RESTRICTED  
  
WT/TPR/S/278  
6 March 2013  
(13-1138)  Page: 1/123  
Trade Policy Review Body   
 
TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
INDONESIA  
This report, prepared for the sixth Trade Policy Re view of Indonesia, has been drawn up by the 
WTO Secretariat on its own responsibility.  The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mech anism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Indonesia on its trade policies 
and practices.  Any technical questions arising from this report may be addressed to Mario Kakabadse 
(tel. 022 739 5172) and Katie Waters (tel. 022 739 5067). 
 Document WT/TPR/G/278 contains the policy statement submitted by Indonesia. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trad e Policy Review Body on Indonesia. This report was drafted in 
English. WT/TPR/S/278 • Indonesia 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 7 
Economic Envi ronment ...................................................................................................... 7  
Trade and investment policy framework ............................................................................... 7  
Trade measures an d practices ............................................................................................ 8  
Sectoral policy developments ............................................................................................. 10 
1   ECONOMIC ENVIRONMENT ........................................................................................ 12  
1.1   Introduction ............................................................................................................. 12 
1.2   Recent econom ic developments .................................................................................. 12 
1.2.1   Trends in growth ................................................................................................... 12 
1.2.2   Macroeconomi c policy fr amework ............................................................................. 15 
1.3   Current acco unt developments ................................................................................... 16 
1.4   Foreign dire ct invest ment .......................................................................................... 16 
1.5   Developmen ts in trade .............................................................................................. 16 
1.5.1   Composit ion of trade .............................................................................................. 17 
1.5.2   Direction of trade ................................................................................................... 18 
1.6   Outlook ................................................................................................................... 19 
2   TRADE POLICY REGIME: FR AMEWORK AND OB JECTIVES .......................................... 20  
2.1   Administration of trade and investment policy ............................................................... 20 
2.2   Trade poli cy objectives .............................................................................................. 21 
2.3   Trade agreements  and arrang ements .......................................................................... 21 
2.3.1   WTO pa rticipation .................................................................................................. 21 
2.3.2   Regional and bilateral agreements ............................................................................ 22 
2.3.3   Other agreements .................................................................................................. 23 
2.4   Foreign inve stment regime ........................................................................................ 24 
2.4.1   Investment Law ..................................................................................................... 24 
2.4.2   Negative list .......................................................................................................... 25 
2.5   Framework for business ............................................................................................. 30 
3   TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 32  
3.1   Measures direct ly affectin g imports ............................................................................. 32 
3.1.1   Procedures ........................................................................................................... 32 
3.1.1.1   Registrati on requirements .................................................................................... 32 
3.1.1.2   Port of entry restri ctions ...................................................................................... 32 
3.1.1.3   Pre-shipment inspection ....................................................................................... 32 
3.1.1.4   National  single window ........................................................................................ 33 
3.1.1.5   Risk  management ............................................................................................... 33 
3.1.1.6   Internat ional agreements ..................................................................................... 34 
3.1.2   Customs valuatio n and rules of origin ....................................................................... 34 
3.1.3   Tariffs ............................................................................................................... ... 34 
3.1.3.1   Tari ff bindings .................................................................................................... 34 WT/TPR/S/278 • Indonesia 
 
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  3.1.3.2   Applied MFN tariffs .............................................................................................. 35 
3.1.3.3   Customs duty exemptions .................................................................................... 38 
3.1.3.4   Temporary changes to customs duties .................................................................... 39 
3.1.3.5   Tariff preferences ................................................................................................ 40 
3.1.4   Other charge s affecting imports ............................................................................... 42 
3.1.4.1   VAT ................................................................................................................. . 42 
3.1.4.2   Luxury Tax ......................................................................................................... 43 
3.1.4.3   Excise Tax ......................................................................................................... 44 
3.1.5   Import prohibitions, restrictions, an d licensing ........................................................... 44 
3.1.5.1   Import prohibitions ............................................................................................. 44 
3.1.5.2   Quantitative re strictions on  imports ....................................................................... 44 
3.1.5.3   Import licensing .................................................................................................. 45 
3.1.6   Continge ncy measures ........................................................................................... 45 
3.1.6.1   Anti-dumping and countervailing measures ............................................................. 46 
3.1.6.2   Safeguard measures ............................................................................................ 48 
3.1.7   Standards and technical regulations ......................................................................... 50 
3.1.7.1   Notifications and specific trade concerns ................................................................. 51 
3.1.7.2   Testing, inspec tion, and cert ification ...................................................................... 52 
3.1.7.3   Market surveillance ............................................................................................. 53 
3.1.8   Sanitary and Phytosanitary Measures ........................................................................ 53 
3.1.8.1   Selected SPS-related import requirements and restrictions ........................................ 54 
3.1.8.1.1   Processed food ................................................................................................. 54 
3.1.8.1.2   Live animals, meat and dairy products ................................................................. 54 
3.1.8.1.3   Ho rticultu re ..................................................................................................... 54 
3.2   Measures direct ly affectin g exports ............................................................................. 55 
3.2.1   Export procedures .................................................................................................. 55 
3.2.2   Export prohibitions, restrictions, and licensing ............................................................ 55 
3.2.2.1   Export prohibitions .............................................................................................. 55 
3.2.2.2   Export restri ctions and licens ing ............................................................................ 56 
3.2.2.3   Export taxes ....................................................................................................... 58 
3.2.2.4   Export  assist ance ................................................................................................ 59 
3.2.2.4.1   Free-tr ade zones (FTZs) .................................................................................... 59 
3.2.2.4.2   Bonded zones .................................................................................................. 59 
3.2.2.4.3   Export-orientated production entr epôts (EPTEs) .................................................... 60 
3.2.2.4.4   Special ec onomic zone s (SEZ s) .......................................................................... 60 
3.2.3   Export finance, in surance, and guarantees ................................................................ 60 
3.3   Measures affectin g productions and trade..................................................................... 61 
3.3.1   Governme nt procurement ....................................................................................... 61 
3.3.2   Legislative and regulatory framew ork ....................................................................... 62 
3.3.3   State-trading, state-owne d enterprises, an d privatization ............................................ 64 WT/TPR/S/278 • Indonesia 
 
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  3.3.3.1   State-trading ...................................................................................................... 64 
3.3.3.2   State-owned ente rprises and pr ivatization .............................................................. 64 
3.3.4   Competition policy and price controls ........................................................................ 66 
3.3.4.1   Competition policy .............................................................................................. 66 
3.3.4.2   Pric e contro ls ..................................................................................................... 68 
3.3.5   Intellectual property rights ...................................................................................... 68 
3.3.5.1   WTO and other international agreements and arrangements ...................................... 68 
3.3.5.2   Institutional framework ........................................................................................ 69 
3.3.5.3   Legislative and institutional framework ................................................................... 70 
3.3.5.4   Regulatory de velopments (2007-12) ...................................................................... 70 
3.3.5.5   IP applications .................................................................................................... 70 
3.3.5.6   Enforcement ....................................................................................................... 72 
4   TRADE POLICIES BY SECTOR ..................................................................................... 73  
4.1   Introduction ............................................................................................................. 73 
4.2   Sectoral structure of the economy ............................................................................... 73 
4.3   Infras trucut re ..........................................................................................................  74 
4.4   Agriculture, fish eries, and forest ry .............................................................................. 75 
4.4.1   Agricultural policy .................................................................................................. 75 
4.4.2   Domestic policy instruments .................................................................................... 76 
4.4.3   Trade policy instruments ......................................................................................... 77 
4.4.4   Fisheries ............................................................................................................... 77 
4.4.5   Forestry and forest products .................................................................................... 78 
4.5   Mining .................................................................................................................. .. 79 
4.6   Manuf acturi ng .......................................................................................................... 81 
4.6.1   In centives ............................................................................................................  81 
4.6.2   Trade-related measures .......................................................................................... 82 
4.7   Services ................................................................................................................ .. 83 
4.7.1   WTO and other agreements ..................................................................................... 84 
4.7.2   Financial services ................................................................................................... 85 
4.7.2.1   Banking .............................................................................................................  86 
4.7.2.2   Non-bank financial sector ..................................................................................... 87 
4.7.3   Telecommunications services ................................................................................... 88 
4.7.3.1   Investment in the telecoms industry ...................................................................... 88 
4.7.3.2   Market developments .......................................................................................... 89 
4.7.4   Transport .............................................................................................................  90 
4.7.4.1   Road  transport ................................................................................................... 90 
4.7.4.2   Ra il transp ort ..................................................................................................... 91 
4.7.4.3   Mariti me tran sport .............................................................................................. 91 
4.7.4.4   Air transport ....................................................................................................... 93 
4.7.5   Tourism ................................................................................................................ 93 WT/TPR/S/278 • Indonesia 
 
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  4.7.6   Othe r servic es ....................................................................................................... 94 
4.7.6.1   Legal services ..................................................................................................... 94 
4.7.6.2   Audit and a ccounting se rvices ............................................................................... 94 
4.7.6.3   Construction, arch itecture and engineering ............................................................. 95 
4.7.6.4   Health services ................................................................................................... 95 
4.7.6.5   Educat ion services .............................................................................................. 95 
4.7.6.6   Logistics an d postal services ................................................................................. 95 
4.7.6.7   Audiov isual services ............................................................................................ 95 
REFERENCES .................................................................................................................. 9 6 
5   APPENDIX  TABLES .................................................................................................... 98  
 
CHARTS 
 Chart 1.1 Product composition of merchandise trad e, 2007 an d 2011 ...................................... 17
 
Chart 1.2 Direction of merchandise trade, 2007 and 2011 ...................................................... 18 
Chart 3.1 Distribution of M FN tariff rates,  2006 and 2012 ...................................................... 36 
Chart 3.2 Average applied MFN tariff ra tes, by HS sect ion, 2006 an d 2012 ............................... 37 
Chart 3.3 Composition of Indonesian National Standards, 2007-12 .......................................... 51 
Chart 3.4 SOEs based on sectors, 2011 ............................................................................... 65 
 
TABLES 
 
Table 1.1 Selected macroeco nomic indicato rs, 2007- 12 ......................................................... 13 
Table 1.2 Government tax revenues, 2007-12 ...................................................................... 15 
Table 2.1 Main institutions involved in  trade and investme nt policy-making .............................. 20 
Table 2.2 Indonesia's involvement in WTO di spute settlement:  new cases, 2007 to 
January 2013 ..................................................................................................................  22 
Table 2.3 Investment Negative List  (2010), foreign eq uity ce ilings .......................................... 26 
Table 2.4 Corporate income tax incentives ........................................................................... 30 
Table 3.1 Indonesia's risk management system:  customs cl earance ch annels .......................... 33 
Table 3.2 Indonesia's tariff structure, 2006 and 2012 ............................................................ 35 
Table 3.3 Indonesia's ta riff summary , 2012 ......................................................................... 37 
Table 3.4 Customs du ty waiver s, FY2012 ............................................................................ 39 
Table 3.5 Indonesia's selected preferential tariff averages, 2012 ............................................. 40 
Table 3.6 VAT rates, 2012 ................................................................................................. 42 
Table 3.7 Luxury Tax rates,  2012  ....................................................................................... 43 
Table 3.8 Excise tax rate s on alcoho l, 2012 ......................................................................... 44 
Table 3.9 Anti-dumping investigatio ns, January 2007 to  November 2012 ................................. 47 
Table 3.10 Safeguard activity, 2007-12 ............................................................................... 48 
Table 3.11 SPS measures noti fied by Indo nesia, 2007-12 ...................................................... 53 
Table 3.12 Export prohibitio ns, 2012 .................................................................................. 55 WT/TPR/S/278 • Indonesia 
 
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  Table 3.13 Export restrict ions and lice nsing,  2012 ................................................................ 56 
Table 3.14 Export taxe s, October 2012 ............................................................................... 58 
Table 3.15 Eximbank  services , 2012  ................................................................................... 61 
Table 3.16 Major state-ow ned enterpri ses, 2012 .................................................................. 65 
Table 3.17 KPPU ca se-load, 2007-12  .................................................................................. 67 
Table 3.18 IP applications, 2007-11 .................................................................................... 71 
Table 4.1 Share of main sectors in GDP and empl oyment, 2007-11 ......................................... 73 
Table 4.2 Major laws, regulations and decrees affecting the agro-food sector ............................ 76 
Table 4.3 Key implementing regu lations under th e Mining Law ............................................... 79 
Table 4.4 Trade in  services , 2007- 11 .................................................................................. 83 
Table 4.5 Limitations on foreign pa rticipation in te lecom serv ices ............................................ 89 
Table 4.6 Inbound tourism, 2007-12 ................................................................................... 93 
 
BOXES 
 
Box 4.1 The Timber Legality and Assurance System: SVLK (System Verifikasi Legalitas Kayu) certification ............................................................................................................ 79
 
Box 4.2 Bank ownership ................................................................................................... 87 
 
APPENDIX TABLES 
 
 
Table A1. 1 Foreign direct investment by sector, 2007-12 ...................................................... 98 
Table A1. 2 Foreign direct in vestment by or igin, 2007- 12 ...................................................... 99 
Table A1. 3 Merchandise exports by product group, 2007-11 ................................................ 100  
Table A1. 4 Merchandise imports by product grou p, 2007-1 1 ............................................... 102  
Table A1. 5 Merchandise export s by destinatio n, 2007-11  .................................................... 104  
Table A1. 6 Merchandise impo rts by origin , 2007-11  ........................................................... 105  
 
Table A2. 1 MP3EI priority sectors an d regional econom ic corridors ....................................... 106  
Table A2. 2 Notifications to the WTO,  1 January 2007 to  1 July 2012 ..................................... 107  
Table A2. 3 Free-trade agreements, 2007-12 ..................................................................... 109  
Table A2. 4 Investment  framework,  2012 .......................................................................... 111  
 
Table A3. 1 Non ad-valorem  (specific) MFN applied tariffs and ad valorem  equivalents of 
their specific duty component,  2011 ................................................................................. 112  
Table A3. 2 Products subject to impo rt licensing requ irements, 2012 ..................................... 114  
Table A3. 3 Intellectual property rights protection Indonesia, October 2012 ............................ 120  
 
Table A4. 1 GDP by economic activiti es at constant 2000 prices, 2007- 11 .............................. 121  
Table A4. 2 Selected ASEAN service agreements ................................................................ 122  
 
 WT/TPR/S/278 • Indonesia 
 
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  SUMMARY 
Economic Environment 1. Since its previous review in 2007, Indonesia has made steady economic progress with an 
average annual real GDP growth rate of 5.9%. GDP per capita almost doubled to almost $3,500 
and the poverty incidence declined from a post-crisis peak of 24% to 12.4% in 2011. These and 
other solid fundamentals provided good underlying support in the face of the 2008-09 global recession. Looking ahead, the government's 2011 Master Plan for the Acceleration and Expansion 
of Economic Development 2011-2025 recognizes th at higher and sustainable economic expansion 
requires that the country diversify sources of growth, accelerate infrastructure development and close the development gap between eastern and west ern regions.  Real GDP has been forecast by 
the World Bank to grow by 6.1% in 2012, rising slightly to 6.3% in 2013, assuming continued 
strong consumption and investment growth, supported by a recovery in exports. 
2. Indonesia has taken steps to improve its business environment, which is reflected in 
improvements in its rankings in various global in dicators. In addition to positive assessments of 
Indonesia's macroeconomic climate and FDI regime, some notable reforms include the launch of 
the Indonesia National Single Window to facilitate online processing of trade and licensing activities and the development of initiatives to improve governance. 
3. State-owned enterprises (SOEs) continue to play a key role in Indonesia's economy, 
estimated to account for around 40% of Indone sia's GDP. There has not been any significant 
privatization activity over the review period. However, the government has partially divested itself of some of its ownership shares in various industries, including: cement, telecommunications, 
mining, energy, pharmaceuticals, construction, highways, steel, manufacturing, airlines and banks. 
An SOE monopoly on the importation of alcoholic beverages was terminated in 2010. 
4. Trade remains limited as a share of economic output, with merchandise exports accounting 
for between 21% and 26% of GDP during the re view period and imports for between 15% and 
18.5% of GDP. Indonesia continues to trade more energy-related products (fuels) than any other 
product category on both the import and export sides. A number of measures - including export 
restrictions and taxes on raw resources, tighter import licensing requirements, point of entry 
restrictions on imports, ownership limitations on  banks and certain divestment requirements for 
foreign mining companies - have recently raised concerns about the direction of trade and investment policy-making. In this regard, the authorities consider that domestic industrial policy 
considerations, aimed, inter alia,  at developing local industries and moving up the value chain, 
should be balanced with maintaining an open foreign trade and investment regime in order to ensure that Indonesia's external commitment s continue to be fully respected.    
Trade and investment policy framework   
5. Indonesia provides at least MFN treatment to all WTO Members. In order to improve trade 
and investment policies, Indonesia has enacted new laws relating, inter alia,  to investment, its SPS 
regime, export financing, special economic zones as well as in agriculture, fisheries, shipping, 
mineral and coal mining and tourism. Indonesia is continuing to strengthen its economic ties with countries in the region, both bilaterally and through its participation in ASEAN. Under ASEAN, which is working towards achieving an ASEAN Community by 2015, new goods and investment 
agreements have recently entered into force.   
6. Indonesia's medium-term trade policy objectives are to increase the export of non-oil 
products, strengthen the domestic market and manage the availability of basic products; and to 
strengthen national distribution channels. To this en d, it has identified ten priority products of key 
interest in its trade negotiations. Its economic priorities may also be understood within the context of various development plans, which aim to increase the competitiveness of Indonesia's businesses 
and encourage a shift into higher value-added activities. Central to this is the economic 
development of six regional economic corridors, each with industrial clusters focusing on priority sectors. These corridors would be connected  through an enhanced transport and ICT 
infrastructure, which is currently poor. The realisation of these objectives will be dependent to a 
considerable extent on private investment. WT/TPR/S/278 • Indonesia 
 
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  7. There have been significant legal and institutional changes to Indonesia's foreign investment 
regime. A new foreign investment law was enacted in 2007 which represents an improvement to previous rules by doing away, fo r example, with maximum timeframes for investment in permitted 
sectors and has provisions on national treatment for foreign investors as well as access to 
international arbitration. Investment restrictions, including limits to foreign equity participation, 
are set out in a comprehensive "negative list" which has been revised and liberalised over the review period. Foreign ownership is restricted in a number of sectors which include agriculture, 
forestry and fisheries; energy-related activities; communications and financial services and health 
services. Overall, the 2007 Investment law offers greater transparency in terms of the sectors covered and a reduction in administrative burdens.   
Trade measures and practices  
8. Indonesia has continued to undertake systematic efforts to reduce constraints to trade, 
investment and production and to streamline procedures at the border. Customs reform is prominent on the government's agenda. This includes the 2007 launch of Indonesia's National 
Single Window, which allows for the online processing of customs documentation, applications for 
licences, and duty payments. It is now operational at all of Indonesia's ten main customs entry points, through which an estimated 90% of trade enters and leaves Indonesia. Efforts are also 
being undertaken to improve risk management and facilitate trade by introducing schemes for 
reputable importers. The goal of customs reform is to reduce the time and cost of clearing customs and to limit smuggling and customs fraud. The au thorities have observed a significant drop in 
customs-related appeals as a result of guidelines issued to assist customs officers to determine the 
customs value of imported goods. On the other hand , import procedures tend to be complicated by 
registration requirements, port of entry restrictions for several products, and extensive pre-shipment inspection and import licensing requirements. 
9. The tariff has remained Indonesia's main trade policy instrument, albeit a relatively small 
source of tax revenue. Indonesia's revenues from taxes on international trade constitute around 
4% of total tax revenues, which is considerably lower than the average for developing countries. 
Nearly half of Indonesia's trade taxes are levied on exports, mainly commodities, the main policy 
objectives being price stabilization, development of  downstream processing facilities and reducing 
the rate of depletion in non-renewable resources. 
10. The Ministry of Finance concluded a five-year tariff harmonization programme in 2010, 
which has resulted in the lowering of Indonesia's simple average MFN tariff to 7.8% in 2012, down 
from 9.5% in 2006. The average applied MFN tariff is 7.5% for industrial products and 9.5% for agricultural imports. More than 85% of tariff ra tes are currently in the range of zero to 10%. In 
line with long-standing sectoral support, the highest tariffs apply mainly to motor vehicles.  As has 
been the case in previous reviews, 95% of tari ff lines are bound but at 37.4% the average bound 
rate largely exceeds the average applied rate, creating a degree of unpredictability for the tariff. 
The difference between average applied and bound rates remains much higher for agricultural 
products (at 9.5% and 47.1% respectively). With the exception of a few tariff lines subject to specific rates, virtually all applied tariff rates are ad valorem, a feature that contributes to the transparency of the tariff. Tariff preferences offered by Indonesia through bilateral and ASEAN 
FTAs have resulted in significant tariff reductio ns, ranging from 0.8% to 5.9%, thus widening the 
gap with its MFN tariff rate. In addition to the tariff, Indonesia levies VAT at a flat rate of 10%, luxury taxes which range from 10% to 75% and excise taxes on alcohol and tobacco products; for 
alcoholic beverages with an alcohol content of 5% or more excise tax rates on imports are higher 
than on domestic production.   
11. Around 20% of Indonesia's tariff lines are affected by import licensing requirements, which 
have been expanded since Indonesia's previous review. Many are in place to implement policies 
designed to protect domestic production, such as rice, sugar, salt, certain textiles and textile products, cloves, animals and animal products and horticultural products. Various concerns have been raised by WTO Members with regard to  the complexity, lack of transparency and 
trade-impairing effects of Indonesia's import licensing requirements. 
12. In 2011 Indonesia enacted new rules governing anti-dumping, countervailing and safeguard 
measures, with the main changes intended to reinforce investigation procedures as well as to bring 
the regulation of trade remedies under one piece of legislation. Relevant institutional restructuring 
is in progress. Indonesia has not so far initiated a countervailing investigation. At end-2012, it had WT/TPR/S/278 • Indonesia 
 
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  18 definitive anti-dumping measures in force. Since 2010 Indonesia's use of safeguard actions has 
increased significantly, making it the WTO's second most frequent user of this instrument.  
13. National standards are formulated in accordance with international standards, where 
feasible. About 3% of all standards are mandatory.  Indonesia has a transparent approach to the 
formulation of standards and technical regulations, which allows for the participation of interested 
members of the public. During the review period, new SPS-related legislation has entered into force relating to animal husbandry and animal health and to horticulture. All imported meat and 
dairy products must be accompanied by a halal certificate issued by an approved halal certifying 
body. Regulations to implement horticultural legislation have tightened up import quarantine procedures to prevent the spread of fruit fly, which  imits the ports of entry into Indonesia for imports from countries that do not have recognised food safety systems. 
14. Public procurement in Indonesia is undertaken by numerous entities at the central and 
regional levels of government as well as by state owned enterprises.  Indonesia became an observer to the WTO Government Procurement Agreement (GPA) in 2012. Government 
procurement remains an important instrument of industrial policy. Foreign companies may only bid 
in co-operation with a national company (unless no national company has the ability to provide the goods and services requested) and only on bids that exceed certain thresholds. Procurement rules 
mandate the use of domestic products in government procurement if there are providers offering 
goods and services with a local content exceeding 40% of value. Since 2007, transparency in procurement has been improved with the introd uction of mandatory e-procurement for public 
tenders. New procurement regulations require ea ch procuring entity to implement stronger 
management controls and also set out contracting procedures and timeframes.  However, in spite 
of these reforms, bid-rigging remains a major problem and accounts for around 70% of the Competition Commission's caseload, pointing to the need for a comprehensive procurement law 
and strengthened audit procedures. Indonesia's competition policy framework has not undergone 
any significant change in the period under review. 
15. Support for production and trade has been provided through a variety of incentives for 
domestic and foreign investors. These include: corporate tax relief and exemptions; fuel subsidies; 
customs duty exemptions; as well as various incentives related to free trade zones and special economic zones. Indonesia currently has one FTZ in operation. The Government enacted a Special 
Economic Zones (SEZ) Law in 2009 to encourage the development of SEZs as centres of economic 
activity situated in strategic positions and encomp assing export processing zones, bonded zones, 
industrial zones, technology parks, and suppo rting activities. Two SEZs are currently being 
developed. 
16. Indonesia has export licensing, prohibitions and restrictions in place to ensure protection of 
natural resources and endangered species, provide an adequate domestic supply of essential products, promote higher-value-added downstream industries, and upgrade the quality of export 
products. In addition, the government will prohib it mining companies from exporting mineral ore 
products (currently subject to export licensing and taxes) as of 2014, when they will be required to undertake refining activities onshore. During the review period, new export taxes have been introduced on leather and wood, palm oil, raw cocoa and mineral ore products.  The main objective 
of these measures is to encourage value-added processing within Indonesia. Secondary 
considerations are to secure domestic supply, safeguard the environment and raise revenue.  
17. In 2009 the state-owned Bank Ekspor Indonesi a, which had provided pre-shipment and 
post-shipment financing facilities for exporters was transformed under new legislation into the 
Indonesia Eximbank. It provides exporting fina ncing, guarantees and insurance in areas not 
entered into by commercial financial institutions, with enterprises in the areas of crude palm oil, 
textiles, oil and gas, and mining being among its main clients. Another state-owned enterprise, 
Asuransi Expor Indonesia offers export credit insurance to exporters for all products other than oil and gas.   
18. A net importer of IP-intensive goods, Indonesia has sought to strengthen protection of 
intellectual property rights by improving its legal framework. Indonesia is at an advanced stage in 
drafting amendments to legislation concerning copyright, trademarks, patents and industrial designs.  Indonesia is a proponent of incorpor ating into the TRIPS agreement a requirement for 
the disclosure of origin of genetic resources and/ or associated traditional knowledge. Over the 
review period Indonesia has used compulsory licensing on two occasions to permit Government WT/TPR/S/278 • Indonesia 
 
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  use of pharmaceutical patents in order to produce certain antiviral and antiretroviral drugs: in all 
instances Government use of these patents is until their expiry. IPR infringements, particularly with respect to copyright, remain of concern to Indonesia's trading partners and Indonesia is making efforts to combat IPR violations through inter alia import licensing requirements and 
upgraded monitoring and investigation efforts.   
Sectoral policy developments 19. As a large country with a complex archipelagic structure, Indonesia confronts considerable 
difficulties in establishing the extensive infrastructure of transport, communications and public 
utilities that is essential for its economic and social development. Years of under-investment have left Indonesia's infrastructure network crumbling. Roads are congested, ports are bottlenecked, and many Indonesians do not have access to either potable water or reliable electricity. 
Inadequate infrastructure has also contributed to p oor distribution systems, which have resulted in 
high logistics costs; for example, shipping costs are between an estimated 50% and 80% higher than elsewhere in the region. Efforts to draw up a master plan for port development have been 
hampered by the decentralized structure of govern ment and the competing interests of provincial 
and district governments. 
20. In terms of the overall sectoral structure of th e Indonesian economy, there was little change 
during the review period. Agriculture, forestry , and fishing contributed 14.7% of GDP in 2011 and 
engaged an estimated 35.9% of the employed labour  force, continuing to provide employment to 
more than 40 million persons. Agricultural policy priorities are driven by concerns over food self-sufficiency, food consumption and production dive rsification, value-added and competitiveness, 
and the welfare of farmers. Rice is the most impo rtant food crop and the preferred staple of the 
great majority of Indonesians, who get nearly half their calories from rice, so maintaining stable and low rice prices has been a major policy aim of the Indonesian Government. Key domestic 
policy objectives are pursued through a wide range of input subsidies on fertilizer and seeds, and 
credit is used to support producers. Quantitative import restrictions have been maintained for rice, 
sugar, and salt and introduced for animals and animal products. Import requirements imposed for 
food safety, SPS, and cultural reasons appear to have become more stringent. A variable export 
tax regime has been introduced on crude palm oil and derived products, and more recently on cocoa.  
21. Around 70% of Indonesia’s land area remains covered by forests but widespread illegal 
logging practices have led to serious environmental damage. In the face of illegal logging and the 
smuggling of timber, the government has suppl emented its domestic enforcement efforts by 
signing international agreements with the Europe an Union, Malaysia, Japan, and the PRC to ban 
the import of illegal logs from Indonesia. Indonesia has instituted a number of policy measures to 
discourage or ban log exports in order to encourage processing industries within Indonesia. In 2011 Indonesia banned exports of raw and semi-proce ssed rattan (used for traditional furniture). 
The measure was designed to encourage rattan furniture production but instead seems to be 
pushing rattan prices down. On the other hand, processed wood and wood manufactures (including finished products such as furniture) make an important contribution to Indonesia's exports. 
22. Indonesia continues to be an important supp lier in the global mining industry, with 
significant levels of coal, copper, gold, tin, and nickel production. As a result of the new 2009 
Mining Law, mining firms operating in Indonesia will face new restrictions in exporting unprocessed ore. The legislation will require them to process th e ore in Indonesia before shipping it abroad. The 
policy is intended to support the expansion of value-added activities, including the smelting 
industry. 
23. Indonesia’s strong recent GDP performance has been driven by services and commodities, 
not manufacturing, whose share of GDP has fallen to under 25%. Although manufacturing has 
declined or stagnated in terms of its value a dded, its share of exports and employment, it 
nevertheless remains one of Indonesia's biggest contri butors to GDP. Citing the country's relatively 
low labour costs compared with the rest of Southeast Asia, and the large domestic market, the 
Government has been pursuing investors in sectors such as electronics manufacturing, although 
inadequate infrastructure remains an obstacle. Indonesia offers numerous incentives to attract 
foreign direct investment, including bonded or free-trade zones, and exemptions on tax and import 
duties. To take advantage of these incentives, investors must meet certain conditions stipulated in WT/TPR/S/278 • Indonesia 
 
- 11 - 
 
  the 2007 investment law, such as locating in rura l or border regions, employing a large workforce, 
or undertaking research and development.  
24. Services provided 38.1% of GDP in 2011, a share that has remained relatively stable during 
the review period, and engaged 43.5% of the empl oyed labour force. The engine of economic 
growth shifted from manufacturing to services duri ng the review period, when the services sector 
grew at almost twice the rate of manufacturing and agriculture. Trade in services (imports + 
exports) accounted for 6.3% of GDP in 2011, down from over 12% in 2000. Travel services, which 
largely represent the tourism sector, dominate ex ports, with over 37% of Indonesia's services 
exports. Indonesia has latent comparative advantages  in several services sectors, including skilled 
labour services, technology deployment, and business processing outsourcing.  
25. Indonesia's financial system was resilient during the global financial crisis that commenced 
in 2007. This is in large part attributable to the stability of the banking sector, which remains small 
relative to Asian neighbours like India and China. Total financial sector assets were 66% of GDP in mid-2012, with the ratio of total bank assets to GDP at 50%. Bank Indonesia (BI) is responsible 
for supervising and regulating the banking sector although the current supervisory structure is due 
to change. In 2011, Indonesia established a new financial services authority (Otoritas Jasa Keuangan), which is set to become the sole regulatory agency for all financial services institutions 
(banks, securities companies, insurance companie s, pension funds, and multi-finance companies). 
Its authority will include bank licensing, bank operations, setting policy on banking liquidity, and banking supervision, all of which it will take over  from BI at the end of 2013. The new authority 
will start supervising and regulating banks in January 2014.   
26. The financial system is dominated by banks, accounting for 76% of financial sector assets 
and other players in the financial industry, such as insurance companies, pension funds, finance companies, securities companies and pawn shops,  have small shares within the market. Foreign 
banks (including branches, joint venture banks, and foreign-owned local banks) play an important 
role in the sector, with an increasing share in banking assets. Since 1999, up to 99% of a bank’s 
shares may be held by foreign entities or individuals. Indonesia has revised its WTO financial 
services commitments to 51% foreign ownership in its GATS schedule (previously 49%); new bank 
licences are unbound. A 2012 regulation on commerc ial bank ownership is intended to improve the 
resilience of banks through better governance. The regulation minimizes ownership dominance in a bank as this may have a negative effect on a bank’s operations. The regulation applies to all 
shareholders, Indonesians and foreign. Permitte d ownership of banks up to 99% by foreign 
nationals remains unchanged. 
27. During the review period, Indonesia's telecommunications market continued to expand and 
has settled into a healthy development phase. Fixed-wireless technology has provided a fresh 
basis for expansion in the development of the country's fixed-line network. Wireless has become the dominant component within the fixed-market segment, and by 2011 accounted for an 
estimated 80% of the total fixed-line subscriber  base, with teledensity reaching 17% by early 
2012; it has provided much needed basic telephone services to previously unserved communities.   
The number of mobile subscribers increased from 104 million in 2007 (37% penetration rate) to an estimated 249 million by early 2012, with a penetration rate of over 100%. As penetration passed 
the important 100% milestone, there was still considerable potential for further market growth, 
with consumer interest shifting to the 3G services  offered by the operators.  The rapid growth has 
attracted a number of foreign investors to the country.    
28. The Government’s national transport growth strategy emphasizes enhanced domestic 
connectivity through major infrastructure development and transport sector reform. The specific objectives for the transport sector development include: improving capacity of transport 
infrastructure and reducing backlogs and bottlenec ks in transport services; achieving a 90% stable 
road network: increasing domestic sea transport market share to 100%, and railway freight and passenger market shares by 7% and 23%, resp ectively; and improving the level of transport 
safety (to reduce transport accidents by 50% by 2014). Transport infrastructure and services are 
under national, provincial, district, or city agency control, depending on the level of infrastructure 
or service. Targeting funding to specific purposes is difficult because of the decentralized governance. 
 WT/TPR/S/278 • Indonesia 
 
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  1  ECONOMIC ENVIRONMENT 
1.1  Introduction 1.1.  Historically, Indonesia’s economy has relied on agriculture, including small-scale rice farming, 
large-scale plantations (rubber, palm oil), and fish ing. In recent years, new industries extracting 
fuel resources (oil, natural gas, and coal), and manufacturing products such as textiles and 
computer components have driven economic growth and contributed new job opportunities, increasing average incomes. 
1.2.  Since its previous Review, Indonesia has continued to emerge as a regional player, 
prominent in both the Group of Twenty (G20) and the Association of Southeast Asian Nations 
(ASEAN), and as a developing democracy with a robust record of economic growth.  This has 
required protracted legislative reform to restructure the economy and establish democratic 
institutions, decentralization to establish political stability, and a concerted drive to address 
pressing social needs. In 2004, the country also ha d to deal with one of the worst natural disasters 
in recent history, the earthquake and tsunami in Aceh and Nias, in which more than 200,000 
people perished.  
1.3.  From 2007 to 2011, Indonesia’s gross domest ic product (GDP) grew by an average of 5.9% 
per year, GDP per capita almost doubled from US$1,859 to US$3,495, and the poverty incidence 
declined from a post-crisis peak of 24% to 12.4%  in 2011. However, over 50% of the population 
still lives on less than US$2 a day (purchasing power parity)
1, and while most Millennium 
Development Goals (MDGs) are on course to be achieved on time, progress is lagging for important targets such as maternal mortality, HIV and AIDS incidence, and environmental 
management.   
1.4.   The 2011 Master Plan for the Accelera tion and Expansion of Economic Development 
2011-2025 recognizes that higher and sustainabl e economic expansion requires the country to 
diversify sources of growth, accelerate infrastructure development, close the development gap 
between eastern and western regions, improve the quality of human resources, manage rapid urbanization, as well as cope with climate change. 
1.2  Recent economic developments 
1.2.1  Trends in growth 1.5.  During the review period, Indonesia aver aged 5.9% annual real GDP growth, maintained a 
(declining) surplus in its current account, guarded a strong fiscal position, reduced external debt 
as a share of GDP, and nearly doubled internatio nal reserves (Table 1.1).  Inflation averaged 
around 6% since 2007, having fallen from the double-digit rates of 2005–2006.  These solid fundamentals provided good underlying support in the face of the global recession.
2  
1.6.  Indonesia partly avoided the effects of the 2008–09 global recession due to its large domestic 
market and its relatively low dependence on external trade. It managed to recover from the global slow-down with GDP expanding by  4.6% in 2009, about 1.3% belo w the average annual growth of 
the previous five years. The National Development Planning Agency’s (BAPPENAS) annual planning 
document sets targets for 2013 of 5.8%–6.1% for GDP growth, with inflation of 4.5%–5.5% and unemployment at 5%–6%, and poverty reduction from 15% to 10%. According to the Asian Development Bank, Indonesia's economy grew by 6.3% year-on-year in the first half of 2012 with 
stronger domestic demand largely offsetting external weaknesses as exports declined. 
                                               
1 Income inequality, as measured by the Gini coe fficient, increased from 0.32 in 2004 to 0.37 in 2009. 
2 Reflecting the country's good economic performance, two major ra ting agencies raised Indonesia 
sovereign ratings to investment grade: Fitch to BBB minus in Dece mber 2011 and Moody's to Baa3 in 
January 2012. See in ADB (2012), p. 195.   WT/TPR/S/278 • Indonesia 
 
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  Table 1.1 Selected macroeconomic indicators, 2007-12 
  2007  2008  2009  2010 2011 2012a 
Real GDP (Rp trillion, 2000 
prices) 1,964.3  2,082.5  2,178.9  2,313.8  2,463.2  .. 
Real GDP (US$ billion, 2000 
prices) 219.5  206.9  193.3  221.0  229.2  .. 
Current GDP (Rp trillion) 3,950.9  4,948.7  5,606.2  6,436.3  7,427.1  .. 
Current GDP (US$ billion) 432.2  510.2  539.6  708.0  846.8  906 
GDP per capita at current 
market price (US$) 1,859.3  2,171.6  2,272.7  2,951.7  3,494.6  .. 
       
National accounts (% change based on constant figures, unless otherwise indicated) 
Real GDP (2000 prices) 6.3  6.0  4.6  6.2  6.5  6.0 
   Consumption 4.9  5.9  6.2  4.1  4.5  .. 
        Private consumption 
        expenditure 5.0  5.3  4.9  4.7  4.7  4.9 
        Government 
        Consumption         expenditure 3.9 
 10.4  15.7  0.3  3.2  .. 
   Gross fixed capital 
   formation 9.3  11.9  3.3  8.5  8.8  .. 
   Exports of goods and 
    services 8.5  9.5  -9.7  15.3  13.6  .. 
   Imports of goods and 
   services 9.1  10.0  -15.0  17.3  13.3  .. 
          XGS/GDP (%,  at 
          current 
          market price) 29.4  29.8  24.2  24.6  26.3  .. 
          MGS/GDP (%, at 
          current 
          market price) 25.4  28.8  21.4  22.9  24.9  .. 
       
Unemployment rate (%) 9.1 8.1 7.4 7.1 6.5 .. 
Prices and interest rates (%, unless otherwise indicated) 
Inflation (CPI, %age change) 6.4  9.8  4.8  5.1  5.4  4.4 
Time depositb, rupiah 7.7  10.3  7.9  7.2  7.2  .. 
Time depositb, foreign 
currency 4.3  4.2  3.0  2.0  2.1  .. 
Exchange rate       
Rupiah/US$ (annual average) 9,141.0  9,699.0  10,389.9  9,090.4  8,770.4    
-  
Real effective exchange rate 
(%age change)c -6.2 -6.4 13.5 7.3 0.6 ..  
 (% of current GDP, unless otherwise indicated) 
Fiscal policy        
Central government revenue 
(excluding grants) 17.9  19.8  15.1  15.8  16.1  16.3  
   Tax revenue 12.4  13.3  11.1  10.7  10.8   ..  
Central government 
expenditure 19.1  19.9  16.7  16.4  17.3  18.1  
Overall balance  -1.2  -0.1  -1.6  -0.6  -1.1  -1.8  
Primary balance 0.8  1.7  0.1  0.8  0.1  -0.5  
Central government debt 36.9  33.2  28.6  26.9  24.5  23.5  
   Domestic debt   ..   ..   ..   ..   ..   ..  
Saving and investment       
Gross national saving 27.3 27.8 33.0 33.3 33.0 32.3 
Gross domestic investment 24.9  27.8 31.0 32.6 32.8 34.2  
Savings-investment gap 2.4 0.0 2.0 0.7 0.2 -1.9 
External sector       WT/TPR/S/278 • Indonesia 
 
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    2007  2008  2009  2010 2011 2012a 
Current account balance  2.4  0.0  2.0  0.7  0.2  .. 
Net merchandise trade  8.0  4.8  6.0  4.4  4.1  .. 
   Merchandise exports 25.8  25.9  21.0  21.2  22.6  .. 
   Merchandise imports 17.8  21.1  15.0  16.7  18.5  .. 
Services balance -3.1  -2.9  -2.1  -1.4  -1.3  .. 
    Services exports 2.9  3.0  2.5  2.4  2.5  .. 
    Services imports 6.1  5.9  4.5  3.8  3.8  .. 
Capital account 0.1  0.1  0.0  0.0  0.0  .. 
Financial account 0.7  -0.4  0.9  3.8  1.7  .. 
     Direct investment 0.5  0.7  0.5  1.6  1.2  .. 
Balance of Payments 2.9  -0.4  2.3  4.3  1.4  .. 
Terms of trade (%age 
change) 4.1 3.2 -5.8  3.8  2.3  .. 
Merchandise exports (%age 
change)c 13.3  18.8  -14.3  32.4  27.8  .. 
Merchandise imports (%age 
change)c 16.2  40.2  -24.8  46.4  32.3  .. 
Service exports (%age 
change)c 8.4  22.6  -14.1  27.2  26.2  .. 
Service imports (%age 
change)c 9.1  14.7  -19.0  10.7  20.9  .. 
International reserves, excl. 
gold (US$ billion) 56.9  51.6  66.1  96.2  110.1  107.8  
    in months of imports of 
    goods and services 4.7  5.7  5.2  5.9  6.7  5.9 
Total external debt (US$ 
billion; end-period) 133.6  155.0  172.8  202.4  225.4  .. 
Debt service ratiod 19.4  18.1  23.2  21.7  22.5  .. 
..  Not available. 
a  Estimates. 
b  Six-month time deposit at commercial banks, weighted average at end of period. 
c  Growth rate based on US$ dollars. d   As a percentage of exports of goods and receipts from services and income. 
Source:  IMF (2012), International Financial Statistics ; IMF (2011), Country  Report  
  Nos. 11/309 and 12/277 ; and Bank Indonesia online information.  Viewed at:   
  http//www.bi.go.id/web/en [19/09/2012]. 
1.7.  Inflation gained momentum (from 2.9% in December 2009 to 6.7% in February 2011) due to 
the gradual rise in commodity prices as well as th e accelerating economy.  According to the ADB, 
inflation then slowed to 3.8% year-on-year at the end of 2011, below the 4%-6% target of Bank Indonesia, and has remained contained in 2012. According to the authorities, headline inflation 
continued to move down, reaching a 2-year low of  3.6% in February 2012.  With good harvests 
and the postponement of price rises for subsidized  fuel as oil prices declined globally, average 
inflation in 2012 may be the lowest in a decade.   
1.8.  The rate of unemployment declined during the review period, reaching an estimated 6.3% of 
the labour force by February 2012. The level of  underemployment (those working fewer than 
35 hours a week) is around 13.2% of the total empl oyed according to the Indonesian authorities.  
Furthermore, the proportion of those who are employed in the informal sector, where wages and 
job security are low, has also decreased to 63% in 2012 from almost 70% in 2007. Overall, the 
pace of economic growth has been generati ng employment opportunities to absorb the 
unemployed, underemployed and new entrants to the labour market, as well as to reduce the 
proportion of workers in the informal sector. However, substantial employment growth is still 
necessary to provide jobs with better wages and security.    
1.9.  Lacklustre growth in the tradeable sector, particularly labour-intensive manufacturing, is 
largely caused by weaknesses in the business environment (where problems include legal and 
regulatory uncertainty and governance issues) and deficient infrastructure such as roads, ports, WT/TPR/S/278 • Indonesia 
 
- 15 - 
 
  and electricity supply.  While progress has been made, there exists scope to further improve the 
business environment. Indonesia has improved its position in the World Economic Forum’s Global 
Competitiveness index (CGI). At 46th, its current rank is supported by its strong macroeconomic environment (23rd, up from 89th in 2007), but in frastructure, institutions, and security remain 
weak.
3 
1.2.2  Macroeconomic policy framework 
1.10.  Major macroeconomic policy initiatives during the past ten years have included legally 
enshrining fiscal discipline as well as the adoption of inflation targeting and a more flexible 
exchange rate policy. As a result, growth averaged 5.5% during 2002 −11, inflation declined 
sharply, from more than 58% in 1998 to around 5% in 2010, and public debt has fallen from 
around 76% of GDP in 2001 to under 25%.  The strong policy framework ensured that Indonesia 
came out of the 2008 global financial crisis in better shape than its Asian peers. Indonesia's 6.5% 
economic growth rate in 2011 was the highest in 14 years and international reserves had nearly doubled from their level at the beginning of the review period.  
1.11.  Since the 2003 Fiscal Law, public deficits have been capped at 3% of GDP and public debt at 
60%. The gross public debt burden has been reduce d significantly, to an estimated 24.3% of GDP 
from a peak of 89% in 2000.  Indonesia faces formidable financing challenges as it expands the 
coverage of its social security system and develops its infrastructure. The tax-to-GDP ratio of 
11.8%, reflecting widespread informality and tax evasion, is low by international standards and seems insufficient to finance programmes in priori ty areas. Energy subsidies amounted to roughly 
28.9% of central government spending in 2011
4; the fiscal resources put into them would be 
better utilized elsewhere.  
1.12.  Indonesia's revenues from taxes on internat ional trade constitute around 4% of total tax 
revenues, which is considerably lower than in the average developing economy where the share is 
around 15% (Table 1.2). The rates of import duties have fallen in Indonesia, conferring benefits on 
consumers as well as on firms relying on imported intermediate inputs.    
Table 1.2 Government tax revenues, 2007-12 
(Billion Rp and %) 
      2007  2008  2009  2010  2011a 2012a 
Tax revenues (billion Rp) 490,988  658,701  619,922  723,307  878,685  1,019,333  
  (% of GDP) 12.4  13.3  11.1  11.2  11.8   ..  
   (% of total) 
 International trade taxes 4.3  5.5  3.0  4.0  5.3  4.2  
  Import duties 3.4  3.5  2.9  2.8  2.4  2.3  
  Export tax 0.9  2.1  0.1  1.2  2.9  1.9  
         
 Domestic taxes 95.7  94.5  97.0  96.0  94.7  95.8  
  Income tax 48.6  49.7  51.2  49.4  49.2  50.3  
  Value added tax 31.5  31.8  31.1  31.9  34.0  34.4  
  Land and building tax 4.8  3.8  3.9  4.0  3.3  3.5  
  Duties on land and 
building transfers 1.2  0.8  1.0  1.1  0.0  0.0  
  Exercise duties 9.1  7.8  9.1  9.1  7.7  7.1  
  Others domestic taxes 0.6  0.5  0.5  0.5  0.5  0.6  
a  Estimates. 
Source: Statistics Indonesia online informatio n.  Viewed at:  http://www.bps.go.id/eng  
  [04/10/12]. 
                                               
3 These weaknesses are echoed in the World Bank’s Doing Business survey, where Indonesia’s overall 
ranking was less favourable. Constraints identified there included access to electricity, resolving insolvency, and contract enforcem ent. Concerns about the business environment are also prominent in the mining 
community, with mineral extraction co mpanies according Indonesia a relatively weak international ranking, as 
regards the stability and predictability of the tax regime.   
4 In the face of strong political resistance, government proposals in 2011 to reduce fossil-fuel and 
electricity subsidies were postponed to 2013. Although the Constitution prevents the complete liberalization of domestic fuel prices, it appears feasible to reduce energy subsidies.  WT/TPR/S/278 • Indonesia 
 
