: 
http://www.gbgindonesia.com/en/main/legal_updates/registratio n_of_vessels_in_indonesia.php . 
319 ILO, Law on Shipping . Viewed at: 
https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=80281 . 
320 MoT Regulation No. 92/2018 replaces M oT Regulation No. 100/2016. Viewed at: 
http://jdih.dephub.go.id/assets/uudocs/permen/2018/PM_92_TAHUN_2018.pdf . MOT Regulation No. 92/2018 
provides a further extension on the exemptions on the use of foreign -flagged vessels until 31 December 2020; 
it also exempts a wider range of vessel types . WT/TPR/S/401 • Indonesia  
 
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  228.6 million  tonnes. Since May 2020, coal exporters have been required to use Indonesian -owned 
sea transportation companies, with certain exceptions (Section 4.2.1)  
4.239.   Geograph ically, Indonesia is situated in one of the busiest shipping routes (Straits of 
Malacca) , connecting global shipping traffic with four sea lines of communication. Indonesia aims to 
be a "global maritime fulcrum" , and maritime connectivity development remai ns a long -term priority. 
Currently, most container and bulk cargo is transhipped in Singapore and loaded onto vessels 
destined for Indonesia. As indicated by the authorities, a key objective is to have direct shipments 
to Indonesia , to achieve cost savings  through eliminating double -handlings. Direct ship calls were 
made between Jakarta's Tanjung Priok Port and the United States  (from 2017 until April 2020); and 
ports in the Republic of Korea ( since 2018) and China ( since 2019).  
4.240.   Subsidies continue to be pro vided to support "pioneer" shipping companies whose objective 
is to provide access to remote regions; routes are determined by the Government , based on various 
criteria , and the total amount of the subsidy is the difference between gross income and total 
expenses including profits (10% of total expenses). Apparently, pioneer shipping handles around 
250,000 passengers and 120,000 ton nes of freight per year (around 2% of all domestic shipping 
passengers and 0.1% of domestic freight).321 Similarly, the Governme nt provides financial support 
to private -sector owners of vessels (such as sea toll vessels and cattle ships) who support other 
government activities.  
4.241.   In 2015, additional support to the maritime, air and rail subsectors was provided by the 
Government . This  was given  by changing the VAT treatment of imports and deliveries of certain 
transport -related goods and related services from "VAT -exempted" to "VAT not -collected" , allowing 
importers/producers to credit their input VAT and thereby reduce production cost s.322 With respect 
to maritime transport, the measures relate to imports and deliveries of various types of vessels and 
their spare parts , as well as navigational or personal safety equipment used, inter alia , by national 
commercial shipping companies, nati onal seaport operators or national river, lake and ferry 
operators in accordance with their activities. It also applies to the following deliveries of taxable 
services received, inter alia , by national commercial shipping companies, seaport operators and 
river, lake crossing and ferry operators covering vessel leasing services, port services, including 
tugboat, piloting, berthing and anchoring services, and vessel maintenance or docking services.  
4.242.   There are approximately 2,391 ports in Indonesia, of which 6 93 are under government 
jurisdiction and 1,698 are private special -purpose ports, several of which service the coal industry . 
Of the government ports, 111 are commercial ports , operated by the Indonesia Port Corporation 
(IPC), a n SOE under concession and c ooperation on utilization agreements with the MoT. Over the 
review period, IPCs also expand ed their roles into logistics and trade facilitation -related services , 
and light manufacturing.  The IPC has four different branches, which cover different geographic al 
areas. In 2018, the four branches handed over 16 million twenty -feet equivalent units of cargo. As 
indicated by the authorities, due to limited government funding and to increase d competition in port 
services, the Government initiated PPP in the constru ction, financing and operation of selected ports 
(Patimban Port, Anggrek Port , and Baubau Port). The largest port in terms of volume of traffic is 
Tanjung Priok Port. Port infrastructure works underway or completed include: the construction of a 
deep-sea p ort at Kijing in West Borneo and Patimban Port at West Java (planned to be in operat ion 
in late 2020 ); and the ongoing development of Labuan Bajo Port in East Nusa Tenggara .  
4.243.   Port tariffs vary between different ports, with the MoT defining pricing in consultation with 
stakeholders. The basis and procedures for the determination of port fees are set out in M oT 
Regulation No. 121 of 2018.323 As noted in Section 3.1.4, harbour dues  and lift -on, lift -off charges 
have been reported to be significantly higher for international routes than for domestic routes.  
 
321 Japan International Cooperation Agency, Study on the Development of Domestic Sea Transportation 
and Maritime Industry in the Republic of Indonesia . Viewed at: 
https://openjicareport.jica.go.jp/pdf/11761459_02.pdf . 
322 PWC, Tax Indonesia – October 2015 – No. 26 . Viewed at: 
https://www.pwc.com/id/en/taxflash/assets/english/2015/taxflash -2015-26.pdf . 
323 MoT Regulation No. 121 of 2018. Viewed at: 
https://www.indonesia.travel/content/dam/indtravelrevamp/cruise/Transportation%20Regulation%20 -
%20121%20 -%202018%20%20 -%20Port%20Tariff%20 -%20Englis h-pdf.pdf . WT/TPR/S/401 • Indonesia  
 
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  4.244.   There appears to be scope for port efficiency improvements , indicated by the above -average 
times spent by vessels in Indonesian ports compared with the average world total (Table 4.1 8). 
Table 4.18 Median time spent by vessels in Indonesia's ports, by market segment, 2018  
(number of days)  
 Liquid bulk 
carriers  Dry bulk 
carriers  Container 
ships  Break bulk 
carriers  LNG 
carriers  LPG 
carriers  
World average  0.94 2.05 0.70 1.11 1.11 1.02 
Indonesia  1.28 3.55 1.09 1.26 1.38 1.13 
Source:  UNCTAD , Review of Maritime Transport 2019 . Viewed at: 
https://unctad.org/en/PublicationsLibrary/rmt2019_en.pdf . 
4.4.5.2   Air transport  
4.245.   As at mid -2020, 15 Indonesian airlines were operating scheduled services  (8 operated 
international, and 12 operated domestic services). Additionally, 8 airlines were providing cargo 
services ( 3 of which provided exclusively cargo services). Several Indonesian airlines have 
foreign -equity participation (Table 4. 19). 
Table 4.19 Indonesian airline routes, service and ownership, July 2020  
Airline  Route  Service  Ownership  
PT Garuda Indonesia  Domestic & international  Pax & cargo State/ private  
PT Citilink Indonesia  Domestic & international  Pax & cargo State/ private  
PT Lion Mentari Airlines  Domestic & international  Pax Private  
PT Batik Air Indonesia  Domestic & international  Pax Private  
PT Wings Abadi  Domestic & international  Pax Private  
PT Sriwijaya Air  Domestic & international  Pax Private  
PT Indonesia Airasia  Domestic & international  Pax Foreign/ domestic  
PT Transnusa Aviation Mandiri  Domestic & international  Pax & cargo Foreign/ domestic  
PT Nam Air  Domestic  Pax Private  
PT Trigana  Air Service  Domestic  Pax & cargo Private  
PT Travel Express Aviation  Domestic  Pax & cargo Private  
PT Asi Pudjiastuti Aviation  Domestic  Pax Private  
PT Tri MG Intra Asia  Domestic & international  Cargo only Foreign/ domestic  
PT Myindo Airlines  Domestic & international  Cargo only Foreign/ domestic  
PT Cardig Air  Domestic  Cargo only Foreign/ domestic  
Source:  Information provided by the authorities.  
4.246.   In 2018, 102.0 million  passengers and 651,174 tonnes of cargo were carried on domestic 
scheduled flights.324 The market is dominated by two operators: Garuda Indonesia (19.6% market 
share in 2019) and Lion Air (29.9%). As at June 2020 , there was an ongoing competition case 
conce rning price -fixing by these airlines.  
4.247.   Since 2013, there were three bankruptcies in the airline sector (PT Mandala Air , PT Batavia 
Air, and PT Kalstar Aviation) , and privatizations of PT Garuda Indonesia (Persero) Tbk , which 
operated scheduled and non -scheduled services , and PT Indonesia Transport and Infrastructure Tbk 
(which operated non -scheduled services). The Government retains a 60.54% share in 
Garuda  Indonesia. There are two other SOE airlines, PT Citilink Indonesia , and Pelita Air Service.325 
4.248.   Aviatio n policy and administration remains the responsibility of the Director ate-General of 
Civil Aviation (DGCA) in the M oT. In 2020, in response to the COVID -19 pandemic, regulations were 
put in place to limit the number of passengers and seating capacity , by applying physical distancing 
and adjust ing airport slot times.326The number departure s and arrival s per day at Jakarta airport 
over the period 15 March to 30 April decreased by 69% and 67.3%, respectively.  
 
324 Statistics Indonesia, Statistical Yearbook of Indonesia 2019 . Viewed at: 
https://www.bps.go.id/publication/2020/04/29/e9011b3155d45d70823c141f/statistik -indonesia -2020.html . 
325 Pelita  Air Service is 90% owned by the SOE Pertamina (the state oil company) and 10% owned by 
one of its subsidiaries (Patra Jasa). It, inter alia , provides charter services, including VIP transport.  
326 MoT Regulation No. 41 of 2020 on Amendment to MoT Regulation No. 18 of 2020 on Transportation 
Control for the Purpose of Preventing the Spread of Corona Disease 2019 (COVID -2019), and Circular Letter 
No. 13 of 2020.  WT/TPR/S/401 • Indonesia  
 
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  4.249.   Air tickets for both domestic and international flig hts comprise: basic fares; insurance; VAT; 
and a passenger service charge for airports operated by the DGCA.327 Maximum tariffs for economy 
class domestic air transport services are regulated by MoT Regulation s No. 20 of 2019 and 
No. 106/2019; the tariff ta kes into account the direct and indirect operating costs of the aircraft.328  
4.250.   Over the review period, various support measures targeted the airline sector  and were , 
inter alia, aimed at reducing flight operation costs so as to reduce airfares , and responding to the 
COVID -19 pandemic. These include:  
• modified VAT  treatment under GR No. 69 of 2015 , as amended by GR No. 50 of 2019.329 
This applies to the following imports and delive ries related to air transport: ( i) air 
transport , and spare parts thereof , used by the Ministry of Defence, the Indonesian Armed 
Forces and the Indonesian Police; and ( ii) aircraft , and spare parts thereof, aviation and 
personal safety equipment, and repai r and maintenance equipment used by national 
commercial airlines. It also applies to the following deliveries of taxable services related 
to air transport: aircraft leasing services , and aircraft maintenance or repair services 
received by national commerci al airlines ; 
• reduced import tax (to 0% duty rate) on goods related to aircraft maintenance since 
2016330; and 
• in response to the COVID -19 pandemic , the Government extended various support 
measures to the airline sector, including flight subsidies; a new air port tax tariff subsidy; 
and an aviation turbine fuel price subsidy (Box 1.1 and Table A1.1)  
4.251.   Over the review period, Indonesia signed new bilateral air services agreements (ASAs) with 
Papua New Guinea , the United Kingdom ( both in 2013) and Switzerland (in 2016). Table  A4.2 details 
the characteristics of all bilateral ASAs in force for Indonesia, coded according to the WTO QUASAR 
methodology331, which provides an assessment of their degree of liberalness.  
4.252.   Since 2013, Indonesia has also ratified various ASEAN  air transport instruments: the ASEAN 
Multilateral Agreement on the Full Liberalization of Air Freight and its accompanying protocols (in 
2015); Protocols 5 and 6 to the ASEAN Multilateral Agreement on Air Services (in 2014); the ASEAN 
Multilateral Agreeme nt on the Full Liberalization of Passenger Air Services and its Protocols 1 and 2 
(in 2016); the protocols to implement the seventh (in 2014), eighth and eleventh (in 2019) packages 
of commitments on air transport services under the AFAS; and the Air Trans port Agreement between 
the Governments of the Member States of ASEAN and the People's Republic of China, and its 
protocols 1 and 2 (in 2016) and 3 (in 2019).332 ASEAN negotiations on ASAs are ongoing with the 
European Union, the Republic of Korea, New Zeala nd, and Japan.  
4.253.   There are 251 airports in Indonesia , of which  38 are international. Thirty -three airports are 
operated by the state -owned Angkasa Pura 1 and Angkasa Pura 2, one airport is owned by the SOE 
BP Batam , and the rest are operated by the DGCA or by local governments. In 2019, the Government 
signed its first airport management contract with a foreign company; the development and operation 
of Komodo Airport on Flores Island will be undertaken by a consortiu m of PT Cardig Aero Services 
 
327 Since 2015, the passenger service charge,  which is a departure tax, is included in the price of the 
ticket; previously, it was payable at the airport upon departure. GR No. 15/2016 governs the charge. The 
charge per passenger varies, depending on the class of airport and whether flights are domes tic or 
international. For domestic flights, it ranges from IDR 15,000 to IDR 40,000, and for international flights, it 
ranges from IDR 60,000 to IDR 180,000.  
328 MoT Decree No.106/2019 . Viewed at: 
http://jdih.dephub.go.id/produk_hukum/view/UzAwZ01UQTJJRlJCU0ZWT0lESXdNVGs9 . 
329 GR No. 50 of 2019. Viewed at: https://www.p ajak.go.id/sites/default/files/2019 -07/PP -Nomor -50-
Tahun -2019-Salinan.pdf . 
330 This reduced duty rate was first implemented through MoF Regulation No. 35/2016 ; this Regulation 
was revoked with the tariff nomenclature change in 2017 but the 0% tariff duty on goods related to aircraft 
maintenance was maintained.  
331 For more elements on this m ethodology, see WTO document S/C/W/270/Add.1, 30 November 2006.  
332 ASEAN, ASEAN Transport Instruments and Status of Ratification (as of 1 July 2019) . Viewed at: 
https://asean.org/storage/2017/05/Ratification -Status -of-Air-Transport -Agreement -as-of-1-July-2019.pdf ; and 
Tempo.Co, Indonesia Signs Two International Air Transportation Agreements . Viewed at: 
https://en.tempo.co/read/1273161/indonesia -signs-two-international -air-transportation -agreements . WT/TPR/S/401 • Indonesia  
 
