WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO WT/TPR/M/184/Add.1 
16 October 2007 
 (07-4433) 
Trade Policy Review Body 
27 and 29 June 2007 Original:  English/Spanish 
                anglais/espagnol 
                inglés/español 
 
TRADE POLICY REVIEW 
INDONESIA 
Minutes of Meeting  
Addendum  
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
 This document contains the advance writte n questions, and replies provided by Indonesia.1 
 
__________________________________________________________________________________ 
Organe d'examen des politiques commerciales 
27 et 29 juin 2007  
EXAMEN DES POLITIQUES COMMERCIALES 
INDONESIE 
Compte rendu de la réunion
 
Addendum  
Présidente:  H.E. M. Vesa Himanen (Finlande) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses fournies par l'Indonésie.
1 
 
 
__________________________________________________________________________________ 
Órgano de Examen de las Políticas Comerciales 
27 y 29 de junio de 2007  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
INDONESIA 
Acta de la reunión
 
Addendum  
Presidente:  Excmo. Sr. Vesa Himanen (Finlandia) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Indonesia.1 
 
                                                           
1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.  WT/TPR/M/184/Add.1 
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  WRITTEN QUESTIONS BY MEMBERS 
QUESTIONS BY NEW ZEALAND  
1. Development of the agricultural sect or  (WT/TPR/S/184, p. 71, para. 12; 
WT/TPR/G/184, p. 6, para. 7, p. 18, para. 68) 
The Secretariat notes that productivity in Indonesia’ s agriculture sector has seen negative growth 
since the early 1990s, agriculture’s share of GDP decreased by around 3% between 2002 and 2005, 
and labour productivity in the sector is around one-fifth that of the rest of the economy.  At the same time, it employs 44% of the population, and its deve lopment is crucial to the government’s pro-poor 
policies.  Given that the Secretariat report also not es that Indonesia has experienced real GDP growth, 
that macroeconomic vulnerabilities have been decl ining and that there has been strong domestic 
demand over the past few years, could Indonesia co mment on the factors that have led to this 
situation, and what measures Indonesia has or will  be putting in place to develop the agricultural 
sector? 
2. Review of trade laws and regulations  (WT/TPR/S/184, p. 21, para. 17) 
According to the Secretariat, Indonesia has begun "to review all rules and regulations related to 
imports and exports … to identify and rectify one rous bureaucracy and poorly conceived trade and 
investment policies."  New Zealand would be interested in receiving details of the review, including 
its current status, terms of reference, scope and which agencies are involved or lead the review.  
Given the implications of the results of this revi ew for trade, how and when does Indonesia intend to 
consult with trading partners on the draft results of the review? 
3. Investment policy (WT/TPR/S/184, p. 33, para. 46) 
New Zealand was pleased to note the recent passage of the new Investment Law, with its national 
treatment provisions for foreign investors.  The S ecretariat states that the new law will shorten the 
"negative list" of sectors in which foreign investment  is prohibited.  New Zealand would be interested 
in learning more about the process for the implementation of this new law, including progress on formulating the negative list, and what it will mean in practice for investors and other stakeholders. 
4. Services (WT/TPR/S/184, p. 84, para. 49-51) 
The Secretariat notes that "trade barriers remain in many services sectors" (para 51) and that 
Indonesia’s existing GATS commitments "come w ith significant limitations on market access" 
(para 50).  In light of the new investment law,  is Indonesia taking any steps to further relax 
restrictions on the trade in services, particularly in mode 3 services? 
5. Forestry (WT/TPR/S/184, p. 67, para. 2; p 77, para. 30, 31, Box IV.2; WT/TPR/G/184, 
p. 20, para. 85) 
Indonesia notes that "the ban on the export of logs is  used to support Indonesia’s forestry and wildlife 
conservation policy while a broader forest manage ment programme is being put in place."  New 
Zealand welcomes Indonesian efforts to deal with  the problem of over-exploitation of forests and 
particularly illegal logging.  We note, however, th e observation in the Secretariat’s report that such 
bans may not have the desired effect, and can potentially act as a subsidy to domestic processing 
industries.  Could Indonesia comment on how it is monitoring and evaluating its forestry policies and measures in terms of their effectiveness and efficacy , and to ensure that they do not affect other 
sectors of the economy and Indonesia’s trade policy? WT/TPR/M/184/Add.1 
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 6. Meat import policy (WT/TPR/S/184, p. 54, para. 64) 
The Secretariat observes that "a new decree on import of meat of various species … is to be notified 
to the WTO."  Can Indonesia confirm that the Secretariat is referring to decrees 64/Permentan/OT.140/12/2006 and 27/Perm entan/OT.140/3/2007?  When will those new 
decrees be notified to the WTO?  Could Indonesi a provide an explanation for developing the new 
decrees and comment on how they meet the WTO principle of national treatment?   
7. Tariff policy (WT/TPR/S/184, p. 40, para 19, p. 43, para 25) 
New Zealand notes that the structure of Indonesia’s tariff is complex and that it embodies a degree of 
tariff escalation, especially for se mi-processed food, beverages and t obacco.  Given that these factors 
together have the effect of distorting trade and prov iding some uncertainty for importers, what steps is 
Indonesia considering to streamline and improve Indonesia’s tariffs? 
8. Tariff policy – dairy products (WT/TPR/S/ 184, p. 45, table III.3; p. 40, para. 19) 
Indonesia’s average applied tariff rate on dairy pr oducts in 2006 was 5.6%, with bound in-quota rates 
of around 40%.  Given the recent increase in worl d dairy prices does Indonesia plan to reduce tariffs 
on dairy products in the near term?   
9. Government procurement  (WT/TPR/S/184, p. 49, para. 41 – 48) 
The Secretariat notes that Indonesia is trying to increase transparency of government procurement 
processes and that it has done this through various m easures, but that Indonesia is not a party to the 
WTO Government Procurement Agreement (GPA).  What is the likelihood of Indonesia joining the 
WTO GPA in order to further its aims of transpar ency and the use of good procurement practice?  
New Zealand notes that the 8 December 2006 revisi on of the GPA text includes (in Article IV) 
allowance for special and differential treatment to recognise the development needs of developing 
countries, and increased flexibility for transitional m easures.  We would be interested in Indonesia's 
views on the new Article IV.   
The Secretariat notes that Indonesia continues to have conditions that limit the participation of foreign 
firms in government procurement contracts.  Are there any plans to remove these conditions or to 
increase the permissible foreign participation rate further? 
10. Standards and other technical requirements   (WT/TPR/S/184, p. 52, paras. 52, 54 
and 56) 
The Secretariat’s report notes that the National Standardisation Agency of Indonesia (BSN) is 
responsible for all stages of the standards setting pr ocess, but that the development of draft standards 
is the responsibility of technical committees within  various ministries.  Once a draft standard is 
developed by a technical committee, what is th e process for approving the standard as a national 
standard (SNI)?  How does that process ensure al ignment between the basis of SNIs and relevant 
international standards as required by  the TBT Agreement Article 2.4? 
11. Food standard requirements (WT/TPR/S/184, p. 54, para. 62) 
Page 54 of the Secretariat’s report records that all imported processed food products must be tested 
and approved by the National Agency for Drug and Food Control (BPOM), in an "overly complex, 
time consuming and costly procedure."  Given the e fforts that Indonesia is making to review its trade 
policies and make them less onerous and more tran sparent, does Indonesia have any plans to review 
these procedures?  In particular, has Indonesia considered recognition of alternative official  WT/TPR/M/184/Add.1 
 Page 5 
 
 
  certification that imported products meet Indon esia’s requirements and/or recognition of the 
equivalence of an exporting country’s regulator y controls for imported processed food products? 
QUESTIONS BY SWITZERLAND  
I. E CONOMIC ENVIRONMENT  
(2) Recent Economic Developments 
(v) Structural reforms 
• Para 21 and para 46 (II Foreign Trade Policy Regi me): There seems to be a consensus that 
Indonesia has adopted a forward-looking new i nvestment law. Some concern has been 
expressed, however, that the current drafting of th e "negative list" is lacking in transparency. 
Moreover, some fear the list may in fact not reduce the amount of sectors foreclosed for 
foreign investment as it is merely a more formal  compilation of existing practice of exclusion, 
which has hitherto been applied informally. Therefore, we would like to know if Indonesia 
would be ready to draft a short "negative list"? 
II. T RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(1) Introduction 
• Para 4: We know that Indonesia is currently negotiating a bilateral trade agreement with 
Japan, and other bilateral agreements are under study. What are/will be Indonesia's priorities 
with regard to bilateral trade agreements, in terms of coverage, issues, and results to be 
achieved?  
(2) General Constitutional and Institutional Framework 
(i) Decentralisation 
• Para 8-10: Decentralization in Indonesia is re latively new and the TPR documents highlight 
certain concerns (notably uncertainty, complicat ed tax situation and internal trade barriers). 
What mechanisms are available to the Central Government in order to supervise local governments and to ensure the effec tive implementation of regulations?  
(8) Foreign Investment Regime 
(a) Main regulatory developments 
• Para 46: The new investment law provides fo r equal treatment for foreign and domestic 
investment. It also stipulates a technology transfer from companies employing foreign labour. Could this stipulation not lead to a discrimin atory burden to be borne mostly by foreign 
investors? Could new proposals for provisi ons imposing limitations on non-nationals working 
in the financial sector not lead to discrimination against certain banks?  
• Para 46: With respect to the "negative list" , could the Indonesian authorities provide some 
indication on which sectors will be either newly opened or liberalized to foreign investment 
as a result of the new investment law ? 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports (vi) State trading 
• Para 40: SOEs account for roughly 40% of GDP. The report states that in the interest of 
efficiency, the Government plans to reduce the number of SOEs from 158 to about 80 and 
that much of this reduction is expected to take place through consolidation rather than WT/TPR/M/184/Add.1 
Page 6  
 
 divestiture. What are the main reasons for th e Government to chose the route of mergers 
rather than privatisation, notably taking into acc ount the fact that mergers can be very costly 
and bear a risk of failure? 
(vii) Government procurement 
• General: It seems that powerplants shall be excluded from public tendering. Can the 
Indonesian Government confirm this information? If so, for what reasons? 
• Para. 43 and 46: this paragra ph reports that in 2001 the C ountry Procurement Assessment 
Review identified the awarding of government contracts as a major source of corruption. Since then the central government has taken step s to address this situation. The report also 
relates to the decentralisation reform under way. Will government procurement also be 
decentralised? If so, through which measures w ill the central government be in a position to 
ensure that its efforts to combat fraud will not be set back? 
(viii) Contingency measures 
(a) Anti-dumping and countervailing measures 
• Para. 50 of the Secretariat's report suggests th at Indonesia had a rather frequent recourse to 
the anti-dumping instrument in recent years. Could the Indonesian authorities specify, when 
definitive anti-dumping duties have been impo sed, whether they apply the lesser duty rule? 
Also, could the authorities explain their re view practice once final anti-dumping measures 
have been imposed? In addition, is the possibilit y of price undertakings offered systematically 
to exporters in the course of anti-dumping investigations? 
(ix) Standards and other technical requirements 
• Para 60: We note than an increasing number of pr oducts require certificates for standards of 
Islamic purity (halal). How does the Government explain this recent trend? 
(4) Measures Affecting Production and Trade 
(i) Taxation 
• In para. 93, the Secretariat's report indicates that the Indonesian Government expects tax 
revenues to increase from 13.3% of GDP in 2005 to 19% of GDP by 2009. At the same time, 
the report suggests that the Government is cons idering a reform of the corporate taxation to 
make Indonesia more competitive for investor s with respect to neighbouring countries 
(para. 94) and also has plans to reduce the top personal tax rate (para. 99). Could the 
Indonesian authorities indicate what specific new enforcement measures the authorities will 
consider to ensure that such an ambitious obj ective of raising tax collections by more than 
40% in terms of GDP in only a few year s can actually be achieved as planned?  
• Para 94: The report states that arbitrary and abusive tax-enforcement body are among the 
basic concerns of investors. It also states that the Government has proposed three new tax 
laws to improve this record. How do these laws address this particular problem of arbitrary treatment? Which steps can an enterprise undertak e when it assesses to be a victim of such an 
arbitrary treatment? 
(iii) Competition and consumer policy 
• In para. 106, the Secretariat's report indicates that following the 1997 fi nancial crisis and the 
IMF's insistence on the introduction of a number of policy reforms, the local-content  WT/TPR/M/184/Add.1 
 Page 7 
 