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  1.13.  Nearly half of Indonesia's trade taxes are levied on exports.  The Government is making 
further use of export taxes, as demonstrated by the decision to levy a 20% tax on selected mineral ore exports and the introduction of export  taxes on crude palm oil and cocoa. The policy 
objectives regarding export taxes on commodities include price stabilization, fostering the 
development of downstream processing faciliti es, and reducing the rate of depletion of 
non-renewable resources in mining.  According to the authorities, export taxes on primary commodities can be used to reduce the domestic price of primary products in order to guarantee 
supply of intermediate inputs at below world market prices for domestic processing industries. In 
this way, export taxes provide an incentive for the development of domestic manufacturing or 
processing industries with higher value-added exports.  
1.3  Current account developments 
1.14.  Indonesia’s current account has generally remained in surplus since 1998, with export 
earnings more than offsetting imports and income payments to foreign investors. This reflects an 
increase in savings relative to investment after the Asian financial crisis, as a result of more 
conservative investment practices and lending regulations. The persistent current account surplus has helped to provide a source of external financing in recent years and has contributed to the 
four-fold increase in foreign reserves over the past decade.  However, since the 2008 global 
financial crisis, strong domestic conditions combined with  on-going weakness in the global economy have resulted in a narrowing of the current account surplus, as imports and income 
outflows related to increasing FDI (particularly in the mining and minerals sector) have grown 
faster than exports earnings.   
1.15.  In 2012, a shrinking trade surplus, and deficits in income and services together produced a 
current account deficit equivalent to 2.3% of GDP in the first six months. The current account is projected to be in deficit for the year as a whole,  reflecting lower trade surplus caused by weaker 
global demand and declining commodity prices, combined with continued strong demand for 
imports of capital and intermediate goods associated  with the rise in FDI inflows. Thus, like other 
commodity exporters, Indonesia clearly felt the effects of the weaker global economy in 2012 through the trade channel.  
1.16.  Non-oil commodity prices dropped sizeably in 2011-12, including the prices of some of 
Indonesia’s key commodity exports such as coal, rubber, palm oil, and copper. Falling international commodity prices and weaker volumes, due to  the weaker global economic environment, 
contributed to a sharp slowdown in export grow th in 2012.  On the other hand, import growth 
remained strong with a pick-up in intermediate goods, particularly machinery, electrical appliances 
and transport goods. These trends pushed the non-oil and gas goods balance into a deficit for only the second time in ten years while oil and gas trade remained broadly in balance. As a result, the 
trade surplus narrowed and moved into a deficit in April and May 2012. This trend contributed to 
the current account balance turning into deficit, which is consistent with stronger domestic economic performance relative to the external environment. This deterioration has weighted on the rupiah, which depreciated by around 6% on a trade-weighted basis in 2012.  
1.4  Foreign direct investment  1.17.  Following a sharp decline in foreign direct  investment (FDI), from US$14.8 billion in 2008 to 
US$10.4 billion in 2009, FDI rose to US$16.2 billion in 2010 and to an estimated US$19.5 billion in 
2011 and is expected to achieve similar levels in 2012 (Tables A1.1 and A1.2). Thanks to growing 
sectors such as mining, manufacturing, transport and telecommunications, Indonesia has 
continued to attract relatively high levels of foreign direct investment.  Indonesia will benefit if it 
continues to diversify its FDI inflows which have been dominated by the extractive industries and palm oil. The biggest investors come from Singapore, United States, and Japan. The growth in FDI 
since 2009 is partly due to the attractiveness to investors of the relatively rapid growth and long-
term potential of Indonesia's large domestic consumer base, its vast natural resources, and its relatively low cost production base.    
1.5  Developments in trade 
1.18.  Trade remains limited as a share of economic output. Merchandise exports accounted for 
between 21% and 26% of GDP during the review period, whereas imports accounted for between 
15% and 18.5% of GDP.  Indonesia trades more energy-related products (fuels) than any other 
product category, on both the export and import side.  WT/TPR/S/278 • Indonesia 
 
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  1.5.1  Composition of trade 
1.19.  In 2011, fuels accounted for 33.9% of ex ports, up from 25.6% in 2007 (Chart 1.1 and 
Tables A1.3 and A1.4). Coal, in particular, ha s gained prominence and Indonesia has surpassed 
Australia as the top global exporter of coal (as we ll as Thailand as the top exporter of rubber, and 
Malaysia as the top exporter of palm oil). Despite their diminished importance since the 1980s, 
petroleum and natural gas remain important export  products, with their contribution rising in 
tandem with strong energy prices and increases in production as new investments in the 
hydrocarbons sector yield results.  The bulk of  Indonesia’s remaining exports consist of primary 
and semi-processed agricultural and mineral commodities. The most important of these have traditionally been rubber, coffee, tin, shrimps and palm oil. Indonesia is currently the largest producer and exporter of palm oil, having about half of the global export market. In contrast, 
Indonesia’s mineral exports (copper, tin, and baux ite) only account for about 4–5% of total export 
value. Exports of logs, which accounted for 7.6% of total exports in 1980, declined into virtual 
insignificance in subsequent years and were repl aced by exports of processed wood (including 
plywood), which declined gradually but steadily in  subsequent years. The share of manufactured 
exports declined markedly during the review period, reflecting increasing competition in labour-intensive sectors.  
Chart 1.1 Product composition of merchandise trade, 2007 and 2011 
2007 2011
(a)    Exports (f.o.b.)
Other manufactures
11.1
Manufactures
42.3
Total:   US$114.1 billio n Total:  US $203.5 b illion  
(b)    Imports (c.i.f.)
Iron & steel
5.9Chemicals
13.5Transport equipment  
8.3
Manufactures
52.5Non-electrical 
machinery
10.6Electrical machines  
6.7Agricultural 
raw materials
3.5
Other semi-
manuf.
3.9
Other mining
3.8Fuels
29.5Agricultural raw 
materials
3.2Other
manufactures
6.2
Electrical machines
11.1Other mining
7.8
Other semi-manuf.   
4.2Transport 
equipment  
8.7
Chemicals
12.5Manufacture
59.7
Non-electrical 
machinery
11.8
Total:   US$74.5 billion T otal:   US $177.4 b illion Per cent
Manufactures
33.6
Mining
41.6Electrical machines
6.4Agricultural raw 
materials
7.5
Electrical 
machines
7.7Food
16.2
Fuels
25.6Other
1.1
Other semi-
manufactures  
6.8Agriculture
23.7
Other mining
10.7
Other  
manufactures
3.6
Mining
26.6Other manufactures
8.4
Textiles & clothing
6.3
Other semi-
manufactures
9.4Agricultural raw 
materials
6.2Food
14.6
Food
9.4Food
10.6
Mining
33.3
Iron & steel
5.3Textiles & clothing
8.5
Fuels
33.9Chemicals  
5.6Chemicals  
5.7Other 
0.6
Other mining
3.5Fuels
23.0Agric.
12.6Agriculture
14.1Mining
36.3Agriculture
20.9
Other
1.1
 
Source: UNSD Comtrade database (SITC Rev.3). WT/TPR/S/278 • Indonesia 
 
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  1.20.  Manufactured products accounted for almost 60% of imports in 2011, up from 52.5% in 
2007. Significant import sectors include chemicals, non-electrical machinery, office machines and 
telecommunications equipment, and automotive products. Indonesia imports products that serve as inputs to industry (e.g., cotton for textile prod uction), as well as food and animal-feed products. 
A relatively high share of Indonesia’s import value is in commodities, such as cotton, wheat, 
soybeans, soymeal, corn, and rice, which are of ten shipped in bulk and often require further 
processing in Indonesia.  In 2011, fuels accounted for 23% of Indonesia's overall imports, down from almost 30% at the beginning of the review period. 
1.5.2  Direction of trade  
1.21.  China has emerged as a major trading partner, accounting in 2011 for over 11% of 
Indonesia's exports and nearly 15% of imports (Chart 1.2 and Tables A1.5 and A1.6). Trade 
between China and Indonesia is dominated by th e commodity sector. This development has been 
accelerating in the past decade, with China’s rapi d increase in commodity demand affecting global 
prices and import volumes. Given the dominant role of commodities in Indonesia’s export basket, 
lower commodity prices and demand would have an substantial impact on Indonesia’s export earnings.  
Chart 1.2 Direction of merchandise trade, 2007 and 2011 
2007 2011
(a)    Exports (f.o.b.)
Other Asia  
9.2
Asia
68.7
Total:   US$114. 1 billion Total:  US$203.5 billion
(b)    Imports (c.i.f.)
Other Asia  
10.0EU27
10.3United States
6.4 EU27
7.0
China
14.8Thailand
5.9
Singapore  
14.6United States
6.1
Total:   US$74.5 billio n Total:   US$177.4 billionPer cent
Asia
72.6Other Asia  
6.8
Middle East
2.5
Japan
20.7
Other 
Middle East
2.7
Korea, Rep. of
7.3 Korea, Rep. of  
4.3United States
10.2
Singapore
9.2
Other Asia  
9.5United States
8.1
Japan
11.0EU27
10.1
Middle East
3.1
Asia
71.8Asia
66.2
Japan
8.8Australia
4.0EU27
11.8
Malaysia
4.5
Japan
16.6Malaysia
5.4
Malaysia  
5.9Chinese Taipei
3.2
Singapore 
13.2China
8.5
Korea, Rep. of
8.1Korea, Rep. of   
6.6
Other
7.0
Africa
3.1Australia
2.9
Other Middle East
2.8India  6.6
Thailand  2.7Australia  3.0
China
11.3Thailand  2.9
Saudi Arabia
4.5Saudi Arabia
3.1
China
11.5Malaysia   
8.6India  4.3Other   
4.0Other 
4.1
Singapore
9.1Australia  2.7
Other   
6.6
Thailand
5.8Africa
2.3Africa
2.8
Africa
2.2
 
Source: UNSD, Comtrade database. WT/TPR/S/278 • Indonesia 
 
- 19 - 
 
  1.22.  Growth in the consumption of palm oil, which is widely used in the food industry, has gone 
hand in hand with improved income per capita in populous developing countries like China. Palm oil represents about one third of global consumption of edible oil. Beyond its main use for food consumption (about 80%) and the chemical indu stry (about 10%), demand for palm oil for 
biofuels has recently increased and now represents about 10% of total palm oil usage. In the last 
decade, China’s import volume growth averaged around 20% and China and India now import about half of the world’s palm oil. Indonesia is also a large supplier of rubber to China, which has 
become the largest global consumer and importer of natural rubber.  Previously, Indonesia's main 
export market was the United States, whose overa ll share in Indonesian exports declined over the 
review period.  Asian countries have been the largest suppliers of Indonesian imports for many years, particularly Japan and Singapore in addition to China.  
1.6  Outlook  
1.23.  GDP is calculated by the World Bank
5 to have grown by 6.1% as whole in 2012 and forecast 
to rise marginally to 6.3% in 2013, assuming continued strong consumption and investment 
growth supported by a relative recovery in expo rts. Thus, Indonesia's economy is predicted to 
forge ahead although risks from a downturn in the global economy remain pronounced. The private sector played a key role in Indonesia's solid economic performance during the review 
period by driving the impressive growth in investment spending.  However, a number of policy 
announcements made towards the end of the review period, as noted elsewhere in this report, have raised some concerns on the current direction of trade and investment policy-making, which could adversely affect the confidence of investors and trading partners in Indonesia's economic 
outlook. It is important that domestic industrial policy considerations - aimed, inter alia,  at 
developing local industries and supporting domest ic investors and seeking to move up the value 
chain - are balanced with maintaining an open foreign trade and investment regime. 
                                               
5 World Bank (2012b), p. vii. WT/TPR/S/278 • Indonesia 
 
- 20 - 
 
  2  TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
2.1  Administration of trade and investment policy 2.1.  Trade and investment policy-making is the re sponsibility of the national government and is 
undertaken through a variety of institutions that were in existence at the time of Indonesia's 
previous Review (Table 2.1).  Laws are jointly approved by the President and Parliament, and are 
implemented through different instruments, as specified in each law, such as government and presidential regulations.
1  The Government is legally required to offer the public the opportunity to 
give input into the rule-making process orally or in writing.2  The authorities indicated that 
consultations are undertaken on an ad-hoc basis as issues arise.  There is no formal independent advisory body to evaluate trade and investment policies and provide advice to the Government.   
2.2.  Procedures for the negotiation of trade agreements, as with other international agreements, 
are governed by Law No. 24 of 2000 on Internat ional Treaties.  Primary responsibility for 
negotiating trade agreements rests with the Minister of Foreign Affairs. Other Government institutions and agencies may make proposals.  The Minister of Foreign Affairs is obliged to consult 
with the House of Representatives which, in turn, is responsible for treaty ratification, once the 
treaty has been signed by the President.   
Table 2.1 Main institutions involved in trade and investment policy-making 
Institution Trade and investment-rel ated responsibilities 
Coordinating 
Ministry of 
Economic Affairs Sits above line ministries.  Responsible for ensuring coherence of economic 
policy (including trade policy) across the government including in the 
formulation of regulations.  
National Team 
for the 
Enhancement of 
Exports and 
Investment 
(Timnas PEPI) Established in 2003, led by the President and chaired by the Coordinating 
Minister for Economic Affairs.  Consis ts of over 20 ministers and heads of 
institutions. Main aim is to accelerate national economic development by 
increasing exports and investments. Play ed a key role in formulation of the 
Investment Law 2007 and developing early drafts of its revised implementing 
regulations.  Taskforces established in 2007 to assess and evaluate export and 
investment policy, coordinate dispute settlement for export and investment 
enhancement, and promote use of domestic products. 
Ministry of Trade 
(MoT) Coordination of trade policy and support ing Indonesia in international trade 
negotiations, including the WTO. Secretariat for Indonesia's anti-dumping committee (KADI) is located in the Ministry.  Intra-ministry Team for Non-tariff Measures (KNT) established in 2011; scope is limited to measures under the 
authority of the Ministry of Trade.  
Ministry of 
Finance (MoF) Responsible for tariffs; work s with Team Tariff. MoF has final authority to make 
changes in tariffs, export taxes, and other duties applied at the border. Formal 
decisions on tariffs are contained in decrees from the Minister of Finance.  
Team Tariff Inter-ministerial advisory body on tariff policy charged with reviewing 
Indonesia's tariff.  Composed of mini stries of Finance, Industry, Trade, 
Agriculture, and Economic Affairs. 
Investment 
Coordinating 
Board (BKPM) At national level, charged with providing investor services, formulating 
investment policies, and coordinating with national government agencies and 
regional governments.  Several overseas offices promote investment into 
Indonesia. BKPM's Chairman reports directly to the President. BKPM was 
responsible for the issuance of the new Investment Negative List.  
National Development 
Planning Agency (Bappenas) Responsible for formulating national development plans; has developed a 
number of regulatory reform tools. 
Source: WTO (2007), Trade Policy Review: Indonesia; and information provided by the 
Indonesian authorities. 
                                               
1 Law No. 12 of 2011 Concerning Making Rules, sets out the hierarchy of legislation, both at the national 
and sub-national levels.  Viewed at:  http://rulebook-jica.ekon.go.id/english/4778_UU_12_2011_e.html. 
2 Law  2012 of 2011, Article 96. WT/TPR/S/278 • Indonesia 
 
- 21 - 
 
  2.2  Trade policy objectives 
2.3.  According to the authorit ies, the Ministry of Trade's (MOT) Strategic Development Plan 
(2010-14) constitutes the main framework for the development of Indonesia's trade.  It focuses on three goals:  increasing the export of non-oil products; strengthening the domestic market and 
managing the availability of basic products and strengthening national distribution channels.   
2.4.  The Government's trade and investment policy vision should also be viewed within the 
broader context of its national development planning system.  This consists of a Long-Term 
Development Plan (2005-2025) which has set broad targets for economic growth and poverty 
alleviation, emphasizing the need to create an attractive investment climate and greater competition.  This is being implemented by annual plans as well as four, four-year medium-term plans, the current one covering the period 2010-14.
3  The Long-Term Development Plan sees the 
industrial sector as driving the economy, supported by the agriculture, marine, and mining sectors.  
Exports are to be encouraged through strengthened bilateral and multilateral cooperation; initiatives to improve the image of Indonesia's products; and pursuit of trade facilitative measures 
to ensure that Indonesia's exports are competitive.  
2.5.  The Government has also issued a more detailed Master Plan for the Acceleration and 
Expansion of Indonesia's Economic Development (MP3EI) 2011-2025, which is intended to 
complement the long- and medium-term plans.  Among the key objectives of the Master Plan is to 
increase the competitiveness of Indonesia's businesses and encourage a movement into higher value-added activities.  It sets out a roadmap for the economic development of six regional economic corridors, each with industrial clusters focusing on priority sectors (Table A2.1).
4  I t  
foresees greater physical connectivity between these economic corridors, through expanded and 
new transportation and information and communications technology (ICT) networks, which would be linked into an improved maritime and air transport infrastructure, thereby allowing businesses 
to trade more efficiently and competitively both regionally and globally.  Importance is also 
attached to developing human, scientific, and tech nological capacity to support the development of 
these programmes.  The realization of this development vision is highly dependent on private 
investment.
5  The Plan acknowledges that various measures need to be undertaken to make 
Indonesia more attractive to investors, including:  changing the regulatory environment to make it clearer and more business friendly; making the process of developing land easier; and giving various tax and non-tax incentives to attract investment (including tax and customs policies, 
labour regulations, licensing and permits, and special economic zones).  A number of laws have 
already been enacted to realize these objectives. 
2.6.  Since Indonesia's previous Review, in 2007, new laws have entered into force relating to 
investment; the SPS regime; export financing; and special economic zones. New rules on 
contingency measures and government procurement have been issued. In addition, new sectoral laws have been enacted in agriculture, fisheries,  shipping, mineral and coal mining, and tourism.  
2.3  Trade agreements and arrangements 
2.3.1  WTO participation 2.7.  Indonesia, an original member of the WT O, grants at least MFN treatment to all trading 
partners. It is participant in the WTO Information Technology Agreement (ITA) and signatory to 
the GATS protocols on telecommunications (Fourth Protocol) and Financial Services (Fifth 
Protocol).  It is not a signatory but has observer status to the WTO plurilateral agreements on Government Procurement (GPA) and on Trade in Civil Aircraft.   
                                               
3 National Medium-Term Development Plan 2010-2014.  Viewed at:  bappenas.go.id/get-file-
server/node/9374 (in Bahasa Indonesian only). 
4 Master Plan for the Accelerati on and Expansion of Indonesia' s Economic Development (MP3EI) 
2011-2015. Viewed at: http://www.ekon.go.id/media/filemanager/2011/07/06/m/p/mp3ei-english_final.pdf. 
5 As noted in MP3EI, Rp 4,012 trillion of investment is needed to support development of the main 
economic activities within the corrido rs.  The Government envisages contributing around 10% of the cost in the 
form of basic infrastructure provision (i.e. roads, seap orts, airports, railways, an d power generation).  The 
remainder is to be provided by st ate-owned enterprises, the private sector, and through-public private 
partnerships. WT/TPR/S/278 • Indonesia 
 
- 22 - 
 
  2.8.  Indonesia has maintained a solid record of meeting its WTO notification obligations.  
However, notifications are outstanding in the areas of agriculture (domestic support; export 
subsidies; special safeguards; and tariff quotas); import licensing; notification procedures for quantitative restrictions; state trading enterprises; and subsidies and countervailing measures.  
Indonesia has not notified any new, or any changes to existing laws, regulations or administrative 
guidelines, which significantly affect trade in services that Indonesia is obliged to notify under Article III.3 of the GATS (Table A2.2). 
2.9.  Over the review period, Indonesia's participation in new dispute settlement activities has 
involved bringing one case against the United States relating to measures affecting the production and sale of clove cigarettes, and requesting consul tations with the EU with respect to anti-dumping 
measures affecting imports of fatty alcohols.  In January 2013, the United States requested 
consultations with Indonesia with respect to the latter's import licensing and quota regime for 
horticultural products and animals and animal products (Table 2.2).   
Table 2.2 Indonesia's involvement in WTO dispute settlement:  new cases, 2007 to 
January 2013 
Dispute Raised 
by/against Request for 
consultation Panel 
established/panel 
report circulated Appeal/ 
implementation Document 
series 
Complaints by Indonesia 
Anti-dumping measures 
on imports of certain fatty 
alcohols Indonesia/EU 30/07/2012   DS442 
Measures affecting the 
production and sale of 
clove cigarettes Indonesia/ 
United States 07/04/2010 22/07/2010/ 
02/09/2011 04/04/2012 
Appellate Body 
Report circulated DS406 
Complaints against Indonesia  
Importation of 
horticultural products, 
animals and animal 
products United States/ 
Indonesia 10/01/2013   DS455 
Indonesia's participation as a third party  
None      
Source: WTO Secretariat. 
2.10.  Two other dispute settlement cases were active over the review period.  A request for 
consultations brought by Indonesia against South Africa in 2004 relating to the latter's anti-dumping measures on uncoated woodfree paper, was withdrawn by Indonesia in 2008 
(DS374).  With respect to Indonesia's complaint against Korea's anti-dumping duties on imports of 
certain paper from Indonesia (DS312), an Article 21.5 Panel Report was adopted by the DSB in October 2007.  Since 2005, Indonesia has been involved in a total of five cases as complainant, 
four cases as respondent, and four cases as third party. 
2.3.2  Regional and bilateral agreements 2.11.  Indonesia is a member of ASEAN, which has component agreements on goods (ASEAN 
Trade in Goods Agreement (ATIGA)); services (ASE AN Framework Agreement on Services (AFAS)) 
and investment (Comprehensive Investment Agre ement (ACIA)). ASEAN has FTAs with: Australia 
and New Zealand; China; India; Japan; and Korea.  Indonesia has a bilateral FTA with Japan.   
2.12.  Indonesia is continuing to work, together with the other members of ASEAN, towards 
achieving an ASEAN Community by 2015.  The end go al is a single market and production base, in 
which there is a free flow of goods, services, in vestment, and skilled labour, and a freer flow of 
capital, along with equitable economic develo pment, and reduced poverty and socio-economic 
disparities.  The Community comprises three pill ars:  political-security; socio-cultural; and WT/TPR/S/278 • Indonesia 
 
- 23 - 
 
  economic.  An AEC Blueprint sets out the targets and deadlines for advancing the economic pillar 
(the ASEAN Economic Community (AEC)).6   
2.13.  In furtherance of implementing the AEC Blueprint targets, the Agreement on the Common 
Effective Preferential Tariff Scheme for the ASE AN Free Trade Area (CEPT-AFTA) was reviewed in 
2008 and enhanced into a more comprehensive legal instrument, the ASEAN Trade in Goods 
Agreement (ATIGA).  This was signed in February 2009 and entered into force in May 2010.  The ATIGA preserves, consolidates, and streamlines all the provisions in the CEPT-AFTA; enhances the 
transparency of Members' tariff reduction schedules; codifies non-tariff measures (NTMs), and a 
mechanism has been set up to monitor their elimination; and it includes a dedicated chapter on trade facilitation.
7   
2.14.  In addition, ASEAN has reviewed its investment agreements and developed the ASEAN 
Comprehensive Investment Agreement (ACIA), wh ich was signed in February 2009, and entered 
into force on 29 March 2012.  The ACIA replaces the existing ASEAN Investment Agreement and ASEAN Investment Guarantee Agreement and brings together liberalization, protection, promotion, 
and facilitation measures under a single comprehensive agreement.   
2.15.  ASEAN negotiations are on-going with India and Japan on services and investment. In 
addition, in November 2012, ASEAN Members and their FTA partners endorsed guiding principles 
and objectives for negotiating a Regional Comprehensive Economic Partnership (RCEP), thereby 
formally launching formal negotiations on a single FTA which would consolidate ASEAN's existing FTAs with third countries (Australia, China, India, Japan, South Korea and New Zealand).   
2.16.  Including ASEAN members, Indonesia's netw ork of FTAs covers 7 regional and bilateral 
agreements encompassing 15 trading partners. Five FTAs entered into force during the review 
period:  four are regional agreements negotiated  in the context of ASEAN (with Australia and New 
Zealand; India; Japan; and, Korea), and one was negotiated bilaterally by Indonesia (with Japan) 
(Table A2.3).  The goods part of ASEAN's FTA with China was amended in 2010.  Indonesia ratified 
a preferential agreement with Pakistan in  November 2012, which has not yet entered into force.  
Bilateral negotiations to conclude Comprehensiv e Economic Partnership agreements are on-going 
with the European Free Trade Association (EFTA); Australia; and Korea respectively.  Indonesia is 
also negotiating a preferential trade agreement with Iran.  Exploratory discussions are under way 
with India, the European Union and Chile.  
2.17.  Over the review period, Indonesia has seen a healthy growth in exports to most of its FTA 
partners, except New Zealand.  The authorities indicate that securing market access for 10 key 
products remains a priority in trade negotiations.  These are:  textiles and textile products; electronics;  rubber and rubber articles;  palm oil;  forest products;  footwear;  automotives; 
shrimps;  cocoa;  and coffee.  It has also identified products which it considers to have export 
potential, namely:  leather and leather products;  medical instruments and appliances;  medicinal herbs;  processed food;  essential oil;  fish and fish products;  handicrafts;  jewellery;  spices and 
stationery (non-paper). 
2.3.3  Other agreements 2.18.  Indonesia participates in intergovernmental arrangements for dialogue and co-operation 
with other Pacific Rim countries through the Asia Pacific Economic Co-operation (APEC) forum, and 
with Europe through the Asia-Europe Meeting (ASEM). 
                                               
6 Four overarching goals ha ve been identified under the AEC Blueprint:  a single market and production 
base (with 12 sectors earmarked as prio rities for integration, i.e. electronics, e-ASEAN, healthcare, wood-based 
products, automotives, rubber-based pr oducts, textiles and apparel, agri-bas ed products, fisheries, air travel, 
tourism, and logistics services);  a highly competitive economic region (including the areas of competition policy, taxation, and IPRs);  a region of equitabl e economic development (including facilitating SME 
development);  and a region fully integrated into the global economy.  For further details on specific measures 
and timeframes, see the AEC Blueprint. Viewed at: http://www.asean.org/ 21083.pdf. 
7 ASEAN online information. Viewed at: http:/ /www.aseansec.org/Fact%20Sheet/AEC/2010-AEC-025-
2.pdf. WT/TPR/S/278 • Indonesia 
 
- 24 - 
 
  2.19.  An APEC review of Indonesia's Individual Acti on Plan (IAP) to meet the "Bogor Goals" of free 
and open trade and investment was undertaken in 2009.8  APEC trade- and investment-related 
initiatives over the review period included:  the second Trade Facilitation Action Plan (TFAP II), which called for the reduction of transaction costs by 5% over the period 2007-10;  a Strategic 
Window Plan (2007), which provided a series of recommendations to assist member countries to 
develop single-window systems for trade transact ions, with a longer term view of achieving 
interoperability between these systems within the region;  and an Investment Facilitation Action 
Plan (2008).
9   
2.20.  Indonesia is entitled to benefit from preferential tariff rates under the GSP schemes of:  
Australia; Canada; the European Union; Japan; New Zealand; Norway; Switzerland; Turkey; and, the United States.
10   
2.4  Foreign investment regime 
2.21.  There have been significant legal and institutional changes to Indonesia's foreign investment 
regime over the period under review; a law on investment was enacted in 2007 and a new, 
comprehensive list of restrictions to investment has been issued.  On the institutional front, the 
responsibilities of the national and local governments have been more clearly delineated, with the national government taking the lead role in investment policy formulation and investor facilitation, 
while local governments have obtained greater administrative responsibilities.  
2.4.1  Investment Law 2.22.  A new law on investment (Law No. 25) was enacted in 2007, replacing two pre-existing laws 
relating to domestic and foreign investment respectively.
11  The new law does away with 
timeframes for foreign investment in permitted se ctors (which were 10 years for trade sectors and 
30 years for industry and other sectors).12  It grants national treatment to investors, regardless of 
their country of origin, in accordance with laws and regulations. Foreign investors have the right to 
repatriate funds using foreign currency.  The law specifies that the Government will not undertake 
any nationalization activities, except through law and has provisions on market price compensation and recourse to arbitration in such circumstances.  It also has provisions on access to international 
arbitration with respect to investor-state disputes which coexist with provisions on recognition and 
enforcement of foreign arbitral awards in the national Arbitration Law, its obligations under various arbitral conventions to which it is signatory, as well as commitments under FTAs and bilateral investment treaties (Table A2.4) 
2.23.  As noted by the OECD, the law offers greater transparency in terms of the sectors covered 
(see negative list below); extensive land use rights
13, and a reduction in administrative burdens 
through the creation of an integrated service facility and longer work permits for key personnel.  
Moreover, it delineates the sectors in which national and local authorities have responsibility for 
investment licensing (see below); and contains rules on investment incentives.14  
                                               
8 APEC (2009). 
9 APEC online information. Viewed at: http://www.apec.org/en/About-Us/About-APEC/Achievements-
and-Benefits.aspx. 
10 For more information see the WTO database on  preferential trade agreements. Viewed at: 
http://ptadb.wto.org. 
11 Law No. 25 of 2007 concerning Investment. Viewed at: http://www.embassyofindonesia.org/ina-
usa/economy/pdf/laws/Investment_Law_Number_25-2007.pdf. This replaces Law No. 1 of 1967 regarding Foreign Investment, and Law No. 6 of 1968 regarding Domestic Investment. 
12 Under Law No. 1 of 1967, foreign investment was prohibited in certain sectors: ports; electricity; 
telecommunications; shipping; air transport; water; public railway transportation; atomic energy; and mass media. 
13 As noted by the OECD, prior to implementation of the new investment law, land titles were offered to 
investment companies for 25-35 years with the possibil ity of renewal for similar durations.  The new law 
stipulates extension in advance to make the duration of leases 60 years for leaseh olds, 50 years for building 
rights, and 45 years for the right to use land , again with the poss ibility of renewal. 
14 OECD (2010). WT/TPR/S/278 • Indonesia 
 
- 25 - 
 
  2.24.  Under the 2007 Investment Law, foreign investment is defined as investment activities in 
Indonesia made by foreign investors using either foreign capital entirely, or joint capital with domestic capital.
15  Foreign investment may only take the form of a limited liability company.   
2.25.  There is no general government approval or screening process for foreign investment and, 
in principle,  all business fields are open to in vestment with the exception of those declared as 
being closed or open with certain conditions in the 2010 Negative List (see below).   
2.4.2  Negative list 
2.26.  Presidential Regulation No. 36 of 2010 (the Ne gative List) contains the list of business fields 
closed to investment, and businesses open but with conditions to investment.16  This revises the 
2007 list, liberalizing foreign equity participation in industry, public works, culture and tourism, health, and electricity.
17  It also introduces new limitations to foreign equity participation in 
agriculture and in communication and information.18  It was also designed to comply with 
Indonesia's commitments under ASEAN, which is  why it provides ASEAN investors higher 
maximum ownership in some sectors. The Co-ordinating Ministry for Economic Affairs is 
responsible for evaluating the list periodically, ba sed on the criteria and requirements set out in 
Presidential Regulation No. 76, 2007.19  The authorities indicated that an amendment is being 
drafted with a view to liberalizing some restrictions. 
2.27.  Activities closed to investment (domestic and foreign) are generally for health, safety, and 
environmental reasons, and include the alcoholic  beverage industry and gambling and casinos.20  A 
large number of business activities are subject to restrictions to investment. These restrictions are (some activities are subject to more than one restriction):  
 100% domestic capital requirement (50 business groups); 
 100% domestic capital and specific permit (4 business groups); 
 maximum foreign ownership and location  requirements (22 business groups); 
 maximum foreign ownership and specific permit requirements (21 business groups); 
 maximum foreign ownership and/or location requirements for ASEAN investors (5 business 
groups); 
 reservation for micro, small and medium-sized enterprises and cooperatives (MSMEs)
21 
(37 business groups);  
                                               
15 Domestic investment is considered to be investment activities in Indonesia by domestic investors 
using domestic capital. 
16 Presidential Regulation No. 36, 2010. Viewed at: http://www.bkpm.go.id/file_uploaded/PPres-36-
2010.pdf. 
17 The cyclamate and saccharin industry, which was prev iously closed to investment is now opened with 
special permission; and in the public works sector foreign capital ownership was increased from 55% to 67%; Foreign capital in the business of filming techniques was opened (with a 49% limit); Foreign equity participation in specialist medical clinics and medica l support services was increased from 65% to 67% and 
such activities may now be conducted at locations throughout Indonesia.  With respect to electricity, power plant businesses of 10MW may now take the form of part nerships, while maximum foreign equity ownership in 
power plants of above 10MW is 95%. 
18 Law No. 41 of 2009, introduces a maximum foreign equity ownership on the cultivation of staple food 
crops in areas of more than 25 hectares.  Under Law No. 38 of 2009, maximum foreign capital is capped at 49% for postal administration businesses.  In additi on, the new list introduces a 100% domestic capital 
requirement for the management and provision of co nstruction services for telecommunication towers. 
19 Presidential Regulation No. 76, 2007. Viewed at: http://www.scribd.com/doc/4568351/Regulation-of-
the-President-No-76-of-2007-Preparation-of-the -Investment-Negative-Lists-Wishnu-Basuki. 
 20 Activities closed to all investment are:  marijuana cultivation;  capture of certain fish species (as 
listed in Appendix I to the CITES Convention); removal of coral from nature; the alcoholic beverage industry; manufacture of various chemicals; provision and implementa tion of land terminals (i.e . parking lot businesses); 
implementation and operation of vehicle weighing stations; motor vehicle type tests; motor vehicle periodic tests; telecommunications or supporting facilities for sh ipping navigation; vessel traffic information systems; 
air traffic guiding services; manage ment and operation of radio freque ncy and satellite orbit spectrum 
monitoring stations; public museums;  historical an d ancient heritage; residential/traditional environment; 
monuments; and gambling/casinos. 
21 The criteria for SMSEs are set out in Law No. 20 (2008).  Micro enterprises must have a maximum net 
worth of Rp 50 million and maximum a nnual sales of Rp 300 million; small enterprises must have a net worth 
of between Rp 50 million and Rp 500 million and annual sales of between Rp 300 million and Rp 2.5 billion.  
Medium-sized enterprises must have a net worth of betw een Rp 500 million and Rp 10 billion and annual sales 
of between Rp 2.5 billion and Rp 50 billion.  Law No. 25 (1992) governs Cooperatives.  Activities reserved for WT/TPR/S/278 • Indonesia 
 
- 26 - 
 
   partnership requirements (which take the fo rm of cooperation between MSMEs and large 
enterprises, with the latter required to foster the development of the former) (36 business groups); 
 maximum capital ownership requirements (83 business groups); 
 specific territory requirements (1 business group); and 
 permit requirements (35 business groups).  
2.28.  According to the OECD, the Negative List of  sectors where foreign investors face equity or 
other restrictions appears long in comparison with other countries, and with earlier lists published 
by the Government, but this is partly a conseque nce of its transparency.  The OECD notes that 
while the overall restrictiveness of Indonesia in terms of statutory restrictions on FDI is substantially above that found in OECD countries, it is similar, on average, to other major 
emerging economies.
22 
2.29.  Foreign ownership is prohibited in various business activities (i.e. 100% local capital 
requirements) (Table 2.3).  Maximum foreign capital thresholds range from 49% to 95%.   
Table 2.3 Investment Negative List  (2010), foreign equity ceilings 
Sector Activity Maximum 
foreign capital 
(%) 
Agriculture 
 Use of products resulting from genetic engineering;  
cultivation of main crops (corn, soy, peanuts, green beans, 
rice, cassava and sweet potato) in an area of more than 25 ha;  and, nursery businesses for main crops 49 
 Nursery businesses for non-main crops;  plant cultivation for 
land areas exceeding 25 hectares (ha) (non-main crops);  
certain plantation businesses of 25 hectares or more; and 
processing industries for plantation products 95 
Forestry 
 Veneer industry; and supplying and distributing forest plants 
seed and seeding 100% local 
capital 
 Hunting businesses in hunting parks;  raising wildlife in 
parks;  and cultivation of coral  49 
 
 Certain nature tourism businesses 51 
Maritime and 
fisheries 
 Fishery catching business using a ship of 100 GT and/or 
bigger in open sea catching areas;  fishery catching business 
using a ship of 30 GT and/or bigger in water areas beyond 
12 miles;  and sea sand extraction 100% local 
capital 
Energy and 
mineral 
resources  Operation and maintenance of geothermal facilities 90 
 Geothermal drilling service;  geothermal power plant;  oil 
and gas drilling service offshore outside of Eastern Indonesia 
Territory;  oil and gas drilling service on land;  operation and 
maintenance service of oil and gas facility;  power plant 
maintenance and operation installation service;  power plant 
above 10 MW;  nuclear power plant; power plant 
transmission;  electricity distribution;  constructing and 
installing electricity service; engineering procurement 
construction service;  electricity consultation service;  and 
technology development of electricity supplied equipment 95 
 
Industry sector Car maintenance and repair 49 
 Sugar industry (white crystal sugar, refined crystal sugar, 
and raw crystal sugar) 95 
Defence  
 Production of weapons, ammunition, explosive devices and 
war equipment  100% local 
capital 
                                                                                                                                               
SMSEs and Cooperatives, inter alia , include: certain small-scale agriculture, manufacturing and food processing 
industries; forest plantation and rela ted processing industries;  small-scale fishing and fish processing;  low-
volume power plants;  certain textil e and handicraft industries, low-value construction services and tourism 
services. 
22 OECD (2010). WT/TPR/S/278 • Indonesia 
 
- 27 - 
 
  Sector Activity Maximum 
foreign capital 
(%) 
   
 Raw material for explosives  (ammonium nitrate) and 
industry of explosive materials and its components for 
industry need   49 
 
Public works  
 Various consultancy services relating to landscape 
architecture, architecture, engineering; construction; city 
planning; and testing services 55 
 Various listed construction services using advanced 
technology and/or high risk and/or the work value is more 
than Rp 1 million  67 
 Drinking water business and toll road business 95 
Trade  
 Private cleaning services;  various retail businesses;  large 
trade based on fee or contract (agency service / agent 
commission);  various survey services;  property/real estate 
broker based on fee or contract;  rental service of land 
transport equipment (rental without operator);  rental of 
machinery (agricultural, construction, civil engineering, 
office machinery and other);  building cleaning services; 
and, other  activity services (laundry services, barbershop, 
beauty salon, tailor, other) 100% local 
capital 
 Direct selling through a marketing network developed by a 
business partner 95 
Culture and 
tourism  
 Film making; film distribution (export, import and 
distribution) viewing in movie theatre;  recording studio 
(cassette, VCD, DVD etc.);  film promotional facility 
(advertisement, poster, stills, photo, slide negative, banner, 
pamphlet, folder etc.)  
 100% local 
capital 
 Various film technique services  49%  
 Other accommodation services (i.e. motel and lodging 
services); "non-talam" restauranta;  outbound tour operator;  
impresario business service (i.e. bringing into Indonesia and 
returning artists, musicians, athletes and other foreign 
entertainers);  recreational and entertainment business 
(excluding golf); and,  bar/café/singing room (karaoke)  49% (or 51% if 
in partnership 
with micro, small 
or medium 
enterprise or 
cooperative) 
 
 Golf 
 49% (or 51% if 
in partnership 
with micro, small 
or medium 
enterprise or 
cooperative)(or 
100% if from an 
ASEAN country 
in eastern 
Indonesia, 
Bengkulu and 
Jambi) 
 Hotels (one and two starred); guest house; "talam" 
restauranta; catering;  convention, exhibition and incentive 
tour service (for incentive travel by companies to employees 
and business partners);  cultural tourism object business 
(private museum and cultural heritage managed privately);  
spa;  natural tourism object business outside conservation 
area 51% 
 
 Art gallery;  art performance building;  dexterityb 67% 
 Film processing laboratory 49% 
   
 WT/TPR/S/278 • Indonesia 
 
- 28 - 
 
  Sector Activity Maximum 
foreign capital 
(%) 
 
Transportation  
 Container transportation; general cargo; dangerous cargo; 
special cargo; heavy equipment; sea transportation 
(domestic and overseas); ferry transport;  river and lake boat transportation < 30 GT; various port facilities;  salvage 
service and/or underwater work;  terminal supporting 
business;  airport service;  air transport supporting service; non-commercial air transportation;  airport-related services;  transport arrangement service;  airplane cargo service; 
general selling agent of foreign air transport company;  
commercial air transportation (scheduled and unscheduled) 49% 
 Overseas sea transportation and  unloading/loading cargo  49% (60% if 
from an ASEAN 
country) 
Communication 
and 
informatics   Provider, management (operation and renting), and 
construction services for telecommunication tower; press 
company;  private broadcasting agency;  and subscription broadcasting agency 100% local 
capital 
 Fixed-line telecommunications network provider; internet 
service provider; telephone internet service for public need; 
other multimedia services; and mail provider (postal) 49% 
 Mobile network provider (cellular and satellite); and internet 
connection service 65% 
 
 Data communication system service; and establishment of 
testing telecommunication device agency (laboratory test) 95% 
Financial  Pension fund 100% local 
capital 
 Venture capital;  general insurance company; life insurance 
company; reinsurance company; general insurance adjuster 
company;  insurance agent company; insurance broker 
company; reinsurance broker company; and actuary 
consulting company 80% 
 Leasing; and non-leasing funding (factoring funding, 
consumer funding, credit card funding, other non-leasing funding) 85% 
Banking Conventional BPR; Sharia BPR and Foreign Exchange Traderc  100% local 
capital 
Manpower and 
transmigration  Indonesian worker placement service for overseas 100% local 
capital 
 
 Indonesian worker placement service in Indonesia; 
worker/labour service provider; and work training 49% 
Education  
 Non formal education (private computer education service; 
private language education service; private beauty and personality education service; and other private skills 
education) 49% 
Health  
 Production of traditional medicine; traditional medicine 
business;  pharmaceutical wholesaler;  pharmaceutical raw 
material wholesaler;  pharmacy (pharmacist profession 
practitioner);  drug store/public pharmacy;  health research 
centre;  private maternity hospital;  general hospital/public 
healthcare clinic;   other hospital service;  basic health 
service facility;  health worker individual practice (general 
practitioner; specialist doctor; dentist practice; health 
service performed by paramedics; and traditional health 
service);  and supporting health service (ambulance service, 
pest control service/fumigation) 100% local 
capital 
 
   WT/TPR/S/278 • Indonesia 
 
- 29 - 
 
  Sector Activity Maximum 
foreign capital 
(%) 
 
 Calibration testing, health equipment maintenance and 
repair service; acupuncture service; nursing service 
(maximum 51% foreign equity for Medan and Surabaya);  and supporting health services (medical equipment rental) 49% 
 
 Business and management consulting (hospital management 
service);  supporting health service (assistance service in 
heath assistance evacuation and patient evacuation in 
emergency situations);  specialist/sub-specialist hospital 
service (200 beds);  other hospital service (mental 
rehabilitation clinic);  specialist medical clinic; dental clinic;  
and supporting health services (laboratory clinic and medical 
check-up clinic) 67% 
 
 Raw material medicine industry and patent medicine 
industry 75% 
Security  
 Security consulting service; security worker provider service;  
money and valuable goods transport escorting service;  
security equipment implementation service;  security 
education and training service;  and animal provider service 49% 
a Talam restaurant refers to restaurants licenced by the Ministry of Tourism and Creative 
Economy; non-talam restaurants are unlicenced.   
b The authorities clarified that "dexterity" is a business that provides space and facilities for 
a game or game engine with agility as the core business.  This space may be equipped 
with food and beverage services. 
c BPR is a bank financial institution that accepts deposits only in the form of time deposits, 
savings deposits and/or similar. 
Note: The listed activities are based on the Indone sian Standard Industrial Classification Codes 
(KBLI), 2009. Viewed at: http://www.bps.go.id /download_file/KBLI_2009_Cetakan_III. 
 pdf (in Indonesian only).  
Source: Presidential Regulation No. 36 of 2010 on List of Business Fields Closed to Investment 
and Business Fields Open, with Conditions, to Investment.  Viewed at: 
http://www.bkpm.go.id/file_ up loaded/PPres-36-2010.pdf. 
 2.30.  As set out in the 2007 Investment Law, the national Government has responsibility for 
cross-province investment; investment related to non-renewable natural resources possessing 
high environmental damage risk; nationally prioritized industrial sectors
23;  national defence and 
security;  investment stemming from inter-gove rnmental agreements;  foreign investment using 
capital from a foreign government based on a treaty between it and the Indonesian Government; 
and any other investment under governmental authority pursuant to law. Local authorities have 
responsibility for administering all other investment activity.  A more detailed breakdown of the respective responsibilities of the central, provincial, and local governments for investment 
policy-making, promotion, services, and controls  is set out in Regulation No. 38, of 2007 
concerning the sharing of government affairs between the Government, provincial governments and regency/municipal governments.  
2.31.  The BKPM operates a One Stop Shop Inte grated Service (fully implemented in 2012) to 
assist businesses to access fiscal facilities, to provide information on investment regulations and opportunities, and to streamline the process by which investors obtain business licences.  With respect to the latter, rather than going to 16 licensing agencies, businesses may now obtain the 
licences required from central government agencies through Indonesia's National Single Window.
24  
These licences include:  foreign investors registration25; business licences (required for all 
                                               
23 There are six nationally prioritized industrial sectors:  labour intensive industries; small and medium 
industries; capital goods industries; natural resource-b ased industries; high growth industries including 
automotive, electronics, and telematics;  and industry-specific priorities.   
24 BKPM online information. Viewed at: http:// www4.bkpm.go.id/contents/gen eral/16/one-stop-shop. 
25 The purpose of registration of foreign investors is to check whether the business activity they plan to 
engage in is subject to any restrictions as set out in the Negative List (see below). WT/TPR/S/278 • Indonesia 
 
- 30 - 
 
  investors, domestic and foreign); and primary licences, allowing investors (both domestic and 
foreign) to benefit from tax incentives on custom s duties, VAT, and income tax. Business licences 
are also required at sub-national levels and must be obtained from the respective local authorities.  
2.5  Framework for business 
2.32.  Indonesia's business environment is complicated by multiple layers of government.  As a 
result of devolution in 1999, large amounts of pu blic expenditure and service delivery transferred 
from the central government to the local level (comprising provinces and within them regencies 
and municipalities).  There have been recent efforts to ensure that sub-national legislation does 
not conflict with higher laws issued at the national level ( inter alia , through Law No. 12 of 2011) as 
well to delineate more clearly the policy areas in which the central Government has sole responsibility and those where responsibilities are shared with local governments, such as through 
Government Regulation No. 38 of 2007.
26   
2.33.  Indonesia offers a variety of incentives for domestic and foreign investors.  These include: 
corporate income tax relief and exemptions (Table  2.4); fuel subsidies (Chapter 1); customs duty 
exemptions (Chapter 3); VAT exemptions (Chapter  3); as well as various free trade zone and 
special economic zone-related incentives (Chapter 3). 
Table 2.4 Corporate income tax incentives 
Scheme 
 Facilities 
Corporate income 
tax relief (tax allowance) 30% net income tax deduction for investment in certain business fields 
and/or in specific areas. Other incentives such as accelerated depreciation and amortization facilities are also available.   
Corporate income 
tax holiday Tax holidays may be provided to new corporate taxpayers for no more than 
10 years and no less than 5 years from the tax year in which commercial 
production commences. A corporate income tax reduction of 50% applies for 
two years following the tax holiday.  Tax holiday and tax relief may be 
extended by the Minister of Finance to maintain the competitiveness of 
national industries.  Tax payers must meet the following criteria:  
(a) constitute a pioneer industry (these include:  basic metal industries; oil 
refinery industries and/or basic organic chemicals; machinery industries; 
renewable resources industries; and communication devices industries; and 
any other industry as determined by the Minister of Finance); (b) have a new 
and approved investment plan for a minimum of one trillion rupiah; (c) place 
funds in Indonesian banks equal to at least 10% of the total capital 
investment plan and not withdraw such funds before the commencement of 
capital investment realization;  and (d) be a new Indonesian legal entity. 
Source: Information provided by the Indonesian authorities. 
2.34.  Over the review period Indonesia inched up  the ranks in a number of indices which consider 
the health of the business environment from a variety of angles.  In the World Economic Forum's 2012 Global Enabling Trade Report , Indonesia is ranked 58 out of 132 countries, up from 68 out of 
125 countries in 2010.
27  Indonesia is ranked 46 (out of 142) in the WEF's Global Competitiveness 
Index (2011-12), compared to 55 (out of 134) in 2008-09.28  Transparency International's 
Corruption Perceptions Index of 2011 ranks Indonesia 100 (out of 182), up from 130 (out of 163)  
                                               
26 Government Regulation (GR) No. 38 of 2007 clarifies the division of responsibilities set out in Law 
No. 32 of 2004.  Under GR38, the Central Government has exclusive responsibility for:  foreign policy; defence; security; justice; national monetary and fiscal issues; and, religion.  Obligatory shared responsibilities inter alia include:  education; health; environment; public works; development and spatial planning; housing; capital investment; cooperatives and SMEs; food securi ty; and, transportation.  Local governments may also 
decide if they want to have shared responsibilities in the areas of marine and fisher ies; agriculture; forestry; 
energy and mineral resources; and, tourism. 
27 World Economic Forum (2012b) 
28 World Economic Forum (20012a).  WT/TPR/S/278 • Indonesia 
 
- 31 - 
 
  in 2006.29 Indonesia's ranking in the World Bank's Doing Business  report remained largely 
unchanged over the review period; it was 129 out of 183 countries in 2012.30   
2.35.  Various performance indicators and reforms have contributed to these improvements in 
rankings.  Among the positive developments noted are:  solid macroeconomic indicators; efficiency 
of the financial sector; better procedures for registering and licensing businesses; an enhanced 
climate for FDI through improvements to laws regulating investor protection;  reductions in corporate income tax; measures to speed up property registration and building permit 
applications; introduction of bankruptcy reforms;  the launch of a single-window service at several 
of Indonesia's main seaports;  and the successful establishment of institutions and development of 
initiatives to curb corruption.
31 
2.36.  However, Indonesia's position in these vari ous indices indicates that there is still scope for 
reform.  Reports have raised concerns about secu rity and corruption despite reforms undertaken.  
Recent concerns have been expressed about bills to amend the Anti-Graft Act and the KPK Act, which would dilute legal penalties for corruption and reduce the KPK's authority.
32  According to 
the authorities, these bills are still under discussion. It has been noted that getting electricity has 
become more difficult, as a result of increased connection fees, and that minimum capital requirements for establishing a business have been increased.
33  The Economist Intelligence Unit 
reports that there is a lack of transparency in the legal system, which sometimes appears to 
discriminate against foreign interests, and that there are inflexible labour laws and high severance payments.   
2.37.  A number of sources highlight that Indone sia's transport and ICT infrastructure remains 
underdeveloped.  However, the Government is seeking to improve this situation through 
investment and public private partnerships.  Legislative steps have also been made to expedite land acquisition procedures that hitherto hindered infrastructure development, including through 
the 2012 Land Acquisition Law (see Chapter 4, Section 3). 
 