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  and Singapore's Changi Airports International Limited. The contract duration is for 25 years.333 Over 
the review period , several airport infrastructure projects were either completed or were ongoing, 
including the construction o f 15 new airports , and rehabilitation and development works on existing 
airports.334 
4.254.   Ground -handling by private companies is permitted; foreign investment in such companies 
is permitted up to a maximum of 67% ownership.  
4.4.6   Tourism  
4.255.   According to the OECD , touris m is one of the main sources of foreign -currency earnings.335 
Indonesia also saw its rankings in the WEF Travel and Tourism Competitive Index improve from 
70th out of 140 economies in 2013 to 40th out of 140 in 2019; recent improvements were noted in 
the ar eas of health and hygiene, and Indonesia was highly ranked in the areas of price 
competitiveness and privatization of travel and tourism . Challenges were highlighted in the areas of 
environmental sustainability and infrastructure.336  
4.256.   Most international vis itor arrivals are from the Asia -Pacific region, which has been the 
fastest -growing source market in recent years. Of a total of 16.1 million  visitor arrivals in 2019, 
around 80% were from the Asia-Pacific region (with most from Malaysia, China, Singapore, and 
Australia); 4% from the Americas (mainly the United States); 13% from Europe (mainly the United 
Kingdom, France, Germany, the Netherlands , and the Russian Federation) , and 2% from the Middle 
East and Africa.337 Over the period 2013 -19, there was year -on-year growth in both visitor numbers 
and revenue from tourism . The number of hotel rooms also significantly increased (Table  4.20). Bali 
is the main tourist destination. As indicated by the authorities, due to the COVID -19 pandemic, as 
at end -June 2020, mo re than 2,000 hotels were closed, and almost all tourism destinations, 
amenities and facilities had been stopped, affecting the employees therein. From January to 
April 2020, Indonesia only welcomed 2.8 million  international visitors, a more than 45% decli ne from 
the same period in 2019.  
Table 4.20 Inbound tourism, 2013 -April 2020  
Year Number of visitors  
(growth %)  Average 
length 
of stay  Average 
expenditure  
per day  
(USD)  Average 
expen -
diture  
per visit  
(USD)  Total 
revenue 
(USD 
billion)  Revenue 
growth  
(%) Number  
of hotel 
rooms  
2013 8,802,129 (9.42)  7.65 149.31  1,142.24  10.05  10.23  430,793  
2014 9,435,411 (7.19)  7.66 154.42  1,183.43  11.17  11.06  469,277  
2015 10,406,759 (10.29)  8.53 141.65  1,208.79  12.23  9.49 507,201  
2016 11,519,275 (10.69)   8.42 142.64  1,201.04  13.46  10.08  527,176  
2017 14,039,799 (21.88)  .. .. .. 15.24  13.21  .. 
2018 15,810,305 (12.61)  8.64 141.17  1,220.18  19.29  26.61  712,202  
2019 16,106,954 (1.88)  .. .. .. .. .. .. 
2020a 2,767,055 ( -45.01)  .. .. .. .. .. .. 
.. Data not available.  
a Figures are for January to April.  
Source:  Information provided by the Ministry of Tourism and Creative Economy.  
 
333 Reuters, Indonesia to offer more airport management projects to foreign firms in 2 020. Viewed: 
https://www.reuters.com/article/us -indonesia -airport/indonesia -to-offer-more-airpor t-management -projects -
to-foreign -firms-in-2020-idUSKBN1YU0T0 . 
334 The 15 new airports are: Anambas Airport, Namniwel Airport, Miangas Airport, Morowali Airport, 
Werur Airport , Maratua Airport, Koroway Batu Airport, Kertajati Airport, Samarinda Baru Airport, Tebelian 
Airport, Bandar Udara Siau Airport, Bandar Udara Tambelan Airport, Bandar Udara Muara Teweh Airport, 
Bandar Udara Buntukunik Airport, and Bandar Udara Pantar Airport . 
335 OECD , Economics Department Working Paper No. 1535 (2019), Making the Most of T ourism in 
Indonesia to Promote Sustainable Regional Development . Viewed at: 
http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2019)4&docLanguage=En . 
336 WEF, The Travel and Tourism Competitivene ss Report 2019 . Viewed at: 
http://www3.weforum.org/docs/WEF_TTCR_2019.pdf . WEF, The Travel and Tourism Competitiveness Report 
2013. Viewed at: http://www3.weforum.org/docs/WEF_TT_Competitiveness_Report_2013.pdf . 
337 Statistics Indonesia. Viewed at: www.bps.go.id . WT/TPR/S/401 • Indonesia  
 
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  4.257.   The Ministry of Tourism and Creative Economy (MoTCE) remains responsible for the tourism 
sector. It continues to implement the National Tourism Development Master Plan 2010 -25. In 
implementing this Plan, the MoTCE issued MoTCE Regulation No. 10 of 2016 on guidelines for 
developing regional tourism master  plans.338  
4.258.   A new initiative to develop international medical tourism in Indonesia was launched through 
an MOU between the ministries of tourism and creative economy and of health , in 2017 . This 
reportedly involves policy and program me coordination and harmonization, medical tourism 
improvement  and development, information and data exchange, and monitoring and evaluation . It 
was later followed up by the issuance of a health tourism catalogue and a fitness travel book.339 To 
boost international tourist arrivals, in 2015 , the MoT issued MoT Regulation No. 121 , which includes 
a cabotage waiver so that foreign cruise ships may embark and disembark passengers at appointed 
seaports (Tanjung Priok in Jaka rta; Tanjung Perak in Surabaya; Tanjung Benoa in Bali; Belawan in 
Medan; and the Makassar Sea Port in Makassar); previously , they were only allowed to anchor. 
Additionally, the number of countries from which citizens can travel visa -free for 30 days to 
Indonesia was increased from 45 in 2015 to 169.340  
4.259.   The principal law regulating national tourism development remains Tourism Law No. 10 of 
2009; there were no amendments to this Law over the review period.341 Regulatory initiatives aimed 
at increas ing the sust ainability and quality of tourism businesses included: the launch of a 
certification scheme in 2014342; the setting of business standards for a range of tourism 
travel -related services , and recreational, cultural and sporting activities in 2015343; the issua nce of 
"guidelines for sustainable tourism destination s" in 2016344; and the implementation of National 
Working Competency Standards in 2015 , which aim to be the reference for implementing tourism 
professionals' training and certification.345   
4.260.   As set out in  Law No. 44 of 2016 concerning List of Business Fields that are Closed to and 
Business Fields that are Open with Conditions to Investment, the following activities are closed to 
investment: public museums; historical and archaeological remains (temples, Su ltan's palaces, 
inscriptions, ruins, ancient buildings, etc.); and gambling/casinos. Certain activities are open to 
investment on condition that they are reserved for  domestic  MSMEs and cooperatives: tourism travel 
agents; homestay s; tour guides; and Internet cafés. Various activities are open to investment, with 
conditions (Table 4. 21). 
4.261.   The 2016 amendments to the negative investment list introduced various changes to 
investment conditions and FDI thresholds (Section 2.4.2). The business lines in which 100% foreign 
ownership is now permitted are : bars, cafes and the operation of sports facilities (e.g. bowling alleys  
and gyms) (under the 2014 negative list , FDI was capped at 49% (or up to 51% if in partnership 
with domestic MSMEs)); and restaurants, whic h were previously capped at 51% under the 2014 list. 
Increases in FDI thresholds were introduced for ( i) golf courses and travel bureau x (under the 2014 
list, FDI was capped at 49% , or 51% if in partnership with a domestic SME ; and under the 2016  list, 
it was raised to a cap of 67% , or up to 70% for ASEAN investors); ( ii) motels , which  were previously 
capped at 49% (or 51% if in partnership with a domestic SME , or up to 70% for ASEAN investors) , 
are now capped at 67% (or up to 70% for ASEAN investors); ( iii) private museums , which  were 
 
338 MoTCE, MoTCE Regulation No. 10 of 2016 . Viewed at: 
https://jdih.kemenparekraf.go.id/regulation/1136102#1 . 
339 The Jakarta Post, Tourism and health ministries to develop medical tourism in Indonesia . Viewed at: 
https://www.thejakartapost.com/travel/2017/09/27/tourism -and-health -ministries -to-develop -medical -
tourism -in-indonesia.html ; and Jakarta Globe, Medical T ourism a New Target for Gov't . Viewed at:  
https://jakartaglobe.id/business/medical -tourism -a-new-target -for-govt/ . 
340 PR No. 21 of 2016 regarding Visa -Free Visit Embassy of Indonesia in Spain. Embajada de Indonesia, 
169 countries are exempted from visa for a visit to Indonesia. Viewed at: http://embajadaindonesia.es/169 -
countries -are-exempted -from-visa-for-a-visit-to-indonesia/ . 
341 Law No. 20 of 2009 . Viewed at: http://balitourismboard.or.id/uploads/file/reg2.pdf . 
342 Indonesia Company Law, Implementation of Certification of Tourism Businesses . Viewe d at: 
http://www.indonesiacompanylaw.com/tourism -business/implementation -of-certification -of-tourism -
businesses/ .  
343 APEC (2017), Reference Material to Discuss IAP Template for 2018 Review , document 
2017/SOM2/CTI/006, Agenda Item: 6.1, Submitted by: CTI Chair, Forum Doc. No.: 2015/SOM3/021anx02b.  
344 Minister of Tourism Regulation No. 14/2016 on Guidelines for Sustainable Tourism Destinat ion. 
Viewed at: http://ditjenpp.kemenkumham.go.id/arsip/terjemahan/21.pdf . 
345 MoTCE. Viewed at: https://kemenparekraf.go.id/index.php/post/peraturan -menteri -pariwisata -
nomor -11-tahun -2015. WT/TPR/S/401 • Indonesia  
 
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  previously capped at 51% , are now capped at 67%; and ( iv) meetings, incentives, conferences, and 
exhibitions (MICE) operations , which were capped at 51% in 2014 , are now capped at 67% (or up 
to 70% for ASEAN investors).346 
Table 4.21 Investment conditions applied to tourism services  
Services  Ownership  
Museum management; tourism travel bureau x; catering; motel s; 
billiards; bowling; golf cour ses; organization of meeting s, 
incentive s, convention s and exhibition s Foreign capital ownership: max. 67%  
Foreign capital ownership by ASEAN 
countries' investors: max. 70%  
Management of historical and archaeological remains , such as 
temples, Sultan's palace, inscription s, ruin s, ancient building s; 
two-star hotel s; one-star hotel s; non -star hotel s; singing room s/ 
karaoke; natural tourism business outside conservation areas  Foreign capital ownership : max. 67%  
Spa services  Foreign capital ownership: max. 51%  
Source:  PR No. 44 of 2016 concerning List of Business Fields that are Closed to and Business Fields that are 
Open with Conditions to Investment. Viewed at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . 
4.262.   According to the authorities, i n 2018, the Government extended subsidized loans to MSMEs 
in the tourism sector under the KUR programme , in order to increase revenues from tourism and 
boost foreign exchange reserves (Section 3.3.1.2). Loans, up to a maximum of IDR 500 million, are 
distributed by banks and non -bank institutions , at an interest rate of 7%.347 
4.263.   In February 2020, the Government announced a first package of stimulus measures, 
inter alia, to mitigate decreased tourist arrivals in Bali, Riau Islands and North Sulawesi due to 
COVID -19 cases in the Republic of  Korea, Australia, Singapore and China. MSMEs operating in the 
tourism sector may also have access to tax reductions and interest rate subsidies for their loans 
through the second and third packages of  government support measures introduced in March 2020 
in the wake of the COVID -19 pandemic (Box 1.1). The Government also committed to accelerat ing 
social support to employees and practitioners in several regions (Bali, Yogyakarta, South Sumatera, 
and West and East Java).348 
4.4.7   Distribution services with a specific focus on e -commerce  
4.264.   Data was not available on the size of the distribution sector in Indonesia, nor on foreig n 
presence in this sector. Reportedly, the country has witnessed a rapid growth of online commerce 
in recent years, with the share of online sales in total retail sales increasing from less than 1% in 
2014 to around 3% in 2017.349 There are five main domest ic online buying and selling providers 
operating in Indonesia.  
4.265.   The MoT has overall responsibility for the distribution sector, with certain enabling aspects 
of electronic commerce falling under the responsibilities of several ministries: the MoT has 
respo nsibility for business ethics in e -commerce ; the MoF for tax and customs issues; the  Ministry 
of Communication and Information Technology for the ICT and data transactions aspects of 
 
346 White and Case, Indonesia's New 2016 Negative List . Viewed at: 
https://www.whitecase.com/sites/whitecase/files/files/download/publications/indonesias -new-2016-negative -
list.pdf . 
347 Jakarta Globe, Gov't to Offer Microloans to Tourism Sector SMEs . Viewed at: 
https://jakartaglobe.id/business/govt -to-offer-microloans -to-tourism -sector -smes/ ;and Global Trade Alert, 
Indonesia: Expansion of MSME loans to t ourism sector . Viewed at: 
https://www.globaltradealert.org/intervention/62555/state -loan/indonesia -expansion -of-msme -loans-to-
tourism -sector . 
348 Global Trade Alert, Indonesia: Tourism stimulus package announced in preparation for COVID -19 
impact . Viewed at: https://www.globaltradealert.org/intervention/78574/state -aid-nes/indonesia -tourism -
stimulus -package -announced -in-preparation -for-covid-19-impact .  
349 IMF (2019),  Indonesia: 2019 Article IV Consultation -Press Release; S taff Report; and Statement by 
the Executive Director for Indonesia , 31 July.  Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/07/30/Indonesia -2019-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-48535 . WT/TPR/S/401 • Indonesia  
 
