G/TRIMS/Q/IDN/3  
 
21 September 2018  
(18-5878) Page: 1/2 
Committee on Trade -Related Investment Measures  Original: English  
 
INDONESIA – LOCAL CONTENT REQUIR EMENTS FOR PHARMACEUTICAL  
PRODUCTS AND MEDICAL  DEVICES  
QUESTIONS FROM THE U NITED STATES  
The following communication, dated 20 September 2018 , is being circulated at the request of the 
Delegation of the United States . 
 
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Background  
 
In June 2016, the Government of Indonesia (GOI) issued Presidential Instruction No. 6 of 2016 
("PI 6/2016 "), outlining steps the GOI should take to accelerate the development of the domestic 
pharmaceutical and medical devices i ndustry . PI 6/2016 tasked twelve different ministries and 
agencies with formulating policies to promote the competitiveness of the domestic pharmaceutical 
and medical device industries, specifically mandating the Ministry of Health (MOH) to develop an 
action plan to "prioritize the use of domestic pharmaceutical products and medical devices ", and 
mandating the Ministry of Industry (MOI) monitor and evaluate implementation of a local content 
policy for these sectors.  
 
In February 2017, the MOH issued Regula tion No. 17 of 2017: Action Plan for the Pharmaceutical 
and Medical Device Industries (MOH 17/2017) . As directed in PI 6/2016, this regulation lays out an 
action plan to increase the use of domestic products in the pharmaceutical and medical device 
industr ies. The action plan sets a goal of decreasing the market share of imported medical devices 
from 94% to 45% by 2035, and states that both the private sector and government must prioritize 
the use of domestically produced pharmaceuticals and medical devices . 
 
The MOI has this year produced a draft regulation entitled "Provisions and Procedures for Calculation 
of Local Content Levels in Pharmaceutical Products ". As directed in PI 6/2016, the draft regulation 
would establish a detailed local content calculatio n methodology for pharmaceutical products sold in 
Indonesia . The draft regulation defines local content in pharmaceutical product as including 
manufacturing, raw ingredients, research and development, and packaging . Although the minimum 
local content level  is still undefined, MOI officials have said publicly that they are considering a 20% 
minimum local content for pharmaceutical products.1   
 
Question 1  
 
What does PI 6/2016 mean by the phrase "prioritize the use of domestic pharmaceutical products 
and medical devices "?   
 
                                                
1 "Local Content Policy in the Pharmaceutical Industry Continues to be Prepared ", Bisnis Indonesia , 
16 May 2018: 
http://translate.google.com/translate?js=n&sl=auto&tl=d estination_language&u=http://industri.bisnis.com/re
ad/20180516/257/795987/beleid -komponen -lokal-di-industri -farmasi -terus-disiapkan . G/TRIMS/Q/IDN/3  
 
- 2 - 
 
  Question  2 
 
Pursuant to the Ministry of Health Action Plan, MOH 17/2017, what steps is Indonesia taking to 
reduce the market share of imported medical devices? Is there a similar target for reducing the 
market share of imported pharmac eutical products as well?  
 
Question  3 
 
What is the current status of the draft MOI regulation on calculation of local content levels for 
pharma ceutical products? Is the MOI soliciting the views of industry on this regulation? Has a 
decision been made on the issue of a local content threshold (e.g. the 20% that was mentioned in 
the press by MOI officials)?  
 
Question  4 
 
What would be the consequence if a company does not meet the local content requirements of the 
draft regulation? Is there a process for a c ompany to obtain a waiver of the local content 
requirement?  
 
Question  5 
 
Is the MOI planning to propose similar regulations for medical devices? If so, what is the status of 
any such proposal?  
 
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