G/TRIMS/W/161
27 April 2015
(15-2210)  Page: 1/2
Committee on Trade-Related Investment Measures  Original: English
 
INDONESIA – MINIMUM LOCAL PRODUCT REQUIREMENT FOR  
MODERN RETAIL SECTOR 
REPLIES TO QUESTIONS FROM THE UNITED STATES1 
The following communication, dated 15 April 2015, 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/W/139 dated 15 September 2014, Indonesia hereby wishes to provide the following clarifications:  
 
Question 1  
Is our understanding of Regulation 70 co rrect? Can Indonesia provide any further 
clarifications on the operation of this re gulation? For example, can Indonesia provide 
any information about procedures relating to  exemptions from or enforcement of this 
regulation? 
 Reply 
 
In September 2014, the Government enacted  th e Minister of Trade Regulation No. 56/2014 to 
amend the Minister of Trade Regu lation No. 70/2013. According to the new regulation, exemption 
to the 15% requirement applies to Modern Stores who carried out partnership cooperation as 
stipulated in Article 15.3 of the Regulation No. 70/2013. 
 The new regulation also provides exemption, as de scribed in Article 22, for Modern Stores in the 
form of stand alone brand  and/or specialty stores  to meet the 80% requirement, provided the 
products being sold: 
a. Require a uniformity of production and are derive d from single unit of global supply chain; 
b. Are premium products  and have no production base in Indonesia; or 
c. Are originated from certain countries to exclusively meet the needs of its citizens who live in 
Indonesia. 
This exemption shall be given with the authorization of the Minister of Trade. Modern Stores who 
have obtained the exemption must gradually increase the sale of similar goods produced in 
Indonesia as well as submit the implementati on report to the Minister of Trade c.q. 
Director General of Foreign Trade. 
 
Question 2  The regulation was scheduled to come into force in June 2014. Is the regulation now in 
force? We note that investors are provided 2 years to come into compliance with the 
requirement to use local goods. Can Indone sia provide updated information about the 
process for implementing Regulation 70? 
 
                                               
1 G/TRIMS/W/139.   G/TRIMS/W/161 
 
- 2 - 
 
  Reply 
 
The Regulation No.70/2013 as well as the Regulation No.56/2014 is now in force. However, according to Article 41 of the Regulation No.56/2014, Modern Stores are provided 2 (two) years 
period from the entry into force of the regula tion, to come into compliance with the 80% 
requirement. This regulation entered into force in September 2014.   
Similar regulations apply to franchis e establishments. Ministry of Trade 
Regulation 53/2012 requires that "Franchisor s and franchisees must use domestically 
produced goods and/or services for at le ast 80% of their raw materials, business 
equipment and sales". This local sourcing requirement is also reflected in 
Regulations 68/2012 and 7/2013.   
 Question 3 
 
Is our understanding of Regulations 68/2012 and 7/2013 correct? Can Indonesia provide any further clarifications on the op eration of these regulations? For example, 
can Indonesia provide any information about pr ocedures relating to exemptions from or 
enforcement of these regulations?  Reply 
 The Minister of Trade Regulation No.53/2012 co ncerning Franchise provides general rules on 
establishing and operating franchise. It requires all franchisors and franchisees to use domestically 
produced goods and/or services for at least 80% of its raw materials, equipment, and sales.  
 However, there are certain conditions which may allow the Minister of Trade to grant exemption. 
The decision to grant exemption will be made af ter taking into consideration the recommendation 
made by the Assessment Team.  The minimum 80% requirement as well as the exemption is also applied in Regulation No. 68/2012 
which provides more specific rules on Modern Store Franchise and in Regulation No.7/2013 which 
regulates more detail rules on Franchise Partners hip Development for Food and Beverage Services. 
 
The definition of "certain conditions" as well as  the procedure to request the exemption are further 
detailed in the Decision of Director General of Domestic Trade No. 16/PDN/KEP/3/2014.  
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