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  e-commerce; and the BI  and the Financial Services Authority for payments systems. Indonesia is a 
participant in the WTO E -Commerce Joint Statement Initiative.  
4.266.   Law No. 7 of 2014 on Trade is the main law governing distribution services (retail and 
wholesale trade); it also contains general rules (Article 66) regarding e -commerce,  including relating 
to the business actor's obligation to sell goods and/or services , and to the operation of a dispute 
settlement mechanism.  
4.267.   In 2019, the Government issued GR No. 80 of 2019 on Trading Through Electronic Systems , 
to govern e -commerce , including marketplace and e -retail practices. As indicated by an external 
source, it contains various provisions specific to e -commerce practice , including: elaboration of 
busines s actors involved in an e -commerce practice; compliance checklist for e -commerce 
operators; electronic contracts and evidence; personal data protection; and trade practices (e.g. 
taxation, payment, trading contract s, consumer protection, and shipping and l ogistics). The 
Regulation applies to both local and foreign business actors, with the latter including foreign 
individuals or business entities incorporated and located outside of Indonesia that conduct 
e-commerce business activities in Indonesia. All busi ness actors (domestic and foreign) must obtain 
a business licen ce in order to carry out e -commerce business activities in Indonesia.350  
4.268.   Other regulations on retail and wholesale trade are: MoT Regulation No. 70/2013 on 
Guidelines for Structuring and Guidan ce of the Traditional Market, Shopping Center and Modern 
Shop (amended by  MoT Regulation No. 56/2014) ; and MoT Regulation No. 22/2016 on General 
Provisions on the Distribution of Goods (amended by MoT Regulation No. 66/2019) . 
4.269.   As set out in Law No. 44 of 20 16 concerning List of Business Fields that are Closed and 
Business Fields that are Open with Conditions to Investment, retail sale through mail order and 
Internet is reserved for domestic partnerships. Various activities are open to investment, with 
condit ions (Table 4.2 2). 
Table 4.22 Investment conditions applied to distribution services  
Business field  Conditions  
Retail business of car s, motorcycle s, and commercial vehicle s; retail 
business of spare -parts and accessories of car s, motorcycle s and 
commercial vehicle s; supermarket s with retail space of less than 1,200 
m2; minimarkets with retail space of less than 400 m2, including 
convenience stores and community stores; antique retail business; r etail 
business in non -supermarket or non -minimarket; retail business in non -
department store; textile retail business; games and toys in stores retail 
business; cosmetics retail business; footwear retail business; electronics 
retail business; food and beve rage retail business; and retail business 
for any kind of product via electronic system (e.g. liquor)  Domestic capital 100%  
Department store s with retail space of 400 m2-2,000 m2 Foreign capital ownership : max 
67%; and specific licence from 
the MoT only i f: (i) located in a 
mall and not stand -alone; and 
(ii) the addition of outlet stores 
shall be based on export 
performance (pay performance)  
Distributor's business , not affiliated to production  Foreign capital ownership : 67% 
Liquor wholesale trade (importer, distributor or sub-distributor); liquor 
retail business; sidewalk vendor , liquor business  Must have : (i) business licence 
certificate for liquor ; and ( ii) 
distribution network and specific 
place of sale  
Source:  Law No. 44  of 2016 concerning List of Business Fields that are Closed and Business Fields that are 
Open with Conditions to Investment . Viewed at: 
https://www2.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/REGULATION -OF-THE-
PRESIDENT -OF-THE-REPUBLIC -OF-INDONESIA -NUMBER -44-YEAR-2016.pdf . 
4.270.   The 2016 amendments to the negative list introduced various changes to investment 
conditions and FDI thresholds. The business lines in which 100% foreign ownership is now permitted 
are: distribution affiliated with production (previously capped at 33%) and  direct selling through 
 
350 Baker McKenzie, Indonesia Now Has Specific E -commerce Regulation . Viewed at: 
https://www.bakermckenzie.com/en/insight/publications/2019/12/indonesia -specific -e-commerce -regulation . WT/TPR/S/401 • Indonesia  
 
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  marketing networks (previously capped at 95%). Business lines in which the permitted level of 
foreign ownership was increased are: ( i) department stores (with a retail space of between 400 m2 
and 2,000 m2; previously , this was close d with respect to department stores of less than 2,000 m2, 
and now FDI is capped at 67% and subject to licensing and other requirements); and ( ii) distribution 
(non-affiliated with production) and warehousing was capped at 33% under the 2014 negative list , 
and this was increased to 67% under the 2016 list. Finally, retail trading via mail or Internet order 
(for goods under the categories of food, beverages, tobacco, pharmac eutical products , cosmetics, 
laboratory devices, textiles, apparel and footwear, and household and kitchen goods) was previously 
closed to foreign investment; under the 2016 negative list , it is permitted , subject to partnership 
with SMEs.351 Ongoing discussions to revise the negative list to open certain activities to 100% 
foreign investme nt are , inter alia , considering Internet and postal -based retailing (Section 2.4.2).  
4.271.   Many of the necessary supporting elements for e -commerce development were set out in 
the Government's E -Commerce Roadmap 2017 -19. This establishes actions to be taken to a ccelerate 
e-commerce through various components.352 In pursuit of the objectives of this Roadmap, Indonesia 
launched the National Movement of SMEs Go Online , in April 2018. This Movement  includes 
9.4 million SMEs who sell their products via e -commerce platf orms. In addition to focusing on digital 
marketing in the marketplace, Indonesia plans to encourage the business production and operational 
processes to adopt the most recent technology in the next five years. The Movement  aims to scale 
up 44,000 industries from the micro and small levels to medium industrie s by 2024. Additionally, in 
2018, the authorities also introduced the Nexticorn programme , to promote Indonesia's most 
investable digital start -ups with global investors.  
4.272.   Since  2018, Indonesia drastically reduced the de minimis  value for import duty exemp tions 
for consignments and e -commerce traded goods on a B2C basis (Section 3. 1.3.6). As indicated by 
the authorities, the majority of goods purchased through e -commerce platforms are shipped to 
Indonesia using postal services. These postal shipment service s are processed through "consignment 
note clearance type" , which is regulated under MoF Regulation No. 199/PMK.010/2019 regarding 
Procedures of Custom Excise, and Tax for Import Parcels. Under this Regulation, import shipments 
with a  f.o.b. value under the  de minimis  USD 3 are exempted from import duty. Shipments with an 
f.o.b.  value of between USD 3 and USD 1,500 are subject to a flat tariff import duty rate of 7.5% of 
the shipment f.o.b.  value (exceptions apply to bags, shoes, and textiles and textile pro ducts , for 
which MFN rates apply). Shipments with a  f.o.b.  value above USD 1,500 are subject to the MFN tariff 
rate. 
4.273.   Under GR in Lieu of Law No. 1 of 2020, the Government may charge VAT on taxable 
intangible goods and/or services sold through e -commerce pl atforms , and charge income tax on 
e-commerce done by foreign individuals or digital companies that have a significant economic 
presence.353 
 
 
351 White and Case, Indonesia's New 2 016 Negative List . Viewed at: 
https://www.whitecase.com/sites/whitecase/files/files/download/publications/indonesias -new-2016-negative -
list.pdf . 
352 PR 74 of 2017 on Roadmap for National Electronic Commerce System for 2017 -2019. Viewed at: 
https://www.amcham.or.id/images/Roadmap.pdf . The eight components to the Roadmap are : funding, 
taxation, consumer protection, education and human resources, communication infrastructure, logistics, cyber 
security, and the implementing organization.  
353 KPMG, Indonesia: Tax developments in response to COVID -19. Viewed at: 
https://home.kpmg/xx/en/home/insights/2020/04/indonesia -tax-developments -in-response -to-covid-19.html . WT/TPR/S/401 • Indonesia  
 
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  5  APPENDIX TABLES  
Table A1. 1 Government Fiscal Stimulus Package I, 24 February 2020  
Stimulus programme  Nominal 
(IDR  trillion)  Period  % 
budget  
Consumption of Basic Needs (Sembako) Card 
incentives  4.6 March -September 2020 
(7 months)  0.18 
Additional housing subsidy  1.5 2020 0.06 
Flight subsidies  0.4 March -May 2020 (3 months)  0.02 
New airport tax PJP2U tariff subsidy  0.3 March -May 2020 (3 months)  0.01 
Aviation turbine fuel (Avtur) price subsidy  0.3 March -May 2020 (3 months)  0.01 
Budget reallocation to 10 tourism destinations  0.1 2020 0.00 
Hotel and restaurant tax exemption for 
10 tourism destinations  3.3 March -May 2020 (3 months)  0.13 
Total incentives  10.4  0.41 
Source:  Ministry of Finance; and BI  (2020), 2019 Economic Report on Indonesia , 22 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx . 
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  Table A1. 2 Fiscal Stimulus Package II, 13 Mar ch 2020  
Fiscal  Non-fiscal Financial sector  Food policy 
Income Tax Law 
(PPh) Article 21 Tax 
Exemption  
(IDR 8 .6 trillion)  
 
Exemption paid fully 
(100%) by the 
Government for the 
income of workers from 
all industrial sectors in 
the Directorate General 
of Taxes classification of 
business field , includ ing 
those  in category C 
(processing industry). 
Valid April -September 
2020 (6  months)  Reduction of exports 
ban & restriction  
 
Health Ce rtificate and 
V-Legal document are no 
longer required. 
Consequen tly, there is a 
reduction of ban & a 
restriction for 
749 HS codes, including  
443 fish commodities 
and products, and 
306 forestry industry 
products  
 Ease of financing  
 
Assessment of 
credit/fina ncing/provision 
of fund s only based on 
punctuality of principal 
payment and/or interest , 
for credit up to IDR 10 
billion, also applied to 
MSMEs  Government guarantee s 
the availability of main 
and strategic supplies to 
resident s, at affordable 
prices 
Income Tax Law 
(PPh) Article 22 
Imports Withholding 
Tax Exemption  
(IDR 8 .15 trillion)  
 
Exemption of Income 
Tax Law (PPh) Article  22 
regarding imports is 
given to 19  subsectors in 
manufacturing. Valid 
,April-September 2020 
(6 months)  Reduction of imports 
ban & restriction  
 
Reduction of imports ban 
& restriction , primarily  
on raw materials , for 
producer s with producer 
status , of steel, alloy 
steel, and its derivative 
products (early stage). 
Next, it will also be 
implemented on 
strategic  food products 
(industrial salt, sugar, 
and flour)  Restructuring  
 
Banks could perform 
restructuring for  the 
whole credit/financing 
without considering 
credit limit or debtor 
type, especially MSME  
debtor s Main and strategic food 
supplies are rice, corn, 
shallots, garlic, bird's 
eye pepper , cayenne 
chili, beef, chicken meat, 
chicken egg s, sugar, and 
cooking oil  
PPh 25 Organization 
Tax Exemption  
(IDR 4 .2 trillion)  
 
Reduction of PPh 25  
organization instalment 
tax by 30% to 
19 subsectors in the 
processing industry . 
Valid April-September 
2020 (6  months)  Exports & imports 
process acceleration  
 
For reputable traders, 
the exports & imports 
process is to be 
accelerated through the 
auto-response and auto -
approval system s. There 
are 735 traders  
consider ed as reputable  BPJAMSOSTEK social 
security programme 
relaxation  
 
A stimulus injection will 
be formulated, so it will 
not affect benefits to 
recipients or interfere 
with the continuity and 
security of employment 
or the  social security 
programme fund  During  March -August 
2020, the availability 
projection of 11 strategic 
commodities is 
confirmed to be 
adequate. Most of the 
supply is from domestic 
production ; only garlic, 
beef, and sugar are 
imported  
Value Added Tax 
Restitution  
(IDR 1 .97 trillion)  
 
Acceleration of VAT 
(PPN) restitution , valid 
April-September 
(6 months) , for 
exporters without a 
nominal limit and for 
non-exporters with a 
nominal limit up to 
IDR 5 billion  Exports & imports 
service acceleration  
 
Development of the 
National Logistics 
Ecosystem to simplify 
and synchronize 
information flow and 
export & import 
documents   Accelerating the imports 
recommendation process 
for several commodities 
that need to be 
imported, as a result  of 
COVID -19 
Source:  BI (2020), 2019 Economic Report on Indones ia, 22 May. Viewed at: 
https://www.bi.go.id/en/publikasi/laporan -tahunan/perekonomian/Pages/LPI_2019.aspx .  
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  Table A1. 3 Merchand ise exports by group of products, 2012 -19  
  2012  2013  2014  2015  2016  2017  2018  2019  
Total exports (USD billion)  190.0  182.6  176.0  150.4  144.5  168.8  180.2  167.0   
(% of total)  
Total primary products  63.3 61.8 58.8 55.0 52.1 57.0 55.7 52.0 
Agriculture  23.7 23.4 25.0 26.5 27.1 29.2 25.5 25.7 
Food 17.7 17.5 20.1 21.5 22.3 23.2 20.4 20.2 
4222 - Palm oil and its fractions  9.3 8.7 9.9 10.2 9.9 11.0 9.2 8.8 
4313 - Fatty acids, acid oils from 
refining, and residues resulting 
from the treatment of fatty 
substances or animal or vegetable 
waxes; degras  0.8 0.8 1.1 1.0 1.3 1.3 1.2 1.2 
Agricultural raw material  6.0 5.9 4.9 5.0 4.8 6.0 5.1 5.5 
2312 - Natural rubber (other than 
latex)  4.1 3.8 2.7 2.5 2.3 3.0 2.2 2.1 
2515 - Chemical wood pulp, soda 
or sulphate, other than dissolving 
grades, semi -bleached or bleached  0.8 1.0 1.0 1.1 1.1 1.4 1.4 1.4 
Mining  39.6 38.5 33.8 28.5 25.0 27.8 30.2 26.3 
Ores and other minerals  3.7 4.7 2.4 3.5 3.7 3.6 4.6 3.4 
Non-ferrous metals  2.5 2.3 2.3 2.0 2.0 2.3 2.2 2.1 
Fuels 33.3 31.4 29.0 23.0 19.3 21.8 23.3 20.8 
3212 - Other coal  12.8 12.5 10.6 9.8 8.9 10.6 11.4 11.2 
3431 - Natural gas, liquefied  7.9 7.1 6.6 4.9 3.6 3.7 3.9 3.1 
3432 - Natural gas, in the gaseous 
state 2.9 2.8 3.1 2.0 1.3 1.5 2.0 2.2 
3222 - Lignite, whether or not 
pulverized (excluding jet)  1.0 1.0 1.2 0.9 1.1 1.5 1.8 1.7 
3330 - Petroleum oils and oils 
obtained from bituminous minerals, 
crude  6.5 5.6 5.3 4.3 3.6 3.1 2.8 1.0 
Manufactures  35.6 37.2 40.3 44.1 46.9 41.9 43.1 45.8 
Iron and steel  0.9 0.9 1.1 1.6 1.5 2.2 3.5 4.7 
6715 - Other ferro -alloys 
(excluding radioactive ferro -alloys)  0.2 0.1 0.2 0.2 0.4 0.8 0.8 1.6 
6753 - Flat-rolled products of 
stainless steel, not further worked 
than hot -rolled  0.0 0.0 0.0 0.0 0.0 0.3 1.1 1.5 
Chemicals  5.6 6.0 6.4 5.7 6.4 5.8 6.2 6.2 
Other semi -manufactures  6.1 6.3 6.8 7.2 7.5 6.3 6.6 6.8 
6412 - Paper and paperboard, 
uncoated, of a kind used for 
writing, printing or other graphic 
purposes, and punch card stock 
and punch tape paper, in rolls or 
sheets (other than paper of 
heading 641.1 or 641.63); 
handmade paper and paperboard  1.1 1.0 1.1 1.2 1.2 1.2 1.3 1.3 
Machinery and transport equipment  12.0 12.1 12.4 13.2 14.0 12.8 12.6 13.4 
Power -generating machines  0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 
Other non -electrical machinery  1.4 1.6 1.7 1.6 1.9 1.6 1.4 1.5 
Agricultural machinery and tractors  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 
Office machines and 
telecommunication equipment  4.1 3.7 3.6 3.7 3.4 3.1 3.0 2.9 
Other electrical machines  2.7 2.9 2.9 3.2 3.2 3.0 2.9 2.9 
7731 - Insulated (including 
enamelled or anodized) wire, cable 
(including co -axial cable) and other 
insulated electric conductors, 
whether or not fitted with 
connectors; optical fibre cables 
made up of individually sheathed 
fibres, whether or not assembled   0.6 0.6 0.7 0.7 0.8 0.7 0.8 0.8 
Automotive products  2.3 2.3 2.8 3.2 3.7 3.6 3.5 3.9 
7812 - Motor vehicles for the 
transport of persons, n.e.s.  1.2 1.2 1.5 1.6 1.8 1.8 1.8 2.4 
7843 - Other parts and accessories 
of the motor vehicles of groups 
722, 781, 782 and 783  0.8 0.8 0.9 1.2 1.4 0.8 0.8 0.9 WT/TPR/S/401 • Indonesia  
 