 
  requirements for automobiles were removed. Could the Indonesian authorities indicate 
whether they still maintain other trade-relate d investment measures or, whether, with the 
removal of this measure, all such trade-relate d investment measures have now been removed? 
(iv) Intellectual property rights 
(b) Patents 
• General:  There is some concern that a lack of  transparency in the Indonesian legal system 
might result in unjustified revocations of existi ng patent rights and hence uncertainty in the 
industry as to patent enforcement or patent in terpretation. What kind of assurance to patent 
holders can the Government provide in this regard? 
QUESTIONS BY COLOMBIA  
Informe del Gobierno de Indonesia (WT/TPR/G/184) 
I. I NTRODUCCIÓN  
Párrafo 3.  "… La política industrial se orie nta a fomentar los conglomerados, empleando 
selectivamente incentivos para sustentar el desarro llo de las regiones de Indonesia y profundizar y 
diversificar la producción industrial ante la tenaz competencia internacional y la rápida evolución del 
entorno empresarial….". 
• ¿Qué tipo de incentivos emplea el gobierno para sustentar el desarrollo de las regiones de 
Indonesia y profundizar y diversificar la producción industrial? 
• ¿Qué productos o sectores de la economía se han beneficiado de éstos incentivos? 
• ¿Por cuánto tiempo se han aplicado estos incentivos? 
IV. P OLITICAS COMERCIALES Y POLITICAS RELACIONADAS CON EL COMERCIO  
B) Evolución del Comercio y Política Comercial 
5. Medidas no arancelarias 
Párrafo 82.  "…Indonesia también ha venido elimin ando progresivamente las medidas no arancelarias, 
en particular la utilización de licencias de import ación, que en la actualidad se limita a mercancías 
peligrosas; explosivos; sustancias que agotan la cap a de ozono; bebidas alcohólicas; sal; copolímeros 
de propileno; lubricantes; clavos de especia; tex tiles y productos textiles; nitrocelulosa; máquinas y 
maquinaria; discos ópticos; y diamantes en bruto. 
• ¿Se requiere licencia de importación para tod as las posiciones arancelarias correspondientes a 
textiles, productos textiles, máquinas y maquinarias?. 
• ¿El Gobierno tiene previsto en el corto o mediano plazo reducir el número de líneas 
arancelarias sujetas a restricciones mediante licencias de importación? 
• ¿Cuál es el lineamiento de política comercia l para mantener estos productos sujetos a 
restricción mediante licencias de importación? WT/TPR/M/184/Add.1 
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 V. O
RIENTACIÓN FUTURA  
B) Programas Gubernamentales  5. Medidas no arancelarias 
Párrafo 112.  "…el Gobierno avanza con prudencia, pe ro progresivamente, haci a una apertura incluso 
más amplia de la economía con la reducción de los aranceles y las medidas no arancelarias, la 
facilitación del comercio y el fomento de la inversió n.  En esta última esfera, el Gobierno confía en 
que la nueva Ley de Inversiones y su reglamento de aplicación, así como los demás elementos del paquete de medidas en materia de inversión contri buyan en grado importante a mejorar el clima de 
inversión…". 
• ¿Fuera de las zonas económicas especiales y los polígonos industriales, la nueva Ley de 
Inversiones o su reglamento de aplicación contempla algún tipo de incentivo tributario, 
fiscal,  aduanero o de cualquier otro tipo  para atraer inversionistas extranjeros?  Si la respuesta es afirmativa, ¿Cuáles? 
Informe de la Secretaria (WT/TPR/S/184) 
III. P
OLITICAS Y PRÁCTICAS COMERCIALES , POR MEDIDA  
2) Medidas que afectan directamente a las importaciones  
ii) Valoración en aduana y normas de origen 
Párrafo 13.  "Indonesia cumple el Acuerdo sobr e Valoración en Aduana de la OMC… En 1997 
cambió la base de valoración, que era el valor pred ominante en el mercado aplicado en la inspección 
previa a la expedición, pasó a ser el valor de tran sacción más ciertos costos y gastos.  No obstante, la 
Aduana aplica, una lista de precios de control arbitr arios, en lugar del valor de la transacción, al 
determinar los derechos sobre ciertas importaciones de productos alimenticios". 
• ¿Indonesia podría indicarnos si estos "precios de control" que se mencionan en este párrafo 
son precios mínimos? 
• ¿Cuáles son los criterios y el procedimiento pa ra la elaboración del listado de "precios de 
control"? 
• ¿Cómo aplica Indonesia los precios de control? 
• ¿Tiene Indonesia autorización del Comité de Va loración para mantener precios que difieren 
del valor de transacción? 
v) Prohibiciones, restricciones y licencias de importación 
Párrafo 36.   "Un decreto del Ministerio de Comercio de  septiembre de 2004 permite a cinco empresas 
(productores-importadores) importar azúcar.  Ese decreto también est ablece que el Ministerio de 
Comercio decide qué empresas pueden importar azú car y en qué cantidad.  Según el Gobierno, las 
importaciones de azúcar se regulan pa ra proteger a los agricultores del país contra los precios bajos.  
Los importadores registrados están obligados a abso rber tres cuartas partes de la caña de azúcar 
producida por los pequeños agricultores.".  
• ¿Cuáles es el procedimiento y los requisitos para que el Ministerio de Comercio designe las 
empresas autorizadas a importar azúcar? 
• ¿Cómo define los montos permitidos a cada una?  WT/TPR/M/184/Add.1 
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  • ¿Cada cuanto tiempo el Ministerio de Comercio expide el Decreto que autoriza a las empresas 
a importar azúcar? 
• ¿Las empresas autorizadas a importar azúcar son estatales o privadas? 
• ¿Cuáles son los requisitos para registrarse como importador de azúcar? 
• ¿Este registro es permanente o debe reno varse con alguna periodicidad determinada? 
Párrafo 37.  "En marzo de 2002, el Ministerio de Industria y Comercio dictó un decreto que exigía a 
los importadores de determinados productos esencial es obtener un número de código de identificación 
del importador (NPIK).  Los importadores de dete rminadas categorías de productos deben solicitar 
una tarjeta especial de identificación del importador, sin la cual los productos pueden ser retenidos en 
el puerto.  Entre dichos productos se incluyen el ma íz, el arroz, la soja, el azúcar, los textiles y 
productos conexos, el calzado, los productos electróni cos y los juguetes.  Las autoridades explicaron 
que esa medida se tomó para impedir el contrabando a gran escala de esos productos, que estaba perjudicando a los productores nacionales.". 
• ¿La obtención del código de identificación del importador y la expedición de la tarjeta 
especial de identificación del importador tienen algún costo? 
• ¿Cuánto es el tiempo aproximado de tramitación tanto del código de identificación del 
importador como la expedición de la tarj eta especial de identificación del importador? 
• ¿Cuál es la vigencia en el tie mpo de estos dos documentos? 
Párrafo 38.  "El Ministro de Industria y Come rcio dictó un decreto relativo a los acuerdos de 
importación de textiles el 23 de octubre de 2002.  Sólo las empresas que tengan instalaciones de producción en las que se utilicen tejidos importados como insumo para los productos acabados, como prendas de vestir o muebles, pueden obtener licencias de importación.  Todos los importadores 
autorizados deben solicitar la aprobación del Ministerio  respecto de la cantidad y el calendario de sus 
importaciones, y también deben presentar informes pe riódicos al Ministerio….  Indonesia sostiene 
que la reglamentación está concebida pa ra ayudar a poner freno al contrabando". 
• ¿Cómo justifica Indonesia esta medida que restri nge y distorsiona el mercado de textiles?  
Qué cantidad de importación es aprobada por parte del Ministerio para cada empresa? Por qué no se autorizan importaciones de textiles a comerciantes locales que distribuyan textiles?  
• ¿Con cuanto tiempo de anticipación deben las empresas solicitar la aprobación del Ministerio 
respecto a la cantidad y el calendario de sus importaciones? 
• ¿Cuáles datos debe contener el informe que periódicamente deben presentar las empresas 
importadoras de textiles al Ministerio?  
• ¿Tiene el Ministerio la facultad de rechazar una solicitud de aprobación respecto a la cantidad 
o al calendario de las importaciones de textiles?.  Si la respuesta es afirmativa, ¿En que casos? WT/TPR/M/184/Add.1 
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 vii) Contratación pública 
Párrafo 42.  "Las autoridades estiman que la contratación pública en 2006 representó el 30-40 por 
ciento del total del gasto público…." 
• ¿Podría Indonesia suministrar información sobre el porcentaje de la contratación pública del 
año 2006 adjudicada a empresas extranjeras? 
• ¿En qué sectores, productos o servicios se adjudicaron licitaciones públicas a empresas 
extranjeras en el 2006? 
ix) Normas y otras prescripciones técnicas 
b) Reglamentos sanitarios y fitosanitarios 
Párrafo 62.  "Todos los productos alimenticios ela borados han de superar las pruebas del BPOM 
(Organismo Nacional de Inspección de Productos Farmac éuticos y Alimenticios).  En virtud de la Ley 
de Protección del Consumidor de 1998, la import ación de productos alimenticios está sujeta a la 
obtención de un número de registro del BPOM.  A causa de las quejas formuladas por la lentitud y el 
elevado costo de los procedimientos relacionados  con la obtención de ese número de registro, el 
BPOM concedió temporalmente números de regist ro para los productos alimenticios que, según las 
autoridades, se importaban ya en el territorio in donesio, aunque no hubiesen obtenido su autorización.  
En julio de 2000, el Gobierno comenzó a aplicar  la Ley de Protección del Consumidor de 1908 
exigiendo el registro de los productos alimenticio s importados.  Los importadores deben solicitar un 
número de registro del BPOM.  Este procedimiento ha resultado demasiado complejo, lento y costoso.  
Todos los productos alimenticios importados de ben ser sometidos a prueba por el BPOM." 
• Según lo expuesto en este párrafo, la solicitud del número de registro del BPOM para la 
importación de productos alimenticios en Indonesia ha resultado en un proceso complejo, lento y costoso.  ¿Ante esta situación, el Gobierno tiene previsto algún plan para facilitar y 
agilizar este procedimiento, evitando además  que se convierta en una fuente de corrupción? 
4) Medidas que Afectan la Producción y el Comercio 
i) Fiscalidad 
Párrafo 97.  "El impuesto sobre artículos de lujo  se aplica con un tipo del … ; 40% sobre las bebidas 
alcohólicas, los artículos de cuero importados, los metales preciosos importados, las aeronaves privadas y las armas de fuego:…" 
• ¿Podría Indonesia confirmar si el 40% del impu esto sobre artículos de lujo también se aplica a 
artículos de cuero de producción local? 
• En caso negativo, se estaría configurando una práctica discriminatoria contra productos de 
cuero importados en ese mercado, frente a los de producción local.  ¿Podría Indonesia dar argumentos a favor o en contra de esta afirmación? 
ii) Asistencia a la producción 
Párrafo 104.  "Siguen rigiendo "precios administ rados" para un puñado de productos y servicios, 
incluidos el petróleo, la electricidad, el gas licuado de petróleo, el arroz, los cigarrillos, el cemento, 
los servicios de hospital, el agua potable/corriente, el  transporte urbano, el transporte aéreo, las tarifas 
telefónicas, los ferrocarriles, la sal, los peajes de  carretera y el correo.  En 1999 se liberaron los 
mercados de productos alimenticios esenciales como el azúcar, el aceite de cocina, la harina de trigo y 
las habas de soja".  WT/TPR/M/184/Add.1 
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  • ¿Puede interpretarse que "precios admini strados" son precios s ubvencionados por el 
Gobierno? 
• ¿Los "precios administrados" son del mismo nive l tanto para hogares como para industria y/o 
los establecimientos de comercio, en el caso de la  electricidad, el agua potable/corriente y las 
tarifas telefónicas? 
• ¿Cuál es el procedimiento para establecer los "precios administrados"? 
• ¿Cada cuanto tiempo se actualizan los "precios administrados"?. 
QUESTIONS BY CHINESE TAIPEI  
Report by the WTO Secr etariat (WT/TPR/S/184) 
I. E CONOMIC ENVIRONMENT  
(2) Recent Economic Developments (iv) Balance of payments 
(Page 7, paragraph 18)  As indicated in the Report, capital inflow has in creased, especially in the form of portfolio 
investments, attracted by favourable interest rate di fferentials and improvement in the risk premium.  
It is pleasing to note that the amount of investme nt in Indonesia to date from the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu is es timated to be in excess of US$ 13.5 billion. At 
this time, we do not anticipate any decline in fore ign and domestic investors’ confidence in Indonesia 
as a destination for their capital, nor any sudden pul l-out of portfolio investment that might trigger a 
huge outflow of capital in a short period of time.  
In this context, we would appreciate knowing whether any preemptive measures are in place which 
aim to prevent a repetition of the 1997-98 Asian fina ncial crises in Indonesia? Furthermore, if such a 
crisis were unfortunately to occur, while the Indonesian government may protect itself from the 
impact of a huge outflow of capital, what kind of  measures will it take to protect our investors’ 
interests in Indonesia, especially those in the manufacturing sector?  
(v) Structural reforms 
(Page 9, paragraph 22) The Report indicates that reform of the labour law is central to the Government's efforts to boost job 
creation and encourage investment.  
We would appreciate receiving further details of the government’s labour law reform programme. In 
particular, we would like to know how Indonesia is  planning to revise the provisions on severance 
payments and other regulations relating to labour af fairs?  Moreover, besides the labour law reforms, 
is Indonesia planning to take any other measures to increase the flexibility of its labour market? WT/TPR/M/184/Add.1 
Page 12  
 
