G/TRIMS/Q/IDN/2  
 
21 September 2018  
(18-5877) Page: 1/2 
Committee on Trade -Related Investment Measures  Original: English  
 
INDONESIA  – CERTAIN MEASURES ADD RESSING LOCAL CONTEN T  
IN INVESTMENT IN THE  TELECOMMUNICATIONS SECTOR  
REPLIES TO QUESTIONS FROM JAPAN1 
The following communication, dated 20 September 2018 , is being circulated at the request of the 
Delegation of Indonesia . 
 
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Background  
 
Japan considers  that Indonesia 's answers (G/TRIMS/W/160) to our questions with regard to the local 
contents requirements in Indonesia 's telecommunications sector (G/TRIMS/W/154) fail to address 
our concerns. Following the Ind onesia 's commitment in the previous meeting that Indonesia would 
provide answers in written form if any further questions are posed , Japan reiterate s the following 
questions which reflect our concerns.  
 
Question 1  
 
Firstly, according to Item 1 of Indonesia's answers to our questions (G/TRIMS/W/160), 
the regulation (i.e. the local contents requirements) "does not differentiate treatment 
between local and foreign -service provider". However, the issue concerned in this case is 
not whether there is differentiated treatment between local and foreign 
telecommunications service providers, but whether there is differentiated treatment 
between local and foreign origin products (i.e. communication equipment or devices). In 
fact, Article s 16 and 17 of the Indonesia's Ministerial Decree No.7/2009 stipulate local 
contents requirements on communication equipment or devices. Japan consider s that 
such regulation substantially differentiates local and foreign origin products, which is 
inconsistent with Article 3.4 of the GATT  1994 , and that  requires the purchase or use by 
an enterprise of local origin products, which is inconsistent with Article 2.2 of the 
TRIMs  Agreement according to Item 1 (a) of its Annex (i.e. the Illustrative List) . Japan 
would like Indonesia to explain clear ly on this point.  
 
Reply  
 
This regulation is aimed only to supplier that have won auction process in bandwidth 2.3 GHz. The 
aforementioned regulation will not be in force operationally by 2019.  
 
Question 2  
 
Seco ndly, according to Item 2 of Indonesia's answers to our questions 
(G/TRIMS/W/160), the regulation falls under the Article 3.8 (a) of the GATT 1994 that 
stipulates exemption of government procurement. Specifically, the Article exempt s "laws, 
regulations or requirements governing the procurement by governmental agencies of 
products purchased for governmental purposes and not with a view to commercial resale 
or with a view to use in the production of goods for commercial sale". However, it is not 
clear for Jap an why Indonesia consider s the scope of the regulation (i.e. local contents 
                                                
1 G/TRIMS/Q/IDN/1.  G/TRIMS/Q/IDN/2  
 
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  requirements) corresponds to government procurement. The regulation  is applied to 
enterprises , not to the government, and there are no existing rules that allow  those 
enterprises to use the government budgets. Therefore, Japan could not find any reason 
why the regulations fall under Article 3.8(a) of the GATT  1994 , and would like Indonesia 
to explain clear ly on this point.  
 
Reply  
 
Ministerial Regulation No. 38 Year 2007 has been revoked and replaced by Ministerial Regulation 
No. 32 Year 2008. As of now the Ministerial Regulation No. 32 Year 2008 has been revoked and 
replaced by Ministerial Regulation No. 25 Year 2015 which does not require local content.  
 
 
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