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    2012  2013  2014  2015  2016  2017  2018  2019  
Other transport equipment  1.2 1.3 1.1 1.2 1.5 1.3 1.5 2.0 
7851 - Motor cycles (including 
mopeds) and cycles fitted with an 
auxiliary motor, with or without 
side-cars; side -cars 0.1 0.1 0.1 0.3 0.3 0.4 0.6 0.9 
Textiles  2.4 2.5 2.7 2.9 2.8 2.4 2.2 2.2 
Clothing  4.0 4.2 4.4 5.0 5.2 4.9 5.0 5.1 
Other consumer goods  4.7 5.1 6.6 8.5 9.4 7.5 7.0 7.4 
8512 - Sports footwear  1.1 1.2 1.3 1.6 1.7 1.6 1.6 1.5 
8973 - Jewellery of gold, silver or 
platinum group metals (except 
watches and watch -cases) and 
goldsmiths' or silversmiths' wares 
(including set gems)  0.1 0.1 1.2 2.2 2.8 1.6 1.1 1.2 
Other  1.1 1.0 0.9 1.0 1.0 1.1 1.2 2.2 
9710 - Gold, non-monetary 
(excluding gold ores and 
concentrates)  1.1 1.0 0.9 0.9 1.0 1.1 1.1 2.1 
Source:  UNSD, Comtrade database (SITC Rev.3).  
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  Table A1. 4 Merchandise imports by group of products, 2012 -19  
  2012  2013  2014  2015  2016  2017  2018  2019  
Total imports (USD billion)  191.7  186.6  178.2  142.7  135.7  156.9  188.7  170.7   
(% of total)  
Total primary products  36.4 39.1 40.4 33.8 32.2 34.1 33.5 30.7 
Agriculture  10.9 11.5 12.5 12.9 14.7 14.2 13.1 13.4 
Food 8.3 8.8 9.6 10.0 11.6 11.0 10.2 10.6 
0412 - Other wheat (including 
spelt) and meslin, unmilled  1.1 1.3 1.3 1.4 1.7 1.7 1.4 1.6 
0813 - Oilcake and other solid 
residues (except dregs), whether or 
not ground or in the form of pellets, 
resulting from the extraction of fats 
or oils from oil -seeds, oleaginous 
fruits and germs of cereals  1.0 1.1 1.3 1.3 1.2 1.1 1.1 1.0 
0611 - Sugar, beet or cane, raw, in 
solid form, not containing added 
flavouring or colouring matter  0.8 0.9 0.7 0.9 1.5 1.3 0.9 0.8 
2222 - Soya beans  0.6 0.6 0.7 0.7 0.7 0.7 0.6 0.6 
Agricultural raw material  2.6 2.7 2.9 2.9 3.1 3.2 2.9 2.8 
2631 - Cotton (other than linters), 
not carded or combed  0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.7 
Mining  25.5 27.6 27.9 20.9 17.5 19.9 20.4 17.3 
Ores and other minerals  1.3 1.4 1.4 1.4 1.3 1.4 1.6 1.7 
Non-ferrous metals  1.9 1.8 1.9 2.0 2.0 2.3 2.1 1.9 
Fuels 22.3 24.4 24.7 17.5 14.2 16.2 16.7 13.8 
334 - Petroleum oils, other than 
crude  14.6 14.9 15.0 9.8 7.3 9.0 9.1 7.7 
3330 - Petroleum oils and oils 
obtained from bituminous minerals, 
crude  5.6 7.3 7.3 5.7 5.0 4.5 4.9 3.3 
3425 - Butane, liquefied  0.9 0.9 0.9 0.7 0.7 0.9 0.8 0.7 
3421 - Propane, liquefied  0.7 0.7 0.8 0.7 0.6 0.8 0.8 0.7 
Manufactures  62.3 59.9 58.8 65.1 66.4 64.5 64.8 67.6 
Iron and steel  6.2 5.9 5.3 5.3 5.1 5.3 5.8 6.4 
6726 - Semi-finished products of 
iron or non -alloy steel, containing 
by weight less than 0.25% carbon  1.1 1.0 0.8 0.8 0.9 0.9 0.8 0.8 
6732 - Flat-rolled products of iron 
or non -alloy steel, not clad, plated 
or coated, not further worked than 
hot-rolled (other than those of 
subgroup 673.1)  0.5 0.4 0.2 0.2 0.1 0.5 0.5 0.6 
Chemicals  12.3 12.6 13.3 14.8 14.7 14.3 14.0 14.0 
5751 - Polymers of propylene or of 
other olefins  0.7 0.8 0.9 0.8 0.9 0.9 0.8 0.9 
5711 - Polyethylene  0.5 0.6 0.6 0.8 0.8 0.7 0.7 0.6 
Other semi -manufactures  4.5 4.5 4.7 5.3 5.2 4.9 5.0 5.3 
Machinery and transport equipment  33.1 30.3 28.7 31.6 32.2 31.1 31.4 32.3 
Power -generating machines  1.6 1.6 1.7 1.9 1.8 1.6 2.2 2.3 
Other non -electrical machinery  11.1 10.8 11.0 11.8 11.6 10.3 10.5 11.7 
7284 - Machinery and mechanical 
appliances specialized for particular 
industries, n.e.s.  0.8 0.8 0.8 1.0 0.8 0.8 0.7 0.8 
Agricultural machinery and tractors  0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 
Office machines and 
telecommunication equipment  6.9 7.0 6.9 7.6 7.9 8.0 7.7 8.0 
7643 - Transmission apparatus for 
radio-telephony, radio -telegraphy, 
radio-broadcasting or television, 
whether or not incorporating 
reception apparatus or sound -
recording or reproducing apparatus  1.4 1.5 1.6 1.3 0.5 0.9 0.9 0.9 WT/TPR/S/401 • Indonesia  
 
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    2012  2013  2014  2015  2016  2017  2018  2019  
7522 - Digital automatic data -
processing machines, containing in 
the same housing at least a central 
processing unit and an input and 
output unit, whether or not 
combined  0.7 0.8 0.7 0.8 0.6 0.6 0.6 0.6 
Other electrical machines  3.7 3.7 3.5 4.2 4.7 4.4 4.3 4.2 
Automotive products  5.0 4.1 3.5 3.5 3.8 4.2 4.2 4.0 
7843 - Other parts and accessories 
of the motor vehicles of groups 
722, 781, 782 and 783  1.6 1.7 1.6 1.7 1.9 1.6 1.5 1.4 
7812 - Motor vehicles for the 
transport of persons, n.e.s.  1.4 1.2 0.8 0.8 0.9 0.7 0.6 0.7 
Other transport equipment  4.8 3.0 2.3 2.6 2.4 2.6 2.5 2.1 
Textiles  2.9 3.1 3.3 4.0 4.3 3.9 3.6 3.9 
6552 - Other knitted or crocheted 
fabrics, not impregnated, coated, 
covered or laminated  0.6 0.7 0.7 0.9 0.9 0.8 0.8 0.8 
Clothing  0.3 0.3 0.3 0.3 0.4 0.5 0.5 0.6 
Other consumer goods  2.9 3.2 3.1 3.7 4.4 4.5 4.5 5.1 
Other  1.3 1.0 0.8 1.1 1.4 1.4 1.7 1.7 
9710 - Gold, non -monetary 
(excluding gold ores and 
concentrates)  0.0 0.0 0.0 0.5 0.6 0.7 1.1 1.0 
Source:  UNSD, Comtrade database (SITC Rev.3).  
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  Table A1. 5 Merchandise exports by destination, 2012 -19 
  2012  2013  2014  2015  2016  2017  2018  2019  
Total exports (USD billion)  190.0  182.6  176.0  150.4  144.5  168.8  180.2  167.0   
(% of total)  
Americas  10.1 11.0 11.9 13.4 13.9 13.1 12.7 13.0 
United States  7.8 8.6 9.4 10.8 11.2 10.6 10.2 10.6 
Other America  2.3 2.4 2.5 2.6 2.7 2.6 2.5 2.4 
Europe  10.3 10.1 10.6 11.4 12.3 11.2 10.6 9.8 
EU-28 9.5 9.2 9.6 9.9 10.0 9.7 9.5 8.6 
Netherlands  2.5 2.2 2.3 2.3 2.3 2.4 2.2 1.9 
Germany  1.6 1.6 1.6 1.8 1.8 1.6 1.5 1.4 
Italy 1.2 1.2 1.3 1.2 1.1 1.1 1.1 1.0 
Spain  1.1 1.0 1.1 1.0 1.1 1.2 1.2 0.9 
United Kingdom  0.9 0.9 0.9 1.0 1.1 0.8 0.8 0.8 
EFTA 0.1 0.1 0.1 0.8 1.6 0.8 0.4 0.5 
Other Europe  0.7 0.9 0.8 0.8 0.7 0.7 0.7 0.7 
Turkey  0.7 0.8 0.8 0.8 0.7 0.7 0.7 0.7 
Commonwealth of Independent 
States (CIS)  0.8 0.9 0.9 0.9 1.1 1.0 0.8 0.8 
Africa  3.0 3.1 3.5 3.2 2.9 2.9 2.6 2.7 
Middle East  2.7 2.7 3.6 3.5 2.9 2.6 2.3 2.7 
Saudi Arabia, Kingdom of  0.9 0.9 1.2 1.4 0.9 0.8 0.7 0.9 
United Arab Emirates  0.9 0.9 1.4 1.3 1.1 1.0 0.8 0.9 
Asia 73.1 72.1 69.5 67.6 66.9 69.2 70.9 70.9 
China  11.4 12.4 10.0 10.0 11.6 13.7 15.1 16.7 
Japan  15.9 14.8 13.1 12.0 11.1 10.5 10.8 9.5 
Other Asia  45.8 44.9 46.4 45.6 44.1 45.0 45.1 44.7 
Singapore  9.0 9.1 9.5 8.4 7.8 7.6 7.2 7.7 
India 6.6 7.1 7.0 7.8 7.0 8.3 7.6 7.1 
Malaysia  5.9 5.8 5.5 5.1 4.9 5.0 5.2 5.4 
Korea, Republic of  7.9 6.3 6.0 5.1 4.8 4.8 5.3 4.3 
Philippines  2.0 2.1 2.2 2.6 3.6 3.9 3.8 4.0 
Thailand  3.5 3.3 3.3 3.7 3.7 3.8 3.8 3.7 
Viet Nam  1.2 1.3 1.4 1.8 2.1 2.1 2.5 3.1 
Chinese Taipei  3.3 3.2 3.6 3.4 2.5 2.5 2.6 2.4 
Hong Kong, China  1.4 1.5 1.6 1.4 1.5 1.4 1.4 1.5 
Australia  2.6 2.4 2.8 2.5 2.2 1.5 1.6 1.4 
Pakistan  0.7 0.8 1.2 1.3 1.4 1.4 1.4 1.2 
Bangladesh  0.6 0.6 0.8 0.9 0.9 0.9 1.0 1.1 
Memorandum:          
ASEAN  22.0 22.3 22.5 22.3 23.0 23.3 23.4 24.9 
Source:  UNSD Comtrade database.  
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  Table A1. 6 Merchandise imports by origin, 2012 -19 
  2012  2013  2014  2015  2016  2017  2018  2019  
Total imports (USD billion)  191.7  186.6  178.2  142.7  135.7  156.9  188.7  170.7   
(% of total)  
Americas  9.6 8.8 8.3 9.5 9.7 8.7 8.5 9.2 
United States  6.1 4.9 4.6 5.3 5.4 5.2 5.4 5.5 
Other America  3.6 3.9 3.7 4.1 4.3 3.5 3.1 3.7 
Brazil  1.0 1.2 1.4 1.7 1.8 1.2 1.0 1.1 
Canada  0.9 1.1 1.0 1.1 1.0 1.0 1.0 1.1 
Argentina  0.9 0.9 0.8 0.9 1.0 0.7 0.8 1.1 
Europe  8.0 8.6 8.2 8.7 8.9 9.0 8.4 8.0 
EU-28 7.4 7.4 7.1 7.9 7.9 8.0 7.5 7.3 
Germany  2.2 2.4 2.3 2.4 2.3 2.3 2.1 2.0 
Italy 0.8 0.9 1.0 1.0 1.0 1.0 1.0 1.0 
France  1.0 0.9 0.7 0.9 1.0 1.0 0.9 0.8 
United Kingdom  0.7 0.6 0.5 0.6 0.7 0.7 0.6 0.6 
EFTA 0.4 0.5 0.5 0.6 0.8 0.7 0.6 0.5 
Other Europe  0.2 0.7 0.6 0.2 0.2 0.4 0.4 0.2 
Commonwealth of Independent 
States (CIS)  2.4 2.7 2.6 1.9 1.5 1.6 1.7 1.5 
Russian Federation  1.3 1.4 0.9 0.7 0.6 0.8 0.8 0.7 
Africa  3.0 3.0 3.0 2.6 2.6 2.7 3.4 2.3 
Nigeria  1.4 1.7 1.9 0.9 0.9 0.8 1.3 1.1 
Middle East  6.3 6.4 6.7 4.7 4.2 4.8 5.1 4.6 
Saudi Arabia, Kingdom of  2.7 3.5 3.7 2.4 2.0 2.0 2.6 2.1 
United Arab Emirates  0.9 1.0 1.0 1.0 1.0 1.3 1.0 1.3 
Asia 70.7 70.5 71.2 72.6 73.1 73.2 72.9 74.2 
China  15.3 16.0 17.2 20.6 22.7 22.8 24.1 26.3 
Japan  11.9 10.3 9.5 9.3 9.6 9.7 9.5 9.2 
Other Asia  43.5 44.2 44.4 42.6 40.8 40.7 39.2 38.8 
Singapore  13.6 13.7 14.1 12.6 10.7 10.8 11.4 10.1 
Thailand  6.0 5.7 5.5 5.7 6.4 5.9 5.8 5.5 
Korea, Republic of  6.2 6.2 6.6 5.9 4.9 5.2 4.8 4.9 
Malaysia  6.4 7.1 6.1 6.0 5.3 5.6 4.6 4.5 
Australia  2.8 2.7 3.2 3.4 3.9 3.8 3.1 3.2 
India 2.2 2.1 2.2 1.9 2.1 2.6 2.7 2.5 
Viet Nam  1.4 1.5 1.9 2.2 2.4 2.1 2.0 2.3 
Chinese Taipei  2.4 2.4 2.1 2.2 2.1 2.1 1.9 2.2 
Hong Kong, China  1.0 1.1 1.0 1.3 1.3 1.2 1.4 1.9 
Memorandum:          
ASEAN  28.1 29.0 28.6 27.3 25.7 25.0 24.4 23.2 
Source:  UNSD Comtrade database.  
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  Table A2. 1 Notifications to the WTO, January 2013 -August 2020  
Agreement/Article  Requirement  Symbol and date of notification  
Agreement on Agriculture  
Article s 10 and 18.2  
 