 II. T
RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime (a) Main regulatory developments 
(Page 31 paragraph 43)  On 29 March, 2007, the Indonesian government replaced the Law on Foreign Investment of 1967 and 
the Law on Domestic Investment of 1968 with the New Law on Investment, No. 25/2007.  As one of 
the ten largest foreign investors in Indonesia, we warmly welcome the recent passage of this new 
Investment Law.  
However, our business community in Indonesia of ten complains that current domestic labour 
regulations and tax laws are responsible for the di sruption of factory management and production.  
We therefore take this opportunity to express our c oncern in this respect, and to encourage Indonesia 
to please consider revising its labour and tax laws in order to effectively improve the investment 
climate as a whole. 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports 
(vi) State trading 
(Page 48, paragraph 40) 
It is stated that "State-owned enterprises (S OEs) are estimated to account for up to 40% of 
Indonesia’s GDP, reflecting their role  in the oil, gas and electricity industries, their continued 
presence in various other industries, including cement, fertilizer, steel and mining as well as in agricultural plantations, transportation,  banking, and telecommunications."  
Later in the same Report, (page 62, paragraph 108)  it is also stated that "Exempt from the law are 
small enterprises and cooperatives, as well as th e production and marketing of goods and services 
deemed vital to public welfare, and the state-owned companies."  
Could Indonesia please elaborate further as follows: (i) What is the justification for the exempti ons from the competition law applied to these state-
owned companies, given that they account fo r such a large share of Indonesia’s GDP and 
that their trade practices may affect domestic competition? 
(ii) Does Indonesia (or the KPPU) plan to a pply the competition law to these state-owned 
companies in the future? If so, please provide details. 
(ix) Standards and other technical requirements 
(a) Standards Mandatory standards 
(Page 52, paragraph 56)  It is mentioned in the Report that there are 211 mandatory SNIs in Indonesia.  Are these mandatory SNIs also technical regulati ons? Could Indonesia please provide a list of the 
coverage of these mandatory SNIs and the responsi ble authorities, in addition to those under the 
Ministry of Industry and Trade and Ministry of Energy and Mineral Resources?  WT/TPR/M/184/Add.1 
 Page 13 
 
 
  Testing and certification 
(Page 53, paragraph 57)  
Certification in Indonesia is conducted by domestic organizations or laboratories accredited by the 
National Accreditation Body (KAN), or overseas organizations or laboratories that have mutual 
recognition agreements with the KAN.  
Could Indonesia please provide a list of overseas or ganizations or laboratories that have mutual 
recognition agreements with the KAN? 
IV. T RADE POLICIES BY SECTOR  
(3) Mining and Energy  
(Page 79, paragraph 35) 
As indicated in the Secretariat Report and in the Government Report (WT/TPR/G/184, IV. T RADE 
AND RELATED POLICIES , C. S ECTORAL POLICIES ), prior to 2001, the state-owned oil and gas 
company, Pertamina, was the industry regulator.  Now, following the reform and deregulation of 
2001, BP MIGAS and BPH MIGAS have replaced Pert amina as the regulatory agencies for upstream 
and downstream activities respectively.   
Our questions are as follows: 
(i) Given the need for firms supervising the re gulation of upstream and downstream activities in 
the oil and gas industry to be in harmony with each other, how do BP MIGAS and BPH 
MIGAS coordinate their operations? 
(ii) Moreover, how do these two organizations mana ge to cooperate with Pertamina’s continuing 
dominant influence in the downstream sector? 
(iii) Has the privatization of Pertamina, which we note was "scheduled" for 2006, already been 
accomplished by the state-owned oil and gas company? 
(iv) Were there any difficulties or obstacles enc ountered during the process of privatization? We 
would be very interested in learning about th e Indonesian government’s experiences with the 
privatization of Pertamina and the repective measures taken, because we have plans to privatize our own state-owned oil and gas company as well. 
(Page 79, paragraph 36)  
The Report mentions that a policy is under develo pment to reduce exports of liquefied natural gas 
(LNG) from 2010 because of the growing need for domestic LNG.  All existing supply contracts will 
be honored, but extension and renewal thereafte r will be decided on a case-by-case basis.  
When considering whether to extend or renew an LNG contract, how would the Indonesian 
government ensure each individual LNG buyer is treated on an equal basis? WT/TPR/M/184/Add.1 
Page 14  
 
 (4) Manufacturing 
(i) Textiles and clothing 
(Page 81, paragraph 44) 
Please explain why only companies that have produc tion facilities using imported fabrics as materials 
for finished products may obtain import licences? Ho w does this regulation help curb smuggling, and 
not unduly restrict or distort trade? How is the u se of import licensing procedures to restrict textile 
imports and protect domestic pr oduction would be consistent wi th Indonesia's WTO commitments 
under Articles III and XI of the GATT 1994? 
(5) Services 
(iii) Transportation Air 
(Page 95, paragraph 80) 
As indicated, there are currently two state-owned ai r transport carriers, Garuda and Merpati, with 
market shares for domestic routes in 2006 of 20% and 5% respectively; the Government is planning 
to privatize both.   
Could Indonesia please provide us with details of the schedule for privatization of the above-
mentioned carriers? 
Report by the Government of Indonesia (WT/TPR/G/184) 
III. I
NSTITUTIONAL FRAMEWORK  
B. I NSTITUTIONAL AND LEGAL REFORM  
(Page 11, paragraph 29)  
The Report states that "an online Certificate of Or igin facility was also launched in January 2006 as 
an integral part of the National Single Window.  In 2006, the Port of Batam had a pilot project to implement the National Single Window and in 2007 th is is being followed up by the port of Tanjung 
Priok, Jakarta.  By 2008, through the agreement in AS EAN, Indonesia has to fini sh its preparation for 
a National Single Window and start linking to the ASEAN Single Window (ASW) network." 
As the National Single Window may have not been put into operation, we notice that currently 
different government authorities in Indonesia are in  charge of issuing certificates of origin for 
exports. We would appreciate if Indonesia could: 
(a) provide us with the list of those authorities i ssuing Certificates of Origin, and indicate which 
ones have already begun the operation of issuing online Certificates of Origin. 
(b) inform us of the timeframe of each ph ase for setting up the National Single Window. 
IV. T
RADE AND RELATED POLICIES  
B. TRADE DEVELOPMENTS AND POLICY  
5. Non-tariff measures 
(Page 20, paragraph 83) 
Now that the ban on the export of sands has been implemented, we should be grateful for further 
clarification from the Indonesian government as to whether the restrictive measure applies to  WT/TPR/M/184/Add.1 
 Page 15 
 
 
  Singapore only, or to other countries as well, incl uding the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu?  Furthermore, will the I ndonesian government consider lifting this ban?  
C. S ECTORAL POLICIES  
1. Agriculture 
(Page 21, paragraph 90) 
In Indonesia, BULOG, a state-owned agency, procures and buys rice from farmers using the HPP 
(government procurement price).   
We would be grateful for a detailed description of  Indonesia’s procurement project for rice and the 
results of its implementation over the last three years? 
3. Oil, gas and minerals 
(Page 23, paragraph 98) 
As stated, Indonesia has potential for further developm ent of green sources of energy, but the lack of 
infrastructure has limited the use of alternative en ergy resources and investment in the sector is 
needed.  
Are any incentives offered to invest ors in Indonesia’s green energy industry, and to foreign investors 
in particular? 
V. F UTURE DIRECTIONS  
B. G OVERNMENT PROGRAMMES  
(Page 25, paragraph 111) 
According to the Report, further privatization of state-owned enterprises is being considered, but it 
will take time to prepare some of the businesses for privatization. 
We would appreciate knowing how long the prepara tion of these businesses is likely to take, and 
whether there will be any limita tions placed on foreign investors during the privatization process? 
QUESTIONS BY JAPAN  
The Government Report (WT/TPR/G/184) II. E
CONOMIC ENVIRONMENT  
C. I NVESTMENT  
(Question 1: page 8, paragraph 13) 
According to the Government report, Japan unde rstood that the Investment Law was passed in 
Parliament on 29 March and w as implemented in April 2007. 
(1) Please indicate when detailed rules and regula tions regarding the Law plan to be established 
and also when the Law will be practically implemented. 
(2) Please confirm Japan’s understanding that th e Law is aimed at facilitating investment from 
foreign countries including Japan, not at introduc ing a new limitation of foreign investment. WT/TPR/M/184/Add.1 
Page 16  
 
 (3) (a) (In case that new regulations will be intr oduced to strengthen the limitation of foreign 
investment) If a negative list of the limitations  has already been determined, please provide 
the following information: 
 1) specific sector where limitation was newly strengthened,  
 2) specific outline and reason of  the strengthened limitation, and 
 3) the consistence with the WTO commitment.  
(3) (b) If a new negative list has not been determined , Japan would like to be informed of the future 
prospect for the decision. 
III. I
NSTITUTIONAL FRAMEWORK  
B. I NSTITUTIONAL AND LEGAL REFORM  
(Question 2: page 10, paragraph 26) 
The Government report, along with the Secretar iat report (page 65, paragraph 119), states that 
Indonesia made a number of efforts to take measures to protect Intellectual Property Rights, resulting in the downgrading from Priority Watch List status  to Watch List status imposed on Indonesia by 
USTR on IPR-related issues in early 2007. Japan a ppreciates such efforts taken by the Indonesian 
Government. 
(1) Please indicate when the report on IP-relat ed data/activities will be announced, which the 
National Team is now  coordinating.  
(2) Japan would like to be informed of the outlin e of the reports and the specific activities of the 
National Team (which, Japan guesses, is a ‘special task force’).     
IV. T
RADE AND RELATED POLICIES  
B. T RADE DEVELOPMENTS AND POLICY  
2. Tariff policy 
(Question 3: page 19, paragraph 73-78) In response to the request from Japan, the Indon esian Government made commitments on a MFN 
basis to eliminate customs duties, gradually from January 2007 to January 2009, on still image digital 
cameras capable of moving image recording. This type of digital camera had previously been 
classified under the Indonesian national tariff line " 8525.40.30.00"or "Other di gital camera", before 
the entry into force of the new tariff harmonization in Indonesia in January 2007.  
(1) Japan would like to be informed of the current Indonesian national tariff line 
(heading/subheading and its description) of the aforementioned products (still image digital 
cameras capable of moving image recording) under the new tariff classification. 
(2) Please inform the MFN rate of the pr oducts concerned until the year 2009.  WT/TPR/M/184/Add.1 
 Page 17 
 
 
  The Secretariat Report (WT/TPR/S/184) 
II. T RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime 
IV. T RADE POLICIES BY SECTOR  
(5) Services  (ii) Telecommunications 
(Question 4: page 31-33 and 91, paragraph 43-47 and 68) According to the Secretariat report, Japan understood that the Investment Law was officially approved 
by Indonesia’s House of Representatives on 29
th March and was implemented in April 2007. Japan 
also understood that the government of Indonesia has been working to finalize related rules and 
regulations regarding the Law, such as a presi dential decree on business sectors where foreign 
investment is prohibited, and where foreign investment is open under some conditions.  
The telecommunications sector is listed in the "business activity open to investment under the 
condition of a joint venture betw een foreign and domestic invest ors", under Presidential Decree 
No. 118 / 2000.  
Japan would like to know whether or not the govern ment of Indonesia has any plan to remove the 
telecommunications sector from the list for further liberalization. 
(6) Trade Agreements and Arrangements 
(ii) Regional arrangements 
(Question 5: page 25-27, paragraph 26-34) 
Please describe the recent progress in the implementa tion of Indonesia’s ‘behind the border issues’. 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports 
(iii) Tariffs 
(Question 6: page 39-41, par agraph 16, 19, 20, Box III.2) 
As a result of reducing tariff rates of non-agricultural goods, the average applied rate in 2006 is 9.2 %, 
while the average bound tariff rate is 35.8%. Japan is of the view that the gap between the applied and 
bound rates should be improved due to th e significant reduction of predictability. 
Please indicate specific views about this issue. 
(Question 7: page 39, paragraph 16) 
As Indonesia adopted the ASEAN Harmonized Tariff Nomenclature (AHTN), which increased the 
number of tariff lines from 2003 to 2004, the average a pplied tariff rate increased from 7.2% to 9.9% 
in 2004. According to the Government, the reason for this increase is explained as the merging of 
tariff lines with different tariff lines. 
(1) Please explain specific methods in which the Indonesian Government took in the above 
mentioned process regarding the merging of tariff lines with different tariff lines. 
Japan is of the view that the rapid increase in num ber of tariff lines also caused the escalation of the 
simple average applied rate. WT/TPR/M/184/Add.1 
Page 18  
 
 (2) Please indicate Indonesia’s view on how the ra pid increase in number of tariff lines caused 
the increase in the simple average applied rate. 
(Question 8: page 39-40, paragraph 16, Box III.1) 
Indonesia announced a medium-term tariff harmonizati on programme, which aims to move toward a 
‘low and uniform’ tariff rate and specifies the schedule of tariff reduction between 2005 and 2010. 
Please indicate specific schedules of reduci ng tariff rates by 2010 and after 2010. 
(3) Measures Directly Affecting Exports 
(ii) Export taxes 
(Question 9: page 56, paragraph 78) According to the Secretariat report, Japan understo od that the Government started imposing export 
tariffs on raw skins (25%). 
(1) Please explain specific reasons for this export tariff at this juncture. 
Japan is of the view that such imposition of export tariffs possibly retards stable and effective export 
and import of raw skins. 
(2) Please indicate in what terms this export tariff continues to be imposed. 
(4) Measures Affecting Production and Trade 
(iv) Intellectual property rights 
(Question 10: page 64, paragraph 115) Please provide information on the number of cases infringing on intellectual property rights 
(regarding counterfeiting and pirated goods). 
IV. T
RADE POLICIES BY SECTOR  
(3) Mining and Energy (i) Mining 
(Question 11: page 78, paragraph 32) The draft Law of mineral resource and coal is curre ntly under consideration in the Indonesian Diet. 
Japan understood that under the new Law, the Govern ment is reported to consider that refining 
process is required to the enterprise which mines the mineral resource.  
As Japan imports many mineral resources such as nickel, copper and coal from Indonesia, Japan will 
have an interest and concern about  such regulations, if such require ments are posed to  the companies. 
In this light, Japan would like to be informed of the following questions: 
 1) current situation of deliberation in the Diet (timing of passing the draft Law through 
the Diet, schedule of implementing the Law),  
 2) whether or not the refining process is required to the enterprise under the Law, and 
 3) the consistency of such regul ations with the WTO Agreements.  WT/TPR/M/184/Add.1 
 Page 19 
 
