G/TRIMS/W/137  
 
13 August 2014  
(14-4696)  Page: 1/4  
Committee on Trade-Related Investment Measures  Original: English  
 
  INDONESIA – CERTAIN LOCAL CONTEN T PROVISIONS IN THE ENERGY  
SECTOR (MINING, OIL AND GAS) 
REPLIES TO FOLLOW-UP QUESTIONS FROM THE UNITED STATES1 
The following communication, dated 11 July 2014, 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/128 dated 
4 October 2013. Indonesia hereby wishes to provide the following clarifications: 
 Mining 
 In response to a question about how price considerations are treated, Indonesia explained that there is no limitation with regard to price provided that the goods and 
services meet the criteria listed. Indonesi a has previously explained that the term 
"prioritize" "encourages companies to give  preference to domestic good services 
provided that they are available on the Indo nesia market and meet the quality and post-
sales service standards, as well as having their sustainability of supply and timely 
distribution warranted".  
 Question 1 
 What does it mean to give preference? Does it mean that as long as the product meets the two criteria that companies must ch ose the product already available on the 
Indonesian market, regardless of price? 
 Reply 
 
Preference is given based on the availability of th e products in domestic market either imported or 
being produced domestically.  
In response to a question about who determ ines the availability of local goods and 
services and whether a foreign investor has "prioritized" use of those goods and 
services, Indonesia explained that the "Minis ter of Energy and Mineral Resources c.q. 
Director General of Mineral and Coal and th e Indonesia Investment Coordinating Board 
(BKPM) determine the availabili ty and preference of goods an d services based on master 
list approval database and evaluation of domestic producers' capacity".  
 
Question 2  
 
What factors are considered in determining av ailability? Also, please further explain how 
"domestic producers' capacity" is evaluated.  Does this mean that goods and services 
that domestic producers could potentially produce are included in the masterlist? 
 
                                               
1 G/TRIMS/W/128. G/TRIMS/W/137 
 
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  Question 3 
 
How often is the database updated? Is the masterlist approval database available to 
companies? 
 
Reply (Questions 2 and 3) 
 
Availability of products and services in domestic market required for production process will be 
determined through an assessment by the Mini stry of Energy and Mineral Resources. The 
assessment will inter alia  include a visit to the producers to check and ensure their production 
capacity, quality and sustainable supply. The assess ment will be considered as a base to approve 
the masterlist, submitted by the companies. 
 The data and information of domestic producers' capacity obtained in the assessment are regularly 
updated i.e. 4 (four) times in a year (every three months).  
 Question 4 
 Also, please describe the process by which it  is determined that a foreign investor has 
"prioritized" use of the goods and services ? Is a company able to select a foreign 
product even if the product appears on the li st if the foreign product is more suitable 
based on other factors, such as price? 
 Reply 
 Please see Indonesia's response in document G/TRIMS/W/100 for question number 1.  
Question 5 
 
Please explain the consequence if a company is  found not to have "prioritized" products 
already on the domestic market. 
 
Reply 
 
The provision is not mandatory in nature and its implementation is provisional to the availability of 
the products.   
In response to a question regarding the minimum percentage for domestic use, 
Indonesia explained that "investors may alloca te less in certain conditions which render 
them unable to meet the minimum domestic needs".  
Question 6 
 
Please describe in further detail the "certain  conditions" in which investors may allocate 
less than the minimum. 
 Reply 
 Certain conditions which may allow investors to allocate less than minimum requirement are, inter 
alia:  
 
1. Force majeure, which shall include wars, civil commotions, rebellions, epidemics, 
earthquakes, floods, fire, and other natural disasters. 
2. Deterring circumstances, inter alia, blockades, labour strikes, and labour disputes.  
3. Carrying capacity of the environment circumstances, which cannot support the load of 
production activities performed in their areas. 
 
Oil and Gas 
 
In response to a question regarding the APDN book, Indonesia explained that it 
"contains a list of goods/services provided by national companies, either local or foreign 
investors, to support oil and gas upstream activities". G/TRIMS/W/137 
 
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Question 7 
 What is the process by which the Ministry of Energy and Mineral Resources determines 
the availability of goods and services  provided by national companies? 
 Reply 
 In order to determine the availability of goods and services, Directorate General of Oil and Gas, 
Ministry of Energy and Mineral Resources, publis hed a Book of Domestic Production Appreciation 
(APDN), resulting from evaluation and audit of national companies possessing capacities to 
produce national goods and/or services. 
 The national companies which produce the products are in close cooperation with the users which 
help in updating the list of goods/services needed by users. 
 In document G/TRIMS/W/100, Indonesia expl ained that for the oil and gas sector 
"prioritization shall be carried out if the necessary goods, services, technologies, and 
engineering and design capab ilities have been made or ar e available domestically and 
satisfy the quality/grade, delivery date, and price requirements in goods and services 
procurement". 
 
Question 8 
 
Does that mean if a company can find a go od, service, technology or engineering or 
design capabilities at a lesser price from a foreign source that they would not need to 
"prioritize" the domestic equivalent? 
 
Reply 
 As long as the products are available in domestic market, the investors are always able to import 
the required products. 
 In document G/TRIMS/W/100, Indonesia al so explained that "[g]oods which are not 
contained in the list of APDN Book can be  imported through RIB (Rencana Import 
Barang – Plan to import goods).  
Question 9 
 
Please explain how a company would import a product that is on the list of the APDN product, but does not satisfy the "quality/gr ade, delivery date, and price requirements 
in goods and services procurement"? 
 Reply 
 In case national companies listed in the APDN failed to satisfy quality/grade, delivery time, and price set in the goods and services procurement, the company may propose an RIB (Rencana 
Impor Barang - Plan to Import Goods) to Director General of Oil and Gas, Ministry of Energy and 
Mineral Resources. The procedure for proposing an RI B is further detailed in the Minister of Energy 
and Mineral Resources Regulation No.037/2006.   
We understand that in April 2013 Special Task Force for Upstream Oil and Gas Business 
Activities (SKK Migas) issued a decision amending PTK-007, the Work Procedure Manual 
for Contractors with Production Sharing Cont racts. We understand that this tightened 
the criteria by which companies are consider ed national and therefore can benefit from 
their products being considered as qualif ying under the local content requirements. 
 G/TRIMS/W/137 
 
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  Question 10 
 
Please explain changes that were made  by the April 2013 SKK Migas decision. 
 
Reply 
  
Changes made by the April 2013 SKK Migas Decision (Surat Keputusan Kepala SKK Migas No. Kep-
0066/SKKO000/2013/S0) are inter alia : status of domestic company, location of procurement 
process, performance bond, registration of goods/ services provider, pre-qualification process, own-
estimated correction process and penalties.   
 
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