 
 
 
 
Article s 10 and 18.2 
 
 
 
 
 
Article 16.2  
 
 
 
 
 
Article 18.2  
 
 
 
 
 
 
 
 
 
Article 18.2  
 
 
 
 
 
 
 
 
Article s 5.7 and 18.2  Export subsidies (ES:1)  
 
 
 
 
 
Export subsidies (ES:2)  
 
 
 
 
 
Net food importing decision: food and 
other assistance (NF:1)  
 
 
 
 
Domestic support (DS:1)  
 
 
 
 
 
 
 
 
 
Market access, imports under tariff 
quotas (MA:2)  
 
 
 
 
 
 
 
Market access, special safeguard (MA:5)  
  G/AG/N/ IDN/65, 15/10/2019 
G/AG/N/IDN/5 9, 28/09/2018  
G/AG/N/ IDN/58, 28/09/2018 
G/AG/N/IDN/ 35, 01/09/201 6 
G/AG/N/IDN/ 31, 14/02/2013 
 
G/AG/N/IDN/ 66, 15/10/2019 
G/AG/N/IDN/ 61, 01/10/2018 
G/AG/N/IDN/ 60, 01/10/2018  
G/AG/N/IDN/ 35, 01/09/201 6 
G/AG/N/IDN/ 31, 14/02/2013 
 
G/AG/N/IDN/6 2, 15/10/2019  
G/AG/N/IDN/ 51, 21/09/2019 
G/AG/N/IDN/ 50, 21/09/2018 
G/AG/N/IDN/ 49, 21/09/2018 
G/AG/N/IDN/ 48, 21/09/2018 
 
G/AG/N/IDN/6 7, 17/10/2019  
G/AG/N/IDN/ 57, 24/09/2018 
G/AG/N/IDN/ 56, 24/09/2018 
G/AG/N/IDN/ 55, 24/09/2018 
G/AG/N/IDN/ 54, 21/09/2018 
G/AG/N/IDN/5 3, 21/09/2018 
G/AG/N/IDN/ 52, 21/09/2018 
G/AG/N/IDN/ 30/Rev.1 , 10/04/2013 
G/AG/N/IDN/ 34, 09/04/2013  
 
G/AG/N/IDN/6 4, 15/10/2019  
G/AG/N/IDN/ 47, 17/09/2018 
G/AG/N/IDN/ 46, 17/09/2018 
G/AG/N/IDN/ 45, 17/09/2018 
G/AG/N/IDN/ 44, 17/09/2018 
G/AG/N/IDN/ 43, 17/09/2018 
G/AG/N/IDN/ 42, 17/09/2018 
G/AG/N/IDN/ 32, 14/02/2013 
 
G/AG/N/IDN/6 3, 15/10/2019  
G/AG/N/IDN/ 41, 17/09/2018 
G/AG/N/IDN/ 40, 17/09/2018 
G/AG/N/IDN/ 39, 17/09/2018 
G/AG/N/IDN/ 38, 17/09/2018 
G/AG/N/IDN/ 37, 17/09/2018 
G/AG/N/IDN/ 36, 17/09/2018 
G/AG/N/IDN/ 33, 15/02/2013 
General Agreement on Trade in Services  
Article V:7(a)  Notification of RTA  S/C/N/822, 24/08/2015  
Agreement on the Implementation of Article  VI of the GATT 1994 (anti -dumping)  
Articles 16.4 and 16.5  
 
 
 
 
Article 16.4  
 Anti-dumping actions ( ad hoc ) 
 
 
 
 
Anti-dumping actions (taken within the 
preceding six months)  G/ADP/N/327, 29/05/2019  
G/ADP/N/323, 25/01/2019  
G/ADP/N/319, 18/10/2018  
G/ADP/N/295, 30/01/2017  
 
G/ADP/N/335/IDN, 20/05/2020  
G/ADP/N/328/IDN, 28/10/2019  
G/ADP/N/322/IDN, 23/04/2019  
G/ADP/N/314/IDN, 09/10/2018  
G/ADP/N/308/IDN, 20/04/2018  
G/ADP/N/300/IDN, 19/10/2017  
G/ADP/N/294/IDN, 21/03/2017  
G/ADP/N/286/IDN, 20/10/2016  
G/ADP/N/280/IDN, 01/03/2016  
G/ADP/N/272/IDN, 13/10/2015  
G/ADP/N/265/IDN, 23/0 2/2015  
G/ADP/N/259/IDN, 15/10/2014  
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  Agreement/Article  Requirement  Symbol and date of notification  
G/ADP/N/244/IDN, 25/04/2014  
G/ADP/N/237/IDN, 24/04/2014  
GATT 1994  
Article XVII:4(a)  
 
 
 
Article XXIV:7(a)  State trading activities  
 
 
 
Agreement establishing free -trade area  G/STR/N/17/IDN, 19/09/2018  
G/STR/N/16/IDN, 01/11/2016  
G/STR/N/13/IDN, 24/11/2014  
 
WT/REG403/N/1, 02/04/2020  
WT/REG277/N/3, 24/08/20 18 
Agreement on Import Licensing  
Article s 5.1, 5.2, and 
5.3 
 
Article 7.3  Notifications under Articles 5.1, 5.2, and 
5.3 of the Agreement  
 
Replies to questionnaire  on import 
licensing procedures  G/LIC/N/2/IDN/43, 18/10/2019 to  
G/LIC/N/2/IDN/13, 08/02/2013  
 
G/LIC/N/3/IDN/11, 20/05/2020  
G/LIC/N/3/IDN/10, 12/02/2016  
G/LIC/N/3/IDN/ 9, 02/11/2015  
G/LIC/N/3/IDN/8, 02/11/2015  
G/LIC/N/3/IDN/7, 26/09/2014  
G/LIC/N/3/IDN/6, 26/09/2014  
G/LIC/N/3/IDN/5, 26/09/2014  
Agreement on Subsidies and Countervailing Measures  
Article 25.1  
 
 
Article 25.11  Subsidies  
 
 
Countervailing duty actions (preliminary 
and final)  G/SCM/N/343/IDN, 02/08/2019  
G/SCM/N/253/IDN, 20/05/2019  
 
G/SCM/N/349, 14/06/2019  
G/SCM/N/3 42, 14/12/2018 
G/SCM/N/ 334, 15/06/2018 
G/SCM/ N/328, 15/12/2017 
G/SCM/N/3 21, 15/06/2017 
G/SCM/N/3 13, 16/12/2016 
G/SCM/N/3 05, 15/06/20 16 
G/SCM/N/ 298, 18/12/2015 
G/SCM/N/ 289, 15/06/2015  
G/SCM/N/281, 12,12, 2014  
G/SCM/N/267, 16/12/2013  
Agreement on Sanitary and Phytosanitary Measures  
Article 7, Annex B  Sanitary/phytosanitary regulations  G/SPS/N/ IDN/134, 30/04/2020 to  
G/SPS/N/ IDN/60, 13/02/2013 
TBT Agreement  
Article  2.9 Technical regulations  G/TBT/ N/IDN/124/Rev.1, 17/12/2019 
to G/TBT/N/IDN/68, 19/03/2013  
Articles 2.9 and 5.6  Proposed amendments to laws and 
regulations  G/TBT/N/IDN/128, 23/06/2020 to  
G/TBT/N/IDN/70, 20/03/2013  
Agreement on Rules of Origin  
Annex II, paragraph 4  
 
Article 5.1  Preferential rules of origin  
 
Non-preferential and preferential rules of 
origin  G/RO/N/199, 21/07/2020  
 
G/RO/N/196, 16/04/2020  
Trade Facilitation Agreement   
Articles 1.4, 10.4.3, 
10.6.2 , and 12.2.2  
 
WT/PCTF  Notification under Article 1.4, 10.4.3, 
10.6.2, and 12.2.2  
 
Category A commitments  G/TFA/N/IDN/2, 23/07/2019  
 
 
WT/PCTF/N/IDN/1, 04/08/2014  
Agreement on Trade -Related Aspects of Intellectual Property Rights  
Article 69 Members contact points  IP/N/3/IDN/3  
Safeguard Measures  
 
 
 
 
 
 
Article 12.1 (a)  
 
 
Article 12.1 (b)  
 
 
 Termination  
 
 
 
 
 
Initiation of an investigation, and reasons 
for it 
 
Finding serious injury or threat thereof 
caused by increased imports  
 
 G/SG/N/ 9/IDN/10, 14/06/2016 
G/SG/N/9/IDN/ 9, 10/01/2014 
G/SG/N/9/IDN/ 8, 20/12/2013 
G/SG/N/9/IDN/ 7, 20/12/2013 
G/SG/N/9/IDN/ 6, 29/04/2013 
 
G/SG/N/6/IDN/35, 12/06/2020 to  
G/SG/N/6/IDN/11, 16/07/2010  
 
G/SG/N/8/IDN/26, 19/05/2020 to  
G/SG/N/8/IDN/4, 20/11/2011  
 
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  Agreement/Article  Requirement  Symbol and date of notification  
Article 12.1 (c)  
 
 
 
 
 
 
Article 12.4  
 
 
 
Article 12.5  
 
 
Articles 12.5, and 8.2  
 
Article 7.2   
 
 
 
 
 
 
Mid-term review  G/SG/N/IDN/25/Suppl.1;  
G/SG/N/11/19/Suppl.2, 03/06/2020  
G/SG/N/IDN/24/Suppl.1;  
G/SG/N/11/20/Suppl.2, 03/0 6/2020  
G/SG/N/IDN/23/Suppl.1;  
G/SG/N/11/18/Suppl.2, 03/06/2020  
 
G/SG/N/11/IDN/18, 06/11/2019  
G/SG/N/11/IDN/1 9, 06/11/2019  
G/SG/N/11/IDN/ 20, 06/11/2019  
 
G/SG/N/13/IDN/2, 08/08/2015  
G/SG/N/13/IDN/1, 28/11/2014  
 
G/SG/N/12/IDN/2, 26/05/2015  
 
G/SG/N/14/IDN/2, 20/01/2017  
Source:  WTO Secretariat.  
 