                                               
29 Transparency International online information.  Viewed at: http://cpi.transparency.org/cpi2011/. 
30 World Bank (2012). 
31 World Economic Forum (2012a). 
32 Transparency International online information. Viewed at: http://blog.transparency.org/2011/07/22/ 
indonesian-ngos-protest-an-unnecessary-revision-of-anti-corruption-laws/. 
33 World Bank online information, Doing Business Reports  (2008 to 2012). Viewed at: 
http://doingbusiness.org. WT/TPR/S/278 • Indonesia 
 
- 32 - 
 
  3  TRADE POLICIES AND PRACTICES BY MEASURE 
3.1  Measures directly affecting imports 3.1.1  Procedures  3.1.  Indonesia has several customs entry points. Its main seaports are Tanjung Periok port 
(Jakarta); Tanjung Perak port (Surabaya); Belawan port (Medan); and Tanjung Emas Port 
(Semarang). Its main airport is Soekarno-Hatta airport (Jakarta). Customs matters, including facilitating and controlling the flow of goods in and out of the Indonesian territory and the 
collection of customs duties, excise and other taxes, are the responsibility of the Directorate-
General of Customs and Excise (DGCE), under th e Ministry of Finance (MOF). The Customs Act 
No. 10/1995 (as amended by Act No. 17/2006) governs customs matters. 
3.2.  A number of customs-related reforms were  implemented over the review period. These 
include: the introduction of a single administrative document (SAD); implementation of the 
Indonesian National Single Window (INSW) (see  below); and the development of Customs Prime 
Service Offices with trade facilitation for "prioritized" and "non-prioritized" prominent partners (see 
below). 
3.1.1.1  Registration requirements 3.3.  Use of a customs broker to import goods into Indonesia is not required. All importers must be 
registered with the DGCE: they are given a cust oms identification number (NIK) and an importer 
registration number (API).  
3.4.  Since 2007, two types of importer registration number have been used: a General API 
(API-U) and a Producer API (API-P).  Each impo rter may obtain only one type of API. This 
duel-registration system has been modified several times and is currently regulated by Minister of 
Trade Regulation No. 27/2012 (as amended).
1   
3.5.  A General API (API-U) is granted to importers who import goods for trading purposes. API-U 
registered importers are permitted to import goods falling within only one of the 18 sections in 
Indonesia's good's classification system.2 Exceptions are permitted for state-owned enterprises 
and for imports where there is a special relationship between the importing and exporting 
companies.3 
3.6.  A Producer API (API-P) is granted to importers importing goods for their own use, such as 
capital goods, raw materials, auxiliary materials and/or materials to support the production process. Trading or transfer of these imports is not allowed (except for market testing purposes, 
under certain conditions). 
3.1.1.2  Port of entry restrictions 3.7.  Port of entry restrictions apply to: (a) f ood and beverages, toys, electronics, footwear and 
garments; (b) horticultural products; (c) pearls; (d) ozone depleting substances; (e) salt; 
(f) alcoholic beverages; and (g) hazardous materials. These products are also subject to pre-shipment inspection and import licensing requirements (see below).  
3.1.1.3  Pre-shipment inspection 
3.8.  Various goods require pre-shipment inspecti on (PSI) by surveyors who have been approved 
by the Indonesian authorities. These goods are: (i) sugar; (ii) rice; (iii) salt; (iv) precursors; (v) 
optical discs (empty and filled), and machines and materials used to produce them; (vi) textiles 
                                               
1 Minister of Trade Regulation No. 27/2012 as amended by No 59/2012.  Viewed at:  http://rulebook-
jica.ekon.go.id/english/4682_27_M-DAG_PER_5_2012_e.html and http://rulebook-jica.ekon.go.id/english/ 4847_59_M-DAG_PER_9_2012_e.html. 
2 Attachment to Minister of Trade Regulation No. 27/2012, contains Indonesia's goods classification 
system. 
3 Article 6 of Regulation 27/2012 (as amended) sets out the conditions under which a special 
relationship may be recognized. WT/TPR/S/278 • Indonesia 
 
- 33 - 
 
  and textile products; (vii) ozone-depleting substances; (viii) nitro cellulose; (ix) hazardous 
materials; (x) colour multifunctional machines, colour photocopying and printing machines; (xi) non-hazardous and toxic waste; (xii) used capital goods; (xiii) iron and steel; (xiv) certain imports of electronics, ready-to-wear clothes, children's  toys, footwear, and food and beverages; (xv) 
ceramics; (xvi) sheet glass; (xvii) tyres; (xviii) pearls; and (xix) horticulture products. Most of 
these imported goods are subject to import licensi ng requirements (see below), and some are also 
subject to restrictions on ports of entry (see above).  
3.1.1.4  National single window 
3.9.  Indonesia has had an electronic data interchange (EDI) system in operation for the 
submission of customs documentation since 1997. This was linked into Indonesia's national single window (INSW), launched in 2007. The INSW, inter alia , allows for the single submission of 
customs documents and applications for trade licences, payment of duties, synchronized 
processing, and a final decision by Customs. By the end of 2012, it was operational at eight sea  
ports in Indonesia as well as the Soekarno-Hatta International Airport in Jakarta and the Juanda 
Airport in Surabaya. The authorities indicated that around 90% of trade enters or leaves Indonesia 
through these ten customs entry points. 
3.1.1.5  Risk management  
3.10.  There are four entry channels into Indonesia (Table 3.1). The priority lane was introduced in 
2006 as a result of amendments to the Customs Act. Reputable importers may submit customs 
documentation prior to arrival of the goods. Once the goods arrive, they are automatically released without documentary verification or physical inspec tion for prioritized prominent partners and with 
limited documentary verification or physical inspection for non-prioritized prominent partners. The 
DGCE allocates imported goods from other importers into the green, yellow, or red lane according to the risk levels associated with them, as evaluated by its automated risk management system 
(in operation since 2002). The authorities indicated that customs clearance takes a matter of 
minutes for "prioritized" and "non-prioritized" prominent partners, and a maximum of three days for goods passing though the red channel. The DG CE reported that it performs around 520 post-
clearance audits on average per year.   
Table 3.1 Indonesia's risk management system:  customs clearance channels 
Lane Characteristics 
Priority lane 
(Prime Service Office only)   
- Prioritized 
Prominent 
Partner lane Release of goods from customs without documentary verification or physical 
inspection 
- Non-
prioritized Prominent 
Partner lane Release of goods from customs without physical inspection and document 
verification, except for:  re-imports of exported goods;  goods subject to 
random inspection; or temporarily imported goods 
Green lane 
 Document verification after the issuance of the approval letter for release of 
goods; no physical inspection  
Yellow lane Document verification before the issuance of the approval letter for release of 
goods; no physical inspection   
Red lane Physical inspection and document verification before the issuance of the 
approval letter for release of goods. Reasons for use of red lane include: 
importer is new or high-risk; goods are temporarily imported; goods are type 
II oil operational goods; and goods are certain goods specified by the 
government. 
Source: DGCE Regulation No. 42/BC/2008.   
3.11.  Rules are being elaborated on Authorized Economic Operators (AEO) and specialized 
customs treatment accorded to them. In 2010, a Ministry of Finance regulation delineated the 
types of economic operators that could be given recognition as a AEO; the various security, 
financial and technical capacities required; and the specialized customs treatment that may be WT/TPR/S/278 • Indonesia 
 
- 34 - 
 
  granted, such as simpler and expedited customs procedures.4 According to the authorities, this 
regulation is to be implemented by DGCE rules, which are being developed, and a pilot project set to be launched in December 2012. Requirements AE Os will be similar to those for prioritized and 
non-prioritized prominent partners, but with addi tional security and compliance standards.    
3.1.1.6  International agreements 
3.12.  Indonesia is a member of the World Customs Organization. It is not a signatory to the major 
customs-related international conventions (the WCO Revised Kyoto Convention and the Istanbul 
Convention on Temporary Admission), but the authorities indicated that much of their contents is 
referred to in Indonesian laws and regulations. Indonesia has bilateral agreements for the exchange of customs information with 13 countries
5, and provisions on customs cooperation are 
incorporated in its FTAs (see Chapter 2).   
3.1.2  Customs valuation and rules of origin 
3.13.  Indonesia's rules on customs valuation are contained in Article 15 of Customs Law No. 17 of 
2006. Indonesia uses the transaction value as the basis for customs valuation. When this is not 
feasible, Indonesia uses the sequential methods set out in the Customs Valuation Agreement.  
Information was not available on use of the various customs valuation methods. The authorities indicated that a database of market prices is regularly updated.   
3.14.  Indonesia does not have non-preferential rule s of origin.  Its preferential rules of origin are 
set out in its FTAs. Origin is generally conferred by a change in tariff heading.   
3.15.  The DGCE provides advance rulings for both customs valuation and classification. The 
authorities indicated that these rulings are binding.  
3.16.  Procedures for challenging customs decision s, including valuation and classification issues 
and customs penalties, are set out in the Customs Law.  Objections must be sent, in writing, to the DGCE within 60 days of a customs decision. The DGCE has 60 days in which to issue a decision, 
and if it fails to do so the objection is considered to be approved. Importers may appeal DGCE 
decisions to the Tax Court within 60 days of the DGCE's decision. According to an external source, the hearing process is normally completed within 12 months. However, it may be extended in 
some cases.
6  There were 1,937 appeals against DGCE decisions relating to customs duties in 
2011, 3,357 in 2010, 4,434 in 2009, and 3,306 in 2008. The authorities noted that the big drop in appeals was partly due to the issuance in 2010 of Ministry of Finance guidelines for officers on 
determining the customs value of imported goods. 
3.1.3  Tariffs  
3.1.3.1  Tariff bindings 3.17.  Indonesia has bound 95% of its tariffs (2003 tariff schedule in HS02 nomenclature). Nearly 
72% of these are at bound at 40% or above.
7 Unbound products include salt; some chemical 
products; certain plastic articles; platinum; articles of iron and steel; transport equipment; and arms and ammunitions.  Given the big difference in the tariff nomenclatures it was not possible to 
compare bound and applied rates on a tariff line basis.  However, a large binding overhang is 
apparent when comparing the overall MFN applied av erage with final bound average (Table 3.2).   
                                               
4 Ministry of Finance Regulation No. PMK219/PMK.04/2010. 
5 Australia; Azerbaijan; India; Iran; Japan; Jordan; the Netherlands; Papua New Guinea; South Korea; 
Thailand; Turkey; the United  States; and Uzbekistan. 
6 Deloitte (2010). 
7 Indonesia has 7,157 bound tariff lines of which 273 (3.8% of total bound lines) are bound at over 
40%; 4,846 (67.7%) are bound at 40%; and 2,038 (28.5%) are bound at below 40%. WT/TPR/S/278 • Indonesia 
 
- 35 - 
 
  Table 3.2 Indonesia's tariff structure, 2006 and 2012 
(%, unless otherwise indicated) 
 MFN applied Final bounda 
 2006 2012  
Bound tariff lines (% of all tariff lines) .. .. 95.0 
Simple average rate 9.5 7.8 37.4 
   Agricultural products (HS01-24) 11.4 9.5 47.1 
   Industrial products (HS25-97) 9.2 7.5 35.6 
   WTO agricultural products 11.8 10.5 47.3 
   WTO non-agricultural products 9.2 7.4 35.7 
Duty free tariff lines (% of all tariff lines) 22.0 12.5 2.2 
Simple average rate of dutiable lines only 12.1 9.0 38.3 
Tariff quotas (% of all tariff lines) 0.0 0.0 0.0 
Non-ad valorem  tariffs (% of all tariff lines) 0.2 0.6 0.0 
Domestic tariff "peaks" (% of all tariff lines)b 5.1 2.9 0.5 
International tariff "peaks" (% of all tariff 
lines)c 10.6 3.4 94.6 
Overall standard deviation of tariff rates 13.7 11.4 12.8 
Coefficient of variation of  tariff rates 1.4 1.5 0.3 
Nuisance applied rates (% of all tariff lines)d 0.0 0.0 0.0 
Total number of tariff lines 11,161 10,012 7,157e 
    Ad valorem  rates 8,684 8,696 6,988 
    Duty free 2,450 1,251 159 
    Specific rates 27 65 0 
a Final bound rates are based on the 2003 tariff schedule in HS02 nomenclature. 
Calculations on bound averages are based on 7,157 bound rates out of a total of 7,532 
tariff lines. 
b Domestic tariff peaks are defined as those exceeding three times the overall average 
applied rate. 
c International tariff peaks are defined as those exceeding 15%. d Nuisance rates are those greater than zero, but less or equal to 2%. e Total number of fully and partially bound lines. 
 
Note: The 2006 tariff is based on HS02 nomenclature, the 2012 tariff is based on HS12. 
Calculations for averages are based on nation al tariff line level (10-digit), excluding 
specific rates.  The 2006 simple average rate including AVEs, as provided by the 
authorities, equals 9.5%.  Calculations for averages for final bound rates are based on 9-digit tariff line level. 
 
Source: WTO Secretariat calculations, based on data provided by the authorities of Indonesia.  3.1.3.2  Applied MFN tariffs 
3.18.  In 2012, the Government replaced the Indonesian Entry Custom Tariff Book (BTBMI) with 
the Indonesian Custom Tariff Book (BTKI) 2012, which is formulated in accordance with the World Custom Organization HS2012 nomenclature and the ASEAN Harmonized Tariff Nomenclature (AHTN). Nomenclature changes have resulted in a 10% reduction in the total number of MFN 
applied tariff lines compared to at the time of Indonesia's previous review.
8 Customs duties 
accounted for an estimated 2.4% of total tax revenues in 2012 (down from 3.4% in 2007).  
3.19.  Indonesia's 2012 simple average MFN applied rate is 7.8%; this includes ad valorem  
equivalent duties, as calculated by the Indonesian authorities (see Table A3.1). The number of 
                                               
8 Indonesia changed its tariff nomenclature twice over the review period:  from HS2002 to HS2007, and 
from HS2007 to HS2012. WT/TPR/S/278 • Indonesia 
 
- 36 - 
 
  tariff lines subject to specific rates increased over the review period, from 27 in 2006 to 65 in 
2012. At the time of Indonesia's previous review only  rice and sugar were subject to specific rates. 
However, since 2010 specific rates have also been applied to alcoholic beverages, as well as cinematographic films and related media. Indonesia does not implement tariff quotas. 
3.20.  The Minister of Finance has the authority to change applied tariff rates, and draws on the 
recommendations of Team Tariff (see Chapter 2).  During 2005-10 a number of changes were made to tariff rates in order to achieve the tariff harmonization programmes targets: to achieve 
low tariff rates; have relatively harmonized tariff rates among upstream, intermediate, and 
downstream products; and to simplify and make more uniform its tariff structure. These, together with nomenclature changes reduced Indonesia's si mple average MFN applied rate from 9.5% in 
2006 to 7.8% in 2012; raised tariffs to 5% on a number of lines that were previously duty free; 
and liberalized some higher tariffs (Charts 3.1 an d 3.2). A full description of tariff movements 
since 2006 was not available.  
3.21.  MFN tariffs range from duty free to 150%. Tariffs of 150% apply to 43 lines (34 non- ad 
valorem  lines relating to alcoholic beverages; 7 lines relating to food preparations (not elsewhere 
specified) and 2 lines relating to mixtures of odoriferous substances used in the food or drink industries). The second highest tariff rate is 90% (5 non- ad valorem  lines relating to wine and 
shandy). Thereafter, all other tariff rates are app lied at 40% or below. Overall, Indonesia's tariff 
shows positive escalation; the simple average applied tariff on fully processed goods is 9.0%, compared with 6.2% for semi-processed goods and 5% for goods at the first stage of processing 
(Table 3.3). 
 
  
Chart 3.1 Distribution of MFN tariff rates, 2006 and 2012 
(22.0) (37.1%) 
(15.9%)
(14.4%)
(5.3%) (5.2%)   (12.5%)(54.3%)
(19.3%)
(10.5%)
(0.5%)(2.3%)
05001,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,000
Duty free >0-5 >5-10 >10-15 >15-20 >20Number of tariff lines
Tariff rates MFN 2006
MFN 2012
 
 
Note:  Figures in parentheses denote the share of total lines. Calculations include AVEs for specific rates 
  provided by the authorities. The 2006 and 2012 tariff schedules consist, respectively, of 11,161   and 10,012 tariff lines. 
Source: WTO Secretariat calculations, based on data provided by the authorities of Indonesia. WT/TPR/S/278 • Indonesia 
 
- 37 - 
 
   
Chart 3.2 Average applied MFN tariff rates, by HS section, 2006 and 2012 
051015202530
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Per cent
01   Live animals & products  
02   Vegetable products
03   Fats & oils      
04   Prepared food, etc.
05   Mineral products06   Chemicals & products07   Plastic & rubber
08   Hides & skins
09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.
15   Base metals & products
16   Machinery
17   Transport equipment18   Precision instrument19   Arms & ammunition
20   Miscellaneous manufacturing
21   Works of art, etc.Average 2006
(9.5%)
Average 2012
(7.8%)MFN 2006 MFN 2012
 
Note:  Calculations include AVEs for specific rates provided by the authorities. 
Source: WTO Secretariat calculations, based on data provided by the authorities of Indonesia. 
 
Table 3.3 Indonesia's tariff summary, 2012 
  Number 
of lines Average 
(%) Range 
(%) Standard 
deviation Duty 
free 
(%) 
Total 10,012  7.8 0-150 11.4 12.5 
By WTO category      
WTO agricultural products 1,320  10.5 0-150 26.0 9.2 
   Animals and products thereof 151 4.6 0-20 2.0 10.6 
   Dairy products 38 5.4 5-10 1.3 0.0 
   Fruit, vegetables, and plants 351 5.3 0-20 3.4 8.3 
   Coffee and tea 42 6.4 5-10 2.3 0 
   Cereals and preparations 191  11.8 0-150 27.6 5.8 
   Oils seeds, fats, oil and their 
    products 206 4.3 0-10 1.8 13.6 
   Sugars and confectionary 32 12.8 5-40 13.2 0.0 
   Beverages, spirits and tobacco 108 59.8 5-150 64.0 0.0 
   Cotton 5 4.0 0-5 2.0 20.0 
   Other agricultural products, n.e.s. 196 4.1 0-5 2.0 18.9 
WTO non-agricultural products  8,692 7.4 0-150 6.8 13 
   Fish and fishery products 431 5.5 0-10 2.0 3.5 
   Minerals and metals 1,479 7.1 0-30 4.8 14 
   Chemicals and photographic supplies 1,359 5.6 0-150 6.4 11.8 
   Wood, pulp, paper and furniture 480 4.4 0-15 3.3 28.1 
   Textiles 842 9.4 0-25 3.9 0.8 
   Clothing 348 14.5 0-15 1.7 0.3 
   Leather, rubber, footwear and travel 
   goods 324 9.1 0-25 6.2 7.4 
   Non-electric machinery 1,333 4.9 0-15 2.9 18.2 
   Electric machinery 705 5.8 0-12.5 3.9 21.8 
   Transport equipment 619 17.3 0-40 14.8 10.7 WT/TPR/S/278 • Indonesia 
 
- 38 - 
 
    Number 
of lines Average 
(%) Range 
(%) Standard 
deviation Duty 
free 
(%) 
   Non-agricultural products, n.e.s. 735 6.6 0-15 3.9 11.6 
   Petroleum 37 0.7 0-5 1.7 86.5 
By ISIC sectora      
   ISIC 1 - Agriculture, hunting and 
   fishing 653 4.8 0-30 3.2 14.4 
   ISIC 2 - Mining 118 3.8 0-10 2.4 27.1 
   ISIC 3 - Manufacturing 9,240 8.1 0-150 11.8 12.2 
        Manufacturing excluding food 
        processing 8,156 7.6 0-150 6.9 13.1 
By HS section      
  01  Live animals and products 571 5.3 0-20 2.1 5.4 
  02  Vegetable products 480 5.5 0-30 4.9 11.5 
  03  Fats and oils 164 4.3 0-5 1.8 14.6 
  04  Prepared food, beverages and 
        tobacco 453 21.1 0-150 42.2 2.4 
  05  Mineral products 206 3.3 0-10 2.5 35.4 
  06  Chemicals and products thereof 1,182 4.8 0-150 6.4 14.8 
  07  Plastics, rubber, and articles 
        thereof 491 8.4 0-25 4.4 1.6 
  08  Raw hides and skins, leather, and 
        products thereof 102 6.5 0-15 5.8 35.3 
  09  Wood and articles of wood 160 2.7 0-10 2.9 51.3 
  10  Pulp of wood, paper and 
        paperboard 283 4.4 0-10 2.4 18.7 
  11  Textiles and clothing 1,167 10.8 0-15 4.1 0.6 
  12  Footwear, headgear, etc. 75 13.9 5-25 7.7 0.0 
  13  Articles of stone, plaster, cement 224 7.9 5-30 6.0 0.0 
  14  Precious stones and metals, 
        pearls, articles thereof 89 6.9 0-15 4.4 18.0 
  15  Base metals and articles thereof 984 7.6 0-20 4.6 13.4 
  16  Machinery, electrical equipment, 
        etc. 2,123 5.2 0-15 3.4 20.7 
  17  Transport equipment 633 16.9 0-40 14.8 11.8 
  18  Precision equipment 329 5.4 0-10 2.5 8.8 
  19  Arms and ammunition 27 6.1 5-15 3.1 0 
  20  Miscellaneous manufactured 
        articles 255 9.5 0-15 3.6 0.8 
  21  Works of art, etc. 14 4.6 0-10 2.3 14.3 
By stage of processing      
   First stage of processing 1,116  5.0 0-30 3.8 16.4 
   Semi-processed products 2,613 6.2 0-150 5.7 13.1 
   Fully processed products 6,283  9.0 0-150 13.7 11.6 
a ISIC (Rev.2) classification, excluding electricity (1 line). 
Note: Calculations for averages are based on national tariff line level (10-digit), including AVEs 
for specific rates. 
Source: WTO Secretariat calculations, based on data provided by the authorities of Indonesia. 
3.1.3.3  Customs duty exemptions 
3.22.  Rules on customs duty exemptions are se t out in Articles 25 and 26 of the Customs Act. 
There have been no changes to these provisions since Indonesia's previous Review.   
3.23.  Under Article 25, customs duty exemptions are, inter alia , extended to goods for research 
and scientific purposes.   WT/TPR/S/278 • Indonesia 
 
- 39 - 
 
  3.24.  Under Article 26, duty exemptions may be granted, inter alia , for machinery for the 
establishment and development of industry; go ods and materials for the establishment and 
development of industry for a specified period of  time; seeds and stocks for the establishment and 
development of agriculture, animal husbandry or fisheries; marine products caught by licenced 
vessels; and goods purchased by the Government for public purposes. Provisions on exemptions to 
be granted must be set out in Ministerial regulations.  
3.25.  In November 2009, a scheme was introduced to facilitate investment by offering customs 
duty exemptions for imports of machines, g oods, and materials for the establishment and 
development of industries in the framework of investment. Amendments to this scheme in 2012 
extended incentives to the motor vehicle assembly industry.9 Applications for duty exemptions 
must be made to the Indonesia Investment Coordinating Board (BKPM), and exemptions are 
granted only if products are: (a) not yet produced domestically; (b) produced domestically but do 
not fulfil the required specifications; or (c) are produced domestically but are not sufficient for the industries' needs.  
3.1.3.4  Temporary changes to customs duties 
3.26.  The Ministry of Finance has the flexibility to reduce or increase customs duties temporarily 
on an MFN basis at the request of another Governme nt Ministry  or agency and did so on various 
occasions over the review period, often in order to stabilize domestic commodity prices 
(particularly for rice, sugar, and soybeans).  
3.27.  In order to promote the competitiveness of  certain industries in strategic sectors, the 
Government may waive import duties temporarily on  imported inputs for the production of certain 
goods. This "Government Borne Import Duty" scheme has been in place since 2008. During fiscal 
year 2012, waivers (up to specified budget ceilings) were available to industries using imported goods and materials to produce goods and services sold on the domestic market in accordance 
with the following criteria: (a) they must be provided for the public interest, public consumption or 
to protect the public; (b) they improve the competit iveness of the industries; (c) they increase the 
employment rate; and (d) they increase the State's revenue. Imports must: not yet be produced 
domestically; be domestically produced but do  not meet the specification needed; or be 
domestically produced but not in quantities necessary to meet the industry need (Table 3.4).
10 The 
authorities noted that, for a business to avail itself of these incentives, it must submit proposals to the DGCE, enclosing an import plan that has b een approved by the Ministry of Industry.  
Information on incentives awarded was not available.  
Table 3.4 Customs duty  waivers, FY2012 
Product Ceiling value: 
 
Production of certain parts of heavy equipment or the assembly of heavy 
equipment Rp 58,000,000,000 
The production of ballpoint pens Rp 1,205,600,000 
Production of carpet and/or rugs Rp 24,000,000,000 
Production of automotive components Rp 
147,350,000,000 
Production and repair of the box wagon of the passenger train, 
electric/diesel train, bogie and train's components Rp 10,000,000,000 
Production and/or repair of ships Rp 30,500,000,000 
Production of electronics components and/or products Rp 25,000,000,000 
Production of optical fibre cable Rp 3,382,000,000 
Production of communication devices Rp 14,880,000,000 
Production of toner Rp 824, 900,000 
Production of plastic packages, plastic sheets, biaxially orientated poly 
propylene film, plastic sacks, plasti c threads, welding plastic sheets, 
geotextile, household goods and/or furnishings made of plastic Rp 81, 957,400,000 
  
                                               
9 Minister of Finance Regulation No. 176/PMK.011/2009, as amended by Minister of Finance Regulation 
No. 76/PMK.011/2012, 21 May 2012. 
10 Finance Minister Regulations (PMK) No. 96/PMK.011/2012 to No. 110/PMK.01/2012. WT/TPR/S/278 • Indonesia 
 
- 40 - 
 
  Product Ceiling value: 
 
Production of resin in the form of alkyd resin, unsaturated polyester 
resin, amino resin, pigment phthalate,  solution acrylic/synthetic latex, 
plasticizer Rp 9, 518,000,000 
Production of fertilizer Rp 22,000,000,000 
Repair and/or maintenance of planes Rp 
109,676,000,000 
Production of packaging and/or drug infusion products Rp 9, 372,600,000 
Source: Ministry of Finance. 
3.1.3.5  Tariff preferences 3.28.  Tariff preferences are offered by Indonesia under its bilateral FTA with Japan, under the 
ASEAN ATIGA, and through ASEAN's FTAs with Ko rea, China, Australia and New Zealand, and 
India. These have resulted in significant tariff reductions, particularly with respect to the ATIGA agreement, whereby the simple average applied preferential tariff is 0.8%, compared with an 
average applied MFN tariff rate of 7.8%. For the other FTAs, the simple average applied 
preferential tariffs range from 1.9% to 5.9% (Table 3.5). It was not possible to calculate preferential tariff averages under the Indonesia-Japan Economic Partnership Agreement.  
Table 3.5 Indonesia's selected pr eferential tariff averages, 2012 
Description No. of 
lines MFN 
applied 
(%) ATIGAa  
(%) AK 
FTAb 
(%) AC 
FTAc 
(%) AANZ 
FTAd 
(%) AI 
FTAe 
(%) 
Total 10,01
2 7.8 0.8 1.9  2.5 2.4 5.9 
HS 01-24 1,668 9.5  4.3  4.5  4.5  5.5  7.8 
HS 25-97 8,344 7.5 0.1 1.4 2.1 1.8 5.5 
By WTO category        
WTO Agriculture 1,320 10.5  5.5  5.6  5.7  6.5  8.6 
   Animals and products 
   thereof 151 4.6 0.0 0.1 0.0 0.8 2.2 
   Dairy products 38 5.4 0.0 0.0 0.0 2.6 4.2 
   Fruit, vegetables and plants 351 5.3 0.0 0.1 0.0 1.2 3.8 
   Coffee and tea 42 6.4 0.0 0.0 0.0 0.4 4.3 
   Cereals and preparations 191 11.8 7.1 7.3 7.3 7.7 10.1 
   Oil seeds, fats and oils and 
   their products 206 4.3 0.0 0.0 0.0 0.1 2.3 
   Sugar and confectionary 32 12.8 8.1 8.1 8.1 8.1 10.4 
   Beverages, spirits and 
   tobacco 108 59.8 52.1 52.9 53.8 57.5 56.5 
   Cotton 5 4.0 0.0 0.0 0.0 0.0 1.6 
   Other agricultural products 
   n.e.s. 196 4.1 0.0 0.0 0.0 0.1 2.4 
WTO non-agriculture (incl. 
petroleum) 8,692 7.4 0.1 1.3 2.0 1.8 5.5 
    Fish and fishery products 431 5.5 0.0 0.3 0.1 1.4 4.4 
    Minerals and metals 1,479 7.1 0.0 2.7 1.5 1.7 5.5 
    Chemicals and 
    Photographic supplies 1,359 5.6 0.3 1.5 1.8 0.8 4.0 
    Wood, pulp, paper and 
    furniture 480 4.4 0.0 0.0 0.0 0.2 3.0 
    Textiles 842 9.4 0.0 0.1 0.5 1.1 7.3 
    Clothing 348 14.5 0.0 3.0 2.6 5.6 13.8 
        WT/TPR/S/278 • Indonesia 
 
- 41 - 
 
  Description No. of 
lines MFN 
applied 
(%) ATIGAa  
(%) AK 
FTAb 
(%) AC 
FTAc 
(%) AANZ 
FTAd 
(%) AI 
FTAe 
(%) 
    Leather, rubber, footwear 
    and travel goods 324 9.1 0.0 0.1 2.7 1.3 6.5 
    Non-electric machinery 1,333 4.9 0.0 0.4 0.3 0.7 2.0 
    Electric machinery 705 5.8 0.0 0.4 0.3 0.7 4.3 
    Transport equipment 619 17.3 0.0 5.3 15.2 9.5 13.2 
    Non-agriculture articles 
    n.e.s. 735 6.6 0.3 0.2 0.5 0.5 4.8 
 Petroleum 37 0.7 0.0 0.5 0.5 0.5 0.7 
By ISIC sectorf        
Agriculture and fisheries 656 4.8 0.1 0.2 0.2 0.9 3.4 
Mining 118 3.8 0.0 0.0 0.3 0.2 2.2 
Manufacturing 9,240 8.1 0.8 2.0 2.7 2.5 6.1 
    Manufacturing excluding 
    food processing 8,156 7.6 0.1 1.4 2.1 1.8 5.6 
By HS section        
  01  Live animals and 
        products 571 5.3 0.0 0.3 0.0 1.3 3.7 
  02  Vegetable products 480 5.5 0.6 0.8 0.7 1.6 4.3 
  03  Fats and oils 164 4.3 0.0 0.0 0.0 0.0 2.3 
  04  Prepared food, beverage 
        and tobacco 453 21.1 15.3 15.5 15.8 16.9 18.6 
  05  Mineral products 206 3.3 0.0 0.1 0.3 0.2 1.9 
  06  Chemicals and products 
        thereof 1,182 4.8 0.3 0.4 0.8 0.3 3.1 
  07  Plastics, rubber, and 
       articles thereof 491 8.4 0.0 3.3 4.8 1.9 6.7 
  08  Raw hides and skins, 
        Leather products 102 6.5 0.0 0.2 1.2 1.9 4.7 
  09  Wood and articles of 
        wood 160 2.7 0.0 0.0 0.0 0.1 2.2 
  10  Pulp of wood, paper and 
       paperboard 283 4.4 0.0 0.0 0.0 0.2 2.8 
  11  Textiles and clothing 1,167 10.8 0.0 0.9 1.0 2.3 9.1 
  12  Footwear, headgear, etc. 75 13.9 0.0 1.3 2.3 1.7 10.0 
  13  Articles of stone, plaster, 
       cement 224 7.9 0.0 0.0 2.3 1.0 5.5 
  14  Precious stones and 
        metals 89 6.9 0.0 2.2 2.0 1.6 5.6 
  15  Base metals and articles 
       thereof 984 7.6 0.0 3.9 1.5 2.2 6.3 
  16  Machinery, electrical 
       equipment, etc. 2,123 5.2 0.0 0.3 0.3 0.7 2.8 
  17  Transport equipment 633 16.9 0.0 5.2 14.9 9.3 13.0 
  18  Precision equipment 329 5.4 0.0 0.0 0.0 0.0 3.2 
  19  Arms and ammunition 27 6.1 6.1 0.0 6.1 0.6 1.7 
  20  Miscellaneous 
        Manufactured articles 225 9.5 0.0 0.3 0.6 1.2 7.5 
  21  Works of art, etc. 14 4.6 3.2 0.0 0.0 0.0 4.2 
By stage of processing        
First stage of processing 1,116 5.0 0.3 0.4 0.4 1.3 3.5 
Semi-processed products 2,613 6.2 0.2 1.6 1.3 1.0 4.5 WT/TPR/S/278 • Indonesia 
 
- 42 - 
 
  Description No. of 
lines MFN 
applied 
(%) ATIGAa  
(%) AK 
FTAb 
(%) AC 
FTAc 
(%) AANZ 
FTAd 
(%) AI 
FTAe 
(%) 
Fully-processed products 6,283 9.0 1.1 2.3 3.4 3.1 6.8 
a ASEAN trade in goods agreement. 
b ASEAN-Korea Free Trade Agreement. 
c ASEAN-China Free Trade Agreement. 
d ASEAN-Australia-New Zealand Free Trade Agreement.   e ASEAN-India Free Trade Agreement. 
f ISIC (Rev.2) classification, excluding electricity (1 line). 
 Note: Calculations include AVEs for specific rates. Original data for AANZFTA and AIFTA was 
provided in HS2007 nomenclature; base years being 2011 and 2010.  For calculation 
purposes the FTAs were changed into HS2012. The Indonesia-Japan Economic 
Partnership Agreement was also provided in HS2007 nomenclature but with 2008 as a base year; changing it to HS2012 was not possible. 
Source: WTO Secretariat calculations, based on da ta provided by the Indonesian authorities. 
 
3.1.4  Other charges affecting imports  
3.1.4.1  VAT 3.29.  VAT continues to be levied at a flat rate of 10%, with a number of exceptions and 
exemptions (Table 3.6). It is applied equally to imports and domestically produced goods and 
services. With respect to imports, the VAT is applied on the customs value plus the sum of import duties levied. A 2009 amendment to the Valu e-Added Tax and Luxury Tax Law gives the 
Government flexibility to change tax rates to between 5% and 15%, subject to Parliamentary 
approval.
11 The IMF has commented that while the design of the VAT system is generally sound, 
efficiency improvements could be made by removing some of the exemptions granted.12 In 2012, 
VAT accounted for an estimated 34.4% of total tax revenue.  
3.30.  VAT exemptions (on imports), and zero-rates (for domestic production) apply for certain 
machines, goods, and materials, in order to enhance the productivity of the industrial sector.  They include:  capital goods in the form of machinery and factory equipment; animal, poultry and fish 
feed and raw materials to make feed; agricultural products; and seeds.
13   
Table 3.6 VAT rates, 2012 
General rate 
 10% 
Reduced VAT rates Factoring (5% on the fees received);  package deliveries and travel 
agents' services (1%) 
VAT zero-rated items All exports of goods 
 
Exports of the following services:  toll manufacturing; construction 
services attached to immovable goods located outside the customs 
area;  repair and maintenance services attached to services of 
movable goods used outside the customs area. 
VAT exemptions for goods  Basic necessities (rice, grain, maize, sago, soy bean, salt, meat, 
egg, milk, fruit and vegetables); mining taken from natural resources;  food served in hotels and restaurants including food and drinks provided by catering services; and money, gold, and 
securities. 
                                               
11 This change was introduced by Law No. 42 of  2009, which amends the Va lue-Added Tax (VAT) and 
Luxury Tax Law (18/2000).  Viewed (in Indonesian only) at: http://mastel.or.id/fi les/kelompok%20Kerja/Pajak%20dan %20Telekomunikasi /UU_42_Tahun_2009%20-
%20PPN.pdf. 
12 IMF (2011). 
13 Government Regulation No. 12/2001 (as amended most recently by Government Regulation 
No. 31/2007).  Viewed at:  rulebook-jica.ekon.go.id/English/3006_PP_31_2007_e.html. WT/TPR/S/278 • Indonesia 
 
- 43 - 
 
  General rate 
 10% 
VAT exemptions for 
services 
 Medical, social and religious services, postal services;  certain 
financial and insurance services; educational services; 
entertainment services performed by artists and entertainers; radio 
and television broadcasting services (other than advertisements); 
public transportation services;  manpower and recruitment services; 
hotel and boarding house services; government services; parking 
services;  public telephone (coin) services;  and food and catering 
services. 
Source: VAT Law No. 42 (2009); Decree of the Minister of Finance No. 231 (2001) as amended by 
Regulation of Minister of Finance No. 616 (2 004) and Regulation of Minister of Finance 
No. 27 (2012). 
3.1.4.2  Luxury Tax 3.31.  The Luxury Tax is applied to domestic production and imports of a variety of products 
deemed non-essential. The tax is collected at the manufacturer level for domestic production; and 
on the customs value plus the sum of import duti es levied for imports. The minimum applied rate 
is 10% and the maximum is 75%, although a 2009 revision to the Value-Added Tax and Luxury 
Tax Law gives flexibility for maximum rates to be raised to 200% (Table 3.7). Exports are tax 
exempt. While the IMF has recommended integrat ing the Luxury Tax into the VAT, noting its 
complexity and disproportionately high administra tive costs relative to revenue generated, the 
authorities indicated that the tax remains necessary to balance the tax burden on high and low 
income individuals.
14 In 2012, luxury taxes accounted for an estimated 1.7% of total tax revenue.   
Table 3.7 Luxury Tax rates, 2012 
Luxury items subject to sales tax 
 Tax rate (%) 
Perfumery  20 
Specified luxury devices using electric power, batteries or gas for household use 10 
Photographic and cinematographic devices, video camera, digital camera 10 
Electric and non-electric music instruments 20 
Transmitters and receivers 10, 20 
Luxurious houses, apartments, condominiums, town houses 20 
Luxury devices using electric power, batteries or gas for household use and 
recreation not included in the 10% category 20 
Specified sporting goods and games  10, 30, 50 
Specified clothes and goods made of leather 40 
Suitcases, executive bags and boxes, and purses with an import exceeding 
Rp 500,000 40 
Watches, clocks 40 
Carpets made of special material  40, 50 
Ships, vessels, and yachts 30, 40, 75 
Aircraft (hot air balloons and gliders) 40 
Firearms, air and gas weapons, except for national use 40, 50 
Goods made of crystal, marble or granite 40 
Motor vehicles with a capacity of 10 to 15 passengers 10 
Motor vehicles of 1,500 to 2,500 cc with a capacity of fewer than 10 passengers 20 
Sedans or station wagons with a cylinder up to 1,500 cc 30 
Motor vehicles other than sedans and station wagons with a cylinder up to 1,500 
cc 60 
Special purpose vehicles for gold 50 
Motorcycles with a cylinder capacity of 250 to 500 cc 60 
Special purpose vehicles to be used on snow, beach, mountains, and the like 60 
                                               
14 IMF (2011). WT/TPR/S/278 • Indonesia 
 
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  Luxury items subject to sales tax 
 Tax rate (%) 
Sedans and station wagons with a capacity of more than 3,000 cc 75 
Diesel sedans and station wagons with a capacity of more than 2,500 cc 75 
Motorcycles with a capacity cylinder of more than 500 cc 75 
Caravan trailers and semi-trailers for housing and camping 75 
Source: Information provided by the Indonesian authorities. 
3.1.4.3  Excise Tax 
3.32.  Excise Tax is levied on ethanol; beverages and concentrates containing ethyl alcohol; and 
tobacco products. Legislation governing excise taxes remains the Excise Tax Law (1995), as amended by Law No. 39 of 2007.
15 In 2012, excise taxes accounted for an estimated 7.1% of total 
tax revenue. 
3.33.  In 2010, the Excise Tax on alcoholic beverages were increased (and the Luxury Tax on 
these items removed), with rates ranging from Rp 20,000 per litre to Rp 130,000 per litre. For 
alcoholic beverages with an ethyl alcohol content of 5% or more, Excise Tax rates on imports are 
higher than on domestic production (Table 3.8).  
Table 3.8 Excise tax rates on alcohol, 2012 
Item Ethyl alcohol 
content Excise tax (per litre) 
Domestic 
production (Rp) Imports  
(Rp) 
Ethyl alcohol or ethanol All 20,000 20,000 
Beverages containing ethyl 
alcohol Up to 5% 20,000 20,000 
 >5% to 20% 30,000 40,000 
 >20% 75,000 130,000 
Concentrates containing ethyl 
alcohol All 100,000 100,000 
Source: Ministry of Finance Regulation No. 62/PMK.011/2010.  
3.34.  New tax rates for tobacco products entered into force in 2012 and are levied per stick or 
gram of the tobacco product.16 The authorities explained that excise taxes are applied equally to 
domestic production and imports for tobacco products that are commercially imported. However, certain low-grade tobacco products, which are domestically produced but not imported, are subject 
to lower excise tax rates.  
3.1.5  Import prohibitions, restrictions, and licensing 3.1.5.1  Import prohibitions 
3.35.  Since 2007, the only new import prohibition introduced was a certain shrimp species (in 
2010).
17 A 2006 regulation on the prohibition of cert ain ozone depleting substances was replaced 
in 2012.18 
3.1.5.2  Quantitative restrictions on imports 
3.36.  Imports subject to quantitative restrictions  are: rice, sugar, animals and animal products, 
salt, alcoholic beverages and certain ozone depleting substances. The authorities indicated that import volumes are determined annually at ministerial-level coordination meetings that take into 
                                               
15 Law No. 39/2007 may be viewed at:  http://rulebook-
jica.ekon.go.id/english/3003_UU_39_2007_e.html. 
16 Finance Minister Regulation No. 167/PMK.011/2011. 
17 MOT Regulation No. 52/2010. 
18 MOT Regulation No. 3/2012. WT/TPR/S/278 • Indonesia 
 
- 45 - 
 
  consideration domestic production and consumption. Quantitative restrictions are implemented 
through Indonesia's import licensing system (see below). 
3.1.5.3  Import licensing 3.37.  Import licensing requirements are in place for a number of reasons, including: for health, 
safety, security, and environmental purposes; to implement commitments taken under 
international agreements; to prevent smuggling; and to implement policies that aim to protect domestic production. With respect to the latter, products affected include some goods subject to 
quantitative restrictions (rice, sugar, animals and animal products, salt), as well as certain textiles 
and textile products; LPG and LPG gas containers; used capital goods; oil and gas; cloves; sodium tripolpy phosphate; horticultural products, and fe rtilizer (Table A3.2).  Indonesia's most recent 
notification to the WTO on its import licensing procedures covers the year 2007.
19 
3.38.  The Directorate-General of Foreign Trade (DGFT), within the Ministry for Trade (MOT) is 
responsible for granting import licences to companies to import specific products.  These licences are generally approved contingent upon a recommendation being provided by one or more other 
ministries or agencies with technical competence in the respective area.  In some cases import 
permits are also required on a per shipment basis.  The licensing process (applications and approvals) is done through Indonesia's National Single Window system (INSW).  According to the 
authorities, no licensing fees or charges are levied.  In most cases importers of goods subject to 
licensing requirements must submit import implem entation reports, and many of these goods are 
also subject to pre-shipment inspection (see above). 
3.39.  The authorities indicated that around 2,060 ta riff lines are subject to import licensing. This 
represents around one-fifth of Indonesia's tari ff. The number of products subject to import 
licensing increased significantly over the review period, with new requirements being introduced on: horticultural products (2012); pearls (2012); animal and animal products (2011); used capital 
goods (2011); sodium tripolpyphospate (2011); fertilizer (2011) oil and gas (2009); non-
hazardous and non-toxic waste (2009); LPG and LPG gas containers (2008); certain food, beverages, medicine, cosmetics, clothing and f ootwear (2008); electronic goods and children's 
toys (2008); and colour multifunctional machines and colour photocopying and printing 
machines (2007).   
3.40.  Various concerns have been raised by WTO Members regarding the complexity, lack of 
transparency, and trade-impairing effects of Indonesia's import licensing requirements, in 
particular with respect to horticultural products; animals and animal products; electronics; 
ready-to-wear clothes; children's toys; footwear; and food and beverages.  In addition, Members have requested Indonesia to notify to the WTO its licensing requirements on animal and animal 
products
20. In January 2013, the United States requested consultations with Indonesia on 
measures affecting imports of horticultural products  and animals and animal products (Chapter 2).   
3.1.6  Contingency measures  
3.41.  In 2011, Indonesia enacted new rules governing anti-dumping, countervailing, and 
safeguard measures through Government Regulation No. 34 of 2011.21 This regulation replaces 
previous rules in force, with changes intended to reinforce anti-dumping, subsidy and safeguard investigation procedures as well as to bring the regulation of trade remedies under one piece of 
legislation.
22  
3.42.  The Indonesia Anti-Dumping Committee (KADI) is responsible for investigations in relation 
to anti-dumping and countervailing measures, and the Indonesian Safeguard Committee (KPPI) for 
investigations in relation to safeguard measures. The Advocacy Centre for Safeguards (a 
                                               
19 WTO document G/LIC/N/3/IDN/4, 23 February 2010 (Replies to Questionnaire on Import Licensing 
Procedures). 
20 WTO document G/LIC/M/35, 6 August 2012; and USTR (2011). 
21 This regulation has been notified to the WTO. See WTO document G/ADP/N/1/IDN/3, 
G/SCM/N/1/IDN/3, 27 April 2012. 
22 This replaces rules set out in Decree No. 84 of the President of the Republic of Indonesia in 2002 
regarding safeguards for the domestic industry against surges of impo rts and Government Re gulation No. 34 of 
1996 regarding anti-dumping and countervailing duties.   WT/TPR/S/278 • Indonesia 
 