 
  (5) Services 
(Question 12: page 84, paragraph 51) 
Japan understood that the government of Indonesi a has introduced a new licensing procedure, 
stipulating that telecommunications services operato rs using foreign satellites should acquire a radio 
station license and a landing right.  
Please provide information on the outline of the new license procedure and on the rules and 
regulations concerned. 
(5) Services 
(ii) Telecommunications 
(Question 13: page 90, paragraph 64 and footnote 30) 
Japan understood that the government of Indonesia has introduced a new scheme for universal service 
under Ministerial Decree No. 11, 2007, and has a dopted an auction system under which those who 
offer the least amount of subsidy will win as successful universal service providers.  
As for this new scheme, please provide information on the following points:  
 1) background of adopting such a bidding system to select universal service suppliers, 
and  
 2) outline of this new scheme. (5) Services 
(iii) Transportation 
(Question 14: page 94, paragraph 77) 
The Secretariat report states, "Government Regul ation No. 20 (1994) allows up to 95% foreign 
investment in shipping ventures". This does not clear ly explain the regulations on foreign investment. 
For this reason, Japan would like to request that the Indonesian government clarify the regulations on 
foreign investment for coastal and ocean-going trades, respectively. 
QUESTIONS BY THE EUROPEAN COMMUNITIES
 
I. E CONOMIC ENVIRONMENT  
(v) Structural reforms 
WTO Secretaria's Report, page 8, para. 21 
The government has prepared different policy packag es related to the investment climate and it has 
taken commendable steps to improve the investment and business environment. The EC welcomes the government's commitment to economic reform. A lthough the policy packages have been subject to 
public consultations, the specific regulatory measures foreseen in them are to a very large degree 
prepared and adopted in a non-transparent manner a nd without any prior public consultation. These 
and other regulations affecting tr ade and investment play an inst rumental role in ensuring that 
economic reform is implemented efficiently taking into account both public policy objectives and the 
wishes/concerns of business and other stakeholders. Th e EC believes that transparency, in the form of 
public consultation, is a key ingredient in ensu ring that policy and regulatory measures meet both WT/TPR/M/184/Add.1 
Page 20  
 
 public policy objectives and the interests and con cerns of business and other stakeholders, while 
paving the way for a wide acceptance and understanding before adoption. [ cf also question 18 ]. 
1. In this context, could Indonesia provide in formation on the specific measures it intends to 
take so as to improve transparency, and in par ticular, consultation with  stakeholders before 
the adoption of regulatory measures?  
II. T
RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(5) Trade Policy Objectives 
Sustainable development 
Indonesia's Report, page 5, para. 1 
2. Could Indonesia provide some information a bout how the issue of trade and sustainable 
development fits into its overall development strategies? Have any particular measures been 
taken since the last Trade Policy Review in 2003? 
Trade and environment  
3. What mechanisms does Indonesia have in place to ensure coordination of environmental 
policy and trade policy? 
Trade and Labour 
WTO Secretariat's Report, page 80, para. 39 
The Report states that the growth in the manufacturing sector was adversely affected by the crisis and 
fell to an annual average of around 5% in 2001-2005 with a corresponding decline in efficiency and 
productivity.  As a result, there were severe job losses in the labour-intensive industries, in particular 
those dealing with textiles, garments and leather manufacturing, footwear, and wood processing.  
4. What steps is Indonesia taking to train, retrain and reskill the labour force with a view to 
expanding industrial sectors in the face of globali sation? How is that incorporated into the 
overall trade and industrial policy? 
5. As well as labour market flexibility, what measu res are being taken to implement core labour 
standards to ensure labour quality and productivity? 
WTO Secretariat's Report, page 4,  para. 8 and page 9, para 22 
The Report notes the view of the World Bank that Indonesia ranks least favourably in the region in 
terms of standard indicators of labour market ri gidities used by the World Bank in international 
comparisons.  It appears that planned revisions to labour laws are stalled as the Government attempts 
to strike a balance between the interests of workers and employers.  
6. How does the Indonesian Government address labour  market rigidities which have been cited 
as one of the main causes of rising unemployment? 
The general revision process being stalled, discussi on nevertheless continued on, inter alia, the law's 
provision on severance payments and the ability of employers to outsource tasks. The EC would like 
to note that a satisfactory resolution of these di scussions would help enhancing confidence in the 
business community, and thus fostering foreign invest ment. In this context, could Indonesia provide 
further details on the expected outcome of these di scussions, in particular, regarding the changes to 
the severance payments and the contr act flexibilities to be introduced?   WT/TPR/M/184/Add.1 
 Page 21 
 
 
  7. Does the Government intend to introduce certa in social safety net so as to reduce labour 
conflict in this context and expedite a mo re balance and pro-business labour reform?  
(6) Trade Agreements and Arrangements 
(ii) Regional Trade Agreements 
WTO Secretariat's Report, page 26, para. 28 
8. When does Indonesia expect to complete its fu ll liberalization schedule within ASEAN? How 
much of the trade in goods would be liberalized by the end of the transition period?  
9. Does Indonesia consider the possibility to incl ude any product in the temporary exclusion 
list? 
WTO Secretariat's Report, page 26, para. 29  
The report states that "Indonesia has submitted updat es on its NTM list together with the relevant 
supporting legislation". 
10. Could Indonesia indicate where this information can be consulted?  
WTO Secretariat's Report, page 27, para. 32  
11. Does Indonesia aim at increasing the number of priority sectors to be considered under the 
framework of AEC?  If so, which ones?  
WTO Secretariat's Report, page 27, para. 33 
The Report states that Indonesia decided in Nove mber 2004 to include 400 products on its list of 
sensitive and highly sensitive goods to be exclude d from the FTA between ASEAN and China. In 
2005, the number was reduced to 351.  
12. Could Indonesia indicate the reason behind includi ng this selected group of products in the 
list of sensitive products?   
13. When have these changes effec tively entered  into force? 
14. Have these changes been formally notified?  
15. Where can the new list for sensitive products a nd highly sensitive products be consulted?  
16. What percentage of tariff lines and trade do th e products covered by both lists – sensitive 
products and highly sensitive products- account for?  
WTO Secretariat's Report, page 27, para. 32 
17. In light of the ongoing bilateral negotiations w ith some key partners, could Indonesia indicate 
how it intends to ensure full consistency and coherence betw een the full implementation of 
ASEAN's schedules and the negotiations of bila teral agreements? How does Indonesia plan to 
ensure the creation of genuine building blocks?  WT/TPR/M/184/Add.1 
Page 22  
 
 (8) Foreign Investment Regime 
WTO Secretariat’s report, page.33, para 46-47 
The Capital Investment Law adopted by the DPR on 29 March 2007 is a milestone in the 
Governments economic reform ag enda by providing a solid basis for improving the investment 
climate. Although the Capital Investment Law sets ou t some key principles, such as equal treatment 
between foreign and domestic investors, its ulti mate success will to a large degree depend on a 
number of implementing regulations. The EC is conc erned that the preparation of these implementing 
regulations is being done in a manner that is running contrary to the spirit of the new law. 
Firstly, the EC considers that the implementing re gulations are being prepared in a non-transparent 
manner without any wider public cons ultation. A number of these regulations will directly affect how 
investors will be treated under the new law, for ex ample the proposed integrated services, a new FDI 
negative list, the future role of BKPM etc.  Without a prior public consultation there is a clear risk that 
implementation of the law will not meet investor expectations of a more  open and business friendly 
investment climate [ cf also question 1 ]. 
18. Could Indonesia provide information on the speci fic measures it intends to take to improve 
transparency, and in particular consultation with stakeholders before the adoption of 
implementing regulations?  
In addition,  the EC is also concerned that new FDI nega tive list will be more restrictive than the 
current one. The EC understands that the new FDI li st will be more extensive since it will reflect in 
more detail the actual regulatory s ituation in Indonesia, thus rendering it more transparent. The EC is 
also aware that there would be objective criteria to determine whether a sector would be closed or 
have restricted access for foreign investment. Nevert heless, the EC has received clear indications that 
a number of sectors see foreign equity limits decreased, for example: 
• Maritime transport: from 95% to 49%. 
• Construction sector: from 95% to 49%. For cons truction consulting the foreign equity cap 
would be reduced to 55%. 
• Satellite and telecommunica tions: from 95% to 35%. 
• Logistics: express delivery services from 49% to  35% and freight forwarders from 96% to 
65%. 
Regulatory measures are also being taken to limit the number of foreign professionals that can work 
in, for example, the financial and broadcasted adver tising sectors. All these actions are contrary to the 
Government's objective of attracting foreign invest ment and will risk negating the positive momentum 
created by the new law. 
19. Could Indonesia confirm that it does not intend to impose a more restrictive foreign direct 
investment regime, by in particular lowering foreign equity thresholds?  
20. Could Indonesia explain more in detail the process and timing foreseen for the completion of 
the negative list as well as other implementing regulations of the new investment law?   WT/TPR/M/184/Add.1 
 Page 23 
 
 
  III. T RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports (i) Customs procedures 
Indonesia's Report, page 11, para. 29 
Setting Customs Reform high on the Government's agenda is essential provided it smoothes the flow 
of goods imported into and exported from Indon esia, limits smuggling and customs fraud and 
improves the customs services. According to the WT O Secretariat's Report (page 37), as part of the 
Investment Climate Policy Package, measures would be taken to accelerate the customs examination 
process through, inter alia, revised regulations relate d to the use of red and green lanes, supported by 
appropriate equipments and technology. Specific target s were also set for the reduction in the use of 
the red lane (down to 10% by December 2006). The Government's Report asserts that the time for 
customs clearance has been greatly reduced. 
21. Could the Indonesian authorities provide deta iled information on the measures taken to 
achieve the objectives described above? 
22. In addition, could Indonesia indicate whether the red lane's targets have been actually 
achieved?  
WTO Secretariat's Report, page 37, para. 12 
A new regulation – the so-called Regulation of the Director General of Customs and Excise 
No. P-07/BC/2007dated 5 April 2007 on Ph ysical Inspection of Imported Goods-  related to the 
physical inspection of imported goods, issued in Ap ril 2007 and effective only a few days later, has 
proven to have contradictory effects with regard to  the stated objective of accelerating the flow of 
goods. A very large number of EC companies have comp lained that the regulation has directly led to 
more than doubled the goods passing the red lane , created severe delays  (between 3 and up to 
14 days) and high costs for inspections, demurrage, storage and rising stock levels (minimum one 
container has to be entirely stripped and unpacked). In  this regard, we would like to recall that before 
such measures are imposed, the Government needs to  ensure that port facilities and infrastructure are 
sufficient so as to not hinder the movement of goods. In addition, the EC understands that a new risk 
assessment system is being put into place. 
23. Could Indonesia provide specific information on what concrete measures are being taken to 
rectify the current situation with excessive  and undue inspection of imported goods? 
24. Could Indonesia explain how risk assessments are carried out and to what extent these 
inspections and risk assessments are in accordance with international standards as set out by 
WTO and WCO (please refer to relevant chapters and articles)?  
(ii) Customs valuation and rules of origin  
WTO Secretariat's Report, page 39, para. 13 
The Report states that "Customs reportedly uses a sc hedule of arbitrary check prices rather than the 
transaction value when assessing duties on certain food imports". 
25. Could Indonesia clarify on what basis the tr ansaction value is refused, and whether these 
practices are in compliance with the provisi ons set out in the WTO Agreement on Customs 
Valuation?  WT/TPR/M/184/Add.1 
Page 24  
 
 26. In addition, could Indonesia indicate which food imports are affected by these practices? 
27. Is Indonesia planning to address this situation?  If so, what measures does Indonesia intend to 
take? 
28. Is Indonesia encountering difficulties in fully implementing the WTO Agreement on Customs 
Valuation? 
WTO Secretariat's Report, page 39, para. 15 
29. Could Indonesia explain in detail the state of play of the process of completing its regulations 
on preferential rules of origin under ASEAN CEPT and the ASEAN-China FTA?  
(iii) Tariffs 
WTO Secretariat's Report, page 41, para. 20 
Indonesia committed to binding almost all of its tariffs at 40%. Textiles and clothing are bound at 
100% whilst the average applied rate is 10.8%.  
30. Does Indonesia intend to bridge the gap between the applied and bound tariffs for textiles and 
clothing? 
(iv) Other charges affecting imports 
WTO Secretariat's Report, page 46, para. 28 Indonesia wishes to boost its exports and improve co nditions for its manufacturing industry. Logistics 
and freight forwarding companies are an important li nk to facilitate the moveme nt of goods in and out 
of Indonesia. 
According to the prevailing VAT regulation - Government Regulation No. 144 year 2000 regarding 
the Types of Goods and Services which are not Subject to Value Added Tax (elucidation of Article 13) 
- freight is not subject to VAT. In practice, ma ny tax auditors are still imposing VAT on invoices 
issued by international freight forwarding compani es, contradictory to what is the case in most 
countries world-wide. Importers in Indonesia are already paying VAT on the landing cost of their goods, which includes the international freight. The application of the law on VAT has thus led to a double taxation. The imposition of VAT on internati onal transport services also imposes a cost burden 
on Indonesian exporters, putting them at a competitiv e disadvantage compared to countries that do not 
undertake this practice. 
31. Could Indonesia clarify whether it intends to adopt international practice and remove VAT on 
international transport services? 
The European Commission and the Government of I ndonesia have agreed on a reciprocal basis not to 
impose VAT on port services for international traffic-  as laid down in Letter from Ministry of Finance 
No. 995/MK.04/1990 dated 20 August 1990. However, c ontrary to this agreement, Indonesia imposes 
VAT on port services (such as terminal and cargo ha ndling services) since 2005. Companies are even 
threatened to be retroactively imposed  VAT on these services since the year 2000. 
32. Could Indonesia provide information on what  concrete measures, and within which 
timeframe, are being taken to exempt port servi ces from VAT and thus normalise the situation 
with regard to the existin g reciprocal agreement?   WT/TPR/M/184/Add.1 
 Page 25 
 