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  Table A3. 1 MFN applied tariff summary, 2020  
  Number 
of lines  Average 
(%) Range 
(%) Standard 
deviation  Duty free 
(%) 
Total  10,813  10.1 0-150 13.2 12.0 
HS 01 -24 1,725  10.2 0-150 21.4 7.0 
HS 25 -97 9,088  10.1 0-150 11.0 13.0 
By WTO category       
WTO agricultural products  1,369  11.2 0-150 23.9 8.4 
Animals , and products thereof  152 8.2 0-30 9.2 10.5 
Dairy products  45 5.6 5-10 1.6 0.0 
Fruit, vegetables, and plants  356 5.5 0-20 3.6 7.0 
Coffee and tea  43 13.8 5-20 6.6 0.0 
Cereals and preparations  200 13.3 0-150 28.6 5.5 
Oil seeds, fats, oil , and their products  222 4.3 0-10 1.8 13.5 
Sugars and confectionary  31 8.5 5-20 5.6 0.0 
Beverages, spirits and tobacco  122 54.1 5-150 52.2 0.0 
Cotton  5 4.0 0-5 2.0 20.0 
Other agricultural products, n.e.s.  193 4.2 0-5 1.9 16.6 
WTO non -agricultural products  9,444  9.9 0-150 10.8 12.5 
Fish and fishery products  437 6.0 0-20 3.1 3.9 
Minerals and metals  1,554  8.4 0-30 6.0 13.7 
Chemicals and photographic supplies  1,506  6.1 0-150 6.6 11.6 
Wood, pulp, paper and furniture  557 4.9 0-25 4.9 29.4 
Textiles  855 11.9 0-35 6.4 0.8 
Clothing  351 23.5 10-25 2.5 0.0 
Leather, rubber, footwear , and travel 
goods  322 10.5 0-30 7.5 7.5 
Non-electric machinery  1,329  5.4 0-30 3.8 17.0 
Electric machinery  719 6.2 0-20 4.5 23.6 
Transport equipment  1,019  26.6 0-50 20.2 6.1 
Non-agricultural products, n.e.s.  751 7.5 0-25 5.2 11.5 
Petroleum  44 0.5 0-5 1.4 90.9 
By ISIC sector       
ISIC 1 - Agriculture, hunting and fishing  685 4.6 0-20 3.1 16.8 
ISIC 2 - Mining  122 3.7 0-10 2.5 28.7 
ISIC 3 - Manufacturing  10,005  10.6 0-150 13.6 11.5 
Manufacturing , excluding food 
processing  8,883  10.2 0-150 11.1 12.3 
Electrical energy  1 0.0 0 0.0 100.0  
By stage of processing       
First stage of processing  1,132  4.8 0-35 3.6 18.0 
Semi-processed products  2,855  7.1 0-150 6.2 12.5 
Fully processed products  6,826  12.3 0-150 15.7 10.8 
By HS section       
01  Live animals and products  589 5.3 0-20 2.1 5.6 
02  Vegetable products  491 5.3 0-20 3.8 10.6 
03  Fats and oils  175 4.3 0-5 1.7 14.3 
04  Prepared food, beverages and tobacco  470 23.9 0-150 37.5 2.1 
05  Mineral products  218 3.2 0-10 2.6 38.5 
06  Chemicals , and products thereof  1,259  5.0 0-150 6.4 15.4 
07  Plastics, rubber, and articles thereof  565 9.3 0-25 4.8 1.4 
08  Raw  hides and skins, leather, and its 
products  91 8.6 0-20 7.9 34.1 
09  Wood and articles of wood  228 5.1 0-25 7.8 51.3 
10  Pulp of wood, paper and paperboard  300 4.5 0-10 2.1 15.0 
11  Textiles , and textile articles  1,175  15.3 0-35 7.8 0.5 
12  Footwear, headgear, etc.  84 16.4 5-30 9.2 0.0 
13  Articles of stone, plaster, cement  250 9.2 0-30 6.6 0.8 WT/TPR/S/401 • Indonesia  
 
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    Number 
of lines  Average 
(%) Range 
(%) Standard 
deviation  Duty free 
(%) 
14  Precious stones and metals, pearls  86 7.1 0-15 4.9 18.6 
15  Base metals , and articles thereof  1,035  9.4 0-20 5.9 12.5 
16  Machinery, electrical equipment, etc.  2,133  5.6 0-30 4.1 20.6 
17  Transport equipment  1,033  26.3 0-50 20.3 6.9 
18  Precision equipment  326 5.6 0-25 3.1 9.2 
19  Arms and ammunition  30 6.0 5-15 3.0 0.0 
20  Miscellaneous manufactured articles  267 10.7 0-25 5.0 1.9 
21  Works of art, etc.  8 4.4 0-10 3.0 25.0 
Note:  Including AVEs for specific rates, as available (out of 27 specific rates , 24 AVEs are calculated).  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
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  Table A3. 2 Non-ad valorem  (specific) MFN applied tariffs and AVEs, 2020  
HS code  Description  MFN applied rate  AVE  
(%) Bound rate 
(%) 
10061010  Rice in the husk (paddy or rough)  IDR 450/kg  0.7 160.0  
10061090  Rice in the husk (paddy or rough)  IDR 450/kg  0.5 160.0  
10062010  Husked (brown) rice  IDR 450/kg  0.4 160.0  
10062090  Husked (brown) rice  IDR 450/kg  1.2 160.0  
10063030  Semi-milled or wholly milled rice  IDR 450/kg  5.6 160.0  
10063040  Semi-milled or wholly milled rice  IDR 450/kg  .. 160.0  
10063091  Semi-milled or wholly milled rice  IDR 450/kg  3.7 160.0  
10063099  Semi-milled or wholly milled rice  IDR 450/kg  6.8 160.0  
10064010  Broken rice  IDR 450/kg  0.2 160.0  
10064090  Broken rice  IDR 450/kg  7.7 160.0  
11029010  Rice flour  IDR 450/kg  5.0 9.0 
17011200  Beet sugar  IDR 790/kg  15.9 95.0 
17011300  Cane sugar  IDR 550/kg  .. 95.0 
17011400  Cane sugar  IDR 550/kg  10.8 95.0 
17019100  Sugar containing added flavouring 
or colouring matter  IDR 790/kg  .. 95.0 
17019910  Refined sugar  IDR 790/kg  13.6 95.0 
17019990  Other sugar  IDR 790/kg  10.7 95.0 
22030011  Beer made from malt  IDR 14 ,000/litre  107.5  150.0  
22030019  Beer made from malt  IDR 14 ,000/litre  59.7 150.0  
22030091  Beer made from malt  IDR 14 ,000/litre  42.9 150.0  
22030099  Beer made from malt  IDR 14 ,000/litre  54.5 150.0  
37061090  Cinematographic film  IDR 21 ,450/m in 2.1 40.0 
37069090  Cinematographic film  IDR 21 ,450/m in 14.9 40.0 
85232985  Magnetic media  IDR 21 ,450/m in 3.9 40.0 
85232989  Magnetic media  IDR 21 ,450/m in 4.9 40.0 
85234915  Optical media  IDR 21 ,450/m in 5.2 40.0 
85235191  Semiconductor media  IDR 21 ,450/m in 5.0 40.0 
.. Not available.  
Note:  Calculations of AVEs are based on the unit value method. 2018 import data is used , which was  
provided by the authorities (via IDB).  
Source:  WTO Secretariat calculations, based on data provided  by the authorities.  
 
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  Table A3. 3 Tariff lines where the MFN applied rate exceeds the bound rate, 2020  
HS code  Description  MFN applied  Bound  
38180000  Chemical elements , doped for use in electronics  5% 0% 
63090000  Worn clothing , and other worn articles  35% 30% 
70171010  Quartz reactor tubes and holders  5% 0% 
84717091  Automatic data -processing machines , and units thereof  5% 0% 
84717099  5% 0% 
84718090  5% 0% 
84719030  5% 0% 
84861010  Machines and apparatus for the manufacture of boules and 
wafers  5% 0% 
84861020  5% 0% 
84861030  5% 0% 
84861040  5% 0% 
84861050  5% 0% 
84861060  5% 0% 
84861090  5% 0% 
84862011  Machines and apparatus for the manufacture of 
semiconductor devices or electronic integrated circuits  5% 0% 
84862012  5% 0% 
84862019  5% 0% 
84862029  5% 0% 
84862031  5% 0% 
84862032  5% 0% 
84862033  5% 0% 
84862039  5% 0% 
84862049  5% 0% 
84862051  5% 0% 
84862059  5% 0% 
84862091  5% 0% 
84862092  5% 0% 
84862093  5% 0% 
84862094  5% 0% 
84862095  5% 0% 
84862099  5% 0% 
84863010  Machines and apparatus for the manufacture of flat panel 
displays  5% 0% 
84863020  5% 0% 
84863030  5% 0% 
84863090  5% 0% 
84864010  Machines and apparatus specified in Note 9 (C) to this 
HS Chapter  5% 0% 
84864020  5% 0% 
84864030  5% 0% 
84864060  5% 0% 
84864070  5% 0% 
84864090  5% 0% 
84869011  Parts and accessories of machines under HS codes 848610 
to 848640  5% 0% 
84869012  5% 0% 
84869013  5% 0% 
84869014  5% 0% 
84869015  5% 0% 
84869016  5% 0% 
84869017  5% 0% 
84869019  5% 0% 
84869021  5% 0% 
84869022  5% 0% 
84869023  5% 0% 
84869024  5% 0% 
84869025  5% 0% WT/TPR/S/401 • Indonesia  
 
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  HS code  Description  MFN applied  Bound  
84869026  5% 0% 
84869027  5% 0% 
84869028  5% 0% 
84869029  5% 0% 
84869031  5% 0% 
84869032  5% 0% 
84869033  5% 0% 
84869034  5% 0% 
84869035  5% 0% 
84869036  5% 0% 
84869039  5% 0% 
84869041  5% 0% 
84869042  5% 0% 
84869043  5% 0% 
84869049  5% 0% 
85044011  Static converters  5% 0% 
85044019  5% 0% 
85045010  Other inductors  5% 0% 
85319020  Parts of electric sound or visual signalling apparatus under 
HS subheadings 853110 -853180  5% 0% 
85319030  5% 0% 
85319090  5% 0% 
85429000  Parts of electronic integrated circuits  5% 0% 
85489010    5% 0% 
90261010  Instruments and apparatus for measuring or checking the 
flow or level of liquids  5% 0% 
90261020  5% 0% 
90261030  5% 0% 
90261040  5% 0% 
90262010  Instruments and apparatus for measuring or checking 
pressure  5% 0% 
90262020  5% 0% 
90262030  5% 0% 
90262040  5% 0% 
90268010  Other instruments and apparatus for measuring or checking  5% 0% 
90268020  5% 0% 
90269010  Parts and accessories of instruments and apparatus for 
measuring and checking  5% 0% 
90269020  5% 0% 
90272010  Chromatographs and electrophoresis instruments  5% 0% 
90272020  5% 0% 
90273010  Spectrometers, spectrophotometers and spectrographs 
using optical radiation (UV, visible IR)  5% 0% 
90273020  5% 0% 
90275010  Other instruments and apparatus using optical radiation 
(UV, visible IR)  5% 0% 
90275020  5% 0% 
90278010  Other instruments and apparatus for physical or chemical 
analysis  5% 0% 
90278030  5% 0% 
90278040  5% 0% 
90308290  Instruments for measuring or checking semiconductor 
wafers or devices (excl. wafer probers)  5% 0% 
Note:  Latest certified bound schedule provided in the HS2002 nomenclature. Concordance to the MFN 
applied tariff schedule in the HS2017 nomenclature is done to the best possible extent.  
Source:  WTO Secretariat, based on data provided  by the authorities.  
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  Table A3. 4 Products subject to import licensing requirements, 2020  
Product(s)  Rationale and procedures  Legislative basis  
Animals and animal 
products (including 
dairy)  
 Rationale : food security and sovereignty 
(implementation of Law No. 18/2009, which specifies 
that imports of live animals and animal products may 
only take place if domestic production and supply is 
not adequate for public consumption at reasonable 
prices)  
Procedures : the national allocation for the import of 
live animal s and fresh animal products is stipulated 
annually , at ministerial level. Only registered importers 
of animal s and animal products may import these 
goods, with importer allocations stipulated twice per 
year. Imports of carcass meat , offal (and/or their 
derivative products) may only be destined for 
industries, hotels, restaurants and catering services. 
An import permit, granted by the DGFT, is required for 
all imports. Importers must first obtain a letter of 
recommendation from the MoA, and importers of 
processed animal products must obtain a letter of 
recommendation from the BPOM.  MoT Reg. No.  24/2011  
MoT Reg. No. 95/2014  
 
Dairy products  Rationale : increasing Indonesia 's self-sufficiency for 
dairy  
Procedure : requires domestic dairy processors to 
purchase fresh domestic milk (SSDN) from local 
producers, and authorizes an inter -ministerial team to 
determine the exact amount of SSDN each domestic 
processor must purchase annually.  MoA Reg. No. 26/2017 
concernin g Milk Supply 
and Circulation , 
MoA Reg s. No. 30/2018 
and 33/2018  
Fishery products  Not provided  MoT Reg. No. 66/2018  
MoT Reg. No. 03/2019  
MoT Reg. No. 64/2019  
Feed corn  Rationale: Not provided  
Procedure : instructing  the state -owned procurement 
body, the BULOG , prioritizing corn distribution to 
small-holder poultry farmers. Some imports intended 
for starch manufacturing are allowed. The import 
volume is set based on the level of domestic feed 
production. Other feed mi llers are obligated to use 
locally produced feed corn.  MoT Reg. No. 21/2018  
 
Sugar (raw, refined 
and plantation white 
sugar)  Rationale : achieve food security and economic growth , 
and create self -sufficiency and improve the 
competitiveness and income of sugarcane farmers and 
the sugar industry  
Procedures : companies wanting to be recogni zed as 
importer -producers of sugar (IP Sugar) must apply to 
the DGFT , enclosing recommendations from the 
Ministry of Industry. Recognitions granted set out the 
volume and type of sugar to be imported , and the 
destination port. Plantation white sugar can only be 
imported: ( i) outside of the milling season ( including 
one mont h prior, during, and two months after the 
milling season); ( ii) if the price of sugar exceeds IDR 
5,000 /kg; and/or ( iii) local production of sugar is 
insufficient to meet demand. It may be imported by I P 
Sugar or by other companies appointed by the Ministe r 
of Trade. Companies seeking to be registered as I P 
sugar must obtain at least 75% of their cane from 
local cane farmers. Approval for each shipment of 
plantation white sugar must be obtained from the 
DGFT. This, inter alia, sets out the volume of sugar 
and destination port.   MoT Reg. No.  527/2004 
(as amended by  
MoT Reg. No.  19/2008)  
MoT Reg. No. 117/2015  WT/TPR/S/401 • Indonesia  
 
- 240 - 
 
  Product(s)  Rationale and procedures  Legislative basis  
Saccharin  Not provided  MoT Reg. No. 29/2018  
Horticulture (fresh and 
processed)  
 Rationale : food security, national economic stability 
and protection of consumer interests  
Procedures : horticultural products may only be 
imported by importers recognized by the DGFT as 
either : (i) importer -producers of horticultural products 
(IP Horticultural Products) where imports are used as 
raw or auxiliary materials in the production process ; or 
(ii)  IP-Horticultural Products for imports that are 
traded or transferred to a distributor (not directly to 
consumers or retailers). I P Horticultural Products 
require an import approval from the DGFT for each 
shipment, which involves obtaining a recommendation 
from the MoA. Permits are only granted if the MoA 
determines that domestic production is insufficient. 
Registered importers must import 80% of their total 
allocation within a six -month period , and chili and 
shallot imports are subject to a reference price 
system.   MoT Reg. No.  30/2012 
(as amended by  
MoT Reg. No.  60/2012)  
MoA Reg. No. 86/2013  
MoT Reg. No. 4 7/2013  
MoT Reg. No. 40/2015  
MoT Reg. No. 95/2017  
MoT Reg. No. 44/2019  
 