- 46 - 
 
  directorate within the Ministry of Trade) is ch arged with defending Indonesian exporters facing 
remedy actions by foreign governments. The authorities noted that institutional restructuring is in progress to merge these institutions.  
3.1.6.1  Anti-dumping and countervailing measures  
3.43.  KADI may undertake anti-dumping and countervailing investigations on its own initiative or 
launch an investigation based on an application from domestic industry. Regulation No. 34 introduces the requirement that the petitioner or  the domestic industry supporting the petition 
must constitute at least 25% of total domestic produc tion of the like product(s) to be investigated.   
3.44.  Most of the main procedural deadlines did not change under Regulation No. 34. Where 
industry applications for an anti-dumping and countervailing investigation are accepted, KADI must inform the government of the exporting country; it then has up to 30 days to review the 
application and decide whether to initiate an investigation. Investigations must be completed 
within 12 months (extendable to 18 months in special circumstances). Any provisional measures imposed must be applied no sooner than 60 days from the date of initiation of the investigation 
and may be applied for a maximum of four months (in specific circumstances they may be applied 
for up to 9 months). The maximum period for the imposition of anti-dumping and countervailing duties is five years from the date of imposition.  
3.45.  New procedural deadlines have been introduced or amended in certain areas: (a) where 
KADI, in the conduct of an investigation, requests information from certain parties, the deadline for their response has been increased from 30 to 40 days (with a possibility of a 30-day extension); (b) there is a new requirement for KADI to report the final determination of an 
investigation to the various parties within 7 working days of when the investigation ends; (c) any 
undertaking offers must be submitted within 7 days from imposition of a provisional anti-dumping or countervailing duty or disclosure of the preliminary report of the investigation, and KADI, rather 
than the Minister of Industry and Trade, now has the authority to approve or reject them; 
(d) refunds of provisional duties must now be  made within 30 days, rather than 90; and 
(e) interim reviews must be conducted within 12 months of their initiation. 
3.46.  Other notable changes introduced by the ne w regulation include: (a) allowing KADI during 
the course of an investigation, to request information from user industries and consumer organizations, as well as to conduct hearings upon request; (b) amended procedures for imposing provisional and final duties, requiring consideration by relevant government ministries/institutions 
prior to the imposition of such measures; and (c) the introduction of sunset review procedures.  
3.47.  Indonesia has never initiated a countervai ling investigation. Compared with other WTO 
Members, Indonesia is a significant, but not a major initiator of anti-dumping investigations and 
imposer of final measures.
23   
3.48.  Indonesia has been active in notifying the status of anti-dumping activity through 
semi-annual reports, but has not immediately notified all preliminary or final actions taken. 
Between 2007 and November 2012, 25 new investigations were initiated (Table 3.9). Of these, 
13 resulted in the imposition of definitive measures; 7 investigations were terminated without the imposition of definitive measures; and the remaining 5 are still under investigation.  
3.49.  In 2009, a sunset review regarding uncoated writing and printing paper from Finland, India, 
the Republic of Korea, and Malaysia resulted in the termination of the measure.   
                                               
23 Of the 40 WTO members that undertook anti-dumping investigations over the period 2005-11, 
Indonesia was the 12th most frequent initiator of investigations (initiating 89 anti-dumping investigations).  It 
was the 14th most frequent in terms of imposing anti-dumping measures (imposing 42 final measures).   WT/TPR/S/278 • Indonesia 
 
- 47 - 
 
  Table 3.9 Anti-dumping investigations, January 2007 to November 2012  
Country 
 Product 
 Investigation 
(date) Status 
Australia Wheat flour 17.11.2008 
 Withdrawal of petition by petitioner.  
Termination of investigation (13.08.2012) 
China Sodium 
Tripolyphosphate 29.06.2007 
 Finding of no causal link.  Termination of 
investigation (16.09.2008) 
 Hot rolled plate 05.11.2008 Finding of no injury (29.09.2009) 
 Polyester staple 
fibre 
 20.04.2009 Definitive duties ranging from 0% to 11.94% 
imposed on 23.11.2010 
 H&I section  
 30.06.2009 Definitive duties ranging from 6.63% to 
11.93% imposed on 23.11.2010 
 Hot rolled plate 31.03.2010 Definitive duty of 10.47% applied on 
01.10.2012  
 Ceramic tableware 21.06.2011 Definitive duty of 87%  applied on  24.04.2012  
 Cold rolled 
coil/sheet 24.06.2011 Under investigation 
Chinese 
Taipei Hot rolled plate 05.11.2008 Finding of no injury (29.09.2009) 
 Polyester staple 
fibre 20.04.2009 Definitive duty of 28.47% imposed on 
23.11.2010 
 Cold rolled 
coil/sheet  24.06.2011 Under investigation 
India 
 Polyester staple 
fibre 20.04.2009 Definitive duties ranging from 5.82% to 
16.67% imposed on 23.11.2010 
Japan Cold rolled 
coil/sheet 24.06.2011 Under investigation 
Korea 
Rep. of Hot rolled coil 08.04.2009 Definitive duty of 3.8% imposed on 07.02.2011  
 Cold rolled 
coil/sheet 24.06.2011 Under investigation 
Malaysia Hot rolled plate 05.11.2008 Finding of no injury (29.09.2009) 
 Aluminium 
mealdish 11.09.2009 Definitive duty of 27% imposed on 27.08.2010 
 Hot rolled coil 08.04.2009 Definitive duty of 48.4% imposed on 
07.02.2011 
Philippines 
 Cavendish 
bananas 23.05.2011 Definitive duty of 35% imposed on 17.11.2011 
on all producers/exporters (replaces definitive 
duty of 49.35% imposed on 28 September 
2006) 
Singapore Hot rolled plate 31.03.2010 Definitive duty of 12.33% applied on 
01.10.2012 
Sri Lanka Wheat flour 
 17.11.2008 Withdrawal of petition by petitioner.  
Termination of investigation (13.08.2012) 
Thailand Bi-axially 
orientated 
polypropylene film 
 09.05.2008 Provisional duties ranging from 10% to 15% 
applied on 08.05.2009.  Definitive duties 
ranging from 10% to 15% imposed on 16 
November 2009 
Turkey Wheat flour 
 17.11.2008 Withdrawal of petition by petitioner.  
Termination of investigation (13.08.2012) 
Ukraine Hot rolled plate 31.03.2010 Definitive duty of 12.5% applied on 
01.10.2012  
Vietnam Cold rolled 
coil/sheet 24.06.2011 Under investigation 
Source: Semi-annual Reports by Indonesia to the WTO, under Article 16.4 of the Agreement; and 
information provided by the authorities. 
3.50.  As of November 2012, Indonesia had 18 definitive anti-dumping measures in force.  These 
included the measures listed in Table 3.9 as well as duties on hot rolled coil from five WTO WT/TPR/S/278 • Indonesia 
 
- 48 - 
 
  Members (China, India, the Russian Federation, Ch inese Taipei, and Thailand), imposed in 2008 as 
the result of an investigation in 2006.  
3.1.6.2  Safeguard measures 3.51.  The main changes introduced by Government Regulation No. 34 with respect to safeguards 
rules are: (a) the removal of a 200-day timeframe for investigations; (b) the introduction of a 
"national interest consideration" whereby the Ministry of Trade reviews KPPI recommendations to ensure that they are in the national interest; and (c) industry may now submit a structural 
adjustment plan to KPPI as part of the investigation process. 
3.52.  Since 1995, Indonesia has initiated 18 safeguard investigations (10 were initiated over the 
review period), and has imposed 11 safeguard actions (9 were imposed over the review period) (Table 3.10). This substantial increase in Indonesia's use of safeguard measures has made it one 
of the most frequent initiators of safeguard investigations and resulting actions since 2010.
24 
Indonesia has attributed its increase in safeguar d activity to greater industry awareness of the 
availability of trade remedies to counter th e negative effects of trade liberalization. 
Table 3.10 Safeguard activity, 2007-12  
Product Investigatio
n initiation Investigation outcome 
 
Wheat flour 24.08.2012 Under investigation 
Mackerel (excluding fillets, 
livers and roes (fresh, chilled or 
frozen) 27.01.2012 In March 2012, KADI proposed the imposition of 
a safeguard measure for three years.  As at 
November 2012, the Minister of Finance 
regulation required to enact the safeguard 
measure had not yet been issued. 
Articles of finished casing and 
tubing 20.01.2012 Under investigation 
 
Articles of iron or steel wire 
 22.08.2011 In January 2012, KADI proposed the imposition 
of a safeguard measure for three years.  As at 
November 2012, the Minister of Finance 
regulation required to enact the safeguard 
measure had not yet been issued.  
Conveyor belts or belting 
reinforced only with metal of a width exceeding 20cm  03.11.2011 Investigation terminated on 13.04.2012without 
recommendation to impose a safeguard measure 
 
Tarpaulins, awnings, and sun 
blinds of synthetic fibres 
 22.03.2011 Imposition on 02.12.2011 of safeguard 
measures for three years:  Rp 13,643 per kg 
(from 17.11.2011 to 16.11.2012);  Rp 12,643 
per kg (from 17.11.2012 to 16.11.2013);  and 
Rp 11,643 per kg (from 17.11.2013 to 
16.11.2014).  Awnings and sun blinds and 
various listed developing countries are excluded 
from the measure. 
Conveyor belts or belting reinforced only with metal of a 
width exceeding 20 cm 03.11.2011 Under investigation 
Articles of iron or steel wire 22.08.2011 Under investigation 
Polypropylene in granule form   
 26.04.2011 Investigation terminated on 16.06.2011 without 
recommendation to impose a safeguard measure 
Cotton yarn (other than sewing 
thread) 25.06.2010 Imposition on 06.06.2011 of safeguard 
measures for three years:  Rp 40,687 per kg 
(06.06.2011 to 05.06.2012);  Rp 38,144 per kg 
(06.06.2012 to 05.06.2013);  and Rp 35,601 
per kg (06.06.2013 to 05.06.2014).  Certain 
tariff lines as well as 105 developing countries 
                                               
24 WTO online information.  Viewed at:  http ://www.wto.org/english/news _e/news11_e/safe_02may11_ 
e.htm. WT/TPR/S/278 • Indonesia 
 
- 49 - 
 
  Product Investigatio
n initiation Investigation outcome 
 
are excluded from the safeguard measure 
Wire of iron and non-alloy steel 
(plated with zinc, containing carbon less than 25% by 
weight) 
 21.01.2010 Imposition on 23.03.2011 of safeguard 
measures for three years:  Rp 6,658 per kg (23.03.2011 to 22.03.2012); Rp 5,643 per kg 
(23.03.2012 to 22.03.2013) and Rp 4,629 per 
kg (23.03.2013 to 22.03.2014) 
Stranded wire, ropes, and 
cables (excluding locked coil, 
flattened strands and non-
rotating wire ropes) 
 30.04.2010 Imposition on 23.03.2011 of safeguard 
measures for three years:  Rp 24,080 per kg 
(23.03.2011 to 22.03.2012);  Rp 21,464 per kg 
(23.03.2012 to 22.03.2013);  and Rp 18,849 
per kg (22.03.2013 to 22.03.2014).  Various 
listed developing countries are excluded from 
the safeguard measure 
Stranded wire, ropes, and 
cables for locked coil, flattened 
strands, and non-rotating wire ropes 
 05.02.2010 Imposition on 23.03.2011 of safeguard 
measures for three years:  Rp 18,620 per kg 
(23.03.2011 to 22.03.2012);  Rp 17,326 per kg (23.03.2012 to 22.03.2013);  and Rp 16,858 
per kg (23.03.2013 to 22.03.2014).  Various 
listed developing countries are excluded from the safeguard measure 
Wire of iron and non-alloy 
steel, not plated or coated 
 19.01.2010 Imposition on 23.03.2011 of safeguard 
measures for three years:  Rp 7,767 per kg 
(23.03.2011 to 22.03.2012);  Rp 7,216 per kg 
(23.03.2012 to 22.03.2013); and Rp 6,665 per 
kg (23.03.2013 to 22.03.2014).  106 listed 
developing countries are excluded from the 
safeguard measure 
Woven fabrics of cotton  25.06.2010 Imposition on 23.03.2011 of safeguard 
measures for three years:  Rp 116,800 per kg (23.03.2011 to 22.03.2012); Rp 109,500 per kg (23.03.2012 to 22.03.2013); and Rp 102,200 
per kg (23.03.2013 to 22.03.2014) 
Aluminium foil food containers/ 
aluminium trays and plain lids 19.01.2010 Investigation terminated on 14.06.2010 without 
recommendation to impose a safeguard 
measure  
Wire nails and staples and wire 
of iron or non alloy steel (not 
plated) 05.11.2008 Imposition on 07.10.2009 of safeguard 
measures for three years:  145% (01.10.2009 
to 30.09.2010); 115% (01.10.2010 to 
30.09.2011); and 85% (01.10.2011 to 30.09.2012).  Various listed developing countries are excluded from the measure 
Dextrose monohydrate (DMH) 
 14.05.2008 Imposition on 07.09.2009 of safeguard 
measures for three years from 24 August 2009 
to 23 August 2012:  first year:  Rp 2,700 per 
kg; second year Rp 2,400 per kg;  and, third 
year Rp 2,100 per kg.  Various listed developing 
countries are excluded from the measure 
Porcelain and non-porcelain ceramic tableware  05.06.2008 A safeguard measure in place from 4 January 
2006 to 4 January 2009 was extended for a further three years (to 3 January 2012).  The rate for the first year is Rp 1,200 per kg; second 
year: Rp 1,150; and third year: Rp 1,100 per 
kg.  Various developing countries are excluded from the measure 
Source: Notifications to the WTO Committee on Safeguards; and additional information provided 
by the authorities. WT/TPR/S/278 • Indonesia 
 
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  3.1.7  Standards and technical regulations 
3.53.  There have been no changes to the institutions responsible for the setting of national 
standards (Standard Nasional Indonesia (SNI)) since Indonesia's previous Review, or to the procedures to be followed. The authorities in dicated that a Standardization and Conformity 
Assessment Act is being drafted. 
3.54.  The National Standardization Agency of Indonesia (Badan Standardisasi Nasional, BSN) 
remains the governmental institution responsible for coordinating and facilitating standard setting. 
BSN is also the contact point for cooperation with international standard setting bodies. BSN 
establishes guidelines for standard development approved by the Technical Management Board for Standard Development (MTPS).
25 This Board comprises experts as well as representatives from 
regulators, and consumer and producer associations. Technical Committees (TCs) within specific 
ministries  are responsible for the drafting of standard s within their spheres competence; the TC 
chairs and secretariats are appointed by BSN.26 TCs comprise representatives from government, 
consumer associations, experts, and industry. Th e Indonesia Standardization Society (MASTAN) is 
an independent body open to public membership , whose objective is to broaden stakeholders' 
participation in the development of national standards.   
3.55.  The process of developing SNIs generally follows five phases: programming; drafting; 
national consensus and finalization; the establishment of the SNI; and maintenance of the SNI.27 
The TC submits proposals for new or revised standards to the BSN based on its stakeholder's needs. The BSN reviews the proposal and, if nece ssary, coordinates with the TC to ensure it is 
aligned with the TC's scope, before submitting it to the MTPS for approval. Approved proposals are 
put on the National Programme for Standard Develo pment (PNPS). A draft SNI is then prepared by 
the TC, which may invite other stakeholders to provide inputs, and is sent to the BSN for circulation to solicit comments, and is posted on the BSN website for comments by MASTAN 
members (draft (unless draft standards that are identical to international standards are directly 
subject to ballot approval). Technical experts an d other interested parties are invited to examine 
draft standards and their opinions are taken into account in the redrafting stage for voting on the 
BSN website. The final draft is subject to electr onic ballot approval by the BSN, and information 
about the issuance of the standard is publishe d on the BSN website (http://websisni.bsn.go.id). 
The authorities indicated that they have been making efforts to align national standards with international ones and that more than 50% of Indonesian standards are now harmonized. 
3.56.  The relevant TCs are responsible for periodic reviews of standards. The authorities noted 
that standards should be reviewed no longer than  five years after they are issued. Following the 
review, the TC may propose revision or withdrawal of a standard if necessary. 
3.57.  SNIs are voluntary. However those related to national security requirements, the prevention 
of deceptive practices, protection of human health or safety, animal or plant life or health, and the 
environment may be adopted to be mandatory. 
3.58.  Responsibility for the formulation of mand atory SNIs (technical regulations) is with the 
ministry or agency in charge of the area to be regulated.  This ministry/agency is responsible for undertaking a cost/benefit analysis of developing a technical regulation, considering its proposed objectives, consumer needs, and technical infrastructure requirements.  It submits the proposal for 
a technical regulation to BSN to be adopted in the National Programme for Technical Regulations 
by a Board comprising members from different ministries and associations.  There follows a drafting period, involving relevant stakeholders.  The draft technical regulation is then notified to 
BSN and forwarded to the WTO Secretariat.  Technical regulations are issued by the relevant 
ministry or agency and enter into force six months after notification to the WTO. 
                                               
25 As at end 2012, ten guidelines had been approved.  The authorities noted that these are all based on 
international directives. 
26 The authorities noted that the main Ministries involv ed in standard setting are: Industry, Agriculture, 
Energy and Mineral Resources, Forestry, Fisheries and Marine Affairs, the Environment, and the National 
Agency for Drug and Food Control within the Department of Health. 
27 These steps are set out in National Standard ization Guideline (PSN 01:2007 The Development of 
SNI). WT/TPR/S/278 • Indonesia 
 
- 51 - 
 
  3.59.  As at December 2012, there were 7,394 approved SNIs (Chart 3.3): 97% voluntary, and 
3% (i.e. 254) mandatory technical regulations (there were 211 technical regulations at the time of Indonesia's previous Review). The 254 technical regu lations are from the Ministry of Industry (79); 
Ministry of Energy and Mineral Resources (19); Mini stry of Marine and Fisheries (80); Ministry of 
Public Works (57); Ministry of Transportation (14 ); NFADC (4); and Ministry of Agriculture (1). The 
authorities indicated that all SNIs are published on the SNI Information System (SISNI) (http://websisni.bsn.go.id).  
Chart 3.3 Composition of Indonesi an National Standards, 2007-12 
 
Agriculture & food
technology
19.0%
Transport & food
distribution
6%Construction 
10%Engineering technology
16%General infrastructure & science
6%
Health, safety & environment
8%
Technology of materials
30%
Special technology
3%Electronic, information & 
communication technology
2%
Total national standards: 7,394
 
 
Source: Indonesian authorities. 
3.1.7.1  Notifications and specific trade concerns 
3.60.  The BSN is Indonesia's enquiry point and notification body responsible for the 
implementation of the WTO TBT Agreement. Over the review period, Indonesia made 
52 notifications to the TBT Committee of proposed  and adopted technical regulations (excluding 
revisions and addenda). The BSN has established a database for the submission of online enquiries 
from domestic and foreign stakeholders, as well as a TBT information system. The latter includes Indonesian notifications, incoming notifications from WTO Members, and a list of technical 
regulations.
28  
3.61.  Most of the specific concerns about Indonesia's measures were raised over the current 
review period (9 during 2007-12, out of 11 since 1995); these related to: 
 a new requirement for rubber hoses for LPG gas stoves to be orange. This was raised by the 
European Union; 
 whether a new regulation on zinc coated steel sheet, intended to protect consumers, should 
apply to certain intermediate goods used in car manufacturing and consumer electronic 
goods. This was raised by the Republic of Korea; 
 the introduction of mandatory certification fo r hot-rolled steel sheets and coils and zinc-
aluminium-coated steel plates and electrolysis-tin-coated thinsteel sheets. Concerns were 
                                               
28 BSN online information. Viewed at: http:// tbt.bsn.go.id/index.php/ notif/usulan/pub/en. WT/TPR/S/278 • Indonesia 
 
- 52 - 
 
  raised by Japan, the Republic of Korea, the European Union, and Chinese Taipei about the 
rationale for the measure and its implementation, including conformity assessment procedures; 
 transparency in the development of a new regu lation regarding trade in Halal products, and 
the absence of a notification to the TBT Committ ee before its entry into force. Raised by the 
United States; 
 a new requirement limiting the granting of dist ribution licenses for food, food supplements, 
drugs, and cosmetics sourced from or contained "un-halal" substances and/or alcohol to 
emergency situations only. This was raised by the United States and the European Union, which also observed that the measure was not notified to the TBT Committee before entering into effect. The measure was later replaced by a labelling requirement, which was 
not contested; 
 labelling requirements for certain imported goods prior to their entry into the Indonesian 
customs area, including a requirement for importers (and domestic producers) to submit a 
sample label to the Ministry of Trade in order to obtain a certification of labelling in the 
Indonesian language. The European Union, Australia, and the United States argued that these measures were more burdensome than necessary to achieve the stated objectives of 
surveillance and consumer information, and asked Indonesia to consider other options. 
Concern was also expressed that this measure had not been notified to the TBT Committee prior to its entering into effect;  
 a draft modification to the technical regulation on food categories, raised by Mexico and 
South Africa; and 
 a draft technical specification and mandatory SNI for toy safety raised by the United States 
and the EU. Both Members raised issues relating to conformity assessment procedures and 
transparency. 
 Import permit regulations for horticultural products from the ministries of Agriculture and 
Trade raised by the European Union, the United States and South Africa. 
3.1.7.2  Testing, inspection, and certification 
3.62.  Standards are implemented through conformity assessment procedures, including 
accreditation and certification systems. The National Accreditation Body (Komite Akreditasi Nasional (KAN)) is responsible for accrediting conformity assessment bodies, including 
laboratories, inspection bodies, and certification bodies.   
3.63.  KAN is a signatory member of various regional and international mutual recognition 
agreements (MRAs) such as the Asia Pacific Labo ratory Accreditation Cooperation (APLAC), Pacific 
Accreditation Cooperation (PAC), International Laboratory Accreditation Cooperation (ILAC) and 
International Accreditation Forum (IAF). Through these MRAs, the equivalence of accredited test reports and certifications from overseas partners are recognized. 
3.64.  Domestic or overseas producers may apply to product certification bodies within Indonesia 
accredited by KAN (and, if applicable, appointed by the ministry responsible for the respective technical regulation). For a sub-licence to use the SNI mark, foreign companies also have the option of applying for sub-licences to foreign product certification bodes (FPCBs) within their own 
country that have been accredited by their do mestic accreditation bodies, when there exist a 
Mutual Recognition Agreement (MRA) between Indonesia and the respective country. The 
authorities indicated that as at January 2012, 360 producers from 33 overseas jurisdictions held 
such sub-licences.
29  
                                               
29 These jurisdictions are:  Australia;  Bangladesh;  Brazil;  Belarus;  Belgium;  China;  Fiji;  Hong Kong, 
China;  Chinese Taipei;  Germany;  Hungary;  India;  Italy;  Japan; Jordan; the United Kingdom;  Malaysia;  
Egypt;  Norway;  France;  Poland;  Portugal;  Russia;  Singapore;  South Korea;  Spain;  Switzerland;  Sri 
Lanka;  Thailand;  Turkey;  Ukraine;   United States;  and Viet Nam. WT/TPR/S/278 • Indonesia 
 
- 53 - 
 
  3.1.7.3  Market surveillance 
3.65.  In general, market surveillance is ca rried out by the Directorate of Supply Goods and 
Services within the Ministry of Trade. However for technical regulations, market surveillance is the 
responsibility of the institution which is designated in the technical regulation itself. These 
individually designated institutions must coordinate their activities with the Ministry of Trade and 
must also comply with the rules on Minist ry of Trade market surveillance procedures.30  
3.1.8  Sanitary and Phytosanitary Measures 
3.66.  There have been no changes to Indonesia's five main regulators for food safety, animal 
health and plant health since 2007. The Indonesian  Agricultural Quarantine Agency (IAQA), the 
Directorate-General of Livestock and Animal Health, and the Directorate-General of Horticulture fall under the responsibility of the Ministry of Agriculture. The Fish Quarantine and Inspection 
Agency (FQIA) is part of the Ministry of Marine Affairs and Fisheries. The National Agency for Drug 
and Food Control (BPOM) falls under the President's responsibility.   
3.67.  All SPS-related regulations are issued at central government level, following coordination 
w i t h  s u b - n a t i o n a l  g o v e r n m e n t s .  T h e  I A Q A  i s  I n donesia's national enquiry point and national 
notification authority for SPS matters. The IAQA has 52 animal and plant quarantine stations at 151 entry points, while the FQIA has 47 fish quarantine stations at 77 entry points throughout the 
country. 
3.68.  The main laws concerned with food safety, and animal and plant health are: Law 
No. 16/1992 on Animal, Fish and Plant Quarantine; Law No. 7/1996 on Food; Law No. 31/2004 on Fisheries; Law No. 18/2009 on Animal Husbandry and Animal Health; and, Law No. 13 of 2010 on 
Horticulture. A new food law has been drafted and is expected to receive Presidential assent by 
end 2012. Information was not available on the main changes likely to be introduced. 
3.69.  Over the period January 2007 to October 2012, Indonesia made 26 notifications to the SPS 
Committee (excluding revisions), most of which were regular notifications (Table 3.11). 
Seven regular notifications were notified after the SPS measure had entered into force.
31  
Table 3.11 SPS measures notified by Indonesia, 2007-12  
 No. of notifications to the SPS 
Committee 
Total regular and emergency notifications 26 
     Regular notifications 23 
     Emergency notifications 3 
Objective of notificationsa  
     Food safety 9 
     Animal health 12 
     Plant protection 10 
     Protect humans from animal/plant pest or disease 14 
     Protect territory from other damage from pests 15 
a Most notifications contain more than one objective. 
Source: WTO online SPS Information Management  System. Viewed at: http://spsims/.wto.org. 
3.70.  Over the review period, specific concerns have been raised in the SPS Committee about: 
import restrictions on pork products due to infl uenza A/H1N1 (raised by Mexico and supported by 
Australia, Brazil, Canada, the Dominican Republic, and the United States); new meat import 
conditions (raised by the European Union);  import restrictions on poultry meat (raised by Brazil); import restrictions on beef and recognition of the principle of regionalization (raised by Brazil); and 
                                               
30 These procedures are set out in Ministry of  Trade Regulation No. 20/M/-DAG/PER/5/2009. 
31 See WTO documents G/SPS/N/IDN/44, 1 March 2011;  G/SPS/N/IDN/46, 7 May 2012;  
G/SPS/N/IDN/47, 7 May 2012;  G/SPS/N/IDN/48, 7 May 2012;  G/SPS/N/IDN/49, 7 May 2012;  G/SPS/N/IDN/53, 13 July 2012;  G/SPS/N/IDN/54, 13 July 2012. WT/TPR/S/278 • Indonesia 
 
- 54 - 
 
  Indonesia's port closure (raised by the United States and supported by Australia, Canada, Chile, 
the EU, Japan, the Republic of Korea, New Zealand, and South Africa). 
3.1.8.1  Selected SPS-related import requirements and restrictions 3.1.8.1.1  Processed food 
3.71.  All processed food products (imports and domestic production) for trade in retail packaging 
must be registered with the National Agency for Drug and Food Control (BPOM) to ensure that they comply with regulations relating to safety, quality, nutrition, and labelling. Registration 
involves submission to BPOM of product information as well as samples for testing by either 
government laboratories or laboratories accredited by (or institutions acknowledged by) the national Accreditation Committee. Since 2008, import  approval from the head of BPOM has been 
required for each imported shipment of proces sed food, raw food materials, food additives, 
processing aids, and food ingredients.  
3.1.8.1.2  Live animals, meat and dairy products 3.72.  Imports of live animals and animal prod ucts are governed by Law No. 18/2009 on Animal 
Husbandry and Animal Health and its implementing regulations (Minister of Agriculture Regulations 
Nos. 50/2011, 51/2011 and 52/2011, as well as Minister of Trade Regulation No. 24/2011). Indonesia requires foreign companies that export animal derived products to Indonesia to prelist 
their establishments with the Indonesian Ministry of Agriculture. All imported meat and dairy 
products (except pork) must be accompanied by a halal certificate issued by an approved halal 
certifying body. The Indonesian Islamic Council (MUI) is responsible for approving Islamic certifying centres in foreign countries. This involves the submission of an application followed by 
an on-site review by the Indonesian authorities.   
3.1.8.1.3  Horticulture 3.73.  In 2010, Indonesia enacted a new Law on Horticulture (Law No. 13/2010). According to an 
external source, the law requires importers of horticultural products to ensure the safety aspect of 
the imported food, the stock availability of domestic products, and the production and consumption targets of horticultural products. In addition, importers must meet standards for 
packaging and labelling, and requirements for sa fety and protection for the health of humans, 
animals, plants, and the environment.
32  
3.74.  Regulations to implement the new law have tightened up import quarantine procedures to 
prevent the spread of fruit fly. Under previous rules (from 2006), importers of fruit and vegetables 
had to submit an import plan to the Head of Operational Plant Quarantine prior to loading the 
goods in the country of origin. 33 In addition, imports of fresh fruit could only enter Indonesia 
through one of seven designated ports. New regulations relating to fresh fruit and vegetables 
(MOA Regulation 42/2012) and on bulbs (MOA Regu lation 43/2012) limit the number of permitted 
entry points to three sea ports (in Makassar (S oekarno-Hatta port), Surabaya (Tanjung Perak 
port) and Medan (Belawan port), one internationa l airport, and free-trade zones. Responding to 
certain exporter concerns that Jakarta's main port (Tanjung Priok) was excluded from the 
permissible list of entry ports, port restrictions do not apply to products imported from fruit fly-free 
sites, and countries with recognized food safety  systems (Australia, Canada, New Zealand, and the 
United States).34 Recognition of food safety systems for fr esh foods of plant origin is governed by 
Minister of Agriculture Regulation No. 88/PP.340/12 /2011. The authorities noted that in order for a 
country's food safety control system to be recogn ized by Indonesia, the competent authority from 
that country must apply to the Indonesian Minister of Agriculture (the application form is annexed 
to the regulation), who will appoint a team to review the application and conduct on-site 
verification in the applicant country. 
                                               
32 USDA Foreign Agricultural Service GAIN Report No. ID1031, 5 November 2010. Viewed at: 
http://gain.fas.usda.gov. 
33 The import plan had to contain details of the amount , type of product, brand, type of packaging, type 
of transportation, container information,  country of origin, entrance port.  
34 Ministry of Agriculture Regulation Nos. 42/2012 and 43/2012. WT/TPR/S/278 • Indonesia 
 
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  3.2  Measures directly affecting exports 
3.2.1  Export procedures  3.75.  Minister of Trade Regulation No. 13 (2012), which entered into force in 2012 sets out export 
procedures as well as the authority of the Minister of Trade to impose export restrictions and 
prohibitions. It replaces Decree of the Minister of Industry and Trade No. 588 of 1998 (and its 
various amendments).  Exported goods are categori zed into (a) free exported goods; (b) restricted 
exported goods; and (c) prohibited exported goods. Free exported goods may be exported by 
individuals, institutions and business entities. Restricted exported goods are regulated through 
specific Ministerial Regulations, the provisions of which vary according to the product.  Prohibited exported goods are regulated by Minister of  Trade Regulation No. 44 (2012) (see below). 
3.76.  Various export permits and authorizations are required.
35 For all commercial exports, 
exporters must submit a declaration to the Dire ctorate-General of Customs and Excise (DGCE), 
together with a commercial invoice, airway bill or bill of lading, packing list, letter of insurance, and export licence if required. The timeframe for submission of these documents is any time from 
seven days prior to departure to just before the departure of the export. Export documentation 
(excluding licences) may be provided electronically through Indonesia's national single window (INSW), as long as the goods are leaving through one of the customs points where the system is 
operational. The INSW is being upgraded to inte grate export licences. Any export duties levied 
(see below) must be paid at the time documentation is submitted. 
3.2.2  Export prohibitions, restrictions, and licensing 3.2.2.1  Export prohibitions 
3.77.  The Minister of Trade has the authority to  prohibit exports by reason of: (a) a national 
security or public interest threat (including for social, cultural, and moral reasons); (b) protection of intellectual property rights; (c) protection of human life and health; (d) protection of the 
environment and ecology; and (e) the signature an d ratification of international treaties or 
agreements by the Government. Export prohibitions in effect as at end 2012 are listed in Table 3.12. Indonesia does not prohibit exports to any specific countries.   
3.78.  As envisaged in Ministerial Regulation No. 34 of 2009, the Government of Indonesia will 
prohibit mining companies from exporting mineral ore products (currently subject to export licensing and taxes) as of 2014, when they will be required to undertake refining activities 
onshore.   
Table 3.12 Export prohibitions, 2012  
Product  Rationale 
 
Raw Rubber  Not provided 
Certain wood products including raw 
and semi-processed rattan  Support domestic processing industry and prevent 
smuggling 
Fish eggs and fry  Not provided 
Certain scrap iron and metal  Implementation of commitments under the Basel 
Convention 
Certain mining products   Environmental protection.  Implementation of 
commitments under the Basel Convention 
                                               
35 Minister of Trade Regulation No. 13 of 2012. Viewed at: http://rulebook-
jica.ekon.go.id/english/4708_13_M-DAG_PER_3_2012.html.  In dividual exporters must have a taxpayer 
identification number and other documents required under specific legislation. Institutions or businesses exporting restricted or non-restricted goods must have:  a trading business permit (SIUP) or business permit 
from the technical ministry/non-ministe rial government institut ions/agencies; company registration; taxpayer 
identification number; and other documents required und er the legislation. To export prohibited goods, 
business/institutional entities also need: recognition as  a registered exporter by and export approval from the 
Ministry of Trade; a surveyors report; a certificate of or igin; and/or other documents required under legislation. WT/TPR/S/278 • Indonesia 
 
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  Product  Rationale 
 
Various animals, birds, reptiles, 
insects, fish, crustaceans, and plants  Implementation of commitments under the CITES 
Convention   
Sand, soil and top soil  Environmental protection 
Subsidized urea fertilizer  Improve the effective control of fertilizer from abuse 
and diversion, and maintain the national availability of 
fertilizer 
Source: Regulation of the Minister of Trade No. 44, 2012 Concerning Goods Subject to Export 
Prohibition; Regulation of the Minister of Trade No. 48, 2012 Concerning Provisions on the Export of Non-Subsidized Urea Fertilizer;  and Regulation of the Minister of Trade 
No. 2, 2007 Concerning Prohibition of Export of Sand, Soil and Top Soil. Viewed at: 
rulebook-jica.ekon.go.id. Additional information provided by the authorities. 
3.2.2.2  Export restrictions and licensing 3.79.  The Minister of Trade may restrict exports for the following reasons: (a) to protect national 
security or public interest; (b) to protect human health, animals, plants or the environment; (c) 
the existence of international treaties or agreem ents signed and ratified by the Government; (d) 
limited supply in the domestic market or for effective conservation; (e) limited capacity of the 
market in the country or export destination area; and/or (f) limited availability of raw materials 
needed by processing industries.
36 Export licences may be obtained through Indonesia's single 
window facility (INSW). All products subject to ex port licensing are listed in Table 3.13. Exporters 
must obtain an authorization to export from the Director-General of Foreign Trade (DGFT) within 
the Ministry of Trade (MOT); generally, this is contingent upon obtaining a recommendation from 
another ministry.  However, the basis for granting or refusing these recommendations is unclear. Export licences are required for exports of bird nest to China.
37 
Table 3.13 Export restrictions and licensing, 2012  
Product   
 Rationale and requirements 
Tin bar  Rationale: (a) prevent excessive exploitation and environmental damage; (b) 
support sustainable use; (c) fulfil domestic demand; (d) boost competitiveness and improved quality of tin exports. 
 
Requirements: tin may only be exported by entities recognized as "ET-Tin" by 
DGFT.  Recognition is valid for three years (extendable) and is, inter alia , 
contingent upon the entity obtaining a recommendation from the local Governor 
from where the tin originates.  Pre-shipment inspection by an authorised surveyor is required.   
Rattan products 
(non-
prohibited)  Not provided 
 
Mineral ore 
products 
 Rationale: (a) prevent excessive exploi tation and environmental damage; (b) 
fulfil domestic demand; (c) develop the competitiveness of the downstream 
industry; (d) increase investment in smelter construction and provide job opportunities; and (e) improve surveillance of the mining process and collection 
of royalty payments. 
 Requirements: exports of 61 mining products may only be exported by mining 
business permit holders, recognized as registered exporters of mining products.  
These products are also subject to export duties of 20% (see below).  Applications to be recognized as a regi stered exporter must be made to DGFT, 
and inter alia , must include a recommendation from DG Mineral and Coal 
(Ministry of Energy and Mineral Resources).  Mining companies must submit a 
work plan for processing and purification development prior to 2014.  
                                               
36 Minister of Trade Regulation No. 13 of 2012 (Article 4). 
37 Minister of Trade Regulation No. 51 (2012). Viewed  at: http://rulebook-jica.ekon.go.id/English/4827 
_51_M-DAG_PER_7_2012_e.html. WT/TPR/S/278 • Indonesia 
 
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  Product   
 Rationale and requirements 
Recognition as a registered exporter is valid for two years.  Registered 
exporters must apply in writing to the DGFT for approval to export each 
shipment.  These approvals also require a recommendation from the DG of Mineral and Coal specifying the product, exported amount, duration, port of 
loading, and export destinations of product.  Pre-shipment inspection by an 
authorized surveyor is required, at the cost of the exporter.  Registered exporters must submit monthly written reports to the DGFT.  
Non-subsidized 
urea fertilizer  
 Rationale:  ensure availability of fertilizer for the domestic market and put in 
place effective controls to prevent abuse and diversion of subsidized urea 
fertilizer. 
 
Requirements: export of non-subsidized urea fertilizer may only be undertaken 
by certain State-Owned Companies approved by DGFT.   
Non- 
pharmaceutical 
precursors  Rationale: combat illicit international narcotic and psychotropic distribution, 
given that precursors may be misused as raw or auxiliary materials in the black 
manufacture of narcotic and psychotropic drugs.  
 
Requirements: listed types of non-pharmaceutical precursors may only be 
exported by a company recognized as a registered exporter by the Minister of Trade.  Companies must submit written applications to DGFT, inter alia , 
attaching a recommendation from DG Manufacturing Industry Base (Ministry of 
Industry).  Registration is valid for 3 years (extendable).  For each export, 
registered exporters must obtain an approval from DGFT, which is based on recommendations from the National Narcotics Agency and the Indonesian 
police.  Approval to export is valid for 180 days (non-extendable).  Registered 
exporters must notify a national shipment plan, and each shipment must be verified by an appointed surveyor.  Re gistered exporters must also submit 
export reports to the Ministry of Trade every three months.   
Silver and gold Rationale:  (a) minimize environmental damaged from uncontrolled mining; (b) 
meet domestic demand, increase exports of higher-value-added gold and silver 
products; (c) create business certainty with respect to export rules; and (d) 
increase investment and provide job opportunities 
 
Requirements: exporters require an approv al letter to export silver and gold.  
To obtain an approval letter, exporters must apply to the Director of Export 
Industry and Mining Products within the Mi nistry of Trade, with an export plan 
as well as a recommendation from the Director of Textiles and Various (Ministry 
of Industry).   The approval letter is valid for six months (extendable).  
Exporters must report on export implementation regardless of whether exports 
have been made. 
Metal rest and 
scrapa (non-
prohibited)  Rationale:  availability and adequacy of raw materials for the establishment and 
development of national industries, especially metal and machinery industries  
 Requirements: exporters of certain metal rest and scrap (affecting 18 tariff 
lines) require a letter of approval.  To obtain an approval letter, exporters must 
submit an application to the Director of Industry and Mining Export Products (Ministry of Trade), inter alia , attaching a recommendation from the Director of 
Metal Base Material Industry (Ministry of Industry).  The approval letter is valid 
for six months (extendable).  Exporters must report on export implementation regardless of whether exports have been made.  Certain metal rest and scrap items may only be exported from Batam Island (6 tariff lines). 
Class C Minerals 
other than 
sand, soil and 
top soil Rationale: to minimize environmental damage caused by uncontrolled mining 
and prevent illegal exports. 
 
Requirements: pre-shipment inspection by Prior to export, Class C Minerals 
must be verified by a surveyor approved by DGFT. 
Raw Diamonds Rationale: implementation of commitments under UN Resolution N° 55/56 
(2000) on the prevention of violations of trade of diamonds related to armed 
conflicts and resulting Kimberly Process Certification Scheme (KPCS).  WT/TPR/S/278 • Indonesia 
 
- 58 - 
 
  Product   
 Rationale and requirements 
Requirements: raw diamonds may only be  exported by exporters approved by 
DGFT, which, inter alia , is contingent upon obtaining a letter of 
recommendation from DG Mineral and Coal (Ministry of Energy and Mineral Resources). Such recognition is for three years (extendable). Raw diamonds 
may only be exported to KPCS participants. Each consignment is subject to pre-
shipment inspection and requires the approval of DGFT. 
Oil and Gas Rationale: (a) sovereignty (Constitution, Article 33(3)); (b) sustainable and 
efficient management of oil and gas as non-renewable natural resources; (c) 
prevention of excessive exploitation an d environmental damage; (d) ensure the 
exploitation of these resources contributes to the prosperity and welfare of the 
Indonesian people; and (e) supply domestic demand. 
 
Requirements: exporters must be approved by DGFT, which, inter alia , is 
contingent upon their obtaining a letter of recommendation from DG Oil and 
Gas (Ministry of Energy and Mineral Resources). 
a Rest is defined as products that have not b een used up in production, or goods that still 
have the same characteristics but their function has changed.   
Source: Minister of Trade Regulations:  No. 10 (2005), as amended by No. 25 (2008); No. 3 
(2007); No. 29 (2012) as amended by No. 52 (2012); No. 45 (2012); No. 46 (2012); No. 47 (2012); No. 48 (2012); and No. 78 (2012). 
3.2.2.3  Export taxes 
3.80.  Exports are zero-rated for VAT and are exempt from Luxury and Excise Taxes.  3.81.  Over the review period, new export taxes have been introduced on leather and wood; crude 
palm oil; raw cocoa; and mineral ore products (Table 3.14). The main objective of these measures 
is to encourage value-added processing within Indonesia. Secondary considerations are to secure domestic supply and to safeguard the environment.  According to the authorities, this policy seems 
to have been successful in achieving its objectives .  They noted, for example, that the export tax 
on raw cocoa has succeeded in attracting more than US$200 million in FDI. 
Table 3.14 Export taxes, October 2012  
Product (date introduced) 
 Tax Rate 
Palm oil, crude palm oil and its 
derivative products 
(2011)  Export duties range from 0-40%.  Reference prices used to 
determine the export price are based on the average rates 
in Kuala Lumpur, Rotterdam, and Jakarta. 
Leather and wood 
(2009)  Rates range from 2-25%   
Raw Cocoa (2010) Export duties range from 0-15%.  The reference price for 
cocoa beans is the New York Bo ard of Trade average c.i.f. 
price. 
Mineral ore products  
(2012)  
 20% export tax.  The Ministry of Finance (MOF) determines 
the export benchmark price, based on prevailing domestic 
factors and international prices.  MOF coordinates with the 
Ministry of Energy and Mineral Resources and consults with 
mining associations and exporters. 
Source: Regulation of the Minister of Finance No. 75 (2012) Concerning Stipulation of Exported 
Goods Subject to Export Levy and Rate of Export Levy. Viewed at: rulebook-
jica.ekon.go.id. Information provided by the authorities. WT/TPR/S/278 • Indonesia 
 
- 59 - 
 
  3.82.  With respect to export taxes on mineral ore products, an external source has noted that 
raising the tax to 50% in 2013 is being discussed, in order to discourage the front-loading of production before the export ban on unprocessed ores enters into effect in 2014 (see above).
38  
3.83.  Export taxes are collected by the central Government. They accounted for an estimated 
1.9% of total tax revenue in 2012.   
3.2.2.4  Export assistance 3.2.2.4.1  Free-trade zones (FTZs) 
3.84.  Indonesia has one FTZ, situated in the Ri au Islands of Batam, Bintan and Karimun. These 
islands are located to the south of Singapore and have a long history of strong commercial links with Singapore and Malaysia.
39 They were granted Free Port and Free Trade Zone status in 2007 
for a period of 70 years, having previously had the status Bonded Zones Plus (see below).40 The 
main business sectors operating within the FTZs are technology, medical equipment and 
electronics, telecommunications, agri-business, textiles, industrial assembly and fabrication, shipbuilding, tourism, and oil and energy services.
41  
3.85.  FTZs are governed by Law No. 1 (2000) on  Free Trade Zones and Free Ports, as amended in 
2007. They are geographically distinct areas loca ted near sea ports and airports, where imported 
goods may be stored, repacked or processed, free from the imposition of import duties, VAT, 
Luxury Tax and Excise Tax. Import and export documentation is simpler than for regular imports. 
3.86.  A 2009 law on Special Economic Zones (see below) foresees that the existing FTZs will 
either expire within a pre-determined period or will become special economic zones, with broader 
activities (see below).  Once FTZ's have changed status or expired, Law No. 1 (2000) will become 
null and void.  
3.2.2.4.2  Bonded zones  3.87.  As at end 2012, Indonesia had 1,557 bonded zones (also known as export processing 
zones). Minister of Finance Regulation No. 147/2011 (as amended) governs bonded zones, and is 
implemented by various DGCE regulations.
42 
3.88.  Bonded zones are buildings or confined areas used to process goods and materials for 
export, including design, engineering, sorting an d packaging activities.  Goods may be imported 
into a bonded zone and then re-exported without the payment of import duties. Exemptions from VAT, excise and luxury taxes apply. Raw materials purchased from local companies are also exempt from the VAT and Luxury Tax. In addi tion, businesses are exempt from payment of 
Corporate Income Tax (see Chapter 2). Companies licensed to operate in bonded zones must 
export at least two thirds of their production. Im porters selling to the domestic market may defer 
payment of taxes until imported goods are released from the bonded zone into the domestic 
market. A Bonded Zone Plus has simpler busine ss licensing provisions and import procedures. 
3.89.  Foreign and domestic investors must apply to the Investment Coordination Board (BKPM) to 
establish projects in bonded zones. Foreign investors in bonded zones are usually granted 
privileges for building manufacturing plants in these zones. Incentives include 100% foreign 
ownership for five years and 95% ownership thereafter, provided 100% of production is exported.  
                                               
38 Economist Intelligence Unit online information.  Viewed at:  http://portal.eiu.com/index.asp?layout= 
displayVw&article_id=679009652&geography_id=1810000181&region_id=. 
39 The Riau Islands are Indonesia's part of the Indo nesia-Malaysia-Singapore growth triangle (IMS-GT), 
a partnership arrangement between the three countries si gned in 1994 to attract investment to the region by 
bringing together the different comp etitive strengths of each country, supported by enhanced infrastructural 
connectivity. For more information see Wong Poh Kam and Ng Kwan Kee (2009). 
40 Batam was granted FTZ status through Govern ment Regulation No. 46 of 2007. Viewed at: 
http://www4.bkpm.go.id/file_uploaded/ Government_Regulation_No_46_of_2007.pdf. 
41 Riau Islands FTZ online information. Viewed at: http://www.riauislandsftz.com. 
42 Minister of Finance Regulation No. 147/2011 amended by Regulation No. 255/2011 and No. 44/2012. 
DGCE implementing regulations are:  No. 57/2011 as amended by No. 2/2012 and 17/2012. WT/TPR/S/278 • Indonesia 
 
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  3.2.2.4.3  Export-orientated production entrepôts (EPTEs) 
3.90.  EPTEs (otherwise known as stand-alone expo rt-processing units) are the place or building of 
an industrial company enjoying special tax treatm ent. They are governed by Minister of Finance 
Decree No. 855/1993 (as amended). Goods may be imported into an EPTE and re-exported 
without payment of tariffs and VAT. EPTEs may divert up to 25% (by volume) of their products to 
Indonesian customs areas, where they are subj ect to normal procedures and customs duties. 
Applications for EPTE status are made to the Minister of Finance through the Directorate-General 
of Customs and Excise.  
3.2.2.4.4  Special economic zones (SEZs) 3.91.  A key objective in Indonesia's MasterPlan and the 2007 Investment Law is to develop 
special economic zones (SEZs) throughout the country as centres of economic activity to enhance 
the competitiveness of Indonesian business and en courage value-added processing activities and 
exports (see Chapter 2). These zones, must have distinct geographical boundaries, be situated in strategic positions (i.e. close to trade and or mari time routes), and/or be supported by a business 
cluster or key sector, as well as being linked into well-developed external infrastructure. The 
concept is that there should be various zones located within the SEZ, including: export-processing zones (assembly and logistics for exports); bonded zones (processing, warehousing, and logistics 
for goods destined for the domestic market and for export); industrial zones (processing and 
manufacturing for the domestic market); technology parks; and supporting activities (such as ports, hotels, and housing).   
3.92.  The Government enacted the Special Economic Zones Law in 2009. Under this law, SEZ 
proposals must be approved by a National Council, consisting of government ministers and heads 
of certain other government institutions, which ha s overall responsibility for administering SEZ's, 
as well as by the President.  Individual SEZ designations are then set out in a Government 
Regulation. The private sector may be involved in putting forward proposals for and developing 
SEZs, funding their development and maintenance, and running business activities within them.   
3.93.  The 2009 law makes provision for various fiscal and non-fiscal incentives in order to attract 
investors. Fiscal incentives relate to corporate income tax; property tax; import duty, VAT, excise 
and luxury taxes and local taxes. Non-tax incentives include assistance relating to acquiring land, licensing, immigration, investment, and manpower. These incentives are to be further developed through implementing regulations. Information was not available as to whether any such 
regulations had been developed. The law specifies that with respect to employment, priority is to 
be given to Indonesian citizens. 
3.94.  As at end 2012, two special economic zones were being developed. The Government's 
objective is to have six in operation by 2014. 
3.2.3  Export finance, insurance, and guarantees 3.95.  In 2009, the state-owned Bank Ekspor Indonesia (BEI), which had provided pre-shipment 
and post-shipment financing facilities for exporter s, was transformed into the Indonesia Eximbank, 
governed by new legislation.
43  Its mission is to "promote and develop national export products 
into excellent and highly competitive products by providing financing, guarantees and local and overseas insurance and consultation services for ex porters and to contribute to the development of 
export-orientated small and medium-sized enterprise s (SMEs)". It provides financing in areas that 
are not entered into by banks or commercial financial institutions (Table 3.15).  
3.96.  As at 31 December 2011, the value of export financing to 224 debtors was Rp 20,541.08 
billion. Nearly half of this went to the industrial sector (particularly crude palm oil, textiles, and oil, 
gas and mining). Export guarantee values were Rp 347.85 billion, with 317 certificates issued. 
There were 22 buyers of export insurance for a value of Rp 38.58 billion).
44  
                                               
