G/TRIMS/W/128  
 
4 October 2013  
(13-5359)  Page: 1/3  
Committee on Trade-Related Investment Measures  Original: English  
 
INDONESIA – CERTAIN LOCAL CONTEN T PROVISIONS IN THE ENERGY  
SECTOR (MINING, OIL AND GAS) 
FOLLOW-UP QUESTIONS FROM THE UNITED STATES 
The following communication, dated 2 October 2013, is being circulated at the request of the 
Delegation of the United States.  
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  The United States appreciates the responses Indonesia has provides in document G/TRIMS/W/123 
(30 April 2013) in answer to questions posed by  the United States and the European Union in 
document G/TRIMS/W/108 (20 September 2012). We note that this exchange followed responses Indonesia provided in G/TRIMS/W/100 (6 July 2012) in response to questions posed by the 
United States in G/TRIMS/W/88 (22 September 2011), as well as G/TRIMS/W/74 (6 August 2010) 
and G/TRIMS/W/79 (22 December 2010) in answer to questions posed by the United States and 
the European Union in document G/TRIMS/W/70 (9 October 2009).  
 
While we appreciate Indonesia’s responses, the United States continues to have a number of questions about policies applicable to the mining and to the oil and gas sectors.  
Mining 
 
In response to a question about how price consid erations are treated, Indonesia explained that 
there is no limitation with regard to price provid ed that the goods and services meet the criteria 
listed. Indonesia has previously explained that the term “prioritize” “encourages companies to give preference to domestic good services provided that they are available on the Indonesia market 
and meet the quality and post-sales service standard s, 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 chose the product already available on the Indonesian market, 
regardless of price?   
 In response to a question about who determines the availability of local goods and services and 
whether a foreign investor has “prioritized” use of those goods and services, Indonesia explained 
that the “Minister of Energy and Mineral Resources c.q. Director General of Mineral and Coal and the Indonesia Investment Coordinating Board (BKPM)  determine the availability and preference of 
goods and services based on masterlist approval da tabase and evaluation of domestic producers’ 
capacity”.  
 Question 2  
 
What factors are considered in determining availability? 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?   
  G/TRIMS/W/128 
 
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  Question 3 
 How often is the database updated? Is the master list approval database available to companies?  
 
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 list if the foreign product is more suitable based on other factors, such as price?  Question 5  
 
Please explain the consequence if a company is found  not to have “prioritized” products already on 
the domestic market. 
 
In response to a question regarding the minimum percentage for domestic use, Indonesia explained that “investors may allocate 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.   
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”.    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?  
 
In document G/TRIMS/W/100, Indonesia explained th at for the oil and gas sector “prioritization 
shall be carried out if the necessary goods, services, technologies, and engineering and design 
capabilities have been made or are 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 good, 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?   
 In document G/TRIMS/W/100, Indonesia also explained that “[g]oods which are not contained in 
t h e  l i s t  o f  A P D N  B o o k  c a n  b e  i m p o r t e d  t h r o u g h  R I B  ( R e n c a n a  I m p o r t  B a r a n g  –  P l a n  t o  i m p o r t  
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/grade, delivery date , and price requirements in goods and services 
procurement”?  
 G/TRIMS/W/128 
 
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  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 Contracts. We understand that this tightened the criteria by which companies 
are considered national and therefore can benefit from their products being considered as 
qualifying under the local content requirements.  
 Question 10 
 
Please explain changes that were made by the April 2013 SKK Migas decision.    
 
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