Cloves  
 Rationale : to protect domestic producers from an 
anticipated sharp increase in the import of cloves , and 
a resulting price decline  
Procedure s: affects 2 lines at the HS 9-digit level. 
Cloves may be imported by registered clove importers 
only for use in the production process. Approval is 
required for each shipment. This approval specifies the 
quantity and kind of clove imported , as well as the 
timing of the import.  MoT Reg. No.  528/2002  
MoT Reg. No. 75/2015  
Alcoholic beverages  Rationale : protection of public health, tranquillity, law 
and order, and morals  
Procedures : annual import volumes are determined by 
an inter -ministerial committee. Only registered and 
licensed i mporters, or certain state - and/or regional -
owned companies (BUMN and/or BUMD) may import 
alcohol. To obtain a licen ce, the importer must satisfy 
certain conditions, including having supply contracts 
with at least 20  manufacturing companies from at 
least f ive different countries , and purchase a minimum 
of 3,000 carton s/brand/year. The importer must also 
show letters of intent from distributors in at least six 
provinces of Indonesia , to prove adequate distribution 
capacity. The Regulation further requires sp ecial trade 
business licen ces from sellers and retailers of alcoholic 
beverages. There is a n annual quantitative quota , and 
use of specific ports  is stipulate d. 
Distribution is based on past performance. Indonesia 
applies quantitative limits , with an annua l company -
specific quota set by the MoT, on the importation of 
wines and distilled spirits. Imports into the Customs 
Area (i.e. not including FTZs) may only take place 
through designated seaports or any international 
airport.   MoT Reg. No.  43/2009 
(as ame nded by  
MoT Reg. No.  54/2012)   
MoT Reg No.20/2014 
and its amendments  
Forestry products  Not provided  MoT Reg. No. 97/2015  
MoT Reg. No. 13/2018  
Salt  Rationale : food security, public health , and the welfare 
of salt farmers  
Procedures : salt (for consumption and industrial use) 
may only be imported for use as a raw material in the 
production process by importer -producers approved by 
the DGFT, or by the BUMN (a n SOE that may import 
salt to meet the needs of industries that do not import 
directly). T o obtain such approval, importers must, 
inter alia , provide a plan of their salt requirements for 
the year, as well as a recommendation from the 
Ministry of Industry. Imports must enter Indonesia 
through the port located closest to the factory of the 
impor ter. Importers approved to import consumption 
salt must procure at least 50% of their salt from 
domestic sources or from companies that cooperate MoT Reg. No.  58/2012  
MoT Reg. No. 23/2016  
MoT Reg. No. 52/2017  
MoT Reg. No. 63/2019  WT/TPR/S/401 • Indonesia  
 
- 241 - 
 
  Product(s)  Rationale and procedures  Legislative basis  
with local salt producers. Consumption salt may not be 
imported: ( i) one month prior to, and two months 
after, the Indonesian harvest period (this period may 
be extended or shortened depending on domestic 
production and the national need) ; or (ii) if the 
average price of bulk salt on the truck at collection 
points is below a certain threshold. The total amount 
of salt that may be imported each year is determined 
at ministerial level , taking into  consider ation domestic 
production and consumption. Importers are allocated 
quantities based on the quantity of domestically 
produced salt that they buy. There is no limit on the 
amount of industrial salt that may be imported. 
Importers approved to import industrial sal t require an 
import permit for each shipment, which is based on a 
recommendation from the Ministry of Industry and, 
inter alia , sets out the quantity to be imported and the 
port of destination.  
Pearls  Rationale : generate economic growth , and create a 
fair, conducive, and certain business environment  
Procedures : in order to import pearls (6 tariff lines), 
importers must obtain an import approval from the 
DGFT, which is cont ingent upon obtaining a 
recommendation from the DG Processing and 
Marketing of Fishery Products ( MOMAF ). Import 
approvals are valid for 6 months. Imports must enter 
through Jakarta Intl. or Surabaya Intl. airports.   MoT Reg. No.  02 /2012  
MoT Reg. No. 03/2 018 
Rough diamonds  
 Rationale : implementation of Kimberly Process 
Certification Scheme  
Procedures : rough diamonds may only be imported by 
importers certified by the DGFT. Approval is required 
for each shipment.  MoT Reg. No.  10/2005 
(amended by  
MoT Reg. No.  25/2008)  
 
Cement (and clinker 
cement)  Not provided   MoT Reg. No. 40/2013  
MoT Reg. No. 07/2018  
Oil and gas  
 Rationale : to support domestic production and 
domestic need   
Procedures : oil and gas may only be imported by a 
corporate body (for oil and gas downstream business 
activities) or by a direct user. Import approval is 
required for importers. Applications for import 
approval must be made to the DGFT, inter alia, 
including a recommendation from the Minister of 
Energy and Mineral Resources. This recommendation 
sets out the types and quantities that may be 
imported, and is based on the Minister's evaluation of 
domestic su pply and need.  MoT Reg. No.  42/2009  
 
Lubricants  Not provided  MOIT Decree 
No. 233/2001  
MoT Reg. No. 19/2018  
LPG, and LPG 
containers  
 Rationale : security and implementation of the 
Government's policy on the conversion plan for the use 
of LPG allocated for  home necessities and micro 
businesses  
Procedures : the Government is responsible for 
assigning a company as the importer of LPG and the 3 
kg LPG container s specially used in the context of the 
conversion plan. Imports may only take place if 
domestic produc tion is insufficient. In order to obtain 
import approval from the DGFT, the importer must 
provide a recommendation from the Ministry of Energy 
and Mineral Resources (for imports of LPG) or from the 
Ministry of Industry (for imports of 3 kg LPG 
containers).  These recommendations set out the type, 
number of goods, and the import period.   MoT Reg. No.  01/2008  
 
Plastic  Not provided  MOIT Reg. No. 230/1997  
MoT Reg. No. 36/2013  
MoT Reg. No. 93/2017  
MoT Reg. No. 08/2018  WT/TPR/S/401 • Indonesia  
 
- 242 - 
 
  Product(s)  Rationale and procedures  Legislative basis  
Fertilizer  
 Rationale : to improve the efficient procurement and 
distribution of subsidized fertilizer , to support national 
food supply  
Procedures : if domestic production of fertilizer is 
insufficient, PT Pupuk Sriwidaja (Pereso) may import 
fertilizer. It needs the approval of the DGFT, which is 
based on a recommendation from the Ministries of 
Industry and of Agriculture.  MoT Reg. No.  17/2011  
 
Ethylene  Rationale : waste management, facilitation of the 
procurement of goods, and reasonable protection for 
domestic companies  
Procedures : import of ethylene is only permitted by 
importers who receive recognition as importer -
manufacturers.  MOIT Reg. No.  230/1997  
Industrial explosives  Rationale : public safety and security  
Procedures : explosive materials for industrial purposes 
may only imported by PT. Dahana , with approval from 
the Police Department.  Presidential Decree 
No. 14/1997  
Precursors  Rationale : health and safety, prevention of smuggling 
and illegal circulation , and to ensure precursor supplies 
for legitimate industries a nd purposes  
Procedures : permits are required for the import of 
precursors. Implementing regulations have yet to be 
developed.  GR No. 44/2010  
 
Nitro cellulose  
 Rationale : public safety and security  
Procedures : importers must be approved by the DGFT , 
and approval is required for each shipment.  MOIT Reg. No.  418/2003 
(as amended by  
Reg. No.  662/2003)  
MoT Reg. No. 62/2015  
Sodium triopoly -
phosphate (STPP)  
 Rationale : allows businesses to import STPP when 
domes tic production is insufficient to meet business 
needs  
Procedures : STTP may only be imported by companies 
for use in production processes. An importer must be 
recognized by the DGFT as a producer -importer of 
STPP. This, inter alia, involves obtaining a 
recommendation from the Ministry of Industry. 
Recognition is valid for one year.  MoT Reg. No.  41/2011  
MoT Reg. No. 77/2015  
Ozone -depleting 
substances  Rationale : implementation of the Vienna Convention 
and the Montreal Protocol  
Procedures : ozone -depleting substances (that are not 
prohibited) may be imported , subject to a maximum 
national volume as decided by the Ministry of 
Environmental Affairs. Imports may only be 
undertaken by producer -importers (IP -BPO) 
(i.e. registered importer manufacturers)  or approved 
importers (IT -BPO) (registered trading/distribution 
companies). To be registered as an IP -BPO or an 
IT-BPO, requirements include  the submission of a 
production plan for 1 year , and recommendations from 
the Ministry of Environmental Affairs and the Ministry 
of Industry. Registration is valid for one year. Imports 
must take place through one of 7 designated seaports.   MoT Reg. No.  03/2012  
MoT Reg. No. 83/2015  
MoT Reg. No. 50/2019  
Hazardous materials                        
 Rationale : control of hazardous materials  
Procedures : importers must be approved by the DGFT, 
which involves obtaining recommendations from 
certain other government agencies. Imports may only 
enter Indonesia th rough 5 designated seaports or 
through international airports.  MoT Reg. No.  44/2009 
(as amended by  
MoT Reg. No.  23/2011)  
 
Non-hazardous and 
non-toxic waste  
 Rationale : Not provided  
Procedures : waste may only be imported by 
companies that undertake industrial business activities 
and are recognized importers. To become a recogni zed 
importer, recommendations must be obtained from the 
Ministry of Industry and the Ministry of Environmental 
Affairs. Recognition as an importer contains the 
quanti ty and kind of waste that may be imported. 
Recognition is valid for one year (extendable).  MoT Reg. No.  39/2009  
MoT Reg. No. 31/2016  WT/TPR/S/401 • Indonesia  
 
- 243 - 
 
  Product(s)  Rationale and procedures  Legislative basis  
Optical discs (empty or 
filled) and machines 
and materials used to 
produce them  
 Rationale : protection of IPRs 
Procedure s: goods may only be imported by importers 
recognized by  the DGFT. In order to be recognized , 
the importer must, inter alia , submit recommendations 
from the Ministry of Industry and the MLHR , an import 
and distribution plan, and a copy of the licence from 
the copyright holder for the import of filled optical 
discs. Approval must be obtained for each shipment.   MoT Reg. No.  5/2005  
MoT Reg. No. 76/2015  
Textiles and textile 
products (TPT)  Rationale : fulfil demand for goods not available from 
domestic sources for production processes and 
national consumption, and to maintain  domestic 
production of TPTs 
Procedures : certain TPTs (12 tariff lines at the HS  4-
digit tariff line level) may only be imp orted by 
registered importers as raw materials for their 
production processes. These products may not be 
traded or transferred. Exceptions relate to imports 
destined for bonded  zones  and FTZs,  and imports for 
certain specified purposes.   MoT Reg. No.  15/2008 
MoT Reg. No. 52/2015  
MoT Reg. No. 85/2015  
Textile and batik textile 
products and batik 
motifs  Not provided  MoT Reg. No. 53/2015  
MoT Reg. No. 86/2015  
Food and beverages, 
traditional and herbal 
medicine s, cosmetics, 
clothing, footwear, 
electronic goods , and 
children's toys  Rationale : to address smuggling , and safeguard health 
and safety through the development of an effective 
tracking system  
Procedures : importers must apply to be registered 
with the MoT and, inter alia , must provide an import 
plan for 1 year , covering the goods to be imported 
(quantity, kinds of goods, and tariff heading) , and the 
port of entry. Imports must enter Indonesia through 
one of 5 designated seaports, or through any 
international airport .  MoT Reg. No.  44/2008 
(as amended by  
MoT Reg. No.  56/2008 
(extended by MoT Reg. 
No. 57/2010)  
MoT Reg. No. 87/2015  
Used clothing  Not provided   MoT Reg. No. 51/2015  
 
Iron, steel or alloy and 
derivative products  Not provided  MoT Reg. No. 28/2014  
MoT Reg. No. 113/2015  
MoT Reg. No. 110/2018  
Hand tools  Not provided   MoT Reg. 30/2018  
Cell phones, handheld 
computers, and tablets  Rationale : Not provided  
Procedures : importers are not permitted to sell directly 
to retailers or consumers, and they must use at least 
three distributors to qualify for a MoT importer licen ce. 
Importers are required to obtain an M oI 
recommendation to establish themselves as registered 
importers of such devices; a recommendation is only 
available for local manufacturers, importers in a joint 
venture with a local manufacturer, or importers of 
"specialized items ". 4G device importers must provide 
evidence of contributions to the development of  the 
domestic device industry , or cooperation with domestic 
manufacturing, design, or research firms.  MoT Reg . 82/2012, as 
amended by MoT 
Regulations No. 
38/2013, No. 68/2015, 
No. 41/2016, and MoI 
Regulation 108/2012, in 
effect since January 
2013;  
MoI Reg.  No. 68/2016  
MoT Reg. No. 38/2013  
MoT Reg. No. 48/2014  
MoT Reg. No. 41/2016  
Colour multi -functional 
machines, colour 
photocopying and 
printing machines  Rationale : prevention of illegal reproduction of 
banknotes and security instruments  
Procedures : may only be imported by registered 
importers. Each import requires prior approval from 
the DGFT, which is based on recommendations from 
the MoT (including information  such as quantity, type, 
destination, and loading ports).   MoT Reg. No.  15/20 07 
(as amended by  
MoT Reg. No.  07/2012)  
MoT Reg. No. 102/2015  
MoT Reg. No. 14/2018  
Electr onic cigarettes  Not provided  MoT Reg. No. 86/2017  
 
Refrigeration -based 
goods  Not provided  MoT Reg. No. 47/2015  
Cooling system -based 
goods  Not provided  MoT Reg. No. 84/2015  
MoT Reg. No. 40/2016  
MoT Reg. No. 18/2018  
Tyres  Not provided  MoT Reg. No. 78/2015  
MoT Reg. No. 77/2016  
MoT Reg. No. 06/2018  
MoT Reg. No. 05/2019  WT/TPR/S/401 • Indonesia  
 
- 244 - 
 
  Product(s)  Rationale and procedures  Legislative basis  
Capital goods  Not provided  MoT Reg. No. 17/2018  
MoT Reg. No.  118/2018  
 
Used capital goods  
 Rationale : to increase the capacity, efficiency, and 
productivity of domestic industry, where the 
availability of such goods cannot be fulfilled from 
domestic sources  
Procedures : used capital goods may only be imported 
by co mpanies holding specific types of business 
licence. All imports (except into bonded zones) must 
be approved by the DGFT. In some cases, applications 
for approval require a recommendation from another 
ministry. This Regulation was to expire on 
31 December 2 013. MoT Reg. No.  48/2011  
Complementary goods, 
goods for the purposes 
of market tests, and 
afte- sales services  Not provided  MoT Reg. No. 18/2015  
Source:  WTO document WT/TPR/S/278/Rev.1, 16 July 2013; USTR, 2019 National Trade Estimate Report on 
Foreign Trade Barriers. Viewed at:  
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf ; export.gov,  
Indonesia Country Commercial Guide.  Viewed at: 
https://www.export.gov/apex/article2?id=Indonesia -Prohibited -Restricted -Imports ; US Department 
of Commerce International Trade Administration, Export Solutions. Viewed at: 
https://www.export.gov/article?id=In donesia -Trade -Barriers ; and information provided by the  
authorities.  
 