43 Export Financing Law (2009). Viewed at: http://www.setneg.go.id/index.php?option 
=com_perundangan&id=2195&task=detail&catid=1&It emid=42&tahun=2009 (in Indonesian only).   
44 Indonesia Eximbank (2011). WT/TPR/S/278 • Indonesia 
 
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  3.97.  The state-owned Asuransi Ekspor Indonesia (ASEI) offers export credit insurance to 
exporters for all products other than oil and gas,  in the event that they do not receive payment 
from the buyer, and to banks, in the event that exporters fail to repay their loans. Commercial and 
political risks are covered.45 ASEI may reimburse up to 85% of losses, while the remaining 15% is 
borne by the exporter. The premium is calculated  based on country repayment risks; terms of 
payment associated with the transaction; and the credit term. In May 2012, ASEI established a Sharia Insurance Unit, offering sharia compliant insurance products.  The authorities noted that 
there is no regulation forbidding domestic insurance companies (including ASEI) from providing 
their services to foreign clients. 
Table 3.15 Eximbank services, 2012 
Service Product 
Financing 
Domestic 
 
  
 
  
 
 Overseas  
Bank  
Export investment loan 
Export working capital loan 
Bills discounting Supplier bill purchasing 
SME financing 
Import letter of credit Project financing 
Buyer's credit 
 Project financing  
Bank financing 
Export loan refinancing Export bills discounting 
Guarantee and 
insurance Indonesia Eximbank guarantee (standby letter of credit;  tender 
guarantee/bid bond; advance payment guarantee;  performance 
guarantee;  payment guarantee; maintenance guarantee;  and 
customs bond) 
Trade credit insurance 
Consultation services Export consultation services 
Export technical assistance 
Source: Indonesia Eximbank Annu al Report 2011.  Viewed at:  http://www.indonesiaeximbank.go 
 .id/en/system/files/AR%202011.pdf. 
3.3  Measures affecting productions and trade 
3.3.1  Government procurement 3.98.  There are no concrete figures on the total value of government procurement in Indonesia. 
However, the authorities indicated that around 30% of the state budget is allocated to 
procurement, with the Ministries of Public Work s, Transportation, Energy and Mineral Resources 
and National Education generally accounting for the bulk of central government purchasing. According to external sources, on  average 60% of fund available from development assistance is 
used for procurement.
46 
3.99.  Indonesia became an observer to the WTO Government Procurement Agreement (GPA) in 
2012. At the time of Indonesia's previous Review, a number of Members asked when Indonesia 
planned to adhere to the GPA. The authorities re sponded that Government intended to study GPA 
accession further.47 
3.100.  There is no centralized government procur ement body in Indonesia. Public procurement is 
undertaken by numerous entities, including by the 34 national ministries; 28 national agencies; 
                                               
45 Commercial risks include importer  insolvency, importer default, an d importer refusal to accept the 
goods.  Political risks include prohibition of foreign exch ange transfers, import quota restrictions, revocation of 
import licences, and acts of war or other ho stile situations in the importing country. 
46 Transparency International and the Center for International Private Enterprise  (2011). 
47 WTO document WT/TPR/M/184/Add.1, 16 October 2007. WT/TPR/S/278 • Indonesia 
 
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  33 provinces; 438 regencies; and 117 municipali ties, as well as by state-owned enterprises.  
According to the OECD, given the substantial po wers and public expenditures transferred to 
regions through its decentralization reforms, the ta sk of monitoring its public procurement system 
is huge, and far more complex than in countries with a more centralized government.48 
3.101.  As a result of regulatory reforms in 2011 (see below), each procuring entity must organize 
its procurement arm into three separate units so as to introduce stronger management controls: a Budget Authority to plan and carry out procurements; a Procurement Service Unit to implement 
individual procurements (including defining tend er specifications, evaluating bids, and awarding 
contracts); and a Project Result Receiver Committee to evaluate contracted outcomes.
49 A 
compulsory certification system for public procur ement officials was introduced in 2003 to ensure a 
basic level of competency.50 The authorities indicated that more than 10,000 procurement officials 
have been examined and certified. Officials are now also required to study international best 
practices.   
3.102.  Presidential Instruction No. 17/2011 made e-procurement mandatory as of 2012. Each 
entity must also set up its own electronic procurement services system (LPSE). As at 
mid-October 2012, 503 LPSEs had been established and over 97,500 auctions had been completed online, at a value of over Rp 152 trillion.
51 Procurement announcements with accompanying tender 
documentation for public tenders are available online at the Inaproc portal (in Indonesian only).52   
3.103.  The National Public Procurement Agency (NPPA), established in 2007 based on Presidential 
Regulation No. 106/2007 is responsible for: developing strategy, policies, and regulations; conducting monitoring and evaluation, and de veloping and implementing e-procurement; 
developing and improving the capacity of proc urement practitioners; and providing advice, 
recommendations, and complaint resolution.
53 In December 2007, the Centre for the Development 
of Public Procurement which was under the respon sibility of BAPPENAS, was subsumed under the 
NPPA's responsibilities.   
3.104.  The Indonesia Competition Commission (KPPU) is responsible for addressing tender 
conspiracies (bid rigging), which are prohibited under Article 22 of the Competition Law (see 
section 3.3.3.1). In carrying out its mandate,  the KPPU regularly cooperates and exchanges 
information with the Anti-Corruption Commission (KPK) (see Chapter 2), and when cases arise, the KPPU will deal handle the collusion aspects of the case, while leaving corruption aspects to the KPK.
54  
3.3.2  Legislative and regulatory framework 
3.105.  Indonesia does not have a procurement law. The main source of procurement rules is 
Presidential Regulation No. 54/2010 (PR54), which entered into force on 1 January 2011, replacing 
previous regulations.55 PR54 was revised by Presidential Regulation No. 70/2012 (PR70) which 
allows central government ministries and agencies to start their tendering processes in advance of budget disbursements, and sets out the main steps in the public procurement process (see below). 
An analysis of Indonesia's new procurement regime, as governed by PR54 was undertaken by 
Transparency International (TI) and the Centre for International Private Enterprise (CITE) in 2011, 
benchmarking it against APEC procurement standards. This analysis, inter alia , draws attention to 
                                               
48 OECD document DAF/COMP/GF(2010)6, "Snapshot Assessment of Indonesia's Public Procurement 
System as at June 2007". Viewed at:  http://www. oecd.org/development/aideffectiveness/39254688.pdf. 
49 Presidential Regulation No. 54/2010, Articles 8 and 11. 
50 Presidential Decree No. 80/2003. 
51 LKPP Smart Report.  Viewed at:  http://www.inaproc.lkpp. go.id (in Indonesian only). 
52 Inaproc online information. Viewed  at:  http://www.in aproc/kpp.go.id. 
53 Presidential Decree No. 106/2007. 
54 OECD Document DAF/COMP/GF(2010)6.  Viewed at:  
http://www.oecd.org/development/aideffectiveness/39254688.pdf. 
55 Presidential Regulation No. 54/2010. Viewed at : http://www.setneg.go.id/index.php?option=com_ 
perundangan&id=2593&task=detail&catid=6&Itemid=42& tahun=2010 (available in Indonesian only).  PR54 
replaces Presidential Decree No. 80/2003, as revised by Presidential Decree No. 8/2006. WT/TPR/S/278 • Indonesia 
 
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  the need for a comprehensive national procurem ent law and improved audit procedures. These 
issues were also highlighted in a 2007 OECD review.56   
3.106.  PR54 (as revised): (a) increases the limit for direct procurement (sole sourcing) from 
Rp 50 million to Rp 100 million (except for consultancy services); (b) drops the requirement for a 
bid security deposit in certain circumstances; (c) requires the disclosure of the estimated price of a 
tender; and (d) introduces direct appointment of one provider for goods and services that have a well-known price list, such as hotels.
57   
3.107.  PR54 covers procurements: (a) by ministries, institutes, regional units, and other 
institutions funded from central or regional government budgets; (b) funded entirely or in part from domestic loans or grants received by the government; and (c) financed in part or entirely from international loans or grants.  The boards of directors of state-owned enterprises have the 
freedom to regulate their own procurement, unless their purchases are financed by the central 
Government, in which case provisions in PR54 apply.
58 
3.108.  Rules on bidding for procurement of goods and services are set out in appendices to PR54. 
There are three forms of contracting process: a pu blic tender; direct appointment of one provider 
(used for emergency and defence situations and where prices are public available); and direct procurement (procurement of a maximum value of Rp 200 million). According to the authorities, 
public tenders are the standard form of procurem ent practice. Evaluation criteria need to be 
stipulated in the tender documents. According to external sources, while there are different 
evaluation methods, the most widely used give s price a weight of between 70% and 90% of the 
total evaluation. The main steps in the public procurement process are: 
 announcement of pre-qualification process (if applicable, 15 working days); 
 announcement of request for proposal (at least 7 days before proposals are due); 
 tender clarification session to answer bidders' questions (at earliest 3 working days after 
invitation to tender); 
 submission of proposals by bidders (at least 8 working days); 
 opening and evaluation of technical proposals (no stipulated timeframe); 
 opening and evaluation of financial proposals (no stipulated timeframe); 
 announcement of winner (after financial evaluation is finished); 
 period for objection (5 working days after announcement of winner and 5 more working 
days if there is an appeal);  and 
 award of contract and publication of the awardee's name, and minutes from the evaluation 
process (6 working days after announcement of winner).
59 
3.109.  The authorities indicated that they have started to develop e-catalogues for purchases of 
certain goods, such as government vehicles , based on offers made by manufacturers. 
3.110.  Government policy is focused on developi ng the national market. As stipulated in PR54 
(Article 104), foreign companies may only bid in cooperation with a national company (unless no 
national company has the ability to provide the go ods and services requested) and only on bids 
that exceed a certain threshold: Rp 100 billion for construction services, Rp 20 billion for goods and other services and Rp 10 billion for consulting services. Information was not available on the number and value of contracts awarded to foreign companies. PR54 (Article 97) mandates the use 
                                               
56 OECD document DAF/COMP/GF(2010)6. Viewed at:  
http://www.oecd.org/development/aideffectiveness/39254688.pdf. 
57 Transparency International and the Centre for International Private Enterprise (2011). 
58 SOE Law No. 19/2003 and Ministry of State-owned enterprises Regulation No. 5/2008. 
59 PR70. WT/TPR/S/278 • Indonesia 
 
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  of domestic products in government procurement if there are providers offering goods or services 
with a local content exceeding 40%.   
3.111.  According to external sources, each procuring entity is required to establish a complaint 
mechanism to allow bidders to submit a written ob jection after the list of qualified bidders is 
published and after the winning bidder is announced , if they find a violation of the procedures, 
improper technical specifications, or abuse of authority by the respective Procurement Services Unit. These objections are reviewed by the Procurement Services Unit itself, within five working 
days of receipt of the objection. The only (and fina l) avenue for appeal is the head of the procuring 
entity, and the complainant must provide a bond equal to 1% (down from 2% as of 2012) of the 
value of the contract or a maximum of Rp 50 million. The bond is only returned if the complainant wins the appeal. The NPPA may provide advice to the head of the procuring entity during the 
appeal process but the final decision rests with the latter.   
3.112.  Other laws containing provisions on government procurement are the Construction 
Services Law (Law No. 18/1999), the Law on State-Owned Enterprises (Law No. 19/2003), and the 
Anti-Monopoly Law (Law No. 5/1999).   
3.113.   Indonesia no longer operates a countertrade policy, which was in place at the time of its 
previous Review. This policy linked procurement-related imports by ministries, public-sector 
institutions, and SOEs with exports of non-oil commodities.  
3.3.3  State-trading, state-owne d enterprises, and privatization 
3.3.3.1  State-trading 3.114.  Indonesia's latest WTO notification on state trading was in 2009 (new and full 
notification).
60 It covers the rice trading operations of the state logistics agency, Perum BULOG, 
which was established in 2003 as a state-trading enterprise with the purpose of supporting domestic rice producers and stabilizing the price of rice at consumer and producer levels (see also 
Section 3.3.4.2). Perum BULOG does not have a mo nopoly on the importation of rice, its role 
relates to its mandate to maintain a buffer stock of rice (between 5-10% of total monthly domestic production). When there are buffer stock shorta ges, the Government instructs Perum BULOG to 
import rice, and these imports are subject to cust oms duties.  Perum BULOG does not export rice. 
Private companies may import rice but under licensing conditions (section 3.1.5.2). These imports are subject to customs duties.  
3.115.  The Government is considering expanding Perum BULOG's mandate as a buffer agent to 
include sugar and soybeans.  
3.3.3.2  State-owned enterprises and privatization 3.116.  At the time of Indonesia's previous Review, SOEs were estimated to account for around 
40% of Indonesia's GDP. The legislation governing SOEs is Law No. 19/2003.   
3.117.  In 2012, Indonesia had 141 state-owned-enterprises, under the responsibility of the 
Ministry of State-Owned Enterprises, (139 in 2007).
61 These include 18 SOEs listed on the 
Indonesian stock exchange; 108 non-listed SOEs; and 15 "special purpose entities". In numerical 
terms, SOEs are most active in: manufacturing; agriculture, forestry and fishing; financial and insurance activities; and transportation and stor age (Chart 3.4). The Government's share in its 
major SOEs, in terms of the value of their assets, is set out in Table 3.16. The authorities indicated 
that, in addition, several SOEs are directly controlled by the Ministry of Finance.   
                                               
60 WTO document G/STR/N/11/IDN, G/STR/N/12/IDN,  9 February 2009.  Questions regarding this 
notification were posed by Australia, Turkey, and the Un ited States in the WTO Working Party on State Trading 
Enterprises (WTO documents G/STR/Q1/IDN/11, 1 October 2009; G/STR/Q1/IDN/12, 5 October 2009; and G/STR/Q1/IDN/13, 21 October 2009). The questions from Australia and Turkey were responded to by 
Indonesia (WTO documents G/STR/Q1/IDN/14, 22 October 2009 and G/STR/Q1/IDN/15, 22 October 2009). 
61 For a list of SOEs, see Indonesian Government online information. Viewed at: 
http://indonesia.go.id/en/state-owned-enterprises.html. WT/TPR/S/278 • Indonesia 
 
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  3.118.  According to the authorities, by the end of 2011, the state had partially divested ownership 
in various industries including: cement, telecommunications, mining, energy, pharmaceuticals, construction, highways, steel manufacturing, airlines, and banks. The authorities noted that Indonesia's privatization policy aims to promote SOEs sustainable growth, and hence privatization 
activities are influenced by the respective company's prospects and performance. It was also noted 
that Law 19/2003 restricts SOE privatization in certain sectors or activities, including state defence and safety; services provided for the public benefit; and prohibits SOE privatization in the natural 
resource sector. In addition, privatization may not take place where there is a legal requirement 
for SOEs to operate in a particular sector. 
3.119.  An SOE monopoly on the import of alcoholic beverages was terminated in 2010.  
Registered importers of alcoholic beverages are now allowed to import duty-paid alcoholic 
beverage products, which was previously the preserve of two state-owned companies 
(PT Perusahaan Perdagangan Indonesia (Indonesia Trading Corporation) (until 2007) and PT Sirinah (Persero)). Private companies must obtain an import permit from DGFT, which is 
contingent upon them having substantial import and distribution links. The permit is valid for three 
years (extendable). Each year the Ministry of Trade determines the type and amount of imports of 
alcoholic beverage products.  Imports may only enter Indonesia through international airports and 
four designated ports and there are restrictions on di stribution and sale of alcohol once it is within 
the customs territory. PT Sirinah (Persero) retains its import monopoly on duty-free alcoholic beverages.  
Chart 3.4 SOEs based on sectors, 2011 
A -Water supply, sewerage, waste management, and
remediation activities
B- Agriculture, forestry and fishing
C - Wholesale and retail trade
D - Mining and quarrying
E - Manufacturing
F - Professional, scientific, and technical activities
G - Electricity, gas, steam, and air conditioning supply
H - Information and communication
I - Transportation and storage
J - Construction
K - Financial and insurance activities
L - Accommodation and food service activities
M - Real estate activitiesE(31)
F(5)G(2)H(3)B(25)A(2)
C(4)
D(5)
I(22)
Note:       Figure in brackets refers to the number of SOEs.   Classification based on Indonesian Standard 
Industrial Classification (KBLI) which refers to ISIC.J(16)K(22)M(2)
L(1)
 
Source: Ministry of State-Owned Enterprises. 
Table 3.16 Major state-owned enterprises, 2012  
Firm Activity State ownership 
2007 (%) State ownership 
2012 (%) 
PT Perusahaan Listrik Negara Electricity 100.00 100.00 
PT Bank Mandiri Tbk Banking 69.96 60.00 
PT Bank BRI Tbk Banking 57.57 56.75 
PT Pertamina Oil and gas 100.00 100.00 
PT Bank BNI Tbk Banking 76.36 60.00 
PT Jamsostek Insurance 100.00 100.00 
PT Taspen Insurance 100.00 100.00 
PT Telkom Tbk Telecommunications 51.19 53.24 
PT Bank BTN Tbk Banking 100.00 71.85 WT/TPR/S/278 • Indonesia 
 
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  Firm Activity State ownership 
2007 (%) State ownership 
2012 (%) 
PT Pupuk Indonesia  Fertilizer 100.00 100.00 
PT PGN Tbk Oil and gas 55.33 56.97 
Perum Pegadaian Financial services 100.00 100.00 
Perum Bulog Logistics 100.00 100.00 
PT Krakatau Steel Tbk Steel 100.00 80.00 
PT Semen Gresik Tbk Cement 65.00 51.01 
PT Jasa Marga Tbk Highway 70.00 70.00 
PT Garuda Indonesia Airlines 100.00 69.14 
PT Antam Tbk Mining 65.00 65.00 
PT Askes Insurance 100.00 100.00 
PT Bukit Asam Tbk Mining 65.02 65.02 
PT Pelabuham Indonesia II Sea port 
management 100.00 100.00 
PT Angkasa Pura I Airport 
management 100.00 100.00 
PT Angkasa Pura II Airport 
management 100.00 100.00 
PT Wijaya Karya Tbk Construction 68.30 66.37 
Source: Information provided by the Indonesian authorities. 
3.3.4  Competition policy and price controls 3.3.4.1  Competition policy 
3.120.  The legal framework for competition policy in Indonesia re mains Law No. 5/1999 
concerning the Prohibition of Monopolistic Practices and Unfair Business Competition (Competition Law).
62 Enforcement of the law is the responsibili ty of the Indonesia Competition Commission 
(KPPU). There have been no changes to the Compet ition Law since Indonesia's previous Review in 
2007. An implementing regulation on merger review was issued by the Government in 2010 giving the KPPU new authority to supervise mergers and acquisitions.
63 The KPPU has published 22 
guidelines to help stakeholders understand the Competition Law's various provisions.  
3.121.  The Competition Law covers the wide spectrum of anti-competitive behaviour.64 It, inter 
alia, prohibits abuse of dominance as well as vertical restrictions on competition and any deals or 
contracts allowing for monopolies, oligopolies, price fixing, cartels, trusts, and geographical 
designations of markets between suppliers. The Law also prohibits business actors from conspiring 
with other parties (including government bodies, state-owned enterprises, and other private companies) to bid-rig in tender awards. Among the exemptions to the Competition law are 
agreements related to intellectual property righ ts and the production and marketing of goods and 
services "affecting the livelihood of society at large" as stipulated in law and as implemented by state-owned enterprises. Indonesia's competition legislation has recently been scrutinised in detail 
by the OECD, drawing on an early analysis by UNCTAD. The OECD notes that Indonesia's 
Competition Law contains all of the core elements that are necessary, in order to be fully effective. Nevertheless, it puts forward specific suggestions for strengthening and clarifying certain aspects.
65 The authorities also identified some shortcomings with respect to existing rules: the 
KPPU lacks the power to obtain evidence, which is particularly problematic for cartel-related cases; 
investigation time-frames are too short; penalties for bid-rigging (the bulk of the KPPU's work) are weak; and some legal provisions overlap and need to be rationalized. 
                                               
62 Law No. 5/1999. Viewed at: http://eng.kppu.go.id/law-and-regulation/competition-law/. 
63 Government Regulation No. 57/2010 on Merger that May Cause Monopolistic Practices and Unfair 
Business Competition. This implements Articles 28 and 29 of the Competition Law and stipulates that any mergers meeting a specified threshold must be notified to the KPPU within 30 days of the merger being 
effective. 
64 WTO (2007). 
65 OECD document DAF/COMP(2012)/REV1, 24 May 2012, "Competition Law and Policy in Indonesia". WT/TPR/S/278 • Indonesia 
 
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  3.122.  The KPPU investigates anti-competitive practices on the basis of reports from the 
community, or on its own initiative. The maximum period from preliminary investigation until the execution of a decision is 180 days. The KPPU is  authorized to impose administrative actions 
against any business actors who have violated the law.
66 Objections to the KPPU's decisions may 
be taken first to the District Court and thereafter appealed to the Supreme Court.67   
3.123.  Over the period 2007-10, the KPPU received 895 reports of anti-competitive practices.68  It 
launched 162 preliminary investigations and undertook 14 own-initiative investigations 
(Table 3.17). Nearly 70% of the KPPU's cases during 2000-12 related to bid-rigging in 
procurement processes, with a peak in this type of case in 2007-10.69  According to the authorities 
these cases may involve government officials as well as businesses.  Other big cases have related to cartel activities with respect to aviation fuel surcharges, salt, cement, flour, cooking oil, 
telecommunications (relating to SMS tariffs); pharmaceuticals; and health checking services for 
Indonesian employees going abroad. 
3.124.  Own-initiative investigations are often based upon prior studies undertaken by the KPPU. 
The authorities indicated that they have looked into the logistics sector, rice distribution, 
telecommunications, pharmaceuticals, the retail sector, the oil and gas sector, and the air transport sector. These studies are publically available at their official website in Bahasa 
Indonesian.   
Table 3.17 KPPU case-load, 2007-12 
 Reported cases  Own-initiative cases 
 2007  2008 2009 2010  2011  2012  2007  2008  2009 2010 2011 2012  
Verdicts/ 
decisions              
No indications  1 15 3 4 0 0 0 1 0 1 0 0 
Behavioural 
changes  2 4 0 0  0 0 1 0 0 0 0 0  
Guilty 24 41 26 28 6 2 1 1 5 2 4 0 
Not guilty 1 6 1 7  3 1 1 0 0 0 0 0  
Recommendations/ 
considerations 0 0 0 0 0 0 0 0 0 0 0 0 
Ongoing cases  0 0 0 0  0 3 0 0 0 0 0 1  
Total 28 66 30 39 9 6 3 2 5 3 4 1 
Source: KPPU. 
3.125.  In addition to Competition Law enforcem ent responsibilities, the KPPU has a competition 
advocacy role. At the invitation of a ministry, or on its own initiative, it may undertake competition 
impact assessments of proposed or existing laws and regulations, and issue policy recommendations.
70 According to the OECD, over 2001-10, Indonesia issued 91 recommendations; 
one quarter were related to transport. Thereafter the main policy areas were telecommunications 
and trade policy. Regrettably, the proportion of the KPPU's recommendations adopted by Government appears to be declining.
71 To ensure the KPPU's recommendations have the greatest 
chance of being implemented, the OECD recommend s adoption of a more systematic approach to 
integrate competition analysis into national law making, including making the KPPU's recommendations formally available to Ministers as part of the Cabinet process, as well as to Parliament at the time the bills are being deba ted. The OECD also suggests that substantial 
priority should be accorded to reviewing and reforming existing legislation to remove unnecessary 
                                               
66 These may take the form of: (a) an order to stop the anti-competitive agreement or activity; (b) the 
cancellation of a merger, consolidation, or share acquisit ion;  (c) the imposition of compensation for damages; 
and (d) the imposition of administ rative fines, which may range from Rp 1 billion to Rp 25 billion. 
67 For detailed case-handling procedures (including timeframes), see KPPU's online information. Viewed 
at: http://eng.kppu.go.id/enforcement/complaint/. 
68 KPPU (2011).  
69 In 2007, 23 out of 31 cases related to bid-rigging; in 2008, 52 out of 68; in 2009, 24 out of 35; and 
in 2010, 11 out of 13. 
70 Article 35(e) of the Competition Law allows the KP PU to provide advice and opinions on government 
policies identified as potentially harming competition.  
71 The OECD notes that while 43% of KPPU recomm endations had been adopted since 2001, only 33% 
of recommendations were adopted from 2008 to 2011. WT/TPR/S/278 • Indonesia 
 
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  regulatory impediments to competition; noting that much of the stock of legislation passed before 
Indonesia's reform programme in the late 1990s contains significant anti-competitive provisions.72 
3.126.  Indonesia does not have extensive bilateral agreements on competition. There is a 
competition chapter in the ASEAN-Australia-New Zealand FTA, focusing mainly on capacity building 
to support the creation of a fairer business environment in the signatory countries. The authorities 
indicated that a competition chapter is being ne gotiated in the context of the Indonesia-EFTA 
Comprehensive Economic Partnership Agreement (IE-CEPA), and in the context of bilateral FTA 
negotiations with South Korea.  On bilateral basis, there is a competition chapter in the 
Indonesia-Japan Comprehensive Economic Partnership Agreement (IJ-CEPA) signed in 2007 that mostly relates to exchanges of public informat ion, notification on enforcement activity, and 
capacity building. 
3.3.4.2  Price controls 
3.127.  The Government is involved in stabil izing the price of rice through Perum BULOG's 
guaranteed purchase of rice from domestic producers at a set procurement price as well as 
through its import activities (Section 3.3.3.1). The procurement price for rice purchases is usually 
determined before the planting season (around October) and takes into account factors such as levels of water concentration; impurities; broken grains; and whitening agents.  Perum BULOG is 
required to purchase rice for distribution through RASKIN, a targeted rice-for-the-poor 
programme, that has given the Government flexibility to  allow a steady increase in the price of rice 
but at the cost of increasing budgetary expenditure to finance the programme. Consumer prices for rice are determined by market forces. However, when market prices at the consumer level 
increase by 10% or more than the normal price,  the Ministry of Trade instructs Perum BULOG to 
import. Consideration is being given to assignin g Perum BULOG additional responsibilities for 
stabilizing prices for soybean and sugar.
73 
3.3.5  Intellectual property rights 
3.128.  Indonesia is a net importer of IPR-intensive goods. In 2011, Indonesia's imports of these 
goods were estimated at US$16.4 billion, representing 9.2% of total imports. The respective value 
of exports for the same year was estimated at US$5.8 billion (2.8% of total exports).74  
3.3.5.1  WTO and other international agreements and arrangements 3.129.  Indonesia is an active participant in the WTO Council for Trade-Related Aspects of 
Intellectual Rights (TRIPS Council). In this forum Indonesia has advocated for the incorporation 
into the TRIPS Agreement of a requirement for disclosure of origin of genetic resources and/or 
associated traditional knowledge. Indonesia is in favour of strengthening the mutual supportiveness of TRIPS and the Convention on Biological Diversity (CBD) and, in particular, it's 
recently created Nagoya Protocol, arguing that developing countries are not benefiting from the 
exploitation of genetic resources and tradit ional knowledge and are paying more for new 
inventions created by others while using these assets.
75 The authorities noted that Article 7 of 
Indonesia's patent law prohibits the patenting of living creatures, other than micro-organisms, and 
of any biological process that is essential in producing plants or animals, other than non-biological or microbiological processes. 
                                               
72 OECD Document DAF/COMP(2012)/REV1, 24 May 2012, "Competition Law and Policy in Indonesia". 
73 Perum Bulog online information.  Viewed at:  http://www.bulog.co.id/eng/berita/37/3626/10/9/2012/ 
Bulog-To-Manage-Buffer-Stocks-For-Rice,-Sugar-And-Soybean.html. 
74 For these purposes, IPR-intensive goods include (a) the goods listed in Attachment A of the Ministerial 
Declaration on Trade in Information Technology Products  (WTO document WT/MIN(96)/16). In this regard, no 
adjustment has been made for partial subheadings (ex-lines) and as such there is a risk that the overall figures for both imports and exports may be exaggerated;  (b) HS30 (pharmaceutical products); (c) HS22 (beverages, 
spirits and vinegar, excluding HS2209 (vinegar);  (d) HS49 (books and other printed media); HS3706 (motion picture films); HS3705 (other developed films);  and HS8524 (records, CDs, software and other recorded media). 
75 Paragraph 19 of the Doha Declaration gives a mand ate to WTO Members to review Article 27.3(b) and 
examine the relationship between the TRIPS Agreement and the CBD and the protection of traditional 
knowledge and folklore.  Indonesia is a proponent of amendments to the TRIPS Agreement as set out in WTO 
documents TN/C/W/52, 15 April 2011, and TN/C/W/59, 19 April 2011. This issue has been raised by Indonesia 
in several meetings of the WTO TRIPS Council (see WTO document IP/C/M/69, 15 May 2012). WT/TPR/S/278 • Indonesia 
 
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  3.130.  Indonesia has also expressed concerns about implementation of Paragraph 6 of the Doha 
Declaration on the TRIPS Agreement and Public Health (relating to the ability of countries without sufficient manufacturing capacity in the pharmaceutical sector to make effective use of compulsory licensing under the TRIPS Agreement).
76 Indonesia is of the view that procedures agreed in 2005 
(as set out in the Protocol Amending the TRIPS Agreement) are cumbersome, and that the criteria 
applying to the importing and exporting Members are complicated to follow.77 Nevertheless, 
Indonesia notified acceptance of the Protocol Amending the TRIPS Agreement in October 2011.78  
3.131.  Indonesia has signed and ratified the WIPO Convention; Paris Convention; Berne 
Convention; Patent Co-operation Treaty; Trademark Law Treaty; WIPO Copyright Treaty; and WIPO Performances and Phonograms Treaty.
79 It is still in the process of ratifying the Madrid 
Protocol, the Nice Agreement, the Lisbon Agreemen t for the Protection of Appellations of Origin; 
the Locarno Agreement for industrial designs; the Singapore Treaty on the Law of Trademarks; 
and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms. 
3.132.  Indonesia is also in the process of joining the ASEAN APSEC (ASEAN Patent Examination 
Cooperation) Program, a work-sharing arrangem ent with other ASEAN Members in the field of 
patent search and examination. 
3.3.5.2  Institutional framework 
3.133.  The Ministry of Law and Human Rights has overall responsibility for IP policy formulation, 
with IPR administration being carried out by its Di rectorate-General of Intellectual Property Rights 
(DGIPR). The DGIPR has 33 regional offices responsible for receiving IP applications. In 2010, the DGIPR established a Directorate of Investigation with a mandate to investigate right-holder reports 
of suspected IPR infringements; working with the Police, it may seize the suspected goods. 
Information was not available on cases handled and seizures made. The DGIPR has established a Monitoring Team on Optical Discs as part of a wider effort to prevent piracy of optical media, which 
has been of long-standing concern in Indonesia (see below) and is one of the reasons that 
Indonesia remains on the United States' Special 301 Priority Watch List.
80 The monitoring team 
coordinates its efforts and cooperates with the Ministry of Industry, Ministry of Law and Human 
Rights, the Ministry of Trade, and the customs and police departments. 
3.134.  A National Task Force on Tackling IPR Infringement was established in 2006.  It reports 
directly to the President, and coordinates activiti es between different offices and agencies at the 
national and regional levels.81 According to the authorities, it has been working to respond to 
Priority Watch List-related issues; it has reported on progress in IP enforcement (including 
blocking websites due to digital piracy); monitoring activities relating to optical discs; illegal camcording; and cable piracy; it has also helped to develop regulations on customs; market access 
for pharmaceutical products and films; data pr otection; unfair commercial use; and revisions to 
the Copyright Law. 
3.135.  IPR enforcement is the responsibility of  the Attorney-General, the DGIPR Directorate of 
Investigation, and Patent and Trademark Appeal s Board, Police, Customs and the courts (see 
below).   
                                               
76 For more information, see WTO online information. Viewed at: 
http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm. 
77 WTO document IP/C/M/63, 4 October 2010. 
78 Protocol Amending the TRIPS Agreement. Viewed at:  
http://www.wto.org/english/tratop_e/trips_e/wtl641_e.htm.  Indonesia's letter of acceptance may be viewed at: WTO document WT/Let/831, 20 October 2011. 
79 WIPO online information. Viewed at: http://www.wipo.int/treaties/en/summary.jsp. 
80 USTR (2012). 
81 Presidential Decree No. 47/2006 (27 March, 2006).  The aims of the Task Force are to formulate a 
national policy to prevent IPR infract ions;  determine national efforts needed to prevent IPR violations;  assess 
and determine measures for resolving IPR infractions, in cluding prevention and law enforcement activities in 
accordance with the main duties of participating agencies;  educate related government institutions and society 
about IPR matters through various activities;  and improv e bilateral, regional, and multilateral cooperation to 
prevent IPR violations. WT/TPR/S/278 • Indonesia 
 
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  3.3.5.3  Legislative and institutional framework 
3.136.  No changes were made to legislation govern ing intellectual property rights over the review 
period. Existing laws have been in place si nce between 2000 and 2002 and their main features 
were discussed in Indonesia's two previous Trade Policy Reviews (in 2003 and in 2007).  The 
terms of protection and maximum penalties set out in these laws are contained in Table A3.3). A 
key concern raised in Indonesia's previous TPR with regard to its IPR legislation was that the Patent Law (Article 17) requires an inventor, after being granted the patent, to physically produce 
a product or utilize a process in Indonesia. Th e authorities explained that the purpose of the 
provision is to encourage transfer of technology, investment, and employment. 
3.137.  The authorities indicated that Indonesia is at an advanced stage in drafting amendments to 
several IPR laws in order to reflect IPR developmen ts.  Key issues with respect to copyright reform 
relate to implementation of the Beijing Treaty, internet piracy, and royalty collection.  Reforms 
with respect to trade mark legislation are focused on streamlining application and publication procedures as well as introducing the possibility to apply to the Madrid system.  Revisions to the 
Patent law include incorporating a disclosure requirement in patent applications related to genetic 
resources and traditional knowledge, as well as provisions to implement Paragraph 6 of the Protocol Amending the TRIPS Agreement.  With respect to industrial designs, a key change is to 
introduce criteria on the similarity of design. 
3.3.5.4  Regulatory developments (2007-12) 3.138.  Government Regulation No. 51/2007 (GR 51)  on Geographical Indications, enacted in 
2007, sets out procedures for registration of geographical indications (GIs), implementing 
Article 56(9) of the Trade Mark Act.
82 Applications must be made to the Trade Mark Office within 
the DGIPR. Administrative and substantive examin ations are undertaken. Thereafter there is a 
publication stage to allow third parties to oppose and applicants to rebut the application, which 
may lead to a substantive re-examination. As at end 2012, Indonesia had 16 registered GIs, of 
which 13 were domestic.83  
3.139.  Over the review period Indonesia used co mpulsory licensing on two occasions, in 2007 and 
in 2012, to permit Government use of pharmaceutical patents in order to produce certain antiviral 
and antiretroviral drugs.84 In all instances, Government use of these patents is until their expiry.85 
3.140.  Two regulations have been introduced with  the objective of preventing piracy of optical 
media.  One imposes restrictions on film imports with the objective of deterring film piracy and 
increasing efficiency of enforcement of the Censorsh ip Law. Celluloid film may only be imported in 
the form of negative film master or negative film dupe (reproduction of the master negative film), but may include a copy of the finished product. This Regulation has been somewhat controversial; 
it is contended that, in requiring manufacture in Indonesia of films prints and home videos, this 
constitutes an onerous market access barrier.
86 The other, Minister of Trade Decree No. 11 of 
2010, introduces an import surveillance mechanism for certain products, such as machines and 
machine equipment, raw materials, blank optical discs, and loaded optical discs for IPR protection 
purposes.  
3.3.5.5  IP applications 3.141.  In 2012, DGIPR launched an IP automation system for trade marks which enables regional 
offices to file IPR applications online into a da tabase, and can be accessed by IPR examiners. Work 
                                               
82 Trade Mark Act. Viewed at: 
http://www.jpo.go.jp/shiryou_e/s_sonota_e/fips_e/pdf/indonesia_e/e_shouhyou.pdf. 
83 kopi arabika kintamani bali (coffee)(2008);  champagne (2009);  mebel ukir jepara (furniture); lada 
putih muntok (spices); kopi arabika gayo (coffee);  pisco (2010);  tembakau hitam sumedang (tobacco); 
tembakau mole sumedang (tobacco);  parmegiano reggiano; susu kuda sumbawa (milk); kangkung lombok 
(vegetable); madu sumbawa (honey) (2011);  kopi arabika flores bajawa (coffee)(2012);  Purwaceng Dieng (herbal drink)(2012);  Carica Dieng (fruit)(2 012); and Vanili Kepulauan Alor (vanilla)(2012).  
84 Indonesia's Patent Act (Articles 99 to 103) allows the Government to self-exploit a patent for reasons 
of defence and security of the State or if there is an urgent public-interest need. 
85 Presidential Decrees Nos. 6/2007 and 76/2012 list the active substances subject to compulsory 
licensing, the names of the respective patent holders and the duration of the patent. 
86 IIPA (2010). WT/TPR/S/278 • Indonesia 
 
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  to create a similar system for industrial desi gns and patents w ill commence in 2013 /14. Indonesia 
has also established an Intellectual Property Digital Library (IPDL), which allows IP examiners, IP applicants, and the general public to search for information on IPR applications and protection 
granted. 
3.142.  In 2009, the Government introduce an IP regi stration fee; it is collected by the DGIPR and 
managed by the Ministry of Finance. DGIPR may use up to 25% of the funds collected for IPR-related activities such as IPR socialization, ca mpaigning, education, enforcement, and improving 
the IPR registration service.
87  
3.143.  Over the review period, while trade mark applications were consistently dominated by 
residents, the reverse is true for patent applications (Table 3.18).   
Table 3.18 IP applications, 2007-11 
 2007 2008 2009 2010 2011 
Copyright      
- Resident - - 5,009 4,854 5,501 
- Non-resident - - 40 28 41 
- Total - - 5,049 4,882 5,542 
Trade mark applicationsa      
- Resident 36,621 41,617 37,854 43,835 51,157 
- Non-resident 4,120 4,032 4,964 4,527 2,569 
- Total 40,741 45,649 42,818 48,362 53,726 
Industrial designs 
applications      
- Resident - - 600 2,987 2,738 
- Non-resident - - 3,601 1,060 1,458 
- Total - - 4,201 4,047 4,196 
Patent applications (PCT)      
- Resident 5 11 2 11 8 
- Non-resident 4,357 4,278 3,761 4,596 4,839 
- Total 4,362 4,289 3,763 4,607 4,847 
Patent applications (non-
PCT)      
- Resident 279 375 413 497 533 
- Non-resident 493 469 342 401 458 
- Total 772 844 755 898 991 
Utility model applications      
- Resident 209 214 247 251 236 
- Non-resident 34 34 38 38 56 
- Total 243 248 285 289 292 
.. Not available 
a Includes both new applications and renewals. 
Note A resident filing refers to an application filed in the country by its own resident; a non-
resident filing refers to the one filed by a foreign applicant.   
Source: DGIPR. 
 
                                               
87 Government Regulation No. 38/2009. WT/TPR/S/278 • Indonesia 
 
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  3.3.5.6  Enforcement 
3.144.  Chapter X of the Customs Law (as amended in 2006) provides for border measures with 
respect to trade mark and copyright violations, not only on imports (as required by TRIPS) but also on exports.  At the request of the trade mark or  copyright holder the Chairman of the Commercial 
Court may issue a warrant to Customs to temporarily suspend the release of imported goods into 
or exported goods from Indonesia on the basis of sufficient evidence of IPR violations.
88     
3.145.  Provisions to combat IPR infringements are:   
 A request may be filed with the Commercial Court to issue a provisional decision in order to: 
(a) prevent the continuation of infringement, particularly to prevent the entry of products allegedly infringing the IPR into the trade channel, including importation; (b) keep the evidence relating to the infringement of the IPR, in order to prevent the elimination of 
evidence; and (c) request the party that might su ffer a loss to provide evidence that it is 
truly entitled to the IPR and that such rights are being infringed.
89 
 A lawsuit may be filed with the Commercial Court against an IPR infringement. A request 
may be made to: (a) confiscate the infringing goods or the result of reproduction of the IPR; 
(b) issue an order for the delivery of all or pa rt of income generated from the infringement; 
and (c) issue an order to stop any activities or publishing and/or reproduction of works or 
goods that resulted from the IPR infringement.90 
 The infringement may be reported to the police and/or a DGIPR civil servant investigator.91 
Maximum penalties for IPR infringements are listed in Table A3.3. 
                                               
88 Law No. 17 (2006).  Viewed at:  http://rulebook-jica.ekon.go.id/english/7201_UU_17_2006_EN.html. 
89 Industrial Design Law (Article 45); Patent La w (Article 125); Trade Mark Law (Article 85); and 
Copyright Law (Article 67). 
90 Industrial Design Law (Article 46); Trade Secret Law (Article 11); Layout Design and Integrated 
Circuit Law (Article 38); Patent Law (Article 117); Mark Law (Article 76). 
91 Trade Secret Law (Article 16); Industrial Design  Law (Article 53); Layout Design and Integrated 
Circuit Law (Article 41); Patent Law (Article 129); and Mark Law (Article 89). WT/TPR/S/278 • Indonesia 
 
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  4  TRADE POLICIES BY SECTOR 
4.1  Introduction 4.1.  Indonesia is the fourth most populous count ry in the world, the UN estimated the population 
to have risen to 242.3 million by mid-2011. With substantial deposits of petroleum, natural gas, 
and other minerals, as well as the capacity to produce a wide range of agricultural commodities, 
Indonesia is richly endowed in terms of natural resources.   
4.2  Sectoral structure of the economy  
4.2.  In terms of overall sectoral development in  the economy, there was little change during the 
review period (Table 4.1).  Agriculture, forestry, and fishing contributed 14.7% of GDP in 2011 and engaged an estimated 35.9% of the employed labour  force, continuing to provide employment to 
more than 40 million persons.  Principal crops for domestic consumption include rice, cassava, and 
maize. Indonesia is the world's most important palm oil producer, ahead of Malaysia, the second 
largest natural rubber producer, after Thailand, and the third largest rice producer after China and India. A large percentage of Indonesia’s land area remains covered by tropical rainforests. 
However, widespread illegal logging practices have led to serious environmental damage.   
Table 4.1 Share of main sectors in GDP and employment, 2007-11 
(%) 
    2007 2008 2009 2010 2011 
Share of main sectors in current GDP  
Agriculture, fisheries and forestry 13.7  14.5 15.3 15.3 14.7  
 Food crops 6.7  7.1  7.5 7.5 7.1  
Mining and quarrying 11.2  10.9  10.6  11.2  11.9  
 Oil and gas mining 5.9  5.7  4.5  4.5  5.2  
Manufacturing 27.0  27.8  26.4  24.8  24.3  
 Oil and gas manufacturing industries 4.6  4.8  3.7  3.3  3.4  
Electricity, gas and water 0.9  0.8  0.8  0.8  0.7  
Construction 7.7  8.5  9.9  10.3  10.2  
Services 39.5  37.5  37.1  37.7  38.1  
 Wholesale and retail trade 11.9  11.1  10.5  10.9  11.1  
 Hotels and restaurants 3.1  2.8  2.8  2.8  2.6  
 Transport and communication 6.7  6.3  6.3  6.6  6.6  
 Finance 3.6  3.4  3.3  3.3  3.2  
 Real Estate 2.8  2.7  2.6  2.6  2.6  
 Business services 1.4  1.3  1.3  1.4  1.4  
 Private services 4.9  4.5  4.6  4.7  4.7  
 Government services 5.2  5.2  5.7  5.5  5.8  
Share of sectors in total employment (as at 
August)     
Agriculture, forestry, and fishery 41.2  40.3  39.7  38.3  35.9  
Mining and quarrying 1.0  1.0  1.1  1.2  1.3  
Manufacturing  12.4  12.2  12.2  12.8  13.3  
Electricity, gas, and water 0.2  0.2  0.2  0.2  0.2  
Construction 5.3  5.3  5.2  5.2  5.8  
Services 40.0  40.9  41.5  42.3  43.5  
 Wholesale and retail trade, restaurants and 
hotels 20.6  20.7  20.9  20.8  21.3  
 Transportation, storage and communications 6.0  6.0  5.8  5.2  4.6  
 Financing, insurance, real estate and business 
Services 1.4  1.4  1.4  1.6  2.4  
 Community, social, and personal services 12.0  12.8  13.4  14.7  15.2  
Source: Statistics Indonesia online inform ation. Viewed at:  http://www.bps.go.id/ 
 [30 August 2012]. WT/TPR/S/278 • Indonesia 
 
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  4.3.  Indonesia’s principal mineral resource is petroleum, and the country is a leading exporter of 
liquefied natural gas.  Proven reserves of petrol eum are sufficient to sustain production at current 
rates for nearly 12 years.  Indonesia enjoys a cost advantage over its main competitor, Australia, in coal for power stations, another commodity wher e demand, led by China and India, is expected 
to grow significantly.  Indonesi a is also one of the world’s largest producers of tin and bauxite; 
nickel, copper, gold, and silver are also mined.   
4.4.  Manufacturing contributed 24.3% of GDP in  2011, down from 27% at the beginning of the 
review period, and engaged an estimated 13.3% of the employed labour force.  Apart from 
petroleum refineries, the main branches of the sect or include food products, textiles, clothing and 
footwear, transport equipment, electrical machinery and electronic equipment. According to ADB data, manufacturing GDP increased by an average of 4.6% per year during 2001–10.  Construction 
contributed 10.2% of GDP in 2011, and engaged 5.8%  of the employed labour force.  From the 
1980s Indonesia broadened the base of its energy supplies to include gas, coal, hydroelectricity 
and geothermal energy, in addition to the traditional dependence on petroleum.
1 In 2008, of total 
electricity produced, coal accounted for 41.1%, petroleum for 28.8% and natural gas for 16.9%.   
4.5.  Services provided 38.1% of GDP in 2011, a share that has remained relatively stable during 
the review period, and engaged 43.5% of the empl oyed labour force.  The engine of economic 
growth shifted from manufacturing to services du ring 2001-10, when the services sector grew at 
almost twice the rate of manufacturing and agricu lture, and replaced manufacturing to comprise 
the largest share of GDP in real terms. During the review period, transport and communication 
services and business services grew most rapidly (Table A4.1).  
4.6.  Indonesia's formal private sector, which is  estimated to contribute  about 60% to GDP and 
supports nearly 70% of total employment, is dominated by large business conglomerates, foreign 
investors and state-owned enterprises (SOEs).  Through the SOEs, the Government continues to own large parts of the economy, including financial companies, energy companies, utilities, 
infrastructure companies and manufacturers.  In donesia's new mining law makes the Government 
the owner of all oil and other hydrocarbons in the ground. According to the authorities, there are 140 state-owned enterprises under the Ministry of SOEs, as well as several SOEs (such as PT Sarana Multi Infrastruktur and PT Sarana Multigriya Finansial) directly controlled by the Ministry 
of Finance.   
4.3  Infrastrucutre  4.7.  As a large country with a complex archipel agic structure, Indonesia confronts considerable 
difficulties in establishing the extensive infrastructure of transport, communications and public 
utilities that is essential for its economic and social development.
2  Years of under-investment 
have left Indonesia's infrastructure networ k crumbling. Roads are congested, ports are 
bottlenecked, and many Indonesians do not have access to either potable water or reliable 
electricity.  Inadequate infrastructure has also contributed to poor distribution systems, which 
have resulted in high logistics costs. Shipping  costs are an estimated 50% and 80% higher than 
elsewhere in the region. Efforts to draw up a master plan for port development have been 
hampered by the decentralized structure of govern ment and the competing interests of provincial 
and district governments.   
4.8.  In an attempt to address the increasi ngly serious shortcomings of the country's 
infrastructure, a private company, PT Indonesia Infrastructure Finance (IIF), was formally 
inaugurated in August 2010 with the objective of providing long-term financing for the development of facilities such as telecommunicati ons, energy and transport networks.  One of the 
biggest impediments to infrastructure project implementation - particularly for roads - has been 
land acquisition and the protracted price negotiations. In December 2011, Indonesia's parliament 
                                               
