G/TRIMS/Q/IDN/7  
6 July 2020 
(20-4636) Page: 1/3 
Committee on Trade -Related Investment Measures  Original:  English  
 
  
INDONESIA ‒ COMPREHENSIVE  REVIEW OF LOCALIZATION MEASURES  
REPLIES TO QUESTION S FROM THE UNITED STATES1 
The following communication, dated 1 July 2 020, is being circulated at the request of the Delegation 
of Indonesia . 
 
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We refer to the United States' questions contained in document G/TRIMS/Q/IDN/6 dated 
5 March  2020. Indonesia wishes to provide the following clarifications:  
Question 1  
Comprehensive Review of Local Content Policies  
1. The United States and other Members have long been concerned about the expansive 
and expanding use of local content requirements by Indonesia across a broad range 
of sectors, including telecommunica tions, mobile technology, energy, agriculture, 
retail, and franchising.  In response to these concerns, Indonesia agreed to undertake 
a "comprehensive" review of its local content policies.  Can you please provide us with 
a report on the status of this revie w, including when you expect it to be concluded?  
Reply : 
At present, the review is still on going and it involves a number of ministries. However, due to 
Covid -19 pandemic we are still unable to predict when it will be concluded.  
Question 2 
Retailing and Franchising – Minister of Trade Regulation 71/2019  
1. Article 18 of Minister of Trade Regulation 71/2019 requires franchise operators to 
"prioritize the use of goods and/or services produced domestically, as long as they 
meet the goods and/or se rvices quality standards in writing by the Franchisor."  
a. What is meant by "prioritize" the use of domestic goods and/or services?  
Reply : 
"Prioritize " the use of domestic goods and/or services in the said provision means the usage of 
domestic goods and/or se rvices is greatly encouraged or is designated as being very important. If 
no domestic goods and/or services can qualify with the standard set by the franchiser, then the 
franchiser is free to use any goods and/or services.  
 
1 G/TRIMS/ Q/IDN/6 . G/TRIMS/Q/IDN/7  
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  b. What is meant by "quality standar ds?" Are companies free to specify the quality 
standards they require inputs to meet?  
Reply : 
"Quality standards " means the standard of quality set by the franchiser.  
c. If not, who determines whether the quality standards can be met by local inputs?  
Reply : 
Please refer to the answer for Question 2.1.b. above.  
d. Is there a process for retailing companies to seek an exemption from the 
requirement to prioritize local inputs?  
Reply : 
The said Minister of Trade Regulation does not contain any provision regarding this  matter. 
Moreover, the original language of the regulation does not imply any obligation to solely use 
domestic goods and/or services.  
e. What are the legal consequences if Indonesia determines that a retailing company 
has not sufficiently "prioritized" domes tic content?  
Reply : 
Referring to the answers for Questions 2.1.a -d above, and Article 18 of Minister of Trade Regulation 
No. 71/2019, the said regulation does not provide any sanction or any legal consequences on this 
matter.  
2. Additionally, other measures that require 80% of retail merchandise to be made up of 
domestic goods (such as MOT Regulation 47/2016) continue to remain in force.  
a. Given the changes to MOT Regulation 71/2019, does Indonesia intend to amend 
or revoke these measures?  
Reply : 
At present, we do not have any intention to make any amendments on the regulations mentioned 
above.  
Question 3 
Telecommunications – KOMINFO Regulations 9/2019 and 10/2019  
1. Article 4 of KOMINFO Regulation 9/2019 states: "Wavelength division multiplexing 
telecommu nications tools and/or devices, as referred to in Article 1, must meet local 
content levels, in accordance with statutory provisions." Article 1 states that 
"wavelength division multiplexing telecommunication tools and/or devices … consist 
of: a. coarse -wavelength division multiplexing telecommunication tools and/or 
devices; and b. dense -wavelength division multiplexing telecommunication tools 
and/or devices."  
a. What are the local content levels to which Article 4 refers?  
Reply : 
The provision of Article 4 ref ers to national laws and regulations concerning component requirement.  G/TRIMS/Q/IDN/7  
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  b. Please provide further  details about the products that fall within the scope of 
these provisions, including HTS numbers?  
Reply : 
The products are classified in HS Code numbers: ex8517.6 2.21 and ex8517.62.42.  
2. Article 4 of KOMINFO Regulation 10/2019 states: "Each internet protocol network 
telecommunications  tool and/or device as referred to in Article 1 paragraph (2), must 
meet local content levels, in accordance with statutory provisions." Article 1 
paragraph  (2) states that "Internet protocol network telecommunication tools and/or 
devices … are telecommuni cation tools and/or devices whose main function is to 
operate on layer 3 or up to layer 7."  
a. What are the local content levels to which Article 4 refers?  
Reply : 
The provision of Article 4 refers to national laws and regulations concerning component requirement.  
b. Please provide further details about the products that fall within the scope of 
these provisions, including HTS numbers?  
Reply : 
The products are classifie d in HS Code numbers: ex8517.62.21 and ex8517.62.42.  
 
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