 
  WT/TPR/S/401 • Indonesia  
 
- 245 - 
 
  Table A3. 5 KPPU competition assessment on industries and policies, 2013 -19 
Year Areas of industry/policy assessment  
2019 Upstream oil and gas industry; nickel industry; business safety training institution (LPK3); chain 
supply (distribution) of pharmaceutical industry; industrial structure of information industry; 
pharmacy industry data pattern; structure and behavio ur in th e digital economy sector; digital 
economy policy review; wheat industry; food flour industry; MSME s in flour industry; chicken 
industry; salt industry; two -wheel vehicle policy; anti -dumping  (AD) import duty on biaxially 
orientated polypropylene; AD import duty on hot -rolled coil; AD import duty on aluminum foil; AD 
import duty on hot -rolled plate; AD import duty on polyester staple; AD import duty on fib re spin 
drawn yarn; temporary safeguard imp ort duties on evaporators; statutory regulations; regional 
regulations in business competition perspective; and business competition jurisprudence.  
2018 Financial Services Authority's policy with regard to setting premium rates of indemnity insurance; 
AD import duty on iron or non -alloy steel from China; AD import duty on tinplate products from 
Republic of Korea, China, and Chinese Taipei; automotive industry; competition barriers in flight 
school industry; tyre import policy; flight tariff policy; economy  class airplane ticket prices during 
Eid al -Fitr; terminal and special terminal management for own interest; relevant market 
determination at multi -sided market in special rented transportation; medicine 
purchase/procurement policy of national health insur ance through e -catalogue by private health 
facilities; SOE synergy; ceramic tile industry; garlic industry policy; refined sugar industry policy; 
Kharisma Archipelago Collective Marketing (KPBN)  business development plan; rattan industry 
policy; direct dis tribution policy; general provisions regarding the distribution of goods; draft 
government regulation regarding film production administrative sanctions; e -tendering policy; 
interim review of the imposition of AD import duties on biaxially orientated polye thylene 
terephthalate products from Thailand.  
2017 Drug price s; automotive components industry; automotive industry; taxi industry; drug 
distribution; labo ur loading and dismantling organizers; biodiesel industry; AD steel ropes and 
cables (SWR) policy fr om China; t yre industry policy; national sugar industry; TKI migrant  workers 
visa fee increase in Malaysia; umrah  (pilgrimage)  travel reference cost; refined sugar trading policy 
through commodity auctions; Jakarta Province Central One Door (PTSP) licensin g policy; safeguards 
policy for H steel profiles and Section I Tariff Post s 72287010 and 72287090; flight fares , year 
2017; Pasar Jaya Raperda policy; Director General of SDPPI RPM Ministry of Communications and 
Information of the Republic of Indonesia rel ated to the procedure for the selection of 2.1 GHz radio 
frequency band users and R frequency bands; BJLAS safeguards extension plan 72106111; and 
government procurement policies.  
2016 "Avtur " industry; non -subsidized retail price of fuel oil industry; natural gas industry; corn industry; 
soybean industry; railway industry; cattle industry; third part y administration health industry; 
government policies in the railroad industry; government poli cies in the steel industry; and 
government policies in the rupiah money market.  
2015 Salt industry; sugar price policy; and impact of the lower boundary policy in the official agent 
industry.  
2014 Energy sector ; education and health ; finance and banking ; infrastructure and food; cement 
industry; bank interest rates to MSMEs in South Sulawesi; four -wheeled motor vehicle financing; 
ground handling service industry; regulatory policies on the use of palm oil solid waste; 
advertisement in dustry; and regional sugar imports.  
2013 Automotive industry; formula milk; health services; toll -road management; banking; state gas 
company; beef; insurance; sugar; rice; mining; and broadcasting law.  
Source:  OECD , Annual Report on Competition Policy D evelopments in Indonesia - 2018. Viewed at: 
https://one.oecd.org/document/DAF/COMP/AR(2019)46/en/pdf ; and information provided by the 
authorities.  
  
  WT/TPR/S/401 • Indonesia  
 
- 246 - Table A4. 1 Total allowable catch, 2017  
Fisheries 
management 
area   
Small 
pelagics  Big 
pelagics  Demersal 
fish Reef 
fish Penaeid 
shrimp  Lobster  Blue 
swimming 
crab 3-spot 
swimming 
crab Squid  Total/ 
average  
571 Potential catch  99,865  64,444  145,495  20,030  59,455  673  12,829  13,614  9,038  425,443  
Allowable catch  79,892  51,556  116,396  16,024  47,564  539  10,263  10,891  7,230  340,355  
Utilization rate  0.83 0.52 0.33 0.34 1.59 1.3 1 0.93 0.62 0.83 
572 Potential catch  527,029  276,755  362,005  40,570  8,023  1,483  9,543  989  14,579  1,240,976  
Allowable catch  421,623  221,404  289,604  32,456  6,418  1,186  7,634  791  11,663  992,779  
Utilization rate  0.5 0.95 0.57 0.33 1.53 0.93 0.18 0.49 0.39 0.65 
573 Potential catch  630,521  586,128  7,902  22,045  7,340  970  526  3,913  8,195  1,267,540  
Allowable catch  504,417  468,902  6,322  17,636  5,872  776  421  3,130  6,556  1,014,032  
Utilization rate  1.5 1.06 0.39 1.09 1.7 0.61 0.28 0.98 1.11 0.97 
711 Potential catch  330,284  185,855  131,070  20,625  62,342  1,421  2,318  9,711  23,499  67,125  
Allowable catch  264,227  148,684  104,856  16,500  49,873  1  1,854  7,769  18,799  612,563  
Utilization rate  1.41 0.93 0.61 1.53 0.53 0.54 1.09 1.18 1.84 1.07 
712 Potential catch  364,663  72,812  657,525  29,951  57,965  989  7,664  23,508  126,554  1,341,631  
Allowable catch  29,173  58,250  526,020  23,961  46,372  791  6,131  18,806  101,244  810,748  
Utilization rate  0.38 0.63 0.83 1.22 1.11 1.36 0.7 0.65 2.02 0.99 
713 Potential catch  208,414  645,058  252,869  19,856  30,404  927  4,347  5,463  10,519  1,177,857  
Allowable catch  166,731  516,046  202,295  15,885  24,324  742  3,477  4,370  8,415  942,285  
Utilization rate  1.23 1.13 0.96 1.27 0.52 1.4 0.83 0.73 1.19 1.03 
714 Potential catch  165,944  304,293  98,010  145,530  3,180  724  1,145  1,669  68,444  788,939  
Allowable catch  132,755  243,435  78,408  116,424  2,544  579  916  1,335  54,755  631,151  
Utilization rate  0.44 0.78 0.58 0.76 0.39 1.73 1.55 0.77 1 0.89 
715 Potential catch  555,982  31,659  325,080  310,866  6,436  846  891  495  10,272  1,242,527  
Allowable catch  444,786  25,327  260,064  248,693  5,149  677  712  396  8,217  994,021  
Utilization rate  0.88 0.97 0.22 0.34 0.78 1.32 1.19 0.98 1.86 0.95 
716 Potential catch  332,635  181,491  36,142  34,440  7,945  894  2,196  294  1,103  597,140  
Allowable catch  266,108  145,193  28,914  27,552  6,356  715  1,756  235  883  477,712  
Utilization rate  0.48 0.63 0.45 1.45 0.5 0.75 0.38 0.5 1.42 0.73 
717 Potential catch  829,188  65,935  131,675  15,016  9,150  1,044  489  58  2,140  1,054,695  
Allowable catch  663,350  52,748  105,340  12,013  7,320  835  391  46  1,712  843,755  
Utilization rate  0.7 1 0.39 0.91 0.46 1.04 0.87 1.21 1.09 0.85  
  WT/TPR/S/401 • Indonesia  
 
- 247 - Fisheries 
management 
area   
Small 
pelagics  Big 
pelagics  Demersal 
fish Reef 
fish Penaeid 
shrimp  Lobster  Blue 
swimming 
crab 3-spot 
swimming 
crab Squid  Total/ 
average  
718 Potential catch  836,973  818,870  876,722  29,485  62,842  1,187  1,498  775  9,212  2,637,564  
Allowable catch  669,579  655,096  701,378  23,588  50,274  950  1,198  620  7,370  2,110,053  
Utilization rate  0.51 0.99 0.67 1.07 0.86 0.97 0.85 0.77 1.28 0.89 
Total potential catch , above  4,881,498  3,233,300  3,024,495  688,414  315,082  11,158  43,446  60,489  283,555  12,541,437  
Total allowable catch , above  3,642,641  2,586,641  2,419,597  550,732  252,066  7,791  34,753  48,389  226,844  9,769,454  
Average utilization rate , above  0.81 0.87 0.55 0.94 0.91 1.09 0.81 0.84 1.26 0.90 
Note:  Potential catch:  tonnes.  
 Allowable catch:  tonnes.  
 Utilization rate:  E <0.5 = moderate, fishing capacity can be increased; 0.5 ≤ E < 1 = fully exploited, fishing capacity can be maintained with strict monitoring; E ≥1 = 
over-exploited, fishing capacity must be reduced.  
Source:  Data provided by the authorities.  
 
  
  WT/TPR/S/401 • Indonesia  
 
- 248 - Table A4. 2 Air transport agreementsa 
Partner  Date Entry into 
force  5tha 7thb Cabotagec Coopd Designatione Withholdingf Pricingg Capacityh Stat ALIi 
Australia  07.02.2013  22.08.2002  Y N N Y M SOEC  DA PD Y 13.0 
Austria  17.04.2003  .. Y N N N S SOEC  DA PD Y 6.0 
Bahrain, Kingdom of  07.06.2007  .. Y N N N S SOEC  DA PD Y 6.0 
Belgium  13.05.1992  13.05.1992  Y N N N M SOEC  DA B1 Y 14.0 
Brunei Darussalam  04.12.1998  04.12.1998  Y N N N S SOEC  DA B1 Y 10.0 
Cambodia  20.09.2006  20.09.2006  Y N N N M SOEC  DA N/A Y 10.0 
Canada  02.09.2015  02.09.2015      S  DA PD   
China  17.04.2015  17.04.2015  N N N N S SOEC  DA PD Y 0.0 
Denmark  22.09.1987  22.09.1987  Y N N N M SOEC  DA B1 Y 14.0 
France  06.04.2004  06.04.2004  Y N N N M SOEC  DA B1 Y 14.0 
Germany  10.06.1994  10.06.1994  Y N N N M SOEC  DA OR Y 12.0 
Hong Kong, China  27.07.2016  27.07.2016  N N N N M PPoB DA PD Y 12.0 
Japan  26.06.2013  26.06.2013  Y N N Y M SOEC  ZP FD Y 26.5 
Kyrgyz Republic  28.02.2002  28.02.2002  Y N N N S SOEC  DA PD Y 6.0 
Lebanon  26.04.1967  .. N N N N M SOEC  DA PD Y 4.0 
Malaysia  21.06.2013  21.06.2013  Y N N N M SOEC  DA B1 Y 14.0 
Myanmar  10.05.1995  10.05.1995  Y N N N S SOEC  DA B1 Y 10.0 
Netherlands  19.11.2014  19.11.2014  Y N N N M SOEC  DA B1 Y 14.0 
New Zealand  12.11.2015  12.11.2015  Y N N N M SOEC  DA PD Y 10.0 
Papua New Guinea  17.06.2013  ..           
Russian Federation  25.03.2011  25.03.2011  Y N N N S SOEC  DA PD N 7.0 
Singapore  26.01.2013  26.01.2013  Y N N N M SOEC  DD PD Y 16.0 
South Africa  13.12.2013  13.12.2013  N N N N M SOEC  DA PD Y 4.0  
  WT/TPR/S/401 • Indonesia  
 
- 249 - Partner  Date Entry into 
force  5tha 7thb Cabotagec Coopd Designatione Withholdingf Pricingg Capacityh Stat ALIi 
Sweden  22.09.1987  22.09.1987  Y N N N M SOEC  DA B1 Y 14.0 
Switzerland  31.03.2016  .. Y N N N S SOEC  DA PD Y 6.0 
United Kingdom  27.11.2016  .. N N N N M SOEC  DD B1 Y 14.0 
United States  26.07.2004  .. Y N N Y M SOEC  DD FD N 28.0 
Uzbekistan  02.08.2018  02.08.2018  N N N N S SOEC  DA PD Y 0.0 
.. Information not available.  
a Indicates if fifth freedom rights (even limited ones) are granted (Y - yes; N – no). If fifth freedom rights are subject to approval by the aeronautical authorities, they are 
coded as not granted.  
b Indicates if seventh freedom rights, even limited ones, are granted. If seventh freedom rights are subject to approval by the aeronautical authorities, th ey are coded as 
not granted.  
c Indicates if cabotage rights, even limited ones , are granted. If cabotage rights are subject to appr oval by the aeronautical authorities, they are coded as not granted.  
d Indicates if there are clauses allowing cooperation between airlines e.g. code -sharing. 
e "S"= Single; "M"=Multiple.  
f "SOEC"=Substantial Ownership and Effective Control.  
g "DA"=Doubl e Approval; "ZP"=Zone Pricing.  
h "PD" Pre -Determination; "B1"= Bermuda 1 i.e. post facto  Determination; "OR"=Country of Origin; "OL": Other Liberal, "FD"=Free Determination.  
i "ALI"=Air Liberalization Index (0=no liberalization at all; 50=full liberalization).  
Note  The term " air transport agreements" is used here to refer to ASAs, MOUs , Exchange of Notes, and other such relevant instruments.  
Source:  WTO Secretariat; and inform ation provided by the authorities . 
 
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