1 Plans for the construction of a nuclear power plant on the island of Bangka, to the east of Sumatra, 
were confirmed in 2011. Construction work on the plant, which was expected to supply 40% of electricity needs in Sumatra, Java and Bali, is to commence in 2015.  
2 According to World Economic Forum , Indonesia is ranked only 82nd out of 139 countries in 
infrastructure development. Overall, Indonesia's business environment continues to rank poorly in international 
comparisons. According to World Bank (2012), it ranked 129 out of 183 economies in 2011.   WT/TPR/S/278 • Indonesia 
 
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  passed the land acquisition law3, under which land prices are set by an independent appraiser, in 
the hope that this will expedite procurement an d expropriation; the law needs an implementing 
presidential regulation. The Government is also planning six special economic corridors4, each 
expected to focus on a particular industry, including infrastructure development, to support those 
industry clusters (Chapter 2).   
4.4  Agriculture, fisheries, and forestry  4.9.  The agriculture sector is made up of state-owned estates called PT Perkebunan Nusantara 
(PTPN), large-scale private plantations, and small hold farmers. The sector is divided into four 
main subsectors: food crops (most important in terms of income and employment generation), horticulture crops, cash/estate crops, and anim al husbandry (with fishing and forestry under 
different ministries).   
4.10.   In terms of agricultural output, Indonesia is the world's largest producer of crude palm oil 
and the second largest producer of rubber, and cocoa beans, with both foreign and domestic investors currently active in cocoa production. Imports are diversified with high volumes of sugar 
and soybean, and a high proportion of milk and rice.  The country is still heavily reliant on imports 
for staple goods, such as wheat, soybeans, and su gar which have raised the issue of food security 
on the national agenda as world food prices have  continued to climb. Although the world’s third-
largest rice producer with annual production of over 40 million tonnes of milled rice, Indonesia is 
among the biggest rice importers, with annual imports averaging more than one million tonnes.   
4.4.1  Agricultural policy  4.11.  An important feature of the agricultural policy framework is the establishment of medium 
term (5-year) plans. While the Ministry of Agriculture has the main responsibility for policy 
development and implementation, several other ce ntral government ministries and agencies are 
involved, as are local government agencies since decentralization in 2001.  Agricultural policy 
priorities are driven by concerns over food self-sufficiency, food consumption and production 
diversification, value-added and competitiveness, and the welfare of farmers. The Government is seeking a balance between supporting producers and ensuring affordable prices of essential foods 
for poor consumers.  Rice is the most important food crop and the preferred staple of the great 
majority of Indonesians, who get nearly half their calories from rice, so maintaining stable and low 
rice prices has always been a major policy aim of the Indonesian Government.
5 The rice subsector 
also plays a dominant role in generating employment: 40 million of Indonesia’s labour force is in 
agriculture, and 21 million households or about 10 % of the Indonesian population, are engaged in 
rice production. Important laws and regulations concerning the administration of agriculture 
sector, include the Basic Agrarian Law No. 5/1960 (Table 4.2). Separate laws have been established to control, inter alia,  the production of livestock, estate crops, and horticulture.  
                                               
3 Law No. 2/2012 of 14 January 2012 concerning Acquisition of Land for Development in the Public 
Interest.   
4 Sumatra corridor- to focus on production and proces sing of agricultural commodities, such as crude 
palm oil, and energy;  Java corridor  - for industry and service sectors;  Kalimantan corridor - for mineral 
production and processing; Sulawesi corridor - produc tion and processing for fi sheries, plantation and 
agricultural products; Bali corridor - to serve as a tour ism gate; and Papua-Maluku corridor - natural resource 
processing. 
5 In 2007, Indonesia launched the National Programme to  Increase Rice Production with the objective of 
increasing annual national rice production by 2 million to nnes of milled rice (or 3.5 million tonnes of paddy) for 
2007, and achieving comparable increases in 2008 and 2009 in order to assure rice self-sufficiency in the country. According to Central Bureau of Statistics (BPS), there has been a surplus in national rice production since 2008. However, Indonesia continues to import rice mostly from Viet Nam and Thailand. In August 2012, 
Indonesia signed an additional contract with Cambodia to import 100,000 tonnes of rice.  In 2011, the Minister 
of Finance issued Decree No. 65/PMK.011/2011 introducing a new import tax for rice (Rp 450.00 /kg). Prior to 
this decree, the import tax for rice was zero.  WT/TPR/S/278 • Indonesia 
 
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  Table 4.2 Major laws, regulations and de crees affecting the agro-food sector 
Topic Laws Regulations/Decrees 
Land Law No. 5/1960 Basic Agrarian 
Law Presidential Decree No. 24/1997 on 
Land Registration 
 Law No. 41/1999 on Forestry Presidential Regulation No. 36/2005 
on Land Procurement for Development 
for Public Purposes 
 Law No. 32/2009 on 
Environmental Management Presidential Decree No. 10/2006 
concerning Land administration at 
national, regional and sector levels 
 Law No. 41/2009 on Protection for 
Agricultural Land and Sustainable 
Food Government Regulation No. 10/2010 
on the Procedure for Changing Forest 
Status and Functions 
 Law No. 2/2012 on Land 
Procurement for Public Interest Government Regulation No. 11/2010 
on Control and Use of Abandoned Land 
Water Law No. 7/2004 Government Regulation No. 20/2006 
on Irrigation 
Food Law No. 7/1996 Government Regulation  No. 69/1999 
on Food Labelling and Food 
Advertisement Government Decree No. 68/2002 on Food Security 
Government Regulation No. 28/2004 
on Food Safety, Quality and Nutrition 
Quarantine Law No. 16/1992 on Animal, Fish 
and Plant Quarantine Government Regulation No. 82/2000 
on Animal Quarantine 
Government Regulation No. 14/2002 
on Plant Quarantine 
Extension Law No. 16/2006 on Extension 
System for Agriculture, Fisheries and Forestry Government Regulation No. 43/2009 
on the Financing, Development and Supervision of Extension Services Minister of Agriculture Regulation No. 
26/2007 
Investment Law No. 25/2007 on Investment Presidential Regulation No. 36/2010 
on List of Business Fields Closed to 
Investment and Business Fields Open 
with conditions to Investment 
Production of specific commodities Law No. 18/2009 on Livestock and 
Animal Health 
Law No. 18/2004 on Estate Crops Law No. 13/2010 on Horticulture Law No. 18/2010 on Cultivation Minister of Agriculture Regulation 
No. 26/2007 on Guidance on Licensing 
Plantation Business Minister of Regulation No. 39/2007 on Guidelines of Food Crops Business 
Permits 
Source: OECD (2012), OECD Review of Agricultural Policies: Indonesia 2012 , p. 143. 
4.4.2  Domestic policy instruments 
4.12.  Key policy objectives are pursued through a wide range of input subsidies on fertilizer and 
seeds, and credit is used to support producer s.  The fertilizer subsidy was increased to 
Rp 16.3 trillion in 2011, twice as high as the subsidy given in 2007.  The increasing amount of 
subsidy is related to the sharp climb of gasoline prices as well as Indonesia's food security policy which is the priority in the National Medium-Term Development Plan 2010-2014. The fertilizer subsidy is divided into a gas subsidy to the nitrogen/urea factories and Fertilizer Direct Aid (BLP). 
The gas subsidy reduces factory prices, enabling smallholder farmers to afford fertilizers. The 
Government also provides food crop seeds subsidy for rice, maize, and soybean although the amount is significantly lower than the fertiliz er subsidy. In the second half of 2012, the 
Government revised the Budget and decreased the fertilizer subsidy from Rp 16.9 trillion to 
Rp 13.9 trillion, and the seed subsidy from Rp 279 billion to Rp 129 billion.  WT/TPR/S/278 • Indonesia 
 
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  4.4.3  Trade policy instruments 
4.13.  Import monopolies, licensing requirements, and export restrictions on agricultural products 
were removed in the economic reforms of 1997-98. However, quantitative import restrictions have been maintained for rice, sugar, and salt and intr oduced for animals and animal products (Section 
3.1.5.2). Import requirements imposed for food sa fety, SPS, and cultural reasons appear to have 
become more stringent. A variable export tax regime has been introduced on crude palm oil and derived products, and more recently on cocoa. An overview of trade measures reported to the 
WTO is given in Table A4.2. 
4.14.  In the agriculture sector, tariffs on more than 1,300 products are bound at 40% or above. 
Tariffs on fresh potatoes, for instance, are bound at 50% although applied rates are 20%.  The large gap between bound and applied rates, combined with seemingly arbitrary changes in applied 
rates, creates uncertainty for foreign companies se eking to enter the Indonesian market. Specific 
tariffs are levied on sugar and rice (Table A3.1). The Government also introduced new import tariffs (from zero to 5%) for raw materials for processed milk products (milk powder and 
processed milk). 
4.15.  Since 2008, companies must be approved by the Ministry of Trade as registered importers 
to import processed products including meat, cereal, sugar, and cocoa. This policy also applies to 
animal and animal products, as stipulated in 24/M-DAG/PER/9/2011.  
4.16.  Indonesia has lowered its import quotas for beef (from 73,000 tonnes in 2010 to 
50,000 tonnes in 2011 and 34.000 tonnes in 2012) and similar policy is applied to cattle products. In addition, Decree of Minister of Agricultur e No. 60/Permentan/OT.140/1/2012 on Horticultural 
Product Import Recommendation introduced an import quota system on fresh and processed fruits 
and vegetables.  Indonesia bans salt imports during the harvest season. It requires salt importers to be registered and to source products locally. Indonesia applies quantitative import limits to 
imported wines and distilled spirits.   
4.17.  The authorities noted that animal-based f ood must have an import recommendation from 
the Ministry of Agriculture's Directorate General of Livestock and Animal Health Service or the 
National Agency of Food and Drug Control (BPOM) and be accompanied by a halal certificate.  The 
Government also reduced the number of entry points (selected seaports equipped with stricter quarantine centres) for certain food products, i.e. preparations of meat; sugars; cocoa; preparations of cereals, flour, starch or milk; an d preparations of vegetables, fruit, nuts or other 
plants
6.  The Government also requires that Indone sia’s food and drug agency (BPOM) approve 
every shipment of processed food, food raw mate rials, and other food-related ingredients.  
4.18.  In 2007, the Government replaced the flat rate export tax regime on crude palm oil with a 
variable regime whereby the export tax increases as the international price of crude palm oil 
increases. Crude palm oil is taxed at a higher rate than its derived products to boost domestic processing (Section 3.2.2.3). However, in 2011, the Government reduced export tariffs (from 25% 
to 22.5%). Effective April 2010, Indonesia applies export tariffs (from 0 to 15%) on raw cocoa. 
4.4.4  Fisheries  4.19.  International recognition of the concep t of the archipelagic state in 1982 permitted 
Indonesia to declare the waters separating its many islands to be an exclusive economic zone 
(EEZ), thereby giving the country effective control over the huge marine fisheries resources of this 
sea area. These resources began to be developed in 1987, both through issuing licences to foreign fishing fleets, and encouraging private (including foreign) investment in the fishing industry, 
especially in shrimp and tuna fisheries. These developments notwithstanding, productivity in the 
sea-fishing industry has remained low, while overfishing in some areas is threatening to deplete fish stocks, especially in the western parts of the archipelago. Illegal fishing, by foreign and 
domestic operators, also remains a serious prob lem, causing considerable environmental damage 
and substantial revenue losses to Indonesia.  
                                               
6 The Ministry of Agriculture has announced that, in orde r to comply with priorities set by the Ministry of 
Trade, the port of Jakarta and several other major ports will be closed to horticulture exports to Indonesia, 
beginning in March 2012.  WT/TPR/S/278 • Indonesia 
 
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  4.20.  Indonesia is the biggest tuna-producing co untry in the world, contributing an estimated 
14.4% (577,000 tonnes) of global tuna production in 2010. Tuna products comprise the second largest Indonesian fishery export after shrimp. Effo rts have been made to enhance the potential of 
Indonesia’s freshwater fisheries, which provide the bulk of animal protein consumed in Indonesia, 
through the promotion of freshwater shrimp hatcheries and a nucleus fishpond scheme, similar to 
the expansion programme for cash crops.  
4.21.  Fisheries management is the responsibility of the Ministry of Marine Affairs and Fisheries, 
which has the stated aim of managing the marine ecosystem in a sustainable manner.  Fisheries 
management is regulated by the Fisheries Act No.45/2009. The Act regulates, inter alia,  subsidies, 
support, and incentives to small-scale and artisanal fisheries, including fuel subsidies as stipulated in Presidential Regulation No.15/2012.  Effective management of fisheries is difficult to achieve 
due, inter alia,  to the lack of enforcement capabilities (in the face of illegal, unreported and 
unregulated catches) and inadequate fisheries management at the provincial level.  
4.4.5  Forestry and forest products 
4.22.  Indonesia has vast forest resources. According to the authorities, approximately 130 million 
hectares, or around 70% of its total land area, is forested. A major part of Indonesia's forest area, or 56 million hectares, is designated as a protection and conservation area. Forest management is 
a key concern regarding responsible investment in agriculture.  Agricultural growth has relied to a 
large extent on converting forested areas into agricultural land, which has caused a loss of biodiversity, and generated carbon emissions and higher rates of soil erosion.  The principle of sustainable forest management is the basis of Ministry of Forestry Regulation P.645/Menhut-
II/2012, which also states that timber industri es and exporters must obtain a Timber Legality 
Certification to ensure that timber and timber products in the domestic and international market are legal and produced from sustainable and legal sources.  
4.23.  Government efforts to protect the country’s forestry resources, through the introduction of 
restrictions on logging and through reforestation programmes, have been only partially successful, in part owing to widespread forest fires in Sumatra and Kalimantan that have become an almost 
regular phenomenon since the mid 1990s. Many of  these fires, which generate huge clouds of 
smoke that are carried over much of South-East  Asia, are started deliberately, by subsistence 
farmers practising traditional "slash-and-burn" methods of cultivation, and by large-scale plantation owners seeking to clear the forest for new cash crop estates.  Several legislative 
changes have been made
7, but the legal framework for forest management remains inconsistent 
and allows for unsustainable practices. Reducing Emissions from Deforestation and Forest Degradation (or REDD) was launched in Indonesia in 2010 and the Government declared a 2-year 
forest moratorium in 2011. In a positive develo pment, the Government recently approved the 
country's first project under the REDD scheme.
8  
4.24.  Illegal logging and the smuggling of timber remain serious problems, and the Government 
has supplemented its domestic enforcement efforts by signing international agreements with the 
European Union (EU), Malaysia, Japan, and the People’s Republic of China to ban the import of illegal logs from Indonesia.  The Australian Government is currently legislating to exclude illegally 
logged timber from imports and from domestic processing.9  In its comments on the proposed 
legislation, the Indonesian Government requests Australia to recognize the Timber Legality and 
Assurance System (Box 4.1), a national system de signed to provide legal verification needed for 
regulations such as the proposed Australian law, as well as those of the United States and the EU.   
                                               
7 Including Regulation Inpres RI No. 16/2011 on the Improvement of Forest and Area Fire Control.   
8 Indonesia is a large emitter of carbon due mainly to logging. REDD pays deve loping countries not to 
cut down trees. In this project, called Rimba Raya, fo rest area in Borneo will be preserved for endangered 
species.  
9 Submission by the Indonesian Government  to the relevant Australian Senate Commission containing 
comments on Australia's draft Illegal Lo gging Prohibition Bill, 2011. Viewed at: 
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=rrat_ctte/logging_2011/submissions.htm. WT/TPR/S/278 • Indonesia 
 
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  Box 4.1 The Timber Legality and Assurance Sy stem: SVLK (System Verifikasi Legalitas 
Kayu) certification 
The SVLK is a well-established national system that provides a simple method through which 
Indonesian exporters and international importers can be assured that the timber and timber 
products produced and processed in Indonesia are legally sourced and in full compliance with 
relevant Indonesian laws and regulations, through independent auditing and civil society 
monitoring. Moreover, under the system, the Indo nesian Ministry of Forestry, along with the 
provincial and district forest offices are responsible for legal verification of timber supply chains 
and the checking of related documents (e.g. annual work plans, log balance sheet reports, 
transport documents, logs/raw-material/processed products balance sheet reports, and production 
tally sheets).  In the event of inconsistencies, forestry officials are empowered to withhold 
approval of the control documents resulting in a suspension of operations.  This certainty provides 
a low-cost method of legality assurance. 
The SVLK is recognized under Voluntary Partnership Agreement (VPA) between Indonesia and the 
European Union, and other international systems. 
Source: Submission by the Indonesian Government  to the relevant Australian Senate 
 Commission containing comments on Australia's draft Illegal Logging Prohibition Bill, 
 2011. Viewed at: http://www.aph.go v.au/Parliamentary_Business/ 
 Committees/Senate_Committees?url=rrat_ctte/logging_2011/submissions.htm. 
4.25.  Indonesia has instituted a number of policy  measures to discourage or ban log exports. The 
aim has been to encourage processing industries within Indonesia. The export contribution of 
forestry, i.e. unprocessed logs, is deemed negligible.  In 2011, Indonesia banned exports of raw and semi-processed rattan (used for traditional furniture). The measure was designed to encourage rattan furniture production but instead seems to be pushing rattan prices down. Certain 
rattan may only be exported by firms holding export licences for forestry products. The exports 
require an independent surveyor for technical and preshipment verification.  On the other hand, processed wood and wood manufactures (including finished products such as furniture) make an 
important contribution to Indonesia's exports.  
4.5  Mining  4.26.  Indonesia continues to be an important supplier in the global mining industry, with 
significant levels of coal, copper, gold, tin, and nickel production.
10  Indonesia is among the world's 
largest exporters of thermal coal. The Ministry of Energy and Mineral Resources regulates 
Indonesia's mining industry. Mineral and coal mining activities are governed under the Law on Mineral and Coal Mining No. 4/2009 of 2009 (Mining Law). This replaced Mining Law No.11/1967, 
which provided the framework for all of Indonesia's pre-2009 mining concessions.  The 2009 
Mining Law is dependent on a number of implementi ng regulations, some of which are still to be 
issued (Table 4.3).  
Table 4.3 Key implementing regulations under the Mining Law 
Regulation Entry into force 
Government Regulation No. 22/2010 regarding Mining Zone 1 February 2010 
Government Regulation No. 23/2010 regarding Mineral and Coal 
Enterprises Activity 1 February 2010 
Government Regulation No. 55/2010 regarding Supervising and 
Controlling Mining Activity 5 July 2010; 
Government Regulation No. 78/2010 regarding Reclamation and Post 
Mining 20 December 2010; 
Government Regulation No. 9/2012 regarding Tariff and Type of Non Tax 
State Revenue of Ministry of Energy and Mineral Resources 6 January 2012 
Government Regulation No. 24/2012 regarding Modified of Government 
Regulation No. 23/2010 on Mineral and Coal Enterprises Activity 21/02/2012 
Ministry of Energy and Mineral Resource Regulation No. 28/2009 
regarding Coal and Mineral Mining Service Activity 30 September 2009 
  
                                               
10 Indonesia ranks in the top ten glob ally for its minable reserves of go ld, copper, tin and nickel ore, and 
in the top 20 for coal reserves.  WT/TPR/S/278 • Indonesia 
 
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  Regulation Entry into force 
Ministry of Energy and Mineral Resource Regulation No. 34/2009 
regarding Prioritization of Mineral and Coal Supply for the Domestic 
Needs 31 December 2009 
Ministry of Energy and Mineral Resource Regulation No. 17/2010 
regarding Procedure of Coal Sales Benchmark Price 23 September 2010 
Ministry of Energy and Mineral Resource Regulation No. 12/2011 
regarding Procedure of Determination Mining Business Area and Mining 
Area Information System 11 August 2011 
Ministry of Energy and Mineral Resource Regulation No. 7/2012 regarding 
Procedure of the Mineral and Coal Added Value Through Mineral and Coal Processing and Refining Activity 6 February 2012 
Ministry of Energy and Mineral Resource Decree No. 
1991.K/30/MEM/2011 on Needs Determination and Minimum Percentage 
on Coal & Sales for Domestic Needs of 2012  25 August 2011 
Ministry of Energy and Mineral Resource Decree No. 0617. 
K/32/MEM/2011 on the Price of Coal to State Owned Electricity Company 
in Order to Steam Powered Operation  3 March 2011 
Source: Information provided by the Indonesian authorities. 
4.27.  The law has made significant changes to the way the industry operates, including licensing 
procedures and use of sub-contractors.11 Changes include: (i) replacement of the old mining 
licences, called Contracts of Work (CoW) and Coal Contracts of Work (CCoW), with area-based 
mining licences to be issued by competitive tender by local, provincial or national governments; 
(ii) equality given to foreign and domestic investors (foreign investors may now own mining licences); (iii) mandate to give priority to Indonesian mining service and equipment suppliers; 
(iv) requirement to process and refine mineral products domestically; (v) requirement for 
companies to undertake at least some of their own mining activities rather than wholly subcontracting to third parties; where subcontrac ting is permitted, priority must be given to 
Indonesian owned companies; (vi) requirement afte r five years to divest 20% of shareholding to 
an Indonesian entity or national;  (vii) no legal certainty for large-scale mining projects (previously 
covered under CoWs);  (viii) miners are required to allocate a portion of their production to the domestic market;  and (ix) benchmark prices for key base and precious minerals will be 
established to prevent miners from selling at prices viewed as too low. The coal price benchmark 
was established in 2009, and monthly benchmarks for other key minerals were started in 2011. 
4.28.  As a result of the new mining legislation, mining firms operating in Indonesia will face new 
restrictions in exporting unprocessed ore. The legi slation will require them to process the ore in 
Indonesia before shipping it abroad.  The policy is intended to support the expansion of value-added activities, includin g the smelting industry.   
4.29.  The Indonesian Government recently  issued Government Regulation No. 24/2012 
(amending Government Regulation No. 23/2010) on  the Implementation of Minerals and Coal 
Mining Activities.  The regulation’s preamble explicit ly states that one of its rationales is to allow 
more Indonesians to participate in mining. The significant change brought about by the new 
regulation is a requirement for foreign investors in the Indonesian mining sector to divest a 
minimum of 51% of the equity in the mining licence holding entity by the tenth year of production, in accordance with a divestment schedule.  For ma ny foreign investors, this will mean a mandatory 
divestment of equity. The share must first be offered for purchase to the central Government. If 
the central government is not prepared to purchase the share, it is to be offered to the provincial 
government or city/county government. If they also  refuse, the shares are to be offered by auction 
to (in order of priority) a state-owned enterpri se, and regional state-owned enterprise or a 
national company.  
4.30.  Failure to divest according to this schedule may lead to suspension of production and even a 
revocation of the mining licence. The concept of divesting foreign interests in Indonesian mining 
enterprises is not new. The 2009 Mining Law requir ed a divestment after fi ve years of production, 
but did not specify the required amount of divestment. The 2010 regulation required that Indonesian participants hold 20% equity in foreign-owned mining operations after five years of 
                                               
11 See in PWC (2012).  WT/TPR/S/278 • Indonesia 
 
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  production, but did not require further divestment. The new regulation requires divestment of a 
majority share.    
4.31.  Another recent policy is the regulation of exports of 65 mining commodities including nickel, 
tin, gold, copper, silver, lead, zinc, chromium, platinum, bauxite, iron ore, and manganese. These 
commodities are subject to a 20% export duty, which has been applied since May 2012 
(Section 3.2.2.3).12  Also, to be legally eligible to export these 65 commodities, miners are 
required to be registered exporters and all exportation must be verified by surveyors. A company 
must apply to the Ministry of Trade to become  a registered exporter, having first secured a 
recommendation from the Ministry of Energy and Mineral Resources.  
4.6  Manufacturing  4.32.  Indonesia’s strong recent GDP performanc e has been driven by services and commodities, 
not manufacturing. In fact, the role of manufacturing has declined significantly or stagnated in its 
value added, its share of exports, and its share of employment.  Indonesia’s export growth was 
driven by robust global commodity prices, thanks in part to China’s seemingly insatiable appetite 
for raw materials.  
4.33.  Manufacturing nevertheless remains one of Indonesia's biggest contributors to GDP, in 
subsectors ranging from textiles to automotive parts.  Citing the country's relatively low labour 
costs compared with the rest of Southeast Asia, and the large domestic market, the Government 
has been pursuing investors in sectors such as electronics manufacturing.  However, inadequate 
infrastructure remains an obstacle for investors.  
4.6.1  Incentives 
4.34.  Indonesia offers numerous incentives to attract foreign direct investment, including bonded 
or free-trade zones, and exemptions on tax and import duties. To take advantage of these incentives, investors must meet certain conditions stipulated in the 2007 investment law, such as 
locating in rural or border regions, employing a large workforce, or undertaking research and 
development. 
4.35.  Tax facilities in the form of income tax exemptions or reductions were announced by the 
Government through Minister of Finance Regulati on No. 139/2011. The tax facilities are provided 
to firms in pioneer industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy. Currently, this is applicable to: basic metal industry; oil refinery and/or base organic chemicals 
sourced from oil and gas; renewable energy; machinery; and telecommunications.  Eligible 
taxpayers may enjoy the income tax exemption for five to ten years from the start of commercial production. At the end of the tax holiday, the taxpayers are given a 50% income tax reduction for 
a further two tax years. Only Indonesian legal entities with a minimum investment value of 
Rp 1 trillion (US$120 million) are eligible for the facilities.  
4.36.  New investors (foreign or domestic), or existing investors who are expanding their 
production by at least 30% or diversifying into new products,  are granted relief from duties on the 
importation of capital goods (machinery, equipment, spare parts, and auxiliary equipment) for two years, and on the importation of raw materials and manufacturing components for two years of production. Car and motorcycle assembly (excep t for components) does not qualify for this 
incentive. 
4.37.  Investors manufacturing for export also qualify for certain tax breaks, including refunds on 
import duties (which normally range from 0% to  150% on the customs value of imported goods) 
paid on raw materials; exemption from the 10% VAT and the sales tax on luxury goods (ranging 
between 10%-75% imposed at point of import or manufacture) on materials purchased domestically for use in manufacturing. There is also no restriction on the import of raw materials 
regardless of the availability of comparable domestic products.  Other incentives include: a 
reduction in taxable income of up to 30% of the capital investment spread over six years; accelerated depreciation and amortization; a loss carry-forward facility for a five-year period with a 
                                               
12 Minister of Finance Regulation No. 75/PMK.011/2012.   WT/TPR/S/278 • Indonesia 
 
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  possible extension of an additional five years (tho ugh the length of extension depends on the type 
of investment); and a 10% income tax on dividends (possibly lower if stipulated in the provisions of an existing tax treaty). 
4.38.  The Government offers incentives to foreign and domestic industrial companies that locate 
in any of Indonesia's designated special economic zones, free trade zones and bonded zones 
(Section 3.2.2.4).   
4.6.2  Trade-related measures  
4.39.  Most tariffs are bound at 40% although tariff bindings exceed 40% or remain unbound on 
automobiles, iron, steel, and some chemical products. Motorcycle imports are severely restricted by the combined effect of a 60% tariff, a luxury tax of 75%, a 10% VAT, and the prohibition of motorcycle traffic on Indonesian highways.  Indonesia periodically changes its applied rates:  in 
2010 and 2009, increases in applied rates were implemented for a range of goods that compete 
with locally manufactured products, including chemicals, electronic products, electrical and non-electrical milling machines, cosmetics, medicines, iron wire and wire nails, and a range of 
agricultural products including milk products, animal or vegetable oils, fruit juices, coffee, and tea. 
4.40.  Luxury goods (defined as goods not considered necessities), imported or locally produced, 
may be subject to a luxury tax of up to 200%, although the current range is 10% to 75% for 
goods listed in the implementing regulations as su bject to the luxury tax (Section 3.1.4.2).  The 
luxury sales tax on 4,000 cc sedans and 4x4 Jeeps or vans is 75%, while the rate on automobiles with smaller engine capacities (of 1,500 cc or less) ranges from 10% to 30%. Passenger cars of less than 1,500 cc comprise 40% of the market, incl uding a large group of vehicles predominantly 
produced in Indonesia that are taxed at a rate of 10%.  The luxury tax rate on motorcycles of 250 
cc to 500 cc is 60%.  In addition to a 10% VAT and an import duty of 150%, Indonesia charges luxury taxes on imported distilled spirits at 40% to 75%. The combined effect of these measures, 
which produces an effective rate of protection of over 200%, is to place imports at a significant 
disadvantage in Indonesia’s market.  
4.41.  Exporters to Indonesia must comply with numerous import licensing requirements 
(Section 3.1.5.3 and Table A3.2).  The Government implemented a wide-ranging regulation 
in 2009
13  imposing import licensing procedures on a broad range of products, including 
electronics, household appliances, textiles and footwear, toys, and food and beverage products. Indonesia maintains non-automatic licensing requirements on certain textiles and textile products 
under which, inter alia,  only approved local garment or textile producers may import fabrics 
covered by the regulation, and these fabrics may only be used as inputs in domestic production, not for resale or transfer.  
4.42.  Ministry of Trade Regulation No. 45/M- DAG/PER/9/2009 (as amended and clarified by 
Regulation No. 17/M-DAG/PER/3/2010) introduced a requirement that companies may only import goods for further distribution or for their own manufacturing, but not for both. Under these 
regulations, companies are permitted only one kind of licence; companies that need both kinds of 
licence need to separate into manufacturing and trading businesses. Effective 1 January 2011, 
under Regulation No. 39/MDAG/ PER/10/2010, Indonesia introduced a new kind of importer licence, called a PI Licence, which permits companies to import certain finished products not used 
in the production process provided they help the development of the company' s business in 
Indonesia.  A 2008 Health Ministry decree requires local and foreign pharmaceutical companies operating in Indonesia to manufacture locally in order to get drug approvals.
14  
4.43.  Minister of Finance Regulation No. 75/201 2 implements an export duty on a range of 
products, including leather and wood; cocoa beans; palm oil, crude palm oil and its derivatives; 
                                               
13 Decree 56 was extended by Ministry of Trade Regulation 57/M-DAG/PER/12/2010 in December 2010 
until 31 December 2012. The extended decree included a dditional products under the scope of the licensing 
restrictions, including cosmetics, while retaining a re quirement for preshipment verification by designated 
surveyors at importers' expense, and a restriction that  restricted entry of import s to a limited number of 
designated ports and airports. 
14 Ministry of Health Decree No. 1010/MENKES/PER/XI /2008 requires foreign pharmaceutical companies 
to manufacture locally or entrust a company already re gistered as a manufacturer in Indonesia (a potential 
competitor) to obtain drug approvals for them.  WT/TPR/S/278 • Indonesia 
 
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  and mineral ore. This is in line with Indonesia' s policy of increasing domestic value added, as 
simply exporting raw materials would not create the types of jobs necessary to improve living standards (Section 3.2.2.3). 
4.7  Services  
4.44.  Trade in services (imports + exports) accounted for 6.3% of GDP in 2011, down from over 
12% in 2000. During the review period, Indonesia showed a net services trade deficit (Table 4.4)
15.  Travel services, which largely represent the tourism sector, dominate exports, with 
over 37% of Indonesia's services exports in 2011.   Computer and information services are the 
second largest services exports (27%) followed by transportation services (16.1%), and communication services (7.6%).  Indonesia has latent comparative advantages in several services sectors, including skilled labour services, technology deployment, and business processing 
outsourcing.  On the import side, transportation services (particularly in freight and sea) account 
for 37% of services imports, followed by travel  services (22.4%), and computer and information 
services (19.9%). 
Table 4.4  Trade in services, 2007-11 
(US$ million and %) 
  2007  2008  2009  2010 2011  
Services balance -13,614.0  -14,624.6  -11,096.4  -10,102.1 -11,319.2  
Export of services 12,561.5  15,400.6  13,227.7  16,831.0 21,242.2  
of which in %      
   Transportation 17.6 18.2 18.4 15.8 16.1 
        Passenger 3.9  5.0 3.4 3.9 4.9  
        Freight 10.9 10.2 11.3 8.8 8.6 
        Other 2.8  3.0 3.7 3.1 2.6  
   Travel 42.6 47.9 42.3 41.3 37.4 
        Business 12.8  14.4 13.7 13.3 12.1  
        Personal 29.8 33.5 28.6 28.0 25.3 
   Construction 3.7  4.3 4.4 3.1 2.6  
   Communication 11.8 8.3 8.7 7.4 7.6 
   Computer and information 17.4  14.2 19.1 25.6 27.0  
   Insurance 0.2 0.1 0.2 0.1 0.1 
   Finance 2.3  2.0 1.3 2.0 1.9  
   Royalties and licence fees 0.2 0.2 0.3 0.4 0.4 
   Personal, cultural and 
   recreational 0.4 0.5 0.6 0.6 0.7  
   Manufacturing services on 
   physical inputs owned by 
   others 0.0 0.0 0.0 0.0 3.0 
   Maintenance and repair 
   services n.i.e. 0.6 1.0 0.5 0.4 0.3  
   Government 3.3 3.3 4.1 3.3 2.8 
Import of services 26,175.5  30,025.2  24,324.1  26,933.1 32,561.4  
of which in %      
   Transportation 36.3  46.3 26.8 32.2 37.3  
        Passenger 6.4 10.8 6.5 7.6 7.4 
        Freight 28.6  34.2 19.3 23.5 28.6  
        Other 1.3 1.3 0.9 1.1 1.3 
   Travel 18.7  18.5 21.9 23.7 22.4  
        Business 5.9 5.9 6.4 7.4 7.0 
        Personal 12.9  12.6 15.5 16.3 15.4  
   Construction 2.8 2.5 3.3 2.2 1.5 
   Communication 5.0  5.0 4.5 4.2 4.7  
   Computer and information 20.6 12.8 22.7 20.3 19.9 
                                               
15 The figures reflect balance of payments transactions and may not be representative of the full scope 
of GATS-covered trade.    WT/TPR/S/278 • Indonesia 
 
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    2007  2008  2009  2010 2011  
   Insurance 2.5  2.3 5.4 4.3 4.0  
   Finance 1.4 1.1 1.7 1.7 1.9 
   Royalties and licence fees 4.1  4.4 6.3 6.0 5.5  
   Personal, cultural and 
   recreational 0.4 0.4 0.5 0.5 0.7 
   Manufacturing services on 
   physical inputs owned by 
   others 6.1 5.2 4.8 2.3 0.0  
   Maintenance and repair 
   services n.i.e. 1.0 0.7 1.1 0.8 0.6 
   Government 1.0  0.8 1.1 1.8 1.6  
Source: IMF, Balance of Payment Statistics. IMF online information. Viewed at: http://elibram-
  date.imf.org/. 
4.45.  According to the Indonesian Economic Deve lopment Acceleration and Expansion Master Plan 
2011-2025, the tourism sector is to be expanded mostly to the Bali-Nusa Tenggara Region through development of the necessary infrastructure in te rms of transport facilities and electricity. The 
information technology sector is to be developed mostly in all regions outside Java Island to create 
connectivity within all regions in Indonesia.  
4.46.  The authorities noted that the principal differences between Indonesia’s trade policy on 
goods and trade in services might reflect, to a certain degree, the distribution of competencies 
among relevant ministries and agencies that regulate trade. Trade in goods is relatively centralized under the domain of Ministry of Trade, with the support of the ministries of Industry, Agriculture, 
and others. In trade in services, the Ministry of Trade is the focal point for international services 
trade negotiations through the Directorate of Trade in Services Negotiations (DPPJ), located in the 
Directorate General of International Trade Co-operation, and coordinates the views and positions of the various technical ministries and stakeholders involved.  Domestic policy aspects of services 
trade sectors tend to be in the exclusive domain of the ministries and agencies that technically 
govern and control the sectors.  
4.7.1  WTO and other agreements   
4.47.  Indonesia's services schedule under the GATS covers 45 out of some 160 service 
subsectors, which is about average for developing countries (41). Indonesia's schedule covers a variety of business services, virtually all telecommunication services, construction services, 
financial services, tourism services and maritime transport services.  Indonesia has scheduled a 
foreign equity ceiling of 49% on a horizontal basis, which is reduced to 35% in economically important sectors such as telecommunications.   
4.48.  Indonesia's initial offer of April 2005 in the DDA negotiations contains a limited number of 
new sector inclusions and removals of existing limitations.  Indonesia has not submitted a revised 
offer.  Indonesia's initial GATS offer would provide for new commitments on educational services and health services.  Foreign-equity ceilings for construction would be raised to 55% but remain 
unchanged for telecommunications. Indonesia has received collective requests in the following 
sectors and modes: legal services, architectural/ engineering/integrated engineering, computer 
services, postal/courier services, telecommunications, audio-visual, construction, distribution, 
education, environmental services, financial services, maritime transport, air transport, logistics, 
energy, cross-border trade (mode 1), and comme rcial presence (mode 3). Indonesia makes its 
offer conditional on the outcome of negotiations stipulated by the GATS, including negotiations on the question of emergency safeguard measures.    
4.49.  Indonesia's requests emphasize mode 4 commitments in a number of sectors, including 
services incidental to agriculture, mining, ma nufacturing, construction, computer and related 
services, hotel and restaurant services, and human health services. The authorities indicated that 
Indonesia is preparing a new set of requests, wh ich are subject to on-going discussions between 
interested parties. Regarding Indonesia's participation in regional (including ASEAN) trade, services initiatives are based on a GATS-type commitment structure (Table A4.2).    WT/TPR/S/278 • Indonesia 
 
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  4.7.2  Financial services  
4.50.  Indonesia's financial system was resilient during the global financial crisis that commenced 
in 2007. This is in large part attributable to the stability of the banking sector, which remains small relative to Asian neighbours like India and China.  Total financial sector assets were 66% of GDP in 
June 2012, with the ratio of total bank assets to GDP at 50%.  According to the authorities, 
although around 50% of the Indonesian population  saves at banks, many Indonesians lack access 
to formal financial services and bank deposits have declined relative to GDP since 2007.  
Increasing access to formal financial services remains a priority, with the focus on lower income 
groups. However, the financial sector has been relatively slow to develop over the past decade, which affects the ability of domestic financial institutions and markets to support economic growth and poverty reduction. The lack of diversity in the financial sector and limited capital markets 
development to some extent call into question Indonesia's ability to address its long-term 
financing requirements and domestic resource  mobilization to support investment.   
4.51.  Bank Indonesia
16 (BI), which sets Indonesia's monetary policy, is also responsible for 
supervising and regulating the banking sector, which consists of commercial and rural banks. BI is 
the bank supervisor, issuing regulations, licences  and permits, and imposing prudential sanctions 
where necessary. Non-bank financial institutions involved in capital markets, pension funds, 
insurance, and multifinance are supervised by the Capital Market and Financial Institution 
Supervisory Agency (Bapepam - LK), under the Ministry of Finance.   
4.52.  The current supervisory structure is due to change.  In November 2011, Indonesia 
established the financial services uuthority (Otoritas Jasa Keuangan, OJK) through Law No. 
21/2011. The establishment of an independent body  overseeing the financial sector was mandated 
in a 2004 amendment to the law on Indonesia’s central bank. The OJK is intended to become the sole regulatory agency for all financial services institutions (banks, securities companies, insurance 
companies, pension funds, and multi-finance companies). To a certain extent, this new 
government body appears to be modelled after the United Kingdom’s FSA, and its authority will include bank licensing, bank operations, setting policy on banking liquidity, and banking 
supervision, all of which it will take over from BI at the end of 2013. The OJK will start supervising 
and regulating banks in January 2014.   
4.53.  According to the authorities, in order to facilitate the process of the OJK assuming its new 
roles, a transition period has been established fo r transferring functions, duties, and authority in 
regulation and supervision of the financial service sector from BI and Bapepam-LK to OJK:  (i) as 
of 31 December 2012, all regulatory and supervisor y functions of non-bank financial institutions 
(i.e. capital market, insurance, pension funds, leasing companies, and other financial services 
companies) will be handed over from the Ministry of Finance and Bapepam-LK to OJK; (ii) as of 
31 December 2013, all regulatory and supervisory func tions of banks will be handed over from BI 
to OJK; (iii) OJK’s Board of Commissioners is set up at the latest eight months after the OJK Law is 
enacted and no more than one month after OJK’s Board of Commissioners is set up, a transition 
team is to be established in collaboration with BI and MOF; (iv) during the transition period, some existing employees of BI and Bapepam-LK will be assigned to work in OJK, for three years and one year, respectively. As the assignment period is concluded, they will be given the option to stay at 
the OJK or return to BI or Bapepam-LK; and (v) the existing laws and regulations regarding 
banking and non-banking financial institutions still apply until the new laws and regulations are introduced. Currently, no implementing regulation s are being prepared by the OJK, as banking 
supervisory and regulatory authority remain under BI up to end 2013.  
4.54.  When the OJK takes over, BI’s authority ov er banks will not be abolished entirely. The FSA 
will still be required to coordinate with BI in setting banking policies. These policies will concern 
the capital adequacy ratio for banks, an integrated banking information system, receiving foreign 
exchange, offshore funding and commercial loans, banking products, derivative transactions, and 
                                               
16 The country's central bank, Bank Indonesia, was established under the Central Bank Act No. 13/1968, 
as amended by the Central Bank Act No. 23/1999 and most recently by Act No. 6/2009. It acts as an independent institution, with autonomy to formulate an d implement monetary policy . Bank Indonesia is also 
responsible for regulating the payment system and the nation's banks.  Bank Indonesia regulates and 
implements monetary policy with the objective of maintaining the stability of the Indonesian rupiah. Policy 
direction is based on inflation rate targeting, taking into consideration short-, medium- and long-term macroeconomic targets. WT/TPR/S/278 • Indonesia 
 
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  other banking activities. BI may also conduct special investigations on banks after informing the 
OJK, and the results of these investigations must  be conveyed to the OJK.  According to the 
authorities, no implementing regulations are being prepared, as banking supervisory and regulatory functions remain under BI's authority. The OJK is currently developing its organizational 
structure and preparing the transfer of capital market and non-bank supervisory functions from 
Bapepam-LK.     
4.7.2.1  Banking  
4.55.  Law No. 7 of 1992 on Banking as last am ended by Law No. 10 of 1998 (the Banking Law) 
generally regulates banks in Indonesia. The Banking Law applies to both commercial banks and rural credit banks. Indonesia has a dual bankin g system, conventional and shariah-based, the 
latter being governed under Act No. 21/2008 on Islamic Banking.  A bank must obtain central 
bank approval to operate its business. BI approval is also required to open branch offices and for 
mergers, consolidations or acquisitions. The bankruptcy and liquidation of banks is regulated separately. 
4.56.  The Banking Law distinguishes commercial banks from rural banks by the scope of their 
services. Commercial banks may provide an extensive range of financial services, including raising funds from the public in order to offer loans, trading negotiable instruments, providing bank 
guarantees, issuing credit cards, and settling and receiving foreign currency payments. In 
contrast, rural banks have a very limited scope of services. They may raise funds from the public, provide loans and extend credit, but may not be involved in foreign currency transactions or in direct clearing settlements. Neither type of bank may engage in the insurance business, except 
through a bancassurance arrangement with a licensed insurance company. Commercial banks may 
establish a separate shariah business unit to provide financial services based on Islamic banking principles. Rural banks may also operate as shariah banks.  
4.57.  The financial system is dominated by bank s, accounting for 76% of financial sector assets 
as of June 2012. Other players in the financial industry, such as insurance companies, pension funds, finance companies, securities companies and pawn shops, have small shares within the 
market.  Commercial banks, four of them state-owned
17, account for most banking sector assets. 
Foreign banks (including branches, joint venture banks, and foreign-owned local banks) play an important role in the sector, with an increasing share in banking assets.  Since 1999, up to 99% of 
a bank’s shares may be held by foreign entities or individuals. Indonesia has revised its WTO 
financial services commitments to 51% foreign ownership in its GATS schedule (previously 49%); 
new bank licences are unbound.   
4.58.  A new regulation on commercial bank ownership was issued in 2012 and is intended to 
improve the resilience of banks through better governance. The regulation minimizes ownership 
dominance in a bank as this may have a negative effect on a bank’s operations. The regulation applies to all shareholders, Indonesians and foreig n. Permitted ownership of banks up to 99% by 
foreign nationals remains unchanged (Box 4.2)  
4.59.  BI regulations stipulate that foreign banks seeking to establish operations, including opening 
a branch in the country, must: be rated "A" by a leading international rating agency; rank among the 200 largest banks in the world, by total assets; have paid-up operating funds of at least 
Rp 3 trillion; and have permission from their home market regulator.  Foreign banks are allowed to 
establish branches and sub-branches in 12 major cities in Indonesia.   
4.60.  The single-presence policy, introduced in 2006, prevents any person or company from 
owning a controlling stake in more than one bank.  The Government was granted an exemption 
from the rule for the state-owned banks.  As no ted above, in 2012 BI limited share ownership by 
any single shareholder or corporate group (domestic or foreign) so as to reduce their influence 
over Indonesian banks. The authorities indicate th at the single-presence policy will be adjusted 
according to the policy on bank share ownership.    
                                               
17 Bank Mandiri, Bank Rakyat Indonesia, Bank Negara  Indonesia, and Bank Tabungan Negara.  Cited in: 
Economist Intelligence Unit (2011), p.13.  WT/TPR/S/278 • Indonesia 
 
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  Box 4.2 Bank ownership 
A new regulation on bank ownership, issued by the BI applies to national banks and foreign-owned 
banks in Indonesia. Its aim is to provide incentives for banks to bolster governance. In the face of 
regional and global dynamics and economic develo pments, the national ba nking industry needed 
to enhance its resilience through more robust im plementation of prudential principles and good 
corporate governance. Regulations regarding the shareholding structure of banks were deemed 
necessary, and limits were imposed on bank owne rship in order to reduce dominance and avoid 
the adverse effects ownership dominance may bring.   
 