 
  (v) Import prohibitions, restrictions, and licensing 
WTO Secretariat's Report, page 46, para. 30-38 
Indonesia has been progressively eliminating the u se of import licences which is currently limited to 
dangerous materials, explosive oz one-depleting substances,  alcoho lic beverages, salt, propylene 
copolymers, lubricant, clove, textiles and textile  products, nitrocellulose, machines and machinery, 
optical discs, and rough diamonds. 
33. Could Indonesia indicate the timeline for the phasing out of the restrictive import licensing 
regime for these products, including textiles and clothing? 
Under the above-mentioned licensing system, only on e or two import licences have been granted for 
the import of alcoholic beverages and only a limited number of distributors are allowed on payment of 
a substantial fee (at least USD 200.000 per year). We understand that in recent years the volume of 
imports has been severely restricted on a quota basi s and that to date in 2007 there have been no 
imports of alcoholic beverages as the quota has not yet been released.  
34. We would appreciate Indonesia's view, with par ticular reference to the limitations on the 
number of importers/distributors and the ove rall volume that can be imported, of the 
compatibility of this import licensing and quot a system with Indonesia's commitments under 
the WTO. 
WTO Secretariat's Report, page 47, para. 38 
The Report indicates that in 2002 Indonesia in troduced a decree concerning Textile Import 
Arrangements, whereby only companies that have  production facilities usi ng imported fabrics as 
inputs for finished products may obtain import licenses. In addition, all authorized importers must 
seek approval from the Ministry for the amount and time schedule of their imports and must also 
report to the Ministry on a regular basis.  
35. In light of the distortive effects to trade of  these measures, could Indonesia indicate when it 
intends to abolish these requirements? 
Indonesia continues to apply onerous importer's regi stration requirements in order to obtain an import 
licence for textiles. In March 2002, the Minister of Industry and Trade issued a decree requiring 
importers of certain critical products to obtain a special importer identifica tion code number (NPIK) 
and card, including textile and re lated products, in order to stop  large-scale smuggling of these 
products.  
36. Could Indonesia report on the effectiveness of these measures so as to, for instance, halt 
smuggling? 
37. When does Indonesia plan to abolish obligatory importer's registration ? 
(vii) Government Procurement 
WTO Secretariat's Report, page 49, para. 42 
38. Could Indonesia provide statistic s regarding Government Procurem ent contracts attributed in 
2006 (or 2005), if possible in terms of supplie rs (local, foreign), of products, services and 
construction works?  WT/TPR/M/184/Add.1 
Page 26  
 
 The EC welcomes Indonesia's efforts to carry out anti-corruption campaigns, aimed at strengthening 
the institution framework against corr uption, targeting also public proc urement.  However, substantial 
corruption still seems common in many procurem ent processes. Despite being a middle income 
country and being involved in an anti corruption campaign and having participated in the Working Group on Transparency at the WTO, Indonesia is not a signatory of the WTO Government 
Procurement Agreement (GPA) yet.  
39. When does Indonesia plan to adhere to the WTO GPA?  
WTO Secretariat's Report, page 49, para. 43 
40. Are conditions for foreign participation describ ed in this paragraph exhaustive at central 
level? What kind of other local or pr ovincial barriers are usually in place? 
WTO Secretariat's Report, page 49, para. 44 
41. What is the legal/economical basis for excl uding State owned enterprises from government 
procurement regulations? 
WTO Secretariat's Report, page 50, para. 47 
42. When will the draft next procurement law enter into effect? What kind of enforcement 
mechanisms is envisaged?  
43. Has the pilot e-procurement system already been implemented? 
(ix) Standards and other technical requirements 
WTO Secretariat's Report, page 52, para. 56 
Indonesia imposes since March 2005 mandatory standa rds and certification for tyres. The Indonesian 
standards are not in line with the international standard established by the UN/ECE WP 29 and thus 
contrary to Indonesia's obligations under Article  2.4 of the WTO TBT Agreement. Furthermore, 
Indonesia's certification system is excessive and does not recognise certification and testing carried 
out by accredited bodies in other countries. This is  leading to substantial costs to European tyre 
exporters (up to USD 250.000 for a type approval) . In view of finding a mid-term solution, the 
Government has indicated its commitment  to accede to the UN/ECE 1958 Agreement. 
44. Could Indonesia inform about the concrete step s the Government is taking to accede to the 
UN/ECE 1958 Agreement and according to which timeline? 
WTO Secretariat's Report, page 53, para. 59 
We recognise Indonesia's, as every country's, need to protect consumer health and safety when setting 
sanitary and phytosanitary standards, as long as thes e are in accordance with international standards 
and guidelines. Furthermore, we see the enactment  of Ministerial Decree of the Ministry of 
Agriculture No. 482/Kpts/PD.620/8/2006 on "Importati on of Ruminant and its products from country 
or zone infected by bovine spongiform encephalopath y (BSE) into Republic of Indonesia" (foot note 
as well as headline was deleted so it is not clear that  this paragraph regards B SE) as an important first 
step in aligning Indonesia's regulations with the prevailing international standards. However, on 
several points the new Decree deviates from the OIE Terrestrial Animal Health Code. The OIE Code, 
which is based on international scientific evidence, allows a large number of products, including beef 
and beef products, to be traded freely regardless of the BSE status of a country. However, Indonesia  WT/TPR/M/184/Add.1 
 Page 27 
 
 
  continues to ban the import of these products and h as provided no scientific evidence to deviate from 
international standards. Indonesia thus continues to  impose an unjustified, according to its obligations 
under the WTO SPS Agreement, import ban on beef  and beef products from EC countries with 
controlled or undetermined BSE risk.  
45. Could Indonesia provide information on what sp ecific measures it intends to take and within 
which specific timeframe to fully align its regulation with the OIE Code, both in terms of 
which products should be allowed for import and as to the risk assessment methods, so as to 
comply with the WTO SPS Agreement? 
46. What scientific eviden ce can Indonesia present to motivate its application of a more 
restrictive SPS regime, regarding trade of beef  and beef products, than current international 
standards? 
(3) Measures Directly Affecting Exports 
(ii) Export taxes 
WTO Secretariat's Report, page 56, para.78 
In 2005, the Government imposed export tariffs on raw skins (25%), white tanned hides (15%), and 
coal (5%). 
47. On what basis is Indonesia applying the export taxes on raw hides and skins, and on wet blue 
leather? 
48. When does Indonesia intend to  dismantle, these measures?  
IV. T RADE POLICIES BY SECTOR  
(2) A GRICULTURE  
WTO Secretariat's Report, page 71, para. 14 Paragraph 14 indicates that "in 2003 the Government switched from an ad valorem  to a specific tariff 
in order to deal with under-invoicing practices in par ticular. In the case of rice, the tariff was set at a 
specific rate of Rp 430/kg in 2000 (with an ad valorem equivalent at around 30%)." In the course of 
switching from an ad valorem  to specific duty, was the level of duty changed (in ad valorem  
equivalent). 
49. What is the impact of switching from an ad valorem  to a specific duty on import volumes?  
WTO Secretariat's Report, page 72, para. 17 
Indonesia has notified to the WTO its domestic su pport measures as circulated in WTO document 
G/AG/N/IDN/26/Corr.1 of 27 November 2001.  
50. Have any new domestic support programs b een introduced or existing support schemes 
modified after the date of that notification?  
WTO Secretariat's Report, page 72, para. 19 
The Report indicates that "In January 2004, the Government announced that rice imports would be 
banned for six months to protect farmers during the main harvest.  The ban was subsequently 
extended and remains in place as strong harvest s from 2004 to 2006 have reduced the need for 
imports."  WT/TPR/M/184/Add.1 
Page 28  
 
 51. Is this ban still in place and are there any intentions to remove the ban?  
52. In addition, which article in the WTO Agre ement serves as a legal basis for this ban? 
(5) Services 
WTO Secretariat's Report, page 84, para. 49-51 Postal and courier services  
53. Could Indonesia provide more information on th e objective pursued with a draft new postal 
law, and timing expected for the discussion and adoption of such a law?  
54. Could Indonesia confirm that ongoing reforms,  notably with regards to the investment 
negative list, will enable companies to pursue their operations under the current conditions 
that determined their choice to invest in I ndonesia (in particular ownership rules under which 
foreign companies may control 95% stakes in freight forwarding company and 49% stakes in 
courier services)?  
Distribution services 
55. How many people work in the distribution sector and what has been the evolution in the last 
years? 
56. How much of the FDI attracted by Indonesia in  the last years has been in the distribution 
sector? 
57. What is the existing legislation and regu lation applicable to retailing services?  
58. Could Indonesia indicate prospects and timing for the existing framework to be modified 
(including through the Presidential Decree on "The Management and Fostering of Modern 
Markets and Modern Stores")?   
Construction services 
59. Could Indonesia provide information about the ex isting legislation and regulation applicable 
to foreign equity limitations for construction services? Is there any change of existing 
conditions under c onsideration?  
Environmental services 
60. Could Indonesia provide information on whether foreign equity limitations are in place for 
environmental services, including wastewater and waste management services and remediation services?   
(i) Financial services 
WTO Secretariat's Report, pages 85-86, para. 55 61. Could Indonesia provide additional explanations on plans for privatisation in the financial 
sector? 
62. Could Indonesia provide additional information on plans for new limitations on expatriate 
jobs in the financial sector, and on the cross-border supply of supporting services?   WT/TPR/M/184/Add.1 
 Page 29 
 
 
  63. Could Indonesia please provide an update on the state of play in regard to its planned new 
insurance law, and its plans for estab lishing a financial supervisory agency? 
(ii) Telecommunications 
WTO Secretariat's Report, page 90, para. 65 
64. Could Indonesia confirm whether the provision of universal service includes also the 
provision of mobile services?  
65. How many foreign services providers are currently present in Indonesia? 
66. Could Indonesia provide some detailed inform ation on the framework for granting licenses 
for the provision of satellite services?  
67. Is it among Indonesia's objectives to encourage the provision of satellite services by foreign 
operators? 
68. Could Indonesia indicate whether legislative or  regulatory changes are considered at present 
for the provision of satellite and/or other telecommunication services? If yes, does Indonesia 
consider that existing licenses, notably foreign, could be affected?  
WTO Secretariat's Report, page 91, para. 69 
69. Could Indonesia provide more information on the type of tariffs increase that it has attempted 
to set?  
WTO Secretariat's Report, page 92, para. 71 
70. Could Indonesia provide explanations on its decision to limit the number of VoIP service 
providers? 
WTO Secretariat's Report, page 93, Box IV 
71. Could Indonesia clarify further the statement (source: Ministry of Industry and Trade and DG 
for Telecommunications RI) that "It is clear th at Indonesia's fixed-line policy is more liberal 
than its commitments under the GATS"? 
(iii) Transport WTO Secretariat's Report, page 94, para 77-78 
Government Regulation No. 20 (1994) allows up to 95% foreign investment in shipping ventures. 
However, it is understood that pursuant to a letter of  the Minister of Communications addressed to the 
Capital Investment Coordinating Board (B KPM) (No. PM.303/2/5/ PHB-2005 dated 
19 August 2005), the 95% limit is be ing revised downwards to 49%.  
72. Could Indonesia confirm and clarify the le gal situation concerning this initiative? WT/TPR/M/184/Add.1 
Page 30  
 
 International practices demonstrat e that Terminal Handling Charges,  for moving containers between 
container terminals and ships, are levied on a commercial basis and correspond to the services 
rendered in order to reflect the true costs of us ing port facilities. It is understood, however, that 
Indonesia considers a regulatory role is necessary in the setting of Terminal Handling Services.  
73. Could Indonesia explain its position? 
(iv) Tourism 
WTO Secretariat's Report, page 96, para 81-82 
74. How much of the FDI attracted by Indonesia in the last years has been in the tourism sector? 
75. Could Indonesia describe the existing plans to promote the tourism sector, and what measures 
the government is taking to ensure effective non-discrimination of foreign services suppliers? 
76. Could Indonesia explain its plans for improving professional education a nd training related to 
the tourism sector? 
77. Could Indonesia elaborate on its assessment of the effect of the tourism sector in overall 
economic growth and employment, and in particular in other economic sectors like 
construction, transport, computer serv ices, education and professional training? 
78. What is the existing legislation applicable to tour managers (professionals accompanying 
groups of tourists in their travel through the country) and tourist guides? What plans is the 
government considering to reduce or eliminate discrimination of foreign services suppliers in 
these fields? 
FOLLOW-UP QUESTIONS BY THE EUROPEAN COMMUNITIES
 