Under the new provisions, the maximum bank ownership limit depends on: (a) categories of 
shareholders, and (b) the nature of linkag es between shareholders. The maximum share 
ownership for each category of shareholders is set out: 
• 40% of bank capital for shareholders under the legal entity of financial institutions and non-bank 
financial institutions. However, banks may hold more than 40% of bank capital, with approval 
from Bank Indonesia. Considerations by BI to provide approval include the bank’s rating and 
whether its stocks are listed in the capital market. 
• 30% of bank capital for shareholders under the legal entity of a non-financial institution; 
• 20% of bank capital for individual shareholders. For sharia banks, the limit is 25% of the bank's 
capital. 
Source: Bank of Indonesia. 
4.61.  These measures are intended to shield Indo nesia from the effects of the international credit 
crisis by reducing the impact of foreign banks an d their risky investment practices.  Indonesia’s 
banking sector escaped relatively unscathed from the recent banking crisis thanks to limited exposure to the complex derivatives and other financial products that so devastated U.S. and 
European banks. Total commercial bank lending to the United States and Europe is estimated to 
be well below the total value of Indonesian bank assets.  
4.62.  In addition to reviewing its policy on ownership, BI is also reviewing its licensing policy. 
With the growing complexity of the banking busi ness, there have been proposals for example to 
switch from the current one-size-fits-all single licence to a policy of multiple banking licences.18 
The authorities note that as of December 2012 no  final regulatory framework has been decided.  
4.63.  In implementation of the Basel II Accord , Indonesian commercial banks and rural credit 
banks are required to maintain a statutory capital adequacy ratio (CAR) of at least 8% of their 
risk-weighted assets. The capital adequacy ratio of banks is well above the regulatory minimum 
(17.2% in 2012 according to BI). BI may require banks to reserve more capital if it deems this necessary in order to anticipate potential losses,  depending on the risk profile of the bank. In 
calculating this percentage, BI determines what should be classified as capital and what 
constitutes risk-weighted assets.   
4.7.2.2  Non-bank financial sector 4.64.  The non-bank financial sector remains small and under-developed, accounting for less than 
10% of GDP.  It includes insurance companies, pension funds, mutual funds, finance companies, 
securities companies, and pawnshops.  The insurance, mutual funds, and pension industries are 
growing, albeit from a low base.   
4.65.  The insurance sector is the largest among the non-bank financial institutions, accounting for 
6% of GDP. Indonesia still has one of the lowest life insurance ratios in Asia, with a penetration rate of about 1.2% as of mid-2011, according to the Indonesia General insurance Association.  
There were 45 life insurance companies licensed in Indonesia at end-2010, with the top 5 insurers 
holding over 50% of the market in terms of gross premiums.   
4.66.  The 2007 Negative Investment List placed a new of 80% foreign ownership limit on loss 
insurance, life insurance, reinsurance, and brokerage insurance. Foreign insurance agents are 
obliged to partner with a local entity and may hold a maximum 65% ownership. Many foreign 
                                               
18 OECD (2012), Economic Surveys: Indonesia , Paris, September 2012, p.19.  WT/TPR/S/278 • Indonesia 
 
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  insurers gained entry into the market by acquiring local companies or by establishing joint 
ventures with local companies.  
4.67.  Insurance companies operate under legislation introduced in 1992 (Insurance Law No. 2) 
and subsequent regulations, which provide, inter alia,  for prudential conditions, investment areas 
for insurance, and insurance in the context of th e establishment of a social security system and 
health insurance.   
4.7.3  Telecommunications services 
4.68.  The telecommunications sector is governed primarily by Law No. 36/1999 
(Telecommunications Law), which sets guidelines for industry reforms, including liberalization, facilitation of new entrants, and enhanced transparency and competition. The law is implemented through numerous government regulations and ministerial regulations. Indonesia has committed 
to the WTO Basic Telecommunications Agreement, which provides for fair competition under the 
transparent supervision of an independent regulator.    
4.69.  The independent regulator - the Indonesi an Telecommunication Regulatory Body (Badan 
Regulasi Telekomunikasi Indonesia or BRTI) - was established by the Ministry of Communication 
and Information Technology’ (MCIT) through Ministerial Decree No. 36/2008 with the purpose of ensuring transparency, independence, and fairness in the telecommunication industry.  BRTI 
functions to regulate, supervise, and guarantee the implementation of fair competition through 
transparent, predictable, and accountable policy and regulation including the licensing process. 
The authorities note that the BRTI is not part of, or responsible to, any operators. BRTI reports directly to the Minister of Communication and Information Technology (MoC) every three months.  
The BRTI consists of officials from the Directorate General of Posts and Telecommunications 
(DGPT) and the Committee of Telecommunications Regulations Competition).  
4.70.  Despite the termination of exclusive rights, the Government does not prohibit or discourage 
operators from attaining a dominant position with regard to telecommunications services. 
However, it does prohibit operators from abusing a dominant position.  MoC Decree No. 33/2004 sets forth measures to prohibit the abuse of a dominant position by network and service providers. 
Specifically, the decree prohibits a dominant provider from engaging in practices such as dumping, 
predatory pricing, cross subsidies, compelling co nsumers to use that provider's services (to the 
exclusion of competitors), and hampering mandat ory interconnection. The enactment of KPPU 
Regulation No.1/2009 on Pre-Notification of Mergers, Consolidations and Acquisitions, along with 
implementing guidelines, are considered to pr ovide further legal certainty for the business 
environment, in particular by controlling anti-competitive M&A activity.     
4.7.3.1  Investment in the telecoms industry  
4.71.  Telecommunications providers face a number of investment restrictions (Table 4.5).  
Indonesia permits up to 65% foreign ownership in value-added and mobile telecommunications 
services and up to 49% for fixed networks. Wh ile this foreign ownership level goes beyond 
Indonesia’s current commitments in its WTO GATS  schedule, the new limits on fixed services 
appear to represent a step backward from recent practice, where up to 95% ownership was permitted. Foreign ownership of up 95% is allowed for suppliers of certain data communication system services, and foreign firms have obtained licences in this sector. 
4.72.  A Ministry of Communications and In formatics decree issued in 2008 closed the 
construction, management, and ownership of cell towers to foreign investment. Only 100% locally owned companies may own and manage towers. Telecom companies with foreign investment such 
as PT Telkom, PTIndosat, PT Hutchison Indonesia, and PT Excelcomindo Pratama were affected by 
this decree as they have built and managed their towers since the beginning of their operations.  However, as a compromise, companies publicly listed  in the Indonesian Stock Exchange were to be 
considered locally owned. Some foreign firms were forced to exit the market. The decree also 
reiterates a 2008 ruling that gives local governments the power to control the number of towers located in its territory, as well as where they are built.    WT/TPR/S/278 • Indonesia 
 
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  Table 4.5  Limitations on foreign participation in telecom services 
Services Ownership 
Network operation:  
Fixed networks with circuit-switched or 
packet-switched technology Maximum ownership 49% 
Closed fixed network Maximum ownership 65% 
Mobile network Maximum ownership 65% 
Service operation:  
Internet service provider (ISP) Maximum ownership 49% 
Data communication servic es Maximum ownership 95% 
Voice over Internet protocol/VoIP Maximum ownership 49% 
Internet interconnection services (network 
access provider) Maximum ownership 65% 
Other multimedia services Maximum ownership 49% 
Source: Presidential Decree No. 36,2010 Concerning the List of Closed Business and 
 Opened Business Fields with Certain Requ irements in Capital Investment, Annex II. 
4.7.3.2  Market developments 4.73.   In 2002, the Government ended Telkom's exclusive rights to provide fixed-line services in 
Indonesia but as of today the company still acts as the principal player and also provides 
interconnection, network, and internet services. Also in 2002, the Government sold 42% of its shares in Indonesian Satellite (Indosat), Indonesia's second-largest mobile-phone operator, to Temasek Holdings, the state-owned investment arm of the Government of Singapore.  Indosat's 
monopoly on international calls ended in 2003.   By 2007, Temasek Holdings, through various 
subsidiaries
19, held stakes in Indonesia's two largest telecom operators and controllers of 80% of 
the Indonesian market, Indosat and Telkomsel. Citing these holdings, the Business Competition 
Supervisory Commission (KPPU) found Temasek guilty of anti-competitive practices through cross-
ownership, levying a fine and mandating Temasek's divestment of Telkomsel and Indosat within 
two years.20  
4.74.  During the review period, Indonesia's telecommunications market continued to expand and 
has settled into a healthy development phase. Fixed-wireless technology has provided a fresh basis for expansion in the development of the country's fixed-line network. Wireless has become the dominant component within the fixed-market segment, and by 2011 accounted for an 
estimated 80% of the total fixed-line subscriber  base, with teledensity reaching 17% by early 
2012; it has provided much needed basic telephone services to previously unserved  communities.  
Telkom is the largest provider of fixed wireless service, followed by Bakrie Telecom, lndosat and 
Nobile 8.   
4.75.  The number of mobile subscribers increased from 104 million in 2007 (37% penetration 
rate) to an estimated 249 million by early 2012, with a penetration rate of over 100%. As 
penetration passed the important 100% milestone, there was still considerable potential for further 
market growth, with consumer interest shifting to  the 3G services offered by the operators.   
4.76.  According to the authorities, currently there are 11 mobile operators. Telkom is still the 
most dominant telecommunications player and is pu blicly traded, with the Indonesian Government 
owning 51% of the shares. Telkomsel, the leading cellular operator in Indonesia, is jointly owned 
by Telkom (65%) and SingTel (35%). Indosat is also publicly traded, with the Government owning 15% and Qatar-Telecom (QTEL) 65%. Telkomsel, Indosat, and XL own 75% of the cellular 
subscriber market in Indonesia.  The rapid growth has attracted a number of foreign investors to 
the country, including Singapore Telecommunicati on Ltd (Sing Tel) and Singapore Technology 
Telemedia (STT), Telekom Malaysia and Maxis Communication Bhd from Malaysia, Qtel from 
                                               
19 Via a 54% stake in SingTel group, Temasek ow ned a 35% stake in Telkomsel, and through STT 
Communications (its wholly owned subsidiary) held a 75% stake in Asia Mobile Holdings, which is a 42% owner of Indosat.  
20A 2008 district court decision upheld the KPPU decision but lowered the fine and moderated the 
divestment requirement to 50% of Temasek's holdings in both Indosat and Telkomsel, or 100% of the holdings 
in a single operator. The company complied with the ruling  in 2008 by completing the sale of its entire stake in 
Indosat to Qatar Telecom.   WT/TPR/S/278 • Indonesia 
 
- 90 - 
 
  Qatar, and Hutchison CP Telecommunication, a Thai-Hong Kong joint venture. Canadian IT 
companies are exporting to the market, but have no significant investments. 
4.77.  The fixed-wireless sector is partially competitive, five licensees provide services, two of 
which are the two main companies, PT Telkom and PT Indosat.  Wireline remains a virtual 
monopoly of the incumbent (Telekom). Regarding competition in the broadband sector, there are 
no restrictions on providing internet services; there were 217 internet service providers (ISPs), in March 2012. However, ISPs must purchase international bandwidth from the monopoly provider PT 
Indsat, and local infrastructure from PT Telkom, both of which are competitors in the broadband 
market.     
4.78.  Internet usage is also expanding, reaching an estimated 30 million by end-2011, a 50% 
increase from 2007. Most Indonesians access the in ternet from their mobile phones. Indonesia has 
become one of the biggest markets in the worl d for social media, with the second largest 
population in the world on Facebook and more Blackberry users than any other country in Asia. Fixed-line growth has been leapfrogged by fixed-wireless and mobile technologies. While internet 
penetration at home is relatively low (7% of households in 2010), internet-enabled mobile phones 
and warnets (internet café) have allowed Indonesians to access the internet at relatively low cost.  
4.79.  Both the Government and the private sector  are investing heavily to expand capacity. Under 
its Universal Service Obligation programme, th e Government plans to supply telephone and 
internet service, mainly through satellite terminals, to more than 38,000 rural villages around the country between 2010 and 2015. Private operators ar e also planning to ma intain or ramp up 
capital expenditures, as low tariffs and expanding demand is putting significant pressure on 
network capacity. 
4.7.4  Transport  4.80.  The Government’s national transport growth  strategy is guided overall by the Sistranas 
plan.
21 The development plan for 2010–2014 emphasizes enhanced domestic connectivity through 
major infrastructure development and transport sector reform. The specific objectives for the transport sector development include:  improving ca pacity of transport infrastructure and reducing 
backlogs and bottlenecks in transport services; achieving a 90% stable road network: increasing 
domestic sea transport market share to 100%, and railway freight and passenger market shares by 7% and 23%, respectively; and improving the le vel of transport safety (to reduce transport 
accidents by 50% by 2014).  Transport infrastructu re and services are under national, provincial, 
district, or city agency control, depending on the level of infrastructure or service. Targeting 
funding to specific purposes is difficult because of the decentralized governance.   
4.81.  Between 2004 and 2009, laws governing transport were changed to create a more efficient 
framework for transport network development, including to break the monopolistic role of the 
SOEs and allow increased competition from the private sector in the delivery of transport services.
22  As a result, air and road transport services are now considered to be more competitive, 
offer good service, and are mainly constrained by limitations in infrastructure. Railway operations 
are still going in transition, as private operat ors are selectively encouraged to build special 
railways to carry resources like coal or timber.      
4.7.4.1  Road transport 
4.82.  The road subsector has continued to dominate the other modes in absolute value and in 
passenger- and freight-km.  In units moved, estimated modal shares for passengers are: road 90%, rail 8%, sea 1%, and aviation 1%; and those for freight are road 90%, sea 9%, and rail and 
aviation under 1%.  In service delivery provid ed, 70% of passenger-km and 82% of tonne-km are 
transported via road.  Transport services, by truck or by bus, are operating in competitive 
                                               
21 Minister of Transportation Regulation No. KM  49/2005 on the National Transportation System 
( S I S T R A N A S ) .   T h i s  i s  a n  a s p i r a t i o n a l  n a t i o n a l  t r a n s p o r t  p l a n  w i t h i n  t h e  f r a m e w o r k  o f  t h e  G o v e r n m e n t  o f  Indonesia’s 20-year National Development Plan  (Law No. 17/2007: 2005–2025 National Long-Term 
Development Plan [RPJPN 2005–2025]). 
22 Road and Toll Road Law No. 13/1980 to Law No. 38/2004;  Railway Law No. 13/1992 to Law 
No. 23/2007; Sea Transport and Port Law No. 21/1992 to Law No. 17/2008; Air Transport Law No. 15/1992 to Law No. 1/2009 and Land Transport Law No. 14/1992 to Law No. 22/2009. WT/TPR/S/278 • Indonesia 
 
- 91 - 
 
  markets. Entry to the industry is largely unrestric ted and tariffs are determined by market forces, 
with the exception of fares for low-income passenger bus services, which are set by the Government for interprovincial services and by provincial authorities for services within provinces.   
4.83.  The Directorate General of Highways (DGH),  p a r t  o f  t h e  M i n i s t r y  o f  P u b l i c  W o r k s ,  h a s  
responsibility for the management and development of the national road network. Provincial and 
municipal ( kabupaten) roads are the responsibility of provincial and municipal  governments, 
respectively, although DGH is responsible for the planning of provincial highways. The Toll Road 
Regulatory Agency (BPJT) is responsible for the regulation and management of toll roads, with 
DGH responsible for network system planning and definition of technical standards.   
4.7.4.2  Rail transport  4.84.  Railway operations are the responsibility of an SOE, P.T. Kereta Api Indonesia (PTKA), which 
reports to the Ministry of State-Owned Enterp rises (MSOE), while overall management of the 
sector is left to the Directorate General of Railwa ys of the Ministry of Transport (MOT).  Although 
rail infrastructure is formally the responsibility  of the government, PTKA maintains the track under 
an infrastructure maintenance obligation that exactly matches the cost of maintenance carried as a 
track access charge.  Until the enactment of the new Railway Law (Law No. 23/2007), the MOT 
remained responsible for sector policy, planning, and regulation, and the provision of rail 
infrastructure and signalling, while PTKA had the mandate to operate and provide all services, and 
maintain the infrastructure. However, the law allows the private sector, the local government, and the community to be involved in the provision of railway services in the form of special-purpose railways. It also allows freedom in freight and passenger rates. New institutional arrangements are 
being designed and will form part of the Railway Master Plan.  
4.7.4.3  Maritime transport 4.85.  The Directorate General of Sea Transporta tion of the Ministry of Transport has overall 
responsibility for sea transportation, which includes (i) issuance of licences for ships and maritime 
services; (ii) management and operation of navigation equipment; and (iii) responsibility for maritime safety and training of seafarers. It is also the regulator of port activities whether publicly 
or privately operated.  Until recently, ports were exclusively managed by Indonesian Port 
Corporation SOEs (Pelubahan Indonesia, abbrevia ted to Pelindo), which covered separate regions 
of Indonesia and exercised monopolistic co ntrol over operations and development.
23  This changed 
with the 2008 Shipping Law and its subsidiary regulations, which facilitated a “port authority” 
structure with each Pelindo becoming a port operator competing with other private operators. 
However, all port land is registered to the Pelindos and is carried as an asset on their financial statements, which complicates the full transition to port authorities, which should own and manage 
the port lands.  
4.86.  Efficiency in the major Indonesian ports is questionable, by international standards.
24 When 
comparing container terminal productivity with ports in Southeast Asia and Europe, Indonesian 
ports suffer from excessively high berth occupancy and excessively low twenty-foot equivalent unit 
(TEU) productivity per berth.   
4.87.  The country's largest container terminal is in Tanjung Priok, Jakarta. Tanjung Priok 
dominates container throughput, accounting for 44%  of the country's total throughput and more 
than 60% of Indonesia's exports. In 2010, contai ner flows through Tanjung Priok were estimated 
at 5 million TEUs, and the number of containers that it handles is expected to double in the next five years. Like other aspects of Indonesia's infr astructure, investment in port facilities has not 
matched the rapid growth of traffic moving through them. Bottlenecks are common, cargo 
handling is delayed, and main shipping lines report that vessels must often leave Tanjung Priok before they are fully loaded in order to keep to their published schedules. 
                                               
23 There are approximately 1,700 ports in Indonesia— 725 under government jurisdiction and close to 
1,000 private special-purpose ports. Of the government ports, 111 are commercial ports under the jurisdiction of the Pelindos (I, II, III, and IV) which, as st ate-owned enterprise (SOE), report to the MSOE. 
24 The OECD notes that an assessment of the operat ional performance of Indone sia's ports is difficult 
due to the lack of readily available data. See the chapter on "Regulatory and competition issues in ports, rail and shipping": OECD (2012c).    WT/TPR/S/278 • Indonesia 
 
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  4.88.  According to the World Bank, the cost of ex porting and importing containers in Indonesia in 
2009 was significantly higher than in neighboring Ma laysia or Thailand, primarily due to the high 
transport costs between factory and port.25 Tanjung Priok also lags other ASEAN ports in terms of 
average turnaround time and number of crane movements. 
4.89.  A new Shipping Law enacted in 2008 broke the monopoly of the Pelindos, redefined the 
cabotage policy, and better defined the distinctio n between regulatory functions and operations.  
Key issues revolve around the ownership of the po rt lands, which now rests with the Pelindo and 
which, in the future, should be transferred to the new port authority.  
4.90.  Indonesia's 2008 shipping law requires all vessels operating in Indonesian waters to be 
flagged domestically and manned by Indonesian cr ews; cabotage regulations were due to apply 
that law to all offshore activities beginning May 2011.26 Implementation of such a requirement 
could be a particular problem for foreign investors in Indonesia's energy sector, which will no 
longer be permitted to bring in the sophisticated rigs and specialized equipment needed to develop 
large upstream projects.  Subsequently, the Mi nistry of Transportation issued Regulation 
No. 22/2011 allowing certain classes of non-transportation vessels to be eligible for a three-month 
renewable waiver from the domestic-flag requirem ents when there is no suitable Indonesian-
flagged vessel available. Exceptions included drill rigs, seismic vessels, and other vessels unique to 
the oil and gas industry, as well as cable-laying ships. These exceptions delay implementation of a 
broad-based local-content effort, but are time lim ited and scheduled to phase out over the next 
few years. 
4.91.  Under Article 8 of the Shipping Law, domest ic sea transportation is to be carried out by 
national shipping companies, using Indonesian -flagged vessels manned by an Indonesian crew. 
Similarly, a foreign vessel is prohibited from transporting passengers and/or goods between islands or ports in Indonesian territory. Further, Article 341 of the Shipping Law requires the 
cabotage principle to be applied fully three year s after enactment of the law (i.e. by 2011).  The 
cabotage principle boosted the national shipping industry, during the first five years of implementation, as the number of Indonesian-f lagged vessels has increased significantly. 
Moreover, the domestic sea transportation of commodities, as set out in the ministerial road map, 
has been fully carried out by national shipping companies using Indonesian-flagged vessels, e.g., 
the transportation of general cargo, wood produc ts, cement, rice, crude palm oil, fresh products, 
liquids and other chemical products, farming products, and coal. 
4.92.  To exempt offshore oil and gas vessels from  the cabotage principle, Regulation 22 provides 
that foreign-flagged vessels may engage in activiti es other than the transportation of people and 
goods within Indonesian territory such as: (1) conducting an oil and gas survey; (2) drilling; 
(3) offshore construction; (4) support of offshore operations; and (5) dredging and salvage and 
underwater work. In order to use a foreign-flagge d vessel, it must be demonstrated that no 
Indonesian-flagged vessel is available or, if one is available, that it is not sufficient for the 
proposed activity. Foreign-flagged vessels still require a permit from the Minister of 
Transportation. Regulation 22 is further implemented by Minister of Transportation Regulation No. 48 of 2011, which regulates the use of foreign-flagged vessels for offshore oil and gas activities, including the time period of operation, the permit procedures and the permitted uses. It 
provides that the permit may only be granted if Indonesian-flagged vessels are not available or are 
not sufficiently available. 
4.93.  Foreign-flagged vessels may operate in Indonesia with varied exemptions expiring between 
December 2012 and December 2015, depending on the type of activity and vessel. For example, 
oil and gas vessels for seismic surveys, geophysi cal surveys, and geotechnical surveys are limited 
to operations until December 2014. Drilling activities are generally permitted to operate until 
                                               
25 World Bank (2010). 
26 Under the cabotage principle, domest ic sea transportation shall be the full right of coastal nations. In 
practice, each coastal nation is entitled to prohibit foreign-flagged vessels from tr ansporting and/or operating 
within its territory. The cabotage principle was introduced in Indonesia by Presidential Instruction No. 5 of 2005 (Empowerment of the National Ship ping Industry). The Instruction was addressed to the 13 ministries as 
well as governors/regents/mayors throughout Indonesia, and requested implementation of the cabotage 
principle to empower the national shipping industry. Th e purpose of Indonesia’s cabotage regulation is to 
prevent or lessen the dependence of the national econ omy on foreign shipping companies and foreign-flagged 
vessels. WT/TPR/S/278 • Indonesia 
 
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  December 2015. Barring additional exemptions, no foreign-flagged vessels will be permitted to 
operate within Indonesian territory past 2015.  
4.7.4.4  Air transport 
4.94.  Establishment of aviation policy and administration is the responsibility of the Director 
General of Civil Aviation in the MOT. A new Aviation Law was issued in 2009; the required Air 
Master Plan, which will guide implementation of th e law, has not yet been prepared. The intent of 
the aviation law is to open provision of infrastructure services more fully to the competitive private sector. However, currently, the air services infras tructure is under the direct authority of the 
Angkasa Pura I and II (Persero).  The air subsector is evolving rapidly, with strong growth in air 
travel resulting from highly competitive, low-cost air service. Angkasa Pura I and II (Persero) are responsible for operating 25 air terminals divided equally between west and east Indonesia. They 
retain a monopoly over air terminal capacity, with the ability to limit private-sector investment, 
resulting in cases of overcrowded terminals and poor international flight safety standards.  
4.95.  There are 186 airports in Indonesia, 24 of which are registered as international airports. In 
a few international airports (besides the ones with the highest traffic), capacity improvements and 
modernization are required. This might be hampered by the low airport charges, which may not be 
able to cover new investment costs. Also, in many  domestic airports, air navigation equipment is 
clearly in need of updating. Four major airports (Bali, Jakarta, Medan, and Surabaya) capture 
almost all international traffic and more than half of the domestic traffic.  
4.96.  With liberalization and an open-sky policy dating back to 1999, civil aviation in Indonesia, 
especially domestic travel, has increased rapidly, along with the number of air carriers.  However, air safety and security issues are somewhat limiting the smooth expansion of commercial civil aviation in Indonesia.
27  
4.7.5  Tourism  
4.97.  Tourism is seen as important in Indonesia given its contribution to the national economy. 
The latest data from 2010 suggest that the touris m sector contributes 4.1% to GDP, down from a 
peak of 5.3% in 2005, and employs 6.9% of the workforce.28   
4.98.  International arrivals totalled 7.6 milli on in 2011, representing strong average annual 
growth, at 9.5% since 2006 (Table 4.6).  In 2010, the five leading origin markets – Singapore, 
Malaysia, Australia, China and Japan together accounted for approximately 62% of total arrivals. However, the average length of stay declined between 2007 and 2011.  International travel 
receipts totalled US$8.5 billion in 2011, an increase of more than 12% over 2010.  The average 
expenditure per visitor also increased slightly (2.9%) on the 2010 figure. Hotel room occupancy 
averages around 51%.  
Table 4.6  Inbound tourism, 2007-12 
International visitors Average 
length 
of stay 
(day) Average expenditure 
per person (US$) Revenue Number 
of hotel 
rooms Year Total Growth 
(%) Per day Per visit Total 
(million 
US$) Growth 
(%) 
2007 5,505,759 13.02 9.02 107.70 970.98 5,345.98 20.19 303,376 
2008 6,234,497 13.24 8.58 137.38 1,178.54 7,347.60 37.44 325,218 
2009 6,323,730 1.43 7.69 129.57 995.93 6,297.99 -14.29 334,817 
2010 7,002,944 10.74 8,04 135.01 1,085.75 7,603.45 20.73 353,138 
2011 7,649,731 9.24 7.84 142.69 1,118.26 8,554.39 12.51 381,457 
2012 5,895,288a 5.01 .. .. .. .. .. .. 
..  Not available. 
a  Preliminary figures for January - September 2012  
Source: Information provided by the Indonesian authorities. 
                                               
27 In 2007, the European Union issued a blanket ban fo r all Indonesian airlines. This ban was lifted in 
2009 for Garuda and Mandala (plus two charter companies) . The International Civil Aviation Organization has 
issued no less than 600 safety recommendations to Indonesia. 
28 OECD (2012c). WT/TPR/S/278 • Indonesia 
 
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  4.99.  In 2011, the Ministry of Culture and Touris m became the Ministry of Tourism and Creative 
Economy.  Cultural development affairs are now under the responsibility of the Ministry of Education and Culture.  
4.100.  The principle law governing the tourism industry was passed in 2009 and acts as the main 
regulator of national tourism development. Tour ism Law No. 10 of 2009 adopted the Global Code 
of Ethics for Tourism and principles of sustainability.
29  Tourism policy is further articulated in 
Government Regulation No. 50/2011 concerning the National Tourism Development Master Plan 
2010-2025.  Government policy on tourism is based on sustainability criteria and on four key 
principles: pro-poor, pro-growth, pro-job, and pr o-environment. In this regard, four priority 
activities for the development of the tourism se ctor provide support to: the tourism industry; 
tourist destinations; tourism promotion and marketing; and tourism resources and institutions. 
According to the authorities, the Government has taken several significant measures that include: 
destination management organization; empowerment of local communities related to tourism village development; and  identification of 50 national tourism destinations that contain 
88 national tourism strategic areas across Indonesia, including culture and heritage, nature and 
ecotourism, sports, cruises, shopping and gastronomy, wellness and spa, and meetings/conventions.    
4.7.6  Other services  
4.7.6.1  Legal services 4.101.  The legal profession in Indonesia is regu lated by the Ministry of Law and Human Rights. 
Only Indonesian citizens may practice as lawyers. Foreign lawyers may only work in Indonesia as 
"legal consultants" and must first obtain the approval of the Ministry of Law and Human Rights. 
Foreign lawyers may work in an Indonesian law firm as employees or as experts in international law but are not permitted to appear in court or undertake legal proceedings. A foreign law firm 
seeking to enter the market must estab lish a relationship with a local firm. 
4.102.  Foreign lawyers are obliged to provide free law services for purposes of education, 
research and capacity building.  The number of fore ign lawyers in an Indonesian firm is limited to 
20% of the total number of lawyers or five (whichever is the lower).    
4.7.6.2  Audit and accounting services 4.103.  Foreign accountants may operate in Indonesia if they have a licence from the Ministry of 
Finance and membership of the Indonesia Institute of Certified Public Accountants. Foreign public 
accounting firms must be affiliated with a local public accounting firm to conduct business in 
Indonesia. Foreign accounting firms must use the name of their local affiliate in addition to their firm's name in presentation and disclosure. Indonesia allows a maximum of 10% of foreign 
national staff for each level of management in the affiliated local accounting firm. In affiliated 
accounting firms, the ratio of foreign audit-signing partners to local signing partners may not exceed one to four. 
4.104.  Foreign firms may not practice under international firms’ names, although terms such as 
"in association with" are permissible. Foreign accounting firms must operate through technical assistance arrangements with local firms. Foreign agents and auditors may act only as consultants and may not sign audit reports. Foreign directors, managers, and technical experts/advisors, 
unless mentioned otherwise, are allowed a maximum stay of two years, with a possible one-year 
extension. Licensed accountants must be Indonesian citizens. A Ministry of Finance decree requires a five-year limit on general audits  by a single accounting firm.  
                                               
29 The law states that there are eight principles in establishing tourism:   respecting religion and culture;  
respecting human rights, cultural diversity, and local wisdom;  benefiting people’s prosperity and promoting 
justice;  protecting the environment and promoting conservation;  empowering local communities;  integrating 
sectoral activities between central government, provincial and regional  levels, and othe r stakeholders;  
adopting and implementing wo rld tourism’s code of ethics ; and  strengthening the uni ty of the people of the 
Republic of Indonesia.   WT/TPR/S/278 • Indonesia 
 
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  4.7.6.3  Construction, architecture and engineering 
4.105.  Foreign construction firms are only permitted to be subcontractors or advisors to local 
firms in areas where the Government believes that  a local firm is unable to do the work. In 
addition, for government-financed projects, foreign companies must form joint ventures with local 
firms.   
4.7.6.4  Health services 4.106.  Hospital services are mostly closed to fo reign investment according to Indonesia’s Negative 
List for Foreign Investment, although Indone sia does allow for a maximum of 65% foreign 
ownership in hospital services in the cities of Medan and Surabaya. Indonesia also restricts foreign healthcare professionals from practicing in Indonesia. Foreign-trained physicians are only allowed to supervise and perform procedures in the course of educating Indonesian physicians.  
4.107.  Changes to the negative list of foreign investment restrictions in 2010 allow for 67% 
foreign ownership of private specialist hospitals in all regions of Indonesia, while the previous regulation limited foreign investors to the cities of Medan and Surabaya.  Under Doctors' Practice 
Law No. 29/2004 and Minister of Health Regulation No. 512/2007, foreign doctors should be 
permitted to practice in Indonesia. However, the situation is unclear as a 2004 technical note from 
Indonesia's Investment Coordinating Board (BKPM) bans foreign doctors from practicing in 
Indonesia. In practice, it is almost impossible to obtain a licence due to strong opposition from the 
Indonesian Doctors' Association. Most foreign healthcare professionals act only as consultants and trainers for Indonesian healthcare professionals. 
4.7.6.5  Education services  
4.108.  The  Law on Education Legal Entities does not allow foreign investment in higher education 
in the form of a limited liability company, in conflict with provisions of the existing Investment Law. In addition, in order to provide educational services, foreign nationals must be authorized by 
the Ministry of Education and the Ministry of Manpower. Authorization is granted on a case-by-case 
basis and only when there are no Indonesian instructors capable of filling the position.  
4.7.6.6  Logistics and postal services 
4.109.  In 2009, the Indonesian legislature introduced a new law with restrictions on the provision 
of postal services, broadly defined to include cour ier, express delivery, and other logistics services. 
According to the authorities, the law requires postal service providers to be majority-owned by Indonesians and foreign providers limit their activities to provincial capitals with international 
airports and seaports. The Ministry of Communication and Information has said that joint ventures 
will be able to service cities with international airports and seaports, as well as supporting economic areas of provincial capitals with international airports and seaports.    
4.7.6.7  Audiovisual services  
4.110.  In 2008, the Minister of Culture and Tour ism issued a regulation requiring all local and 
imported films  – both theatrical prints and home  video copies – to be duplicated locally, with 
penalties on exhibitors for failing to do so. Foreign investment is prohibited in broadcast and media 
sectors, including film and video production and distribution, and cinema construction and operation. Foreign investment is also prohibited in the provision of radio and television broadcasting services, radio and television broadcasting subscription services, and media print 
information services. 
4.111.  In 2009, the Indonesia Parliament enacted a new Film Law, which law includes a 60% 
local-content requirement for local exhibitors, unspecified import restrictions to achieve that quota, 
prohibitions on the dubbing of foreign films, and prohibitions against foreign companies 
distributing or exhibiting films. The law also restricts vertical integration across segments of the film industry, which could have unintended consequences in reducing business efficiency and in 
making the market a less attractive destination for foreign investment. In 2010, the Minister of 
Culture and Tourism issued a two-year postponement of the 2008 regulation requiring local replication. A subsequent deferral, until end-2012, was issued. WT/TPR/S/278 • Indonesia 
 
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  REFERENCES 
ADB (2012), Asian Development Outlook 2012 . Viewed at: 
http://www.adb.org/sites/defaul t/files/pub/2 012/ado20 12.pdf. 
 
APEC (2009), Indonesia 2009 IAP Study Report . Viewed at: http://aimp.apec.org/Documents/ 
2009/SOM/SOM1/09_som1_008anx2.pdf.   
Economist Intelligence Unit (2011), Country Finance - Indonesia . Viewed at: 
http://country.eiu.com/FileHandler.ashx?issue_id=1750080959&mode=pdf.  Deloitte (2010) Indonesian Customs Guide . Viewed at: http://www.deloitte.com/assets/ 
DcomIndonesia/Local%20Assets/Documents/Indonesian%20custom%20guide%202010.pdf. 
 IIPA (2010), 2010 Special 301 Report on Copyright Protection and Enforcement . Viewed at: 
http://www.iipa.com/rbc/2010/201 0spec301indonesia.pdf.  
 IMF (2011), Indonesia:  Selected Issues.  IMF Country Report No. 11/310 . Viewed at: 
http://www.imf.org/external/pub s/ft/scr/2011/cr11310.pdf. 
 Indonesia Eximbank (2011), Annual Report 2011 . Viewed at: 
http://www.indonesiaeximbank.go.id/  en/system/files/AR%202011.pdf. 
 
KPPU (2011), Annual Report 2011 . Viewed at: http://eng.kppu.go.id/wp-
content/uploads/2012/06/ annual_report_2011.pdf.  
 
OECD (2010a) Investment Policy Review of Indonesia 2010 . Viewed at: http://www.oecd.org/ 
document/26/0,3746,en_2649_34529562_46225306_1_1_1_34529562,00.html. 
 
OECD (2012a), OECD Economic Surveys: Indonesia , September 2012. Viewed at:  
http://www.oecd.org/eco/surveys/ 20 12%20Indonesia%20Overview.pdf.  
 
OECD (2012b) OECD Review of Regulatory Reform: Indonesia, 2012 . Viewed at: 
http://www.oecd.org/gov/regulat orypolicy/oecdreviewofregula toryreformindonesia.htm.  
 
OECD (2012c), OECD Tourism Trends and Policies 2012 – Indonesia . Viewed at: OECD Publishing. 
doi: 10.1787/tour-2012-en.  
PWC (2012), Mining in Indonesia - Investment and Taxation Guide , April. Viewed at: 
http://www.pwc.com/id.   Transparency International and the Center for International Private Enterprise (2011). APEC 
Procurement Transparency Standards in Indonesia: A Work in Progress . Viewed at: 
http://www.transparency-usa.org/documents /IndonesiaTIReportFINAL-May2011.pdf. 
 
USTR (2011), National Trade Estimates. View ed at: http://www.ustr.gov/webfm_send/2710. 
 USTR (2012) Special 301 Report . Viewed at: http://www.ustr.gov/sites/default/files/ 
2012%20special%20301%20Report_0.pdf.   
 Wong Poh Kam and Ng Kwan Kee (2009) Batam, Bintan and Karimun - Past History and Current 
Development Towards Being a SEZ , National University of Singapore, Asia Competitiveness 
Institute. Viewed at: 
http://www.spp.nus.edu.sg/aci/docs/rese arch_outputs/BBK_Past_History_and 
_Current_Development_Towards_Being_A_SEZ_24Aug09.pdf. 
 
World Bank (2010), Logistics Performance Index 2010 . Viewed at: http://siteresources. 
worldbank.org/INTTLF/Resources/LPI2010_for_web.pdf.  
 WT/TPR/S/278 • Indonesia 
 
- 97 - 
 
  World Bank (2012a), Doing Business in a More Transparent World . Viewed at: 
http://doingbusiness.org/~/media/FPDKM/Doin g%20Business/Documents/Annual-Reports/ 
English/DB12-FullReport.pdf.  
World Bank (2012b), Doing Business in Indonesia 2012.  Viewed at: 
http://www.doingbusiness.org/~/ media/FPDKM/Doing%20Busine ss/Documents/Subnational-
Reports/DB12-Indonesia.pdf 
 
World Bank (2012c), Indonesia Economic Quarterly - Policies in Focus , December. Viewed at: 
http://www.worldbank.org/en/news/2012/12/18/indonesia-economic-quarterly-policies-in-focus.  
World Economic Forum (2008), The Global Competitiveness Report (2008-2009) . Viewed at: 
http://www.weforum.org/repo rts/global-compe titiveness-report -2008-2009.  
 
World Economic Forum (2011), The Indonesia Competitiveness Report 2011. Viewed at: 
http://www3.weforum.org/docs/WEF_ GCR_Indonesia_Re port_2011.pdf. 
 
World Economic Forum (2012a), The Global Competitiveness Report (2011-2012) . Viewed at: 
http://www3.weforum.org/docs/ WEF_GCR_Report_2011-12.pdf. 
 World Economic Forum (2012b), The Global Enabling Trade Report 2012 . Viewed at: 
http://www3.weforum.org/docs/GETR/2012 /GlobalEnablingTrade_Report.pdf. 
 WTO (2007), Trade Policy Review: Indonesia , Geneva. 
 
 WT/TPR/S/278 • Indonesia 
 
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  5  APPENDIX TABLES 
Table A1. 1 Foreign direct investment by sector, 2007-12 
(US$ million and %) 
  2007  2008  2009  2010 2011 2012a 
Total (US$ million) 10,387.3  14,795.2  10,363.1  16,214.8  19,474.5   18,252.0  
 (% of total)  
Agriculture, forestry and fishing 2.4
 0.9 0.9 5.1 6.5 7.3  
Mining 3.0 1.3 1.7 13.6 18.6 17.3 
Manufacturing 45.8  31.6 37.6 20.6 34.9 47.1  
   Food 6.3 4.1 4.4 6.3 5.7 6.3 
   Textiles 1.3  1.4 2.7 1.0 2.6 2.1  
   Leather goods and shoes 0.9 1.0 1.2 0.8 1.3 0.7 
   Timber   1.2  0.9 0.6 0.3 0.3 0.1  
   Paper and printing 6.2 2.1 0.6 0.3 1.3 5.9 
   Chemicals 16.5  4.2 12.7 4.9 7.5 13.6  
   Rubber and plastics 1.5 1.8 2.0 0.6 1.9 3.2 
   Non-metal minerals   0.3  1.7 0.2 0.2 0.7 0.7  
   Basic metal, machinery and 
   electronics 7.2 8.9 6.3 3.6 9.1 7.0 
   Medical and precision 
   instruments 0.1 0.1 0.0 0.0 0.2 0.0  
   Transport equipment 4.0 5.1 5.7 2.4 4.0 7.2 
   Other 0.3  0.3 1.2 0.2 0.3 0.4  
Electricity, gas and water 1.1 0.2 1.7 8.8 9.6 5.9 
Construction 4.7  1.8 5.1 3.8 1.8 1.1  
Services 43.0 64.2 53.1 48.1 28.7 21.4 
   Trade and repair 4.6  3.9 5.1 4.8 4.2 2.2  
   Hotels and restaurants 1.3 1.1 3.0 2.1 1.2 4.0 
   Transportation, warehouse, 
and    telecommunication 31.8
 57.1 40.3 31.3 19.5 10.3  
   Housing, industrial area, 
and 
   offices 0.6 1.2 3.0 6.5 1.0 1.8 
   Other services 4.6  0.9 1.8 3.4 2.7 3.2  
a  FDI figures up to end-September only. 
Source: Data provided by the Indonesian authorities. WT/TPR/S/278 • Indonesia 
 
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  Table A1. 2 Foreign direct investment by origin, 2007-12 
(US$ million and %) 
  2007  2008  2009  2010  2011 2012a 
Total (US$ million) 10,387.3  14,795.2  10,363.1  16,214.8  19,474.5 18,252.0  
 (% of total) 
   Combined countries 43.7 20.4 48.5 23.6 29.9 29.6 
   Singapore  8.7 52.4 8.8 34.3 26.3 19.1  
   EU27 17.5 5.0 16.2 7.2 11.1 10.2 
   Japan 5.7  8.5 6.6 4.4 7.8 9.8  
   Korea, Rep. of 6.1  2.6 5.9 2.0 6.3 6.8  
   Other countries 3.2  0.7 1.2 2.4 0.4 4.9  
   United States 0.6 1.1 1.0 5.7 7.6 4.0 
   British Virgin Islands 1.0  1.2 2.7 10.0 2.7 4.0  
   Australia 1.8  0.2 0.8 1.3 0.5 3.6  
   Chinese Taipei 0.6 1.3 0.3 0.3 1.2 3.5 
   Malaysia 2.0 2.3 1.1 2.9 3.2 2.4 
   Hong Kong, China 1.2  0.9 0.2 3.5 0.7 0.7  
   China 0.1 0.9 0.5 1.1 0.7 0.5 
   Seychelles 2.7  0.4 1.6 0.1 0.4 0.4  
   India 0.1 0.2 0.3 0.1 0.2 0.4 
   Thailand 0.6 0.0 0.5 0.3 0.4 0.1 
   Mauritius 2.2 0.3 1.5 0.1 0.4 0.0 
   Mauritania 0.0  0.0 0.0 0.7 0.2 0.0  
   Indonesia 2.2  1.5 2.4 0.0 0.0 0.0  
a  FDI figures up to end-September only. 
Source: Data provided by the Indonesian authorities. WT/TPR/S/278 • Indonesia 
 
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  Table A1. 3 Merchandise exports by product group, 2007-11 
(US$ million and %) 
 2007  2008  2009  2010 2011  
Total exports (US$ million) 114,100.9  137,020.4  116,510.0  157,779.1 203,496.6  
 % of total 
Total primary products 57.1  60.9 59.1 62.2 65.3  
   Agriculture 20.9 24.0 21.7 22.8 23.7 
      Food 14.6  17.6 17.2 16.2 16.2  
         4222 Palm oil, fractions 6.9 9.0 8.9 8.5 8.5 
         4224 Palm kernel oil, 
fractions 0.9 1.0 0.9 1.1 1.0  
      Agricultural raw material 6.2 6.4 4.5 6.5 7.5 
         2312 Natural rubber 
                 excluding latex 4.3 4.4 2.8 4.6 5.8  
         2515 Chemical wood pulp, 
                 soda/sulphate bleached 0.9 1.0 0.7 0.9 0.8 
   Mining 36.3  36.9 37.4 39.4 41.6  
      Ores and other minerals 6.9 4.4 5.7 6.3 4.4 
         2831 Copper ores and 
                 concentrates 3.7 2.4 4.4 4.4 2.3  
      Non-ferrous metals 3.8 3.5 3.4 3.5 3.4 
         6821 Copper anodes; alloys; 
                 unwrought 1.6 0.9 1.5 1.4 1.3  
         6871 Tin and tin alloys, 
unwrought 0.9 1.4 1.1 1.1 1.2 
      Fuels 25.6  29.0 28.3 29.6 33.9  
         3212 Other coal, whether or 
                 pulverized, not 
                agglomerated 5.8 7.6 11.8 11.5 12.5 
         3431 Natural gas, liquefied 8.6  9.5 6.4 6.7 8.8  
         3330 Crude oils of petroleum 
                 and bituminous 
                 minerals 8.1 9.1 6.7 6.6 6.8 
         3432 Natural gas, in the 
                 Gaseous state 0.0 0.0 1.1 1.8 2.3  
         3354 Petroleum 
                 bitumen/coke/mixtures, 
                 n.e.s. 0.9 1.7 1.2 1.1 0.9 
         3222 Lignite, whether or not 
                 pulverized (excluding 
                 jet) 0.0 0.0 0.0 0.2 0.8  
Manufactures 42.3 38.5 40.1 37.0 33.6 
   Iron and steel 1.4  1.6 1.1 1.1 1.0  
   Chemicals 5.6 5.0 5.0 5.2 5.7 
         5989 Chemical products and 
                 preparations, n.e.s. 0.1 0.3 0.2 0.4 0.8  
   Other semi-manufactures 8.0 7.2 7.4 6.7 5.8 
         6412 Paper and paperboard, 
                 uncoated of a kind used                  for writing 1.5
 1.4 1.5 1.3 1.0  
         6251 Tyres, pneumatic, new, 
                 for cars 0.7 0.6 0.8 0.7 0.8 
   Machinery and transport 
   equipment 13.3 12.7 13.8 12.4 10.7  
      Power generating machines 0.5 0.5 0.4 0.3 0.3 
      Other non-electrical machinery 2.1  2.1 2.3 1.3 1.3  
      WT/TPR/S/278 • Indonesia 
 
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   2007  2008  2009  2010 2011  
         Agricultural machinery and 
         tractors 0.0 0.0 0.0 0.0 0.0 
      Office machines & 
      Telecommunication equipment 4.6 4.2 5.3 5.1 3.9  
         7638 Sound/video recording/ 
                 Reproducing apparatus 0.8 0.9 1.6 1.2 0.7 
      Other electrical machines 3.0  2.7 2.7 2.9 2.5  
      Automotive products 1.9 2.0 1.6 1.6 1.4 
      Other transport equipment 1.2  1.1 1.5 1.4 1.2  
   Textiles 3.4 2.7 2.8 2.6 2.4 
   Clothing 5.1  4.6 5.1 4.3 4.0  
   Other consumer goods 5.4 4.7 5.0 4.7 4.1 
         8512 Sports footwear 1.0  0.9 1.0 1.0 0.9  
Other 0.6 0.6 0.8 0.8 1.1 
         9710 Gold, non-monetary 
                 (excl. gold ores and 
                 concentrates) 0.6 0.6 0.8 0.7 1.1  
Source: UNSD Comtrade database, SITC Rev.3. WT/TPR/S/278 • Indonesia 
 
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  Table A1. 4 Merchandise imports by product group, 2007-11 
(US$ million and %) 
  2007  2008  2009  2010 2011  
Total imports (US$ million) 74,473.4  129,244.1  96,829.2  135,663.3 177,435.6  
 (% of total) 
Total primary products 47.4  38.1 34.6 35.3 39.2  
   Agriculture 14.1 10.3 11.7 11.5 12.6 
      Food 10.6  7.3 8.9 8.5 9.4  
         0412 Other wheat (including 
                 spelt) and meslin, 
                 unmilled 1.6 1.5 1.4 1.0 1.2 
         0611 Sugars, beet/cane, raw, 
                 solid, no added                  flavour/colour 0.8
 0.1 0.5 0.5 0.9  
         0423 Rice, milled, semi-milled 0.6 0.1 0.1 0.3 0.8 
         0813 Oil-cake, oilseed residues 1.0  0.8 1.1 0.9 0.8  
      Agricultural raw material 3.5 3.0 2.8 3.1 3.2 
         2631 Cotton (other than 
                 linters), not carded or                  combed 1.1
 0.9 0.8 0.8 1.0  
   Mining 33.3 27.8 22.9 23.8 26.6 
      Ores and other minerals 1.8  2.1 1.5 1.5 1.6  
      Non-ferrous metals 2.0 2.0 1.7 2.0 2.0 
      Fuels 29.5  23.7 19.7 20.3 23.0  
         3330 Crude oils of petroleum 
                 and bituminous minerals 12.2 7.8 7.6 6.3 6.3 
      
Manufactures 52.5 61.9 65.3 63.2 59.7 
   Iron and steel 5.9  6.9 5.5 5.5 5.3  
         6726 Semi-finished iron/steel 
                 products <0.25% carbon 1.3 1.4 0.9 1.0 0.8 
   Chemicals 13.5  12.3 12.2 12.3 12.5  
         5623 Mineral/chemical 
                 Fertilizers (excl. crude 
                 natural potassium salts) 0.5 1.0 0.4 0.6 0.8 
         5751 Propylene polymers or of 
                 other olefins 0.5 0.5 0.6 0.6 0.8  
         5112 Cyclic hydrocarbons 1.4 0.9 0.9 0.8 0.8 
   Other semi-manufactures 3.9  4.2 4.6 4.5 4.2  
   Machinery and transport equipment 25.6 33.1 37.0 34.6 31.6 
      Power generating machines 1.1  1.7 2.5 2.0 1.5  
      Other non-electrical machinery 9.5 9.6 10.2 10.3 10.3 
         7232 Mechanical shovels, etc., 
                 self propelled 0.5 0.6 0.5 0.7 0.9  
         Agricultural machinery and 
         tractors 0.1 0.1 0.1 0.1 0.1 
      Office machines & 
       telecommunication equipment 4.7 8.9 8.7 8.3 7.2  
         7649 Parts and accessories for 
                 apparatus of division 76 0.6 2.4 1.9 1.9 1.7 
         7643 Radio or television 
                 transmission apparatus 1.5 1.3 2.0 1.7 1.4  
         7764 Electronic integrated 
                 circuits and 
                 microassemblies 0.2 0.7 0.9 0.9 0.9 
      Other electrical machines 2.0  3.5 4.0 4.2 3.9  
      WT/TPR/S/278 • Indonesia 
 
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    2007  2008  2009  2010 2011  
      Automotive products 3.9 5.0 3.9 4.1 4.2 
         7821 Goods vehicles 0.9  1.4 1.2 1.0 1.3  
         7843 Other motor vehicle parts   
                 and accessories of 722, 
                 781 to 783 1.1 2.0 1.1 1.4 1.3 
         7812 Motor vehicles for the 
                 transport of persons,                  n.e.s. 1.0
 0.9 0.9 1.0 1.0  
      Other transport equipment 4.4 4.4 7.7 5.7 4.5 
         7924 Aeroplanes, etc. (excl.        
                 helicopters), >15,000 kg 
                 unladen 1.9 1.3 3.1 2.2 1.5  
         7932 Ships, boats, etc. (excl. 
                 pleasure craft, tugs, etc.) 0.4 0.5 1.9 0.9 0.8 
   Textiles 1.1  2.5 2.9 3.1 3.2  
   Clothing 0.2 0.2 0.3 0.3 0.2 
   Other consumer goods 2.3  2.6 3.0 3.0 2.8  
      
Other 0.1  0.0 0.1 1.5 1.1  
Source: UNSD Comtrade database, SITC Rev.3. WT/TPR/S/278 • Indonesia 
 
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  Table A1. 5 Merchandise expo rts by destination, 2007-11 
(US$ million and %) 
  2007  2008  2009  2010 2011  
Total exports (US$ million) 114,100.9  137,020.4  116,510.0  157,779.1 203,496.6  
 (% of total) 
  America 12.4  11.7 11.5 11.7 10.5  
    United States 10.2 9.5 9.3 9.1 8.1 
    Other America 2.2  2.2 2.2 2.6 2.4  
      Brazil 0.7 0.7 0.8 1.0 0.9 
      
  Europe 13.0 12.4 12.5 11.8 10.9 
    EU(27) 11.8  11.3 11.7 10.9 10.1  
      The Netherlands 2.4 2.9 2.5 2.4 2.5 
      Germany 2.0  1.8 2.0 1.9 1.6  
      Italy 1.2 1.4 1.4 1.5 1.6 
      Spain 1.7  1.2 1.6 1.5 1.2  
      United Kingdom 1.3 1.1 1.3 1.1 0.8 
    EFTA 0.3  0.4 0.2 0.1 0.1  
    Other Europe 0.9 0.7 0.6 0.7 0.7 
      Turkey 0.9  0.6 0.6 0.7 0.7  
      
  Commonwealth of Independent 
States  0.6 0.6 0.6 0.7 0.7  
      
  Africa 2.2  2.4 2.3 2.3 2.8  
      South Africa 0.5 0.5 0.4 0.4 0.7 
      
  Middle East 3.1 3.6 3.0 2.6 2.5 
      United Arab Emirates 1.2  1.2 1.1 0.9 0.9  
      Kingdom of Saudi Arabia 0.8 0.9 0.8 0.7 0.7 
      
  Asia 68.7 69.3 69.9 70.9 72.6 
    China 8.5  8.5 9.9 9.9 11.3  
    Japan 20.7 20.2 15.9 16.3 16.6 
    Six East Asian Traders 26.7  27.0 29.1 30.1 30.2  
      Singapore 9.2 9.4 8.8 8.7 9.1 
      Korea, Rep. of 6.6  6.7 7.0 8.0 8.1  
      Malaysia 4.5 4.7 5.8 5.9 5.4 
      Chinese Taipei 2.3  2.3 2.9 3.1 3.2  
      Thailand 2.7 2.7 2.8 2.9 2.9 
      Hong Kong, China 1.5  1.3 1.8 1.6 1.6  
    Other Asia 12.7 13.5 15.0 14.4 14.5 
      India 4.3  5.2 6.4 6.3 6.6  
      Australia 3.0 3.0 2.8 2.7 2.7 
      Philippines 1.6  1.5 2.1 2.0 1.8  
      Viet Nam 1.2 1.2 1.2 1.2 1.2 
      
Memorandum:      
ASEAN 19.5  19.8 21.1 21.1 20.7  
Source: UNSD, Comtrade database. WT/TPR/S/278 • Indonesia 
 
- 105 - 
 
  Table A1. 6 Merchandise imports by origin, 2007-11 
(US$ million and %) 
  2007  2008  2009  2010 2011  
Total imports (US$ million) 74,473.4  129,244.1  96,829.2  135,663.3 177,435.6  
 % of total 
  America 9.9  9.6 10.8 10.3 9.9  
    United States 6.4 6.1 7.3 6.9 6.1 
    Other America 3.5  3.5 3.5 3.3 3.7  
      Canada 1.4 1.4 1.0 0.8 1.1 
      Brazil 0.9  1.1 1.1 1.3 1.1  
      Argentina 0.6 0.5 0.7 0.7 0.9 
      
  Europe 11.9 9.7 10.1 8.1 7.9 
    EU(27) 10.3  8.2 9.0 7.3 7.0  
      Germany 2.7 2.4 2.5 2.2 1.9 
      France 1.9  1.3 1.7 1.0 1.1  
      Italy 0.9 0.8 0.7 0.7 0.7 
    EFTA 0.6  0.6 0.6 0.6 0.5  
    Other Europe 1.0 0.9 0.6 0.2 0.3 
      
  Commonwealth of Independent 
States  1.5 2.0 1.7 2.0 2.4 
      Azerbaijan 0.1  0.1 0.8 0.7 1.0  
      Russian Federation 0.6 1.0 0.5 0.8 0.9 
      
  Africa 3.1 1.7 2.1 1.8 2.3 
      Nigeria 0.8  0.1 0.5 0.7 0.9  
      
  Middle East 7.3  6.3 6.0 5.8 5.7  
      Kingdom of Saudi Arabia 4.5 3.7 3.2 3.2 3.1 
      Kuwait 2.3  1.4 1.5 1.0 0.8  
      
  Asia 66.2  70.7 69.2 72.0 71.8  
    China 11.5 11.8 14.5 15.1 14.8 
    Japan 8.8  11.7 10.2 12.5 11.0  
    Six East Asian Traders 34.5 38.1 35.8 36.2 37.5 
      Singapore 13.2  16.9 16.1 14.9 14.6  
      Korea, Rep. of 4.3 5.4 4.9 5.7 7.3 
      Thailand 5.8  4.9 4.8 5.5 5.9  
      Malaysia 8.6 6.9 5.9 6.4 5.9 
      Chinese Taipei 2.0  2.2 2.5 2.4 2.4  
      Hong Kong, China 0.6 1.8 1.8 1.4 1.4 
    Other Asia 11.5  9.1 8.8 8.2 8.6  
      Australia 4.0 3.1 3.5 3.0 2.9 
      India 2.2  2.2 2.3 2.4 2.4  
      Viet Nam 1.3 0.6 0.7 0.8 1.3 
      
Memorandum:      
ASEAN 31.9  31.7 28.7 28.8 28.9  
Source: UNSD, Comtrade database. WT/TPR/S/278 • Indonesia 
 
- 106 - 
 
  Table A2. 1 MP3EI priority sectors and regional economic corridors 
Main 
economic 
activity Sumatra 
 
Centre for 
production 
and 
processing 
of natural 
resources 
and as 
nation's 
energy 
reserves Java 
 
Driver for 
national 
industry 
and 
service 
provision Kalimantan 
 
Centre for 
production 
and 
processing 
of national 
mining and 
energy 
reserves Sulawesi 
 
Centre for 
production 
and 
processing of 
national 
agricultural, 
plantation, 
fishery, oil, 
gas, and 
mining Bali-Nusa 
Tenggara 
 
Gateway 
for 
tourism 
and 
national 
food 
support Papua-Kep. 
Makuku 
 
Centre for 
development 
of food, 
fisheries, 
energy, and 
national 
mining 
Steel X  X    
Food & 
beverages  X     
Textiles  X     
Transportation 
equipment  X     
Shipping X X     
Nickel    X  X 
Copper      X 
Bauxite   X    
Palm oil X  X    
Rubber X      
Food agriculture    X  X 
Tourism     X  
ICT  X     
Coal X  X    
Oil and gas   X X  X 
Jabodetabek 
area  X     
Sunda straits 
national strategic area X      
Defence 
equipment  X     
Animal 
husbandry     X  
Timber   X    
Cocoa    X   
Fishery    X X X 
Source:  Master Plan for the Acceleration and Expa nsion of Indonesia's Economic Development 
  (MP3EI) 2011-2015. View ed at: http://www.ekon.go.id /media/filemanager/2011/07/ 
  06/m/p/mp3ei-english_final.pdf. WT/TPR/S/278 • Indonesia 
 
- 107 - 
 
  Table A2. 2 Notifications to the WTO, 1 January 2007 to 1 July 2012 
Legal provision Description of 
requirement Frequency WTO document (most 
recent or series) 
General Agreement on Tariffs and Trade 1994 
Article XXIV.7 Customs unions and 
free-trade areas Ad hoc WT/REG284/N/2, 9 May 2012 
WT/REG284/N/1, 9 April 2010 
WT/REG241/N/1, 2 July 2008 
Understanding on the Interpretation of Article XVII of the GATT 1994 (State Trading)  
Article XVII:4(a) State-trading activities Annual G/STR/N/12/IDN, 9 February 
2009 
Agreement on Agriculture  
Article 5.7 and 18.2 Special safeguard Annual G/AG/N/IDN/28, 17 July 2009 
Articles 10 and 18.2 Export subsid ies Annual G/AG/N/IDN/27/Corr.1, 
22 July 2009 
Article 12.1(b) New export restrictions Ad hoc No notification made 
Article 18.2 Imports under tariff quotas  Annual G/AG/N/IDN/29, 16 July 2009 
Articles 18.2 and 
18.3 Domestic support Annual and ad hoc G/AG/N/IDN/30, 
6 March 2012 
Agreement on the Application of Sanitary and Phytosanitary Measures  
Article 7 and Annex B Proposed SPS regulations 
(including proposed or 
emergency measures) Ad hoc 20 new notifications as well as 
1 revision to and 2 addenda to 
existing notifications  
Annex B, paragraph 3 Enquiry point Once , then changes No new notification 
Annex B, par. 10 National notification 
authority Once, then changes No new notification 
Agreement on Technical Barriers to Trade  
Articles 2, 3, 5 and 7 Proposed and adopted 
technical regulations Before or 
immediately after the 
measure is taken 52 notifications (excluding 
revisions/addenda)  
Article 10.1 and 10.3 Enquiry point Once, then changes No new notification 
Article 15.2 Implementation and 
administration measures Once, then changes G/TBT/2/Add.3/Rev.4, 
20 August 2010 
Agreement on Trade-Related Investment Measures (TRIMs)  
Article 5.1 TRIMs not in conformity with 
the provisions of the 
Agreement Once No new notification 
Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping)  
Article 16.4 Anti-dumping actions taken 
over the past six months Biannual G/ADP/N/223/IDN, 
2 April 2012 
Article 16.5 Investigating authority Once, then changes No new notification 
Article 18.5 Laws and regulations Once, then changes G/ADP/N/1/IDN/3, 
27 April 2012 
Agreement on Implementation of Article VII of the GATT 1994 (Agreement on Customs Valuation)  
Article 22.2 Legislation Once, then changes No new notification 
Decision of the 
Committee on CV (12.5.95) Responses to the checklist 
of issues Once No new notification 
Agreement on Preshipment Inspection  
Article 5 Laws or regulations notified Once, then changes No new notification 
Agreement on Rules of Origin 
Article 5.1 Rules, judicial decisions Once No new notification 
Article 5.2 Changes in non-preferential 
rules of origin Ad hoc No new notification 
Annex II Preferential and 
non-preferential rules of 
origin Once, then changes No new notification 
Agreement on Import Licensing Procedures 
Articles 1.4(a), 
8.2(b) Laws and regulations. Once, then changes No new notification 
Article 5 Import licensin g procedures Ad hoc G/LIC/N/2/IDN/4, 
30 April 2012; 
G/LIC/N/2/IDN/4/Corr.1, 
3 May 2012; 
G/LIC/N/3/IDN/4, 
23 February 2010; 
G/LIC/N/2/IDN/2, 
15 May 2009;  
G/LIC/N/2/IDN/2/Corr.1, WT/TPR/S/278 • Indonesia 
 
- 108 - 
 
  Legal provision Description of 
requirement Frequency WTO document (most 
recent or series) 
20 May 2009; 
G/LIC/N/2/IDN/2/Add.1, 
6 July 2009 
Article 7.3 Questionnaire Annual G/LIC/N/3/IDN/4, 
23 February 2010 
    
Agreement on Subsidies and Countervailing Measures  
Article 25.1 Article XVI:1 of the GATT 
1994 and Article 25 of the 
SCM Agreement Full notifications 
every three years;  
annual updating No new notification 
Article 25.11 Countervailing duties 
applied over the past six months Biannual No new notification 
Article 25.12 Investigating authority, 
domestic investigation 
procedures Once No new notification 
Article 32.6 Laws and regulations Once, then changes G/SCM/N/1/IDN/3, 
27 April 2012 
Agreement on Safeguards  
Article 12.6 Laws and regulations Once, then changes G/SG/N/1/IDN/3, 
22 December 2011 
Article 12.1(a) Initiation of an investigation Ad hoc 15 new notifications.   
Article 12.1(b); Article 9.1 footnote; Article 12.4 Finding Ad hoc 16 new notifications under 
Article 12.1(b) and 9 new notifications under Article 9.1(footnote).   
Article 12.1(c) Decision Ad hoc 11 new notifications 
Decision of the Committee on Safeguards of 6 November 1995 Termination Ad hoc 3 new notifications.   
General Agreement on Trade in Services (GATS)  
Article III:3 Legislation Ad hoc No new notification 
Article III.4 and IV.2 Enquiry and contact point Once, then changes No new notification 
Article V.7(a) Economic integration 
agreements Once only S/C/N/545/Add.1, 9 May 2012 
S/C/N/560, 8 July 2010 
S/C/N/545, 9 April 2010 
S/C/N/462, 2 July 2008 S/C/N/463, 2 July 2008 
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)  
Article 63.2 Laws and regulations Once, then changes No new notification 
Article 69 Contact points Once, then changes No new notification 
Decision of the 
Council for TRIPS of 21 November 1995. Checklist of issues on 
enforcement Once, then changes No notification made 
Other    
G/L/59 Notification procedures for 
quantitative restrictions Biennial No notification made 
Source: WTO Secretariat. 
 WT/TPR/S/278 • Indonesia 
 
- 109 - 
 
  Table A2. 3 Free-trade agreements, 2007-12 
FTAs that entered into force over the review period 
ASEAN Members, Australia and New Zealand (AANZFTA) 
Title Agreement Establishing the ASEAN-Australia-New Zealand 
Free Trade Area 
Parties ASEAN, Australia, New Zealand 
Date of signature/entry into force  February 2009/January 2012  
End of transition period for 
Indonesia (goods) 2026  
Services covered Positive list approach to scheduling of services sectors in 
Annex 3 of the FTA.  Specific commitments made in 8 out 
of 11 sectors identified in the Services Sectoral 
Classification List (GATT document MTN.GNS/W/120, 10 
July 1991).  No commitments made on:  distribution;  
environmental;  and recreational, cultural and sporting 
services.  Other commitments made on energy services 
Selected features Advance origin/classification/valuation ruling on request;  
trade in services;  investme nt;  movement of natural 
persons;  dispute settlement;  intellectual property 
WTO consideration status  Factual presentation not distributed 
Indonesia's merchandise trade with Australia and New Zealand (2011) Australia:  2.9% of total imports;  2.7% of total exports 
New Zealand:  0.4% of total imports; 0.2% of total exports 
WTO document series WT/REG284/N/1 and S/C/N/545, 9 April 2010 
ASEAN member countries and India 
Title Agreement on Trade in Goods (falling under the Framework 
Agreement on Comprehensive Economic Co-operation 
between ASEAN and the Republic of India,2003, as 
amended in 2009) 
Parties ASEAN, India 
Date of signature/entry into force October 2009/June 2010 
End of transition period for Indonesia (goods) 2021 
Selected features Agreement applies to goods only 
WTO consideration status Factual presentation not distributed 
Indonesia's  merchandise trade with 
India (2011) 2.4% of total imports;  6.6% of total exports 
WTO document series WT/COMTD/N/35, 23 August 2010 
ASEAN member countries and Japan 
Title Agreement on Comprehensive Economic Partnership 
Among Japan and Member States of ASEAN 
Parties ASEAN, Japan 
Date of signature/entry into force March 2008/not yet in force.  
End of transition period for 
Indonesia (goods) Information not provided  
Selected features Agreement applies to goods only; provisions on services 
and investment subject to future negotiations 
WTO consideration status Factual presentation not distributed 
Indonesia's merchandise trade with Japan (2011) 11.0% of total imports;  16.6% of total exports 
WTO document series WT/REG277/N1, 14 December 2009, and WT/REG277/N2, 
27 July 2011. 
ASEAN member countries and Korea 
Title Agreement on Trade in Goods (falling under the 2005 
Framework Agreement on Comprehensive Economic Co-
operation among the Governments of the Republic of Korea 
and ASEAN) 
Parties ASEAN, Korea 
Date of signature/entry into force Goods:  August 2006/ January 2010 
Services:  November 2008/ May 2009 
End of transition period for 
Indonesia (goods) 2016  WT/TPR/S/278 • Indonesia 
 
- 110 - 
 
  FTAs that entered into force over the review period 
Services covered Positive list approach to scheduling of services sectors in 
Annex/SC1 of the FTA. Specific commitments in 8 out of 11 
sectors identified in the Services Sectoral Classification List 
(GATT document MTN.GNS/W/120, 10 July 1991).  No 
commitments made on:  distribution; environmental;  and, 
recreational, cultural and sporting services.  Other 
commitments made on energy services 
Selected features Transitional safeguard; dispute settlement   
WTO consideration status Factual presentation not distributed 
Indonesia's merchandise trade with 
Korea (2011) 7.3% of total imports;  8.1% of total exports  
WTO document series WT/REG287/N/1;  WT/COMTD/N/33;  S/C/N/559;  
S/C/N/560, 8 July 2010.  S/C/N/559/Add.1;  S/C/N/560, 
Add.1, 3 May 2011 
Japan-Indonesia 
Title Agreement between Japan and the Republic of Indonesia 
for an Economic Partnership 
Parties Japan, Indonesia 
Date of signature/entry into force  August 2007 / July 2008 
Transition for full implementation by 
Indonesia (goods) 2023.  At end of transition period 618 tariff lines will 
remain dutiable, representing 7.1% of Indonesia's tariff; these 618 tariff lines cover agricultural and industrial 
products. Average final tariff on  dutiable items ranges from 
1.7% to 134.4%, the latter applying to prepared foods 
Services covered Positive list approach to scheduling of services sectors in 
Annex 8 of the FTA.   Specific commitments made in 9 out 
of 11 sectors identified in the Services Sectoral 
Classification List (GATT document MTN.GNS/W/120, 10 
July 1991).  No commitments made on:  environmental; 
and recreational, cultural and sporting services.  Other 
commitments made on energy services 
Selected features Bilateral safeguard measures; investment (negative list 
approach to scheduling of liberalization commitments); 
intellectual property rights; sector specific provisions on energy and mineral resources; dispute settlement 
WTO consideration status  Factual presentation completed  
Indonesia's merchandise trade with Japan (2011) 11.0% of total imports;  16.6% of total exports 
WTO document series WT/REG241 
Source: WTO Secretariat. WT/TPR/S/278 • Indonesia 
 
- 111 - 
 
  Table A2. 4 Investment framework, 2012 
Investment-related legislation and agreements 
Domestic legislation 
Law on Arbitration and Alternative Dispute Resolution (Law No. 30, 1999). 
Domestic arbitral institutions   
Indonesian National Board of Arbitration (BANI);  National Mediation Centre;  Indonesian Institute 
for Conflict Transformation;  Ca pital Market Arbitration Board 
Free-trade agreements containing investment provisions 
ASEAN Comprehensive Investment Agreement (ACIA);  ASEAN-Australia-New Zealand FTA;  
Agreement on Investment of the Framework Agreement on Comprehensive Economic Co-
operation between ASEAN and the People's Republic of China;  ASEAN-Korea Investment 
Agreement;  and Economic Partnership Agreement between Japan and Indonesia 
Bilateral investment treaties 
In force (date of entry into force):  Argentina (2001); Australia (1993); Bangladesh (1999); 
Belgium-Luxembourg (1972); Bulgaria (2005); China (1995); Cuba (1999); Czech Republic 
(1999); Egypt (1994); Finland (2008); France (1975); Germany (1975 & 2007);  Hungary (1996); 
India (2004); Italy (1995); Jordan (1999); South Korea (1994); Kyrgystan (1997); Laos (1995); 
Malaysia (1999); Mauritius (2000); Mongolia (1999); Morocco (2002); Mozambique (2000); 
Netherlands (1995); Norway (1994); Pakistan (1996); Poland (1993); Romania (1999); Slovakia 
(1995); Spain (1997); Sudan (1997); Sweden (1993); Switzerland (1976); Syria (2000); Thailand 
(1998); Tunisia (1992); Turkey (1998); Ukraine (1997); UK (1977); Uzbekistan (1997); 
Venezuela (2003); and, Viet Nam (date not available) 
Signed but not yet in force:  Algeria; Cambodia; Chile; Croatia; Denmark; Guyana;  Iran;  
Jamaica;  North Korea;  Libya;  Philippines;  Qa tar;  Russia;  Saudi Arabia;  Singapore;  Sudan; 
Suriname;  Tajikistan;  Turkmeni stan;  Yemen;  and Zimbabwe 
Under negotiation:  Information not available 
Membership of international arbitral conventions/bodies 
Contracting State to the International Centre for the Settlement of Investment Disputes (ICSID);  
and signatory to the United Nations Conventions on the Recognition and Enforcement of Foreign 
Arbitral Awards (New York Convention) 
Other 
Member of the Multilateral Investment Guarantee Agency (MIGA) 
Double taxation agreements 
Algeria, Australia, Austria, Bangladesh, Belgium, Brunei Darussalam, Bulgaria, Canada, China, 
Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, India, Italy, Japan, Jordan, 
North Korea, South Korea, Kuwait, Luxembourg, Malaysia, Mexico, Mongolia, Netherlands, New 
Zealand, Norway, Pakistan, Philippines, Poland, Po rtugal, Qatar, Romania, Russia, Saudi Arabia, 
Seychelles, Singapore, Slovakia, South Africa, Sp ain, Sri Lanka, Sudan, Sweden, Switzerland, 
Syria, Chinese Taipei, Thailand, Tunisia, Turkey, United Arab Emirates, United Kingdom, Ukraine, 
United States, Uzbekistan, Venezuela, and, Viet Nam 
Source: Information provided by the authorities; and OECD (2010). WT/TPR/S/278 • Indonesia 
 
- 112 - 
 
  Table A3. 1 Non ad-valorem  (specific) MFN applied tariffs and ad valorem  equivalents of 
their specific duty component, 2011 
HS codea Description MFNa AVE (%) 
1006101000 Rice in the husk, suitable for sowing Rp 450,-/kg 30 
1006109000 Rice in the husk, other than suitable for sowing Rp 450,-/kg 30 
1006201000 Husked brown rice Rp 450,-/kg 30 
1006209000 Husked brown rice Rp 450,-/kg 30 
1006303000 Semi-milled or wholly milled rice Rp 450,-/kg 30 
1006304000 Semi-milled or wholly milled rice Rp 450,-/kg 30 
1006309100 Semi-milled or wholly milled rice Rp 450,-/kg 30 
1006309900 Semi-milled or wholly milled rice Rp 450,-/kg 30 
1006401000 Broken rice Rp 450,-/kg 30 
1006409000 Broken rice Rp 450,-/kg 30 
1102901000 Rice flour Rp 450,-/kg 30 
1701120000 Beet sugar Rp 790,-/kg 40 
1701130000 Cane sugar Rp 550,-/kg 30 
1701140000 Cane sugar Rp 550,-/kg 30 
1701910000 Other sugar Rp 790,-/kg 40 
1701991100 Other sugar Rp 790,-/kg 40 
1701991900 Other sugar Rp 790,-/kg 40 
1701999000 Other sugar Rp 790,-/kg 40 
2203001000 Beer Rp 14.000,-/Ltr 40 
2203009000 Beer Rp 14.000,-/Ltr 40 
2204100000 Wine, sparkling Rp 55.000,-/Ltr 150 
2204211100 Wine Rp 55.000,-/Ltr 150 
2204211300 Wine Rp 55.000,-/Ltr 150 
2204211400 Wine Rp 55.000,-/Ltr 150 
2204212100 Wine Rp 55.000,-/Ltr 90 
2204212200 Wine Rp 55.000,-/Ltr 90 
2204291100 Wine Rp 55.000,-/Ltr 150 
2204291300 Wine Rp 55.000,-/Ltr 150 
2204291400 Wine Rp 55.000,-/Ltr 150 
2204292100 Wine Rp 55.000,-/Ltr 90 
2204292200 Wine Rp 55.000,-/Ltr 90 
2204301000 Wine Rp 55.000,-/Ltr 150 
2204302000 Wine Rp 55.000,-/Ltr 150 
2205101000 Vermouth and other wine Rp 55.000,-/Ltr 150 
2205102000 Vermouth and other wine Rp 55.000,-/Ltr 150 
2205901000 Vermouth and other wine Rp 55.000,-/Ltr 150 
2205902000 Vermouth and other wine Rp 55.000,-/Ltr 150 
2206001000 Cider or perry Rp 55.000,-/Ltr 150 
2206002000 Sake Rp 55.000,-/Ltr 150 
2206003000 Toddy Rp 55.000,-/Ltr 150 
2206004000 Shandy Rp 55.000,-/Ltr 90 
2206009100 Other rice wine Rp 55.000,-/Ltr 150 
2206009900 Other fermented beverages Rp 55.000,-/Ltr 150 
2208205000 Brandy Rp 125.000,-
/Ltr 150 
2208209000 Other spirits obtained by distilling grape wine Rp 125.000,-
/Ltr 150 
2208300000 Whiskies Rp 125.000,-
/Ltr 150 
2208400000 Other spirits obtained by distilling fermented 
sugar-cane products Rp 125.000,-
/Ltr 150 
2208500000 Gin and geneva Rp 125.000,-
/Ltr 150 
    WT/TPR/S/278 • Indonesia 
 
- 113 - 
 
  HS codea Description MFNa AVE (%) 
2208600000 Vodka Rp 125.000,-
/Ltr 150 
2208700000 Liqueurs and coridals Rp 125.000,-
/Ltr 150 
2208901000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208902000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208903000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208904000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208905000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208906000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208907000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208908000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
2208909000 Other alcoholic beverages Rp 125.000,-
/Ltr 150 
3706109000 Cinematographic films Rp 21.450,-
/mnt 10 
3706909000 Cinematographic films Rp 21.450,-
/mnt 10 
8523298410 Magnetic media  Rp 21.450,-
/mnt 10 
8523298900 Magnetic media  Rp 21.450,-
/mnt 10 
8523491910 Optical media Rp 21.450,-
/mnt 10 
8523519010 Semi-conductor media Rp 21.450,-
/mnt 10 
a Based on the 2012 tariff schedule in HS12 nomenclature. 
Source: Information provided by the authorities. 
  WT/TPR/S/278 • Indonesia 
 
- 114 - 
 
  Table A3. 2 Products subject to import licensing requirements, 2012 
Product(s) 
 Rationale and procedures Legislative basis 
Sugar (raw, 
refined and 
plantation 
white sugar)  Rationale: achieve food security and economic growth in 
Indonesia and create self-sufficiency and improve the 
competitiveness and income of sugarcane farmers and 
the sugar industry. 
Companies wanting to be recognised by importer-
producers of sugar (IP Sugar) must apply to DGFT enclosing recommendations from the Ministry of Industry.  Recognitions granted set out the volume and 
type of sugar to be imported as well as the destination 
port.  Plantation white sugar can only be imported: (a) outside of the milling season (one month prior, during, 
and two months after the milling season); (b) if the 
price of sugar exceeds Rp 5,000/kg; and/or (c) local production of sugar is insufficient to meet demand.  It 
may be imported by registered sugar importers (IT 
Sugar) or by other companies appointed by the Minister of Trade.  Companies seekin g to be registered as IT 
sugar must obtain at least 75%  of their cane from local 
cane farmers.  Approval for each shipment of plantation 
white sugar must be obtained from DGFT.  This, inter 
alia, sets out the volume of sugar and destination port.   MOT Reg. No. 527/2004 
(as amended by  
Reg. No. 19/2008)   
Rice  Rationale: food security, protection of the welfare of rice 
farmers and national economic stability   
Procedures: the type of rice produced in Indonesia (HS 
1006 3090 00) may only be imported by a state-owned 
enterprise (BULOG) with the approval of the Minister of 
Trade.  This approval specifies the volume to be 
imported and destination port. Imports may only take 
place outside of the harvest period.  BULOG may import 
itself or may instruct private companies, registered as 
special rice importers to undertake such imports on its 
behalf.  Other types of rice may be imported by 
registered special rice importers with the approval of 
DGFT. This approval is contingent upon their obtaining a 
letter of recommendation from the Ministry of 
Agriculture.   MOT Reg. No. 12/2008 
(as amended by  
Reg. Nos. 8/2009 and 
2/2012) 
Salt  Rationale: food security, public health and the welfare of 
salt farmers 
Procedures: salt (for consumption and industrial use) 
may only be imported for use as a raw material in the production process by importer-producers approved by 
DGFT, or by BUMN (a state- owned enterprise that may 
import salt to meet the needs of industries that do not import directly).  To obtain such approval, importers 
must, inter alia , provide a plan of their salt requirements 
for the year, as well as a recommendation from the Ministry of Industry.  Imports must enter Indonesia through the port located closest to the factory of the 
importer.  Importers approved to import consumption 
salt must procure at least 50% of their salt from domestic sources or from companies that cooperate with 
local salt producers.  Consumption salt may not be 
imported: (a) one month prior to, and two months after the Indonesian harvest period (this period may be 
extended or shortened depending on domestic 
production and national need) or (b) if the average price of bulk salt on the truck at collection points is below a MOT Reg. No. 58/2012 
 WT/TPR/S/278 • Indonesia 
 
- 115 - 
 
  Product(s) 
 Rationale and procedures Legislative basis 
certain threshold.  The total amount of salt that may be 
imported each year is determined at ministerial level 
taking into account domestic production and consumption. Importers are allocated quantities based 
on the quantity of domestically produced salt that they 
buy.  There is no limit on the amount of industrial salt that may be imported.  Importers approved to import 
industrial salt require an import permit for each 
shipment, which is based on a recommendation from the Ministry of Industry and, inter alia , sets out the 
quantity to be imported and port of destination. 
Ethylene Waste management, facilitation of the procurement of 
goods, and reasonable protection for domestic 
companies. 
Procedures: import of ethylene can only be done by 
importers who have received recognition as importer 
manufacturers. MOIT Reg. No. 230/1997 
Precursors  Rationale: health and safety, prevention of smuggling 
and illegal circulation and to ensure precursor supplies for legitimate industries and purposes 
Procedures: under Government Regulation 44/2010 
permits are required for the import of precursors.  Implementing regulations have yet to be developed. Government Reg. 
No. 44/2010  
Lubricants Not provided MOIT Decree No. 
233/2001 
Optical discs 
(empty and 
filled) and machines and 
materials 
used to produce 
them  
 Rationale: protection of intellectual property rights 
Procedures: goods may only be imported by importers 
recognized by DGFT.  In order to be recognized the importer must, inter alia , submit recommendations from 
the Ministry of Industry and the Ministry of Law and 
Human Rights, an import and distribution plan, and a copy of the licence from the copyright holder for the 
import of filled optical discs.  Approval must be obtained 
for each shipment.   MOT Reg. No. 5/2005 
Textiles and 
textile 
products 
(TPT) Rationale: fulfil demand fo r goods not available from 
domestic sources for production processes and national 
consumption, and to keep domestic production of 
textiles and textile products 
Procedures: certain TPTs (12 tariff lines at the HS 4-digit 
tariff line level) may only be imported by registered 
importers (IP Textile) as raw materials for their 
production processes.  These products may not be 
traded or transferred.  Exceptions relate to imports 
destined for bonded and free-trade zones and imports 
for certain specified purposes.   MOT Reg. No. 15/2008 
 
Ozone 
depleting 
substances  Rationale: implementation of Vienna Convention and 
Montreal Protocol 
Procedures: ozone depleting substances (that are not 
prohibited) may be imported subject to a maximum 
national volume as decided by the Ministry of Environmental Affairs.  Imports may only be undertaken 
by producer importers (IP-BPO) (i.e. registered importer 
manufacturers) or approved importers (IT-BPO) (registered trading/distribution companies).  To be 
registered as an IP-BPO or IT-BPO requirements include 
submission of a production plan for 1 year and recommendations from the Ministry of Environmental Affairs and Ministry of Industry .  Registration is valid for MOT Reg. No. 03/2012 WT/TPR/S/278 • Indonesia 
 
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  Product(s) 
 Rationale and procedures Legislative basis 
one year.  Imports must take place through one of 7 
designated seaports.   
Nitro 
cellulose  
 Rationale: public safety and security 
Procedures: importers must be approved by DGFT and 
approval is required for each shipment.  MOIT Reg. No. 418/2003 
(as amended by  
Reg. No. 662/2003) 
Hazardous materials       
 Rationale: control of hazardous materials 
Procedures: importers must be approved by DGFT, 
which involves obtaining recommendations from certain 
other government agencies.  Imports may only enter Indonesia through 5 designated sea ports or through international airports.  MOT Reg. No. 44/2009 
(as amended by  
Reg. No. 23/2011) 
 
Alcoholic 
beverages Rationale: protection of public health, tranquillity, law 
and order, and morals  
Procedures: annual import volumes are determined by 
an inter-ministerial committee.  Only registered 
importers, or certain state and/or regional-owned 
companies (BUMN and/or BUMD) may import alcohol.  
At end 2012 there were 12 registered importers.  The 
distribution of volumes to be  imported for the first year 
of operation of the licensing system was on a pro-rata 
basis and thereafter distribution has been based on past 
performance.  Imports into the Indonesian customs area 
(i.e. not including FTZs) may only take place through 5 
designated seaports or any international airport.   MOT Reg. No. 43/2009 
(as amended by  
Reg. No. 54/2012) 
Industrial 
explosives Rationale: public safety and security 
Procedure: explosive materials for industrial purposes 
may only imported by PT. Dahana with an approval from 
Police Department. Presidential Decree 
No. 14/1997 
Hand tools  Not provided Not provided 
Colour multi-
functional machines, 
colour 
photocopying and 
printing 
machines  Rationale:  prevention of illegal reproduction of 
banknotes and security instruments. 
Procedures:  may only be imported by registered 
importers. Each import requires prior approval from 
DGFT, which are based on recommendations provided by MOT (including particulars such as quantity, type, 
destination, and loading ports).   MOT Reg. No. 15/2007 
(as amended by  
Reg. No. 07/2012) 
LPG and LPG 
gas 
containers  
 Rationale: security and implementation of the 
Government's policy on the conversion plan for the use 
of LPG allocated for home necessities and micro 
businesses 
Procedures: the Government is responsible for assigning 
a company as the importer of LPG together with the 3 
kg LPG container specially used in the context of the 
conversion plan.  Imports may only take place if 
domestic production is insufficient.  In order to obtain 
import approval from DGFT, the importer must provide a 
recommendation from the Ministry of Energy and 
Mineral Resources (for imports of LPG) or from the 
Ministry of Industry (for imports of 3 kg LPG 
containers).  These recommendations set out the type, 
number of goods, and the import period.   MOT Reg. No. 01/2008 
 
Non-
hazardous 
and non-toxic waste  
 Rationale: not provided 
Procedures: waste may only be imported by companies 
that undertake industrial business activities and are 
recognized importers.  To become a recognised 
importer, recommendations need to be obtained from the Ministry of Industry and the State Ministry of MOT Reg. No. 39/2009 
 WT/TPR/S/278 • Indonesia 
 
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  Product(s) 
 Rationale and procedures Legislative basis 
Environmental Affairs.  Recognition as an importer 
contains the quantity and kind of waste that may be 
imported. Recognition is for one year (extendable).  
Used capital 
goods  
 Rationale: need for the provision of capital goods in 
order to increase the capacity, efficiency, and 
productivity of domestic industry, where the availability 
of such goods cannot be fulfilled from domestic sources. 
Procedure: used capital goods may only be imported by 
companies holding specific types of business licence.  All 
imports (except into bonded zones) must be approved 
by DGFT.  In some cases, applications for approval 
require a recommendation from another ministry.  This 
regulation expires on 31 December 2013. MOT Reg. No. 48/2011 
Oil and gas  
 Rationale: to support domestic production and domestic 
need.   
Procedures: oil and gas may only be imported by a 
corporate body (for oil and gas downstream business 
activities) or by a direct user.  Import approvals are 
required by importers.  Applications for import approval must be made to DGFT, inter alia , including a 
recommendation from the Minister of Energy and 
Mineral Resources.  This recommendation sets out the 
types and quantities that may be imported, and is based on the Minister's evaluation of domestic supply and 
need. MOT Reg. No. 42/2009 
 
Plastic  Rationale: not provided 
Objective: not provided MOIT Reg. No. 230/1997 
Saccharin  Not provided Not provided 
Cloves 
 Rationale: to protect domestic producers from an 
anticipated sharp increase in the import of cloves and a 
resulting price decline 
Procedure: affects 2 lines at the HS 9-digit level.  Cloves 
may be imported by registered clove importers only for 
use in the production process.  Approval is required for 
each shipment.  This approval specifies the quantity and 
kind of clove imported as well as the timing of the 
import. MOT Reg. No. 528/2002 
Rough 
diamonds  
 Rationale: implementation of Kimberly Process 
Certification Scheme 
Procedures: rough diamonds may only be imported by 
importers certified by DGFT.  Approval required for each shipment.  MOT Reg. No. 10/2005 
(amended by  
Reg. No. 25/2008) 
 
Cyclamate  Not provided Not provided 
PMCX  Not provided Not provided 
Pearl  Rationale: generate economic growth and create a fair, 
conducive, and certain business environment. 
Procedures:  in order to import pearls (6 tariff lines), 
importers must obtain an import approval from DGFT, 
which is contingent upon obtaining a recommendation 
from DG Processing and Marketing of Fishery Products 
(Ministry of Marine and Fisheries).  Import approvals are 
valid for 6 months.  Imports must enter through Jakarta 
Intl. or Surabaya Intl. airports.   MOT Reg. No. 02 /2012. 
 
Animals and 
animal 
products 
(including dairy) 
 Rationale: food security and sovereignty 
(implementation of Law No. 18/2009, which specifies 
that imports of live animals and animal products may 
only take place if domestic production and supply is not adequately available for public consumption at reasonable prices) MOT Reg. No. 24/2011 
 WT/TPR/S/278 • Indonesia 
 
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  Product(s) 
 Rationale and procedures Legislative basis 
Procedures: the national allocation for the import of 
fresh animal and animal products is stipulated annually 
at ministerial level.  Only registered importers of animal and animal products may import these goods, with 
importer allocations being stipulated twice per year.  
Imports of carcass meat, offal (and/or their derivative products) may only be destined for industries, hotels, 
restaurants and catering services.  An import permit, 
granted by DGFT, is required for all imports. Importers must first obtain a letter of recommendation from the Ministry of Agriculture and importers of processed 
animal products must obtain a letter of recommendation 
from the National Agency for Food and Drug Control (BPOM).  
Sodium 
Tripolpy-
phospate 
(STPP)  
 Rationale: allows businesses to import STPP when 
domestic production is insufficient to meet business 
needs. 
Procedures:  STTP may only be imported by companies 
for use in production processes.  An importer must be 
recognized by DGFT as a prod ucer importer of STPP (IP-
STTP). This, inter alia , involves obtaining a 
recommendation from the Ministry of Industry.  
Recognition is valid for one year.   MOT Reg. No. 41/2011 
Horticulture 
(fresh and 
processed) 
 Rationale: food security, national economic stability and 
protection of consumer interests 
Procedures: horticultural products may only be imported 
by importers recognized by DGFT as either (a) importer 
producers of horticultural products (IP Horticultural 
products) where imports are used as raw or auxiliary materials in the production process, or (b) registered importers of horticultural products (IT-Horticultural 
products) for imports that are traded or transferred to a 
distributor (not directly to consumers or retailers).  IT Horticultural products require an import approval from 
DGFT for each shipment, which involves obtaining a 
recommendation from the Minister of Agriculture.  Permits are only granted if the Ministry of Agriculture 
determines that domestic production is insufficient.   MOT Reg. No. 30/2012 
(as amended by  
Reg. No. 60/2012)  
Fertilizer  
 Rationale: to improve the efficient procurement and 
distribution of subsidized fertilizer to support the 
national food supply 
Procedures: in the event that domestic production of 
fertilizer is insufficient, PT  Pupuk Sriwidaja (Pereso) may 
import fertilizer.  It needs the approval of DGFT which is 
based on a recommendation from the Ministries of 
Industry and of Agriculture. MOT Reg. No. 17/2011 
 
Mixture 
concentrate containing 
alcohol  Not provided Not provided 
Food and 
beverages, 
traditional 
and herbal 
medicine, 
cosmetics, 
clothing, 
footwear, 
electronic Rationale: to address smuggling and safeguard health 
and safety through the development of an effective 
tracking system. 
Procedures: importers must apply to be registered with 
the Ministry of Trade and, inter alia , must provide an 
import plan for 1 year covering the goods to be 
imported (quantity, kinds of  goods, and tariff heading) 
and the port of entry.  Imports must enter Indonesia 
through one of 5 designated sea ports, or through any MOT Reg. No. 44/2008 
(as amended by  
Reg. No. 56/2008 
(extended by Reg. 
No. 57/2010) WT/TPR/S/278 • Indonesia 
 
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  Product(s) 
 Rationale and procedures Legislative basis 
goods and 
children's 
toys  international airport .  
 
Source: Notifications to the Committee on Import Licensing; information provided by the  
  authorities; and online information, "Ekon Trade Related RuleBook". Viewed at:   
  http://rulebook-jica.ekon.go.id. WT/TPR/S/278 • Indonesia 
 
- 120 - 
 
  Table A3. 3 Intellectual property righ ts protection Indonesia, October 2012 
Legislation 
 Term of protection Penalties 
Copyrights and 
related rights  
Copyright Law (Law 
No.19, 2002)   Lifetime of the author plus 50 
years (literary, educational and scientific volumes; architecture; 
maps; dramatic, musical and 
artistic work) 
 50 years (computer programs; 
phonograms; performances;  
broadcasting works and cinematography works) 
 25 years from first publication: 
photography works  
 Maximum Rp5 billion fine 
Maximum seven year prison sentence 
Patents 
 
Patent Law (Law 
No. 14, 2001) 
 Products and production processes are 
protected for 20 years, with a possible 
2 year extension Maximum Rp 500 million 
Maximum four year prison 
sentence 
 
 
Industrial designs  Industrial Designs 
Law (Law No. 31, 
2000)  Protection for 10 years for new 
industrial designs Maximum Rp1 billion fine 
Maximum five year prison sentence 
 
Trademarks and 
geographical 
indications 
 
Law on Trademarks 
(Law No. 15, 2001) 
 Protection for 10 years (extendable) 
for trade marks   
 
Protection for GIs lasts as long as the 
goods retain the relevant defining 
characteristics 
 Maximum Rp1 billion fine 
Maximum five year prison 
sentence 
Layout designs of 
integrated circuits 
 
Law on Layout designs of 
integrated circuits 
(Law No. 32, 2000)  Protection for 10 years from date of 
filing or first commercial exploitation (not renewable) Maximum Rp300 million fine  
Maximum three year prison sentence 
Trade secrets 
 
Trade Secrets Law 
(Law No. 30,2000) 
 Protection remains in force as long as 
the trade secret is maintained and not 
disclosed to the public  Maximum 2 years imprisonment 
and/or a fine of Rp300 million 
Plant variety  
Plant Variety Law 
(Law No. 29,2000)  20 years for seasonal plants and 25 
years for annual plants. Maximum imprisonment of 5 
years and a maximum fine of Rp1 
billion 
Source: WTO Secretariat, based on information provided by the authorities of Indonesia. WT/TPR/S/278 • Indonesia 
 
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  Table A4. 1 GDP by economic activi ties at constant 2000 prices, 2007-11 
(Annual percentage change) 
    2007  2008  2009 2010 2011  
       
Agriculture, fisheries and forestry 3.5 4.8 4.0 3.0 3.0 
 Food crops 3.4  6.1 5.0 1.6 1.3  
Mining and quarrying 1.9 0.7 4.5 3.6 1.4 
 Oil and gas mining -1.2  0.4 0.1 0.4 -1.0  
Manufacturing 4.7 3.7 2.2 4.7 6.2 
 Oil and gas manufacturing industries -0.1  -0.3 -1.5 0.6 -0.9  
Electricity, gas and water 10.3 10.9 14.3 5.3 4.8 
Construction 8.5  7.6 7.1 7.0 6.7  
Services 9.0 8.7 5.8 8.4 8.5 
 Wholesale and retail trade 9.4  7.0 0.0 9.7 10.0  
 Hotels and restaurants 6.7 6.1 7.4 4.1 5.3 
 Transport and communication 14.0  16.6 15.8 13.4 10.7  
 Finance 8.0 7.6 3.6 5.1 7.0 
 Real Estate 7.9  8.9 5.2 5.5 6.2  
 Business services 8.2 9.0 9.7 7.4 7.3 
 Private services 7.3  7.7 7.4 7.1 7.8  
 Government services 5.4 4.5 5.1 4.6 5.4 
Source: Statistics Indonesia online inform ation.  Viewed at: http://www.bps.go.id 
 [30 August 2012].  WT/TPR/S/278 • Indonesia 
 
- 122 - 
 
  Table A4. 2 Selected ASEAN service agreements 
Name of the 
Trade 
Agreement Parties 
involved Commited/Offered 
Sectors Indonesia's commitments 
ASEAN 
Framework 
Agreement on 
Services  (AFAS) ASEAN 
countries: 
Brunei, 
Cambodia, Indonesia, Laos, 
Malaysia, 
Myanmar, Philippines, Singapore, 
Thailand Business services 
Communication 
services 
Construction services Distribution services 
Education services 
Health services Environmental services 
Tourism services 
Financial services Transport services 
Other services In AFAS 8th package, Indonesia has 
committed 86 subsectors: business 
services (professional services, computer 
and related services, research and development services, rental and leasing 
services without operator, and other 
business services), communication services, construction and related engineering services, distribution 
services, education services, 
environmental services, healthcare and social services, tourism and travel-
related services, recreational, cultural 
and sporting services (other than audiovisual services), transport services, 
and other services (energy and spa 
services)  Indonesia has completed the target of 
AFAS 8 by committing full commitment 
for mode 1 and mode 2 in 86 subsectors, 18 priority integrity sector (PIS) for 
mode 3, and 40 non-PIS for mode 3. 
Meanwhile, mode 4 commitments of AFAS are listed in a separate schedule 
under the ASEAN MNP agreement. 
 The PIS sectors are air transport, e-ASEAN, healthcare, and tourism . 
ASEAN-China 
Free Trade 
Agreement  
(AC-FTA) ASEAN countries 
and China Communication 
services 
Construction services 
Environnemental 
services 
Tourism services 
Financial services 
Transport services 
Other services In the consolidated 2nd package of 
Indonesia’s Schedule of commitments 
under the ASEAN-China Trade in 
Services Agreement, Indonesia has 
committed 28 subsectors in: construction 
and related engineering services, tourism 
and travel-related services, energy 
services, financial services (non-
banking), and transport services  
 
ndonesia committed in four mode of 
supply with mostly full commitments 
(none) for modes 1 and 2. It gives 
partial commitments for modes 3 and 4, 
applying certain market-access and 
national-treatment limitations. 
Indonesia-
Japan Economic Partnership 
Agreement  
(IJ-EPA) Indonesia and 
Japan Business services 
Communication services Construction services 
Distribution services 
Education services Health services 
Environmental 
services Tourism services 
Financial services Indonesia has committed: business 
services (professional services, computer and related services, research & development services, other business 
services), communication services 
(telecommunication and audiovisual services), construction and related 
engineering services, distribution 
services, educational services, financial services (banking and non-banking), 
health-related and social services, WT/TPR/S/278 • Indonesia 
 
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  Name of the 
Trade 
Agreement Parties 
involved Commited/Offered 
Sectors Indonesia's commitments 
Transport services 
Other services tourism and travel-related services, and 
transport services.  
Indonesia gives GATS+ commitments, 
offering more services sectors and higher commitments in four modes of supply. 
Source: Information provided by the Indonesian authorities.   
 
  
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