Question 1: 
Indonesia affirms that they hold in-depth discussion s with stakeholders at all stages and processes of 
the regulatory reform. Could Indonesia describe mo re in detail how this process is conducted, for 
instance in terms of the format followed and if a formalised process is undertaken? Does this process 
also involve the foreign businesses? 
Question 6: 
Considering that the draft regulation on severance payment has been publicly rejected by all parties on 
the labour market and that the Government's recen tly issued policy package on economic reform does 
not contain any efforts to revise current labour market legislation, what steps and under what 
timeframe does Indonesia intend to improve the labour market rigidities, which are pointed out as one 
of the obstacles to creating a conducive invest ment climate and to reducing unemployment? 
Question 8: 
Since the cash transfers are meant to  be a safety net for people below the poverty line, in what respect 
can they be said to help preventing labour conflicts?  WT/TPR/M/184/Add.1 
 Page 31 
 
 
  Question 11: 
Could Indonesia's NTM list be obtained from Tim Ta rif dan Bea Masuk (Team for Tariff and Import 
Duty) as of today? Could this information be consulted online?  
Question 12: 
We would like to pose again this question since th e text provided was not answering our question. 
Question 19: 
Could Indonesia provide a more detailed account of  how this public consultation takes place? For 
example, could Indonesia indicate how well in advance before issuing of a new regulation the consultation is undertaken – in this regard, we note that some domestic business associations 
complain that for very complex issues they someti mes get only a few days to prepare a position. In 
addition, could Indonesia indicate whether the drafts of regulations are publicly available, and if so, 
where they can be obtained? Could Indonesia confirm which Ministries have launched online consultations?  
Question 20: 
Could Indonesia confirm that foreign ownership th resholds in the mentioned sectors will not be 
decreased? 
Question 21: 
Could Indonesia elaborate further on which stakehol ders are being involved in the discussions? Has 
the general public been able to have their say on the investment law? Since the law aims for equal 
treatment of domestic and foreign investors, to wh at extent has the foreign business community been 
involved in this consultation process? 
We have also received clear indications that the Ca pital Investment Co-ordinating Board (BKPM) will 
maintain its approval function in that foreign inv estments have to go through verification before 
applying for a business license. Coul d Indonesia clarify the intended ro le of BKPM in the investment 
initialising process? Will investors be obliged to go through one-stop shops in order to start up their 
investments or will this be an optional exercise? 
Question 23: 
Could Indonesia provide us with an approximate fi gure regarding the percentage of total goods which 
currently pass through the red lane?  
Question 24: 
Could Indonesia describe what measures are undertaken  to oblige the port operators to have adequate 
facilities to ensure that the enactment of the new customs law and subsequent regulations are done 
without disrupting the smooth flow of goods or delaying customs clearance processes (such as storage 
facilities, number of container x-ray scanners etc.)? 
Question 25: 
Could Indonesia describe in more detail how the current customs regulations are in line with WTO 
and WCO practices? For instance, even for low ri sk importers with low risk goods, the physical WT/TPR/M/184/Add.1 
Page 32  
 
 inspection rate is 10%, meaning that at least one whole container has to be unloaded and inspected 
according to the latest regulation. 
Question 32: 
Although the VAT is applied to a whole package of ser vices, this is still contradictory to international 
practices. Does Indonesia intend to revise existing VAT laws with a view to r ectifying this situation? 
Questions 34 and 35: 
Indonesia seems to invoke the public morals exception of GATT to justify the restrictions on imports 
of alcoholic beverages.  However, in terms of import for tourist needs and foreigners living in 
Indonesia , what are the grounds for considering that a qua ntitative restriction implemented through an 
import licensing system as the one described is necessary for the protection of public morals in 
Indonesia in the sense of Article XX(a) GATT?  
What are the criteria applied for the definition of su ch restrictions, in terms of decision of available 
quotas for each year? We note the fact that there have been no imports to date in 2007 . This raises our 
concerns that there may be a de facto quantitativ e restriction which would be contrary to GATT 
Article XI (and Article 4.2 of the Agreement on Agriculture).  
Question 42: 
Could Indonesia clarify in what way unfair practi ces and conflicts of interests are avoided by 
excluding state-owned enterprises from government procurement regulations? 
Question 45: 
Since the accession to the UN/ECE 1958 Agreement does not automatically mean that relevant 
chapters of the Agreement have to be chosen imme diately. Could Indonesia elucidate if tyres will be a 
priority chapter to adopt of the UN/ECE Agreement? 
Question 46: 
According to existing regulations, beef can be im ported from countries with negligible BSE risk as 
well as from countries with controlled BSE risk but from zones with negligible BSE risk. 
Furthermore, we consider this is a violation of the WTO SPS Agreement, since it allows trading of 
almost all beef products with negligible, cont rolled or undetermined BSE risk. Could Indonesia 
confirm that it will not make the mentioned regulatio ns even stricter, since Indonesia's reply stipulates 
that only beef products from countries declared free from BSE (which according to the OIE code is 
not equal to negligible BSE risk) can be imported into Indonesia? 
Question 47: 
Could Indonesia refer to its scientific evidence wh ich has to be submitted in case the import regime 
should be stricter than envisaged in the WTO SPS Agreement? Where such scientific evidence could 
be obtained? 
Question 54: 
Could Indonesia elaborate on whether the creation of fair competition also includes providing more 
opportunities for private players to enter the postal market?  WT/TPR/M/184/Add.1 
 Page 33 
 
 
  Questions 55 and 59: 
As requested already in the follo w up remark to question 20, could Indonesia confirm that foreign 
ownership thresholds in the men tioned sectors will not be decreased? 
Question 63: 
In what way does the introduction of the Bank of Indonesia Regulation 9/8/PBI/2007 create more 
flexibility for domestic banks which are controlle d by non-nationals, fore ign bank branches and 
foreign bank representative offices, to use foreign professionals? 
Question 64: 
We would like to repeat this qu estion given that the reply provided  refers to liberalisation of the sector 
instead of the plans of establishing a financial supervisory agency. 
Question 73: 
Indonesia explains that the Ministry of Transporta tion's policy with regard to foreign participation 
being capped at 49% is permissible despite Gove rnment Regulation No. 2C (1994) establishing a 
ceiling of 95%. The EC does not consider that th e arbitrary interpretation of this Government 
Regulation by different Ministries offers an accepta ble environment in which foreign investors can 
provide services. In addition, it do es not seem compatible with the spirit of the new capital investment 
law to render the business climate more transparent and accountable for foreign investment. The EC is 
interested to be kept fully inform ed on developments in this respect. 
In addition, press reports from June 2007 indicate that  the Minister of Transportation has welcomed 
an initiative by PT Pelabuhan Indonesia (Pelindo) to buy  back a 51% stake in PT  Jakarta International 
Container Terminal (JICT) from a Hong Kong bu siness group, Hutchison Port Holdings (HPH) 
Group, despite the latter's unwillingness to sell their st ake. Can Indonesia explain how such a policy is 
compatible with the Ministerial Decision of 15 April 1994 on negotiations on Maritime Transport 
Services (confirmed by the Decision on Maritime Transport Services of 28 June 1996), in respect of which WTO Members have undertaken to apply a sta ndstill provision to the maritime sector in order 
not to make market access more restrictive? 
The EC seeks reassurance that Indonesia will not restrict further market  access to the maritime 
transport sector, especially in light of the Minist ry of Transportation's policy initiative to develop 
25 international ports over the next few years in orde r to facilitate the country's growing foreign trade. 
QUESTIONS BY HONG KONG, CHINA
 
Anti-dumping (AD) 
(WT/TPR/G/184, P. 13-15, Paras. 39-50; and WT/TPR/S/184, P. 25, Para. 25) 1. We note that "Indonesian Government has take n serious steps to respond to allegations of 
dumping by foreign government against Indonesia exports".  We are interested to know what 
specific steps the Indonesian Gove rnment has taken in such cases.  
2. In relation to the stance of Indonesia on the current WTO regime on AD, we note that while it 
has expressed concern about certain implem entation issues of AD, its position on the AD 
negotiations under DDA was not mentioned in the G overnment Report, unlike what it did  for  WT/TPR/M/184/Add.1 
Page 34  
 
  other major DDA subjects.  Would Indonesia share with us its position on the AD 
negotiations under DDA? 
Investment 
(WT/TPR/S/184, P. vii - viii, Para. 8; and P. 33, Para. 46) 3. We note that a new legislation was submitted to the Indonesia’s parliament in March 2006 to 
further liberalise investment and it is expected that the legislation would be enacted in 2007.  
The objectives of the legislation include shorte ning the "negative list" of sectors whereby 
foreign investment is prohibited, and resolv ing regulatory overlaps between central and 
regional authorities.  Grateful for an update on the latest development. 
Financial Services - Banking 
(WT/TPR/S/184, P. 88 - 89, Para. 60 & Table IV .12) 
4.  It is stated in the Secretariat Report that fo reign interest in the banking sector has been strong 
and by end 2005, foreign investors owned an  estimated 40% of Indonesia’s banking sector 
assets.  We would like to know Indonesia’s exis ting regime for foreign provision of banking 
services via modes 1 and 3, particularly whether improvements have been made in 
comparison with the level of commitments undertaken in its existing GATS schedule of 
specific commitments.   
Financial Services - Insurance (WT/TPR/S/184, P. 89, Para. 61) 
5. As noted from the Secretariat Report, foreign insurance companies can hold up to an 80% stake 
in a local insurance company in Indonesia,  whereas with respect to Indonesia’s GATS 
commitments, entry limitations are accompanied by restrictions on foreign equity below the level 
of the status quo.  We would like to know the prospect for Indonesia to bring its GATS 
commitments on insurance services in line with its mo re liberal regime in its future offers for the 
current round of services negotiations. 
Telecommunications Services (WT/TPR/S/184, P. 90 - 91, Paras. 65 & 68) 
6. As set out in the Secretariat report, pursu ant to the extensive reforms undertaken in the 
telecommunications sector in the past few year s, majority foreign ow nership is allowed for 
basic telecommunications services, and there is  very little that would impede a foreign 
investor from entering the Indonesian valued -added telecom market.  Would Indonesia 
consider reflecting its liberalisation efforts in the sector in its future services offers, 
particularly in terms of the reduced forei gn equity limitations and an expanded scope of 
value-added services?  WT/TPR/M/184/Add.1 
 Page 35 
 
 
  QUESTIONS BY AUSTRALIA  
II. T RADE POLICY REGIME  
(6) Trade Agreements and Arrangements  (i) Multilateral agreements 
Outstanding Notifications 
The report by the Secretariat notes (WT/TPR/S/184, page 22, paragraph 21) that for the period under 
review, Indonesia has not submitted the notifica tions required under the Agreement on Agriculture. 
Notifications are important to the WTO membership in terms of both transparency and Member’s obligations.  
Can Indonesia confirm that for the period under re view, there were no changes to policies or 
administrative arrangements that required ad hoc  notifications to be submitted to the WTO under the 
Agreement on Agriculture? 
Indonesia has not submitted a domestic support notif ication for the years 2001, 2002, 2003, 2004 and 
2005. When will Indonesia provide WTO members with an opportunity to review its domestic support 
notification for these years? 
Indonesia has not submitted a market access notification for the years 2001, 2002, 2003, 2004 and 
2005. When will Indonesia provide WTO members with an opportunity to review its market access notification for these years? 
(8) Foreign Investment Regime 
Investment environment 
Indonesia has made commendable progress in consolida ting democratic and political reforms, and has 
generated strong macroeconomic performance in re cent years. The Government released three well-
targeted policy reform packages in 2006 covering in frastructure, investment and the finance sector, 
and held its second Infrastructure Conference in November 2006. Australia supports the Indonesian 
Government’s efforts to invigorate its investment  environment and deliver gains in infrastructure 
development, employment genera tion and poverty elevation.   
What are the next steps in the refo rm process? What is planned in relation to labour market reform? Is 
the Indonesian Government planning revis it the planned revision of labour laws?   
Australia remains concerned that new draft mining legislation may create legal uncertainty for current 
and future foreign investors in the Indonesian mi ning and resource sector. Draft provisions that would 
replace existing Contracts for Work with a mu ltiple licensing system could create legal and 
operational uncertainty, particularly for existing ope rators. Furthermore, proposed provisions dealing 
with forestry, land rehabilitation and the revo cation of undeveloped oil and gas licences will 
potentially create operating uncertainty and place a dditional financial burdens on investors.  
When is the mining law expected to be finalised? What licensing will be required? How will the new 
legislation interact with envir onmental and forestry laws? Will the new law insist upon in-country 
processing of extracted resources? Will existing r esource lease holders be required to divest 
undeveloped concessions? Would Indonesi a consider retaining existing Contract for Work schemes in 
any revision of its mining legislation?  WT/TPR/M/184/Add.1 
Page 36  
 
 Australia has an expectation that any revisions to  the Negative Investment List (NIL) are aimed at 
invigorating Indonesia’s investment environment.  How does Indonesia propose revising the NIL to 
open new sectors to foreign investment? Can Indonesi a confirm that there are no planned additions to 
the list or sectoral regulations th at may limit foreign investment? 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports 
(iii) Tariffs 
Tariff Harmonisation Program 
Australia notes from the WTO Secretariat report (WT/ TPR/S/184, page 39, para graph 17 and page 71, 
paragraph 13 and table IV.4) that the first phase of Indonesia’s Tariff Harmonisation Program, 
announced on 1 January 2005, increased tariffs on 96 tariff product lines and decreased tariffs on 143. 
Tariffs on some horticultural product lines – such as mandarins, carrots and potatoes – increased from 
5 per cent to 25 per cent, impacting on Australia n exports of these goods. Tariff increases under the 
Program have not always reduced imports. For exam ple, Indonesian statisti cs indicate that the total 
mandarin imports for 2005 increased by 24 per cent.  
Is Indonesia planning to review changes introduced  under tariff harmonisation prior to their scheduled 
elimination in 2010? If so, what would be the scope  of such a review and will bilateral trading 
partners be consulted? 
(vii) Government procurement 
Government procurement relating to forest products 
The Secretariat report notes that Indonesia has revise d its government procurement regime to increase 
domestic sourcing, reduce corruption and bring its pr ocurement framework into line with international 
public procurement practice (WT/TPR/S/184, page ix , paragraph 16). Could Indonesia please provide 
details and criteria of any g overnment procurement policies relating to forest products? 
(ix) Standards and other technical requirements  
Regulations relating to the import of agricultural products Australia notes the section of the Secretariat re port (WT/TPR/S/184, page 53, paragraphs 59-70) 
regarding Sanitary and Phytosanita ry regulations.  Australia rec ognises its close relationship with 
Indonesia on agricultural and biosecurity issues.  Australia is, however, concerned about the 
introduction of new regulations restricting access for pr oducts that Australia has a long term history in 
exporting to Indonesia. While recognising Indonesia’ s sovereign rights to protect its population from 
unsafe food products and pests and diseases of qua rantine concern, the introduction of such 
regulations has the potential to undermine agricultu ral exporter confidence in the Indonesian market. 
In particular, Australia notes the new import regula tions for meat and edible offal products. The new 
regulations, established for food safety reasons, halted the well-established bilateral trade in a range of 
offal products. Australia has, as a part of its advocacy  efforts on this issue, sought clarification on 
means to resolve this trade impass e and allow trade in these products to resume. Can Indonesia advise 
of plans to review these import regulations, including timing? 
Australia is also concerned about proposals fo r new regulations governing food safety issues for 
products of plant origin. Such regulations, if intr oduced, have the potential to significantly affect 
Australian exports of the wide range  of plant products, including hortic ulture and grains. Australia has  WT/TPR/M/184/Add.1 
 Page 37 
 
 
  a long history as a supplier of high-quality, safe food and agriculture products to Indonesia. Can 
Indonesia outline its rationale for these regulations, its intentions in relation to the timing of 
introduction and potential exclusion of suppliers? 
IV. T RADE POLICIES BY SECTOR  
(2) Agriculture and Forestry 
(ii) Main developments 
Medium-Term Development Plan 
Indonesia’s Medium-Term Deve lopment Plan (MTDP) 2004-09 (WT/TPR/S/184, page 71, 
paragraph 11) identifies the main constraints to grow th in the agriculture sector. As part of the MTDP, 
the Indonesian Government has initiated a plan to re vitalise the agriculture sector with the objective of 
achieving annual average growth of about 3.5 per cent during 2004-09 and increasing the incomes and 
well-being of farmers. 
Has Indonesia undertaken any analytical studies to asses s the constraints to growth in the agriculture 
sector? If so, what were the conclusions of these st udies? Can Indonesia please provide Australia with 
more detail on the plan to revitalise the agriculture sector including any policy or legislation 
developments? Australia notes that the agriculture  sector’s share of GDP has decreased annually since 
2004. Can Indonesia please inform Australia of ch anges in average farm incomes over the period 
since the plan was implemented? Is Indonesia under taking a mid-term review or evaluation of the 
plan?  
Australia notes that Indonesia considers high depe ndence on rice consumption to be one of the main 
constraints on growth in the agriculture sector  (WT/TPR/S/184, page 71, paragraph 11). Can 
Indonesia please explain how high dependence on ri ce consumption constrains growth in the 
agriculture sector? 
(iii) Selected items 
The Secretariat report notes that, at the end of the 1990s, BULOG’s mandate to stabilize prices and 
monopoly powers were removed (WT/TPR/S/184, page 73, paragraph 21 and page  75, paragraph 22).  
Can Indonesia outline how the role of BULOG has ch anged? What is BULOG’s current role in the 
international purchase and procuremen t of rice and other commodities? 
QUESTION BY CANADA  
Report by the Government (WT/TPR/G/184) 
Part IV – Trade and Related Policies, (B) Tr ade Developments and Policy, (5) Non-tariff 
measures, paragraph 85, page 20 
Canada notes that Indonesia intends to introduce a compensation tax to be paid by mining and logging 
companies which is related to environmental damage and also to finance re-forestation, which will be 
implemented by local communities. 
1. Would Indonesia please provide Canada with mo re information regarding the planned tax, 
including details related to objectives, rationale  and implementation, as well as a timetable for 
its introduction? WT/TPR/M/184/Add.1 
Page 38  
 
 Part IV – Trade and Related Policies, (C) Se ctoral Policies, (3) Oil, gas and minerals, 
paragraph 100, page 23 
2. (a) Could Indonesia please provide information regarding new regulations in place,or any 
being planned, which address mi ning and environmental issues? 
(b) Is there a requirement to conduct an environmental assessment of proposed mining 
projects in place or under consideration?  
(c) If 'yes', which level of government conducts such assessments? (d) Could Indonesia also provide informati on regarding the criteria utilized in the 
assessment? 
(e) Could Indonesia please explain the appro ach, including measures used, to protect an 
environment around a mining site or area. For example, how does Indonesia provide 
for protection of land, water, etc. around a site or area? 
(f) Do laws or regulations exist which re quire reclamation of mined-out sites?  
(g) If 'yes', what party/parties are required to pay the costs associated with a reclamation? 
Report by the Secretariat (WT/TPR/S/184) 
Part II - Trade Policy Regime: Framework and Objectives; (8) Foreign Investment Regime, 
paragraph 44, page 31 
The Report by the Secretariat st ates that "A Presidential Decree in 2000 (Keppres No. 118/2000) 
updated the classification of restricted investment sectors under: sectors that are totally closed to 
investment, both domestic and foreign; sectors that  are closed completely to foreign investment; 
sectors that are open to foreign investors but with the requirement that the foreign investor setup a 
joint venture with an Indonesian entity; and sector s that are open to foreign investment but with 
specific requirements. (Table II.4)"  
3. (a) Could Indonesia please indicate how often the negative list is reviewed? 
Additionally, Canada would like further informa tion on the conditions for joint ventures between 
foreign and domestic investors.  
(b) Is there a specific percentage of domestic equity participation required?  
(c) If so, does this vary by sector?  (d) Are there any other conditions for joint ventures?   
Part III - Trade Policies and Practices by Meas ure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 121, page 65 
Canada notes that, according to the Secretariat Report under the Patent Law, "the term of [patent] 
protection remains 20 years with a possible two-year extension".   
4. Could Indonesia please explain on what grounds such an extension would be granted?   WT/TPR/M/184/Add.1 
 Page 39 
 
 
  Part III - Trade Policies and Practices by Meas ures, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 122, page 65 
In light of comments in the Secretariat Report th at "the standards for excluding from patentability 
inventions that are contrary to the public interest appear broader than the st andards enumerated in the 
TRIPS Agreement."  
5. Could Indonesia please provide additional informatio n regarding public interest exceptions to 
patentability in Indonesian law in light of Article 27 of TRIPS? 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 122, page 65 
Canada notes that, according to the Secretaria t Report under the Patent Law "an inventor must 
physically produce a product or utilize a process in Indonesia in order to obtain a patent for the 
product or process." 
6. (a) Could Indonesia please provide additional information regarding this requirement in 
light of the provisions of Article 27 of TRIPS? 
(b)  Is continued production or utilization of  a patent in Indonesia a condition for 
maintaining a patent after it is granted?   
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 121 and 123, pages 65 and 66 
The Secretariat Report states that the "use of an i nvention by a third party before the granting of a 
patent, including the period during which an ap plication is under review" does not constitute 
infringement.  On the other hand, the Secretariat Report also states that "[u]nauthorized use of a product or process invention that is the subject  of a pending application constitutes patent 
infringement". These two statements appear contradictory.  
7. Could Indonesia please clarify if the use of inventions before the granting of a patent 
constitutes patent infringement? 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 123, page 66 
The Secretariat Report states that "[t]he import of patented products or goods made under a patented 
process does not constitute infringement."  
8. Could Indonesia please provide additional informa tion regarding this measure particularly in 
light of the provisions of Article 28 of TRIPS?  
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 123, page 66 
The Secretariat Report states that "[l]aw No. 14/2001 stipulates that infringers of patent rights may be 
imprisoned for up to four years and may be fined up  to Rp 500 million.  Infringers of small patents 
may be imprisoned for up to two years and fine d up to Rp 250 million.  Anyone, including patent 
consultants and officers, who divulges information on patent applications may be imprisoned for up to 
five years."   WT/TPR/M/184/Add.1 
Page 40  
 
 9. Could Indonesia please provide additional info rmation regarding what kind of infringement 
would qualify for this kind of enforcement and whether there are also civil remedies available 
to rights holders that would permit them to sue for infringement and to obtain damages and 
injunctions? 
Part III - Trade Policies and Practices by Meas ure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 125, page 66 
Canada notes that, according to the Secretariat Repor t the trade mark law "provides for the protection 
of well-known marks, but offers no administrative procedures or legal grounds  under which legitimate 
owners of well-known marks can cancel  pre-existing registrations".  
10. Could Indonesia please provide additional informat ion regarding this requirement in light of 
the provisions of Article 16 of TRIPS?  
Part IV -Trade Policies by Sector, (3) Mining and Energy, (i) Mining, paragraph 32, page 78 
The Report notes that there exists a high level of legal uncertainty for investors and operators linked 
to domestic challenges in implementing a new re gulatory framework.  As a result, exploration 
spending by mining companies has declined 90% since 1997. 
11. (a) Does Indonesia have any new initiatives or measures planned which are intended 
to foster greater certainty for firms? 
Canada has learned that Indonesia intends to re-direct central government authority over the mining 
sector entirely to the provincial governments.   
(b) Could Indonesia please indicate whether this  change is planned and, if so, when it is 
expected to occur? 
Canada understands that Indonesia may require mi ning companies to put aside a part of their 
production for the domestic market to ensure dom estic supply at affordable prices, utilizing an 
approach similar to that which exists for crude palm oil.   
(c) Could Indonesia please confirm if this appr oach is to be adopted, the details of the 
measure if planned, including timing for its introduction? 
(d) Does Indonesia's regulatory framework inco rporate the subject of mining safety in 
any laws or regulations?  If 'yes', can Indonesia please provide details, including 
which level(s) of governments are authori zed to establish these laws and regulations? 
Further, what enforcement strategy is utilized? 
Part IV - Trade Policy by Sector; (3) Mining and Energy (ii) Energy, paragraph 35, page 79 
The Report by the Secretariat states that "In Oc tober 2001, the House of Representatives passed a new 
oil and gas bill to liberalize the sector" and that "The Government is aiming to boost investment and 
production and, the major regulatory changes introdu ced since 2001 are an important step in this 
regard.  Foreign firms have entered the oil ma rket, particularly in exploration and production
1, and 
private companies are now allowed to open retail outlets for fuel; Pertamina's monopoly on importing 
and distributing fuel has been lifted, and refining, storage, and transport have been liberalized."   
                                                           
1 Amongst these are the China National Offshore Oil Corporation (CNOOC), Italian firm ENI, Petronas of 
Malaysia, and U.S.-based companies Unocal, Conoco Phillips, and ExxonMobil.  WT/TPR/M/184/Add.1 
 Page 41 
 
 
  Canada notes that in many sectors the Indonesian ma rket is liberalized (e.g. 2001 new law on Oil and 
Gas) and that Indonesia has been branding itself as open for business.  However, Indonesia has 
offered very limited commitments for energy services in its current GATS offer. 
In particular we highlight the importance of t echnical testing and analysis services (CPC 8676), 
services incidental to mining (CPC 883) and rela ted scientific and technical consulting services 
(CPC 8675). 
12. In this light, could Indonesia please indicate whether it will be taking steps to bind its 
domestic regime for energy services under the GAT S?  If not, could Indonesia please explain 
why?  
Part IV - Trade Policies by Sector; (5) Services;  (i) Financial Services; paragraph 52, page 84 
Paragraph 52 indicates that Indonesia has bound its multilateral commitments under the GATS at less 
than status quo in the financial sector.  Cana da notes that Indonesia has entered the following 
headnote in its banking commitments:  "Limitation on national treatment in term s of taxation which is 
specified in Horizontal Measures is not applied on the Banking Sub-sector." 
13. Could Indonesia please clarify whether there are special tax rules that apply to Indonesia’s 
financial sector? 
Part IV - Trade Policies by Sector; (5) Services;  (i) Financial Services; paragraph 55, page 85 
Paragraph 55 states that the Government has conti nued its agenda for economic reform with plans to 
strengthen the financial sector. 
14. Could Indonesia indicate whether it is curren tly considering allowing foreign insurance 
branches to operate in the Indonesian insurance sector? 
Part IV - Trade Policies by Sector; (5) Services; (i) Financial Services;  (a) Banks, paragraph 58, 
page 87 
Paragraph 58 indicates that Bank Indonesia has take n steps towards fully co mplying with the Basel 
Core Principles and has plans to gradually im plement the revised capital framework for banks 
(Basel II). 
15. (a) Could Indonesia provide an overview of its current capital requirements for foreign 
bank branches and joint venture banks? 
Paragraph 58 also states that Bank Indonesia rele ased the Indonesian Banking Architecture plan in 
2004, which sets out the direction and structure of the Indonesian banking system over the next 5-10 years. 
(b) Could Indonesia indicate whether the Ba nking Architecture plan may result in any 
changes to Indonesia’s existing ATM regime?  
Part IV - Trade policies by Sector, (5) Services,  (ii) Telecommunications, paragraph 71, page 92 
The Secretariat notes that the Government of Indon esia has chosen to restrict entry for Voice over 
Internet Protocol (VoIP) to five companies. 
16. (a) Could Indonesia explain why it has limited entry for VoIP providers? WT/TPR/M/184/Add.1 
Page 42  
 
 (b) Does Indonesia intend to examine and/or  remove this limitation in future? 
Part IV - Trade Policies by Sector, (5) Serv ices, (iv) Tourism, paragraph 82, page 96 
The Secretariat Report states that th e Government of Indonesia is also  involved in travel agencies and 
local hotel groups.  
17. (a) Could Indonesia please explain the nature of such involvement is?  
The Secretariat Report also notes that the Indonesian  Culture and Tourism agency has overall control 
over the promotion of tourism.  
(b) Could Indonesia please explain the agency's scope of control is? 
Other questions
 
Environmental Services 
18. (a) With respect to environmental services,  Could Indonesia please explain if foreign 
service suppliers are currently allowe d to operate in the market?   
(b) If so, for what activities? (c) If not, are there any plans for liberalization in the future? 
Engineering services 
With respect to Engineering services, Indonesia' s GATS Schedule of Specific Commitments includes 
limitations on market access for the cross-border supply of services (Modes 1/2) such that the 
following services are unbound for government-funde d projects: advisory and consultative 
engineering services (CPC 86721) and engineering design services for industrial processes and production (CPC 86725).   
Could Indonesia please elaborate on the definition of "government-funded projects" that are unbound 
under their GATS market access commitments, and pr ovide examples of these types of government-
funded engineering projects that have been carried out in Indonesia? 
FOLLOW-UP QUESTIONS BY CANADA
 
Engineering services Original Question
 
With respect to Engineering services, Indonesia' s GATS Schedule of Specific Commitments includes 
limitations on market access for the cross-border supply of services (Modes 1/2) such that the 
following services are unbound for government-funde d projects: advisory and consultative 
engineering services (CPC 86721) and engineering design services for industrial processes and production (CPC 86725). 
1. Could Indonesia please elaborate on the defi nition of "government-funded projects" that are 
unbound under their GATS market access commitments, and provide examples of these types 
of government-funded engineering projects that  have been carried out in Indonesia?  WT/TPR/M/184/Add.1 
 Page 43 
 
 
  Reply  
The project activity is fund by government in partial.   
Follow-up Question:  
Is there a prescribed percentage share of governme nt funding defined to qualify a project as a 
"government-funded project"? What is the overa ll volume of projects that are considered 
"government-funded projects" in the construction and engineering services sectors per year? 
QUESTIONS BY BRAZIL  
1) In document WT/TPR/S/184 paragraph 122, it is stated that the standard for excluding from 
patentability inventions that are contrary to the public interest appears broader than the 
standards enumerated in the TRIPS Agreement."  Brazil will be interested in the view of the 
Indonesian on this issue?  
2) Paragraph 122 mentions the existence of a "re quirement that an inventor must physically 
produce a product or utilize a process in Indonesia in order to obtain a patent for the product 
or process". Does the Indonesian Government sh are the view contained in the Secretariat 
Report on this issue?  
3) Could Indonesia please inform whether cases of misappropriation of biodiversity by the 
granting of patents have been identified? Are there remedies in Indonesian legislation to 
prevent the occurrence of such cases? 
4) Could Indonesia indicate its views on access and benefit-sharing regarding patents of 
pharmaceutical products and processes based on the use of viral material? 
5) Are there cases in which Indonesian exports have been denied access to foreign markets as a 
result of the undue registration of Indonesian common names abroad? 
QUESTIONS BY KOREA  
I. T RADE POLICES AND PRACTICES BY MEASURE  
Delays in Customs Procedures and Lack of Transparency of Customs Authorities 
(WT/TPR/S/184 p.37 para. 12) 
• Minor discrepancies between the description of goods in customs' declaration papers and the 
goods themselves frequently result in delays in th e customs process in Indonesia. In addition, 
there have been delays in the customs process w ithout clear explanation of the reasons of the 
delays by the customs authorities. These delays bring about additional costs to exporters. As a 
result, this lack of transparency in the cu stoms procedures acts as a burden to exporters.  
• Korea hopes that Indonesian customs clearance procedures would be more efficient and 
transparent. In this respect,  does the Indonesian government have any plans to make the 
customs procedures more efficient by enhancing transparency and streamlining the procedures?  WT/TPR/M/184/Add.1 
Page 44  
 
 VAT refunds on the exporting companies  
(WT/TPR/S/184 p. 60 para. 96) 
• According to the Indonesian Value Added Ta x (VAT) law, exporting companies should be 
refunded VAT within one year after the payment of VAT levied on their exports. However, 
there have been many delays in refunding VAT by the Indonesian tax authorities.  
• Also, Indonesian officials have not provided a clear reason for the delays in refunding VAT, 
and the regulations on refunds are not carried out in a transparent ma nner. This lack of 
transparency in refunding procedures cons titutes an undue burden for exporting companies.  
• Korea hopes that the Indonesian tax author ities implement the refunding procedure 
stipulated in the VAT law in a more fair a nd transparent manner. In this regard, Korea 
would appreciate it if Indonesia provides explana tion for plans, if any, to reform the tax 
regulations including the improvement of the governance of the tax system.  
QUESTIONS FROM THE UNITED STATES
 
II. T RADE POLICY REGIME :  FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime 
• WT/TPR/S/184, Page 31, Paragraph 44 (Table II.4):  Section Three of table II.4 (Investment 
Negative List) refers to joint-venture requireme nts for certain sectors.  However, given the 
horizontal limitation of 49 percent on foreign equi ty, this list appears to be incomplete.  Are 
there other sectors (e.g., professional services) that should be listed here?  
•  WT/TPR/G/184, Paragraphs 2, 5, 13, et. al.; WT/TPR/S/184, page 8, paragraph 21:  
Throughout its report, Indonesia refers to its new Investment Law (March 2007), but provides 
no details.  Please describe the main features of the new Investment Law and provide details regarding the following:  
•  Does it remove the horizontal 49-percent equity cap? 
•  Are audiovisual services now open to foreign investment? 
•  Have joint-venture requirements been changed for professional services? 
•  When does Indonesia expect to issue Im plementing Rules and Regulations or a 
Negative List? 
•  Will potential investors still need pre-approval for investments and which 
 government entity will manage the process?   
•  Does the Investment Law address the issue of de-centralization?  What authority over 
 foreign investment is granted to provincial and local governments? 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(1) Introduction 
•  WT/TPR/S/184, Para 8, page 36:  The Secretariat’s report me ntions support programs that 
appear to contain import-substitution elements.  We are concerned that Indonesia appears to 
maintain prohibited subsidies that should have been eliminated as of January 1, 2003.  We 
also note that Indonesia last notified its subsidies under Article 25 of the SCM Agreement in 1995.  When does Indonesia intend to submit a new subsidies notification?  WT/TPR/M/184/Add.1 
 Page 45 
 
 
  (ii) Customs valuation and rules of origin 
•  In paragraph 13, page 39 of its report, the S ecretariat highlights that "Customs reportedly uses 
a schedule of arbitrary check prices rather than  the transaction value when assessing duties on 
certain food imports." 
• Does Indonesian Customs plan to publicize its methodology or a current list of 
reference prices? 
(v) Import prohibitions, restrictions, and licensing 
•  WT/TPR/S/184, Page 46, Paragraph 30:   The Secretariat’s report notes that Indonesia has 
been progressively eliminating non-tariff measur es.  In particular, import licenses are now 
limited to several products. What is Indonesia’ s timeframe for completely eliminating these 
measures?  When does Indonesia intend to eliminate import licensing requirements for machines and machinery? 
•  WT/TPR/S/184, Page 46, Paragraph 31: The Secretariat’s report states that import licenses 
are non-automatic for nitrocellulo se, precursors, and optical discs .  What is the process for 
obtaining import licenses for these products?  
•  Please clarify the import license requirements (Regulation No 37/2006 and 38/2006) 
pertaining to imported seeds.  The regulations could be interpreted as requiring imported seed 
to be produced in Indonesia within two years of  market introduction.  Is the requirement 
limited to certain products, such as hybrid rice seeds?  Please explain. 
•  WT/TPR/S/184, page 47, Paragraph 33:   The Secretariat’s report indicates that Indonesia 
continues its September 2000 ban on imports of chicken parts in order to assure consumers 
that imports are halal  (produced in accordance with Islamic practices).  Please describe 
Indonesia’s halal certification process. 
•  WT/TPR/S/184, Page 47, Paragraph 34:  The Secretariat’s report indicates that Indonesia has 
maintained a ban on imported rice since 2004.  In light of current shortages in domestic production, will Indonesia lift its ban?  What  alternative policies are under discussion?   
(ix) Standards and other technical requirements 
•  We encourage Indonesia to revise its SPS regula tions to conform to the World Animal Health 
Organization’s (OIE) recommendations.  With this in mind, when will the Director General of 
Livestock Services (DGLS) reopen the Indonesian to market to U.S. cattle and products from 
cattle of all ages?  
(4) Measures Affecting Production and Trade 
(iv) Intellectual property rights 
•  WT/TPR/G/184, page 10, paragraph 26 :  In discussing its institutional and legal reforms, the 
Indonesian government refers to steps it has taken to improve enforcement of intellectual 
property rights protection.  We understand that  Indonesia ratified the WIPO Performances and 
Phonograms Treaty (WPPT) in 2005.  When will the government pass the necessary 
implementing legislation?  Please provide an update. WT/TPR/M/184/Add.1 
Page 46  
 
 Patents 
•  Has Indonesia enacted, or is it currently cons idering enacting, any legislation to protect 
undisclosed data pertaining to new pharmaceu tical and agricultural chemical products 
submitted to government authorities as a requi rement for marketing approval from unfair 
commercial use, as required by TRIPs Article 39.3?  
•  WT/TPR/S/184, Page 66, paragraph 123:  The Secretariat’s report indicates that Indonesia’s 
Patent Law contains compulsory licensing provisi ons and limits patent protection to products 
that are made in Indonesia.  What are the situ ations in which a compulsory license could be 
issued?  What is the process and procedur e the government undertakes before issuing a 
compulsory license?  Please clarify this phrase: the law "limits patent protection to products 
that are made in Indonesia".  Does this mean  that if a patented product is not made in 
Indonesia it is afforded greater protection? 
Copyright 
•  Paragraph 116 of the Secretariat’s report states that Optical Disc regulation entered into force 
in October 2004 and that Optical Disc regulations entered into effect in April 2005.  How do 
those two regulations differ? 
Enforcement 
•  Through the implementation of its OD regul ations, Indonesia has conducted a number of 
significant raids, but there is not much info rmation on prosecutions as a result of these raids 
nor information on the disposition of the in fringing goods and equipment and implements 
used to manufacture the infringing goods.  Please provide an explanation for this. 
IV. T
RADE POLICIES BY SECTOR  
(2) Agriculture and Forestry (ii) Main developments 
•  In paragraph 14, page 71, the Secretariat repor t states that "the tariffs on rice and sugar were 
raised when BULOG's monopoly over imports was eliminated."  We understand that in 
February, 2007, BULOG was authorized to im port 1 million tons of white rice due to a 
significant drop in domestic rice production. 
• Is BULOG the only importer eligible to receive an import license?  If other importers 
were issued the license, please provide deta ils as to what companies or entities they 
were and how the licenses were allocated.  Do these companies have purchasing 
independence or must they cooperate with BULOG? 
(4) Manufacturing 
(i) Textiles and clothing 
•  Para 44, page 80:  The Secretariat’s report states that average MFN tariff protection has 
remained at an average level of 10.8% and si nce 2002, tariffs have been accompanied by the 
introduction of a Minister of Industry and Tr ade decree on Textile Import Arrangements.  
Only companies that have production facilities using imported fabrics as inputs for finished 
products, such as garments or furniture, may obtain import licences.    WT/TPR/M/184/Add.1 
 Page 47 
 
 
  • In light of trading partners’ repeated statem ents of concern about the trade restrictive 
effects of Indonesia’s textile decree, what steps has Indonesia taken to eliminate the 
decree? 
(5) Services 
•  WT/TPR/S/184, Page 88, Paragraph 60:  The report indicates that foreign investors can own 
up to 99 percent of the paid-up capital in nationa l commercial banks, both listed and unlisted.  
Please provide information on any plans Indonesia ma y have to reflect this liberalization in its 
GATS offer. 
•  WT/TPR/S/184, Page 89, Paragraph 61:   The report notes that the insurance sector is not 
healthy from a prudential standpoint and that insolvent insurance comp anies are still allowed 
to operate.  What plans does Indonesia have to  restructure or end the operations of such 
companies to help ensure the financ ial stability of its insurance market? 
• The report notes that foreign companies can hold up to an 80-percent stake in a local 
insurance company.  We also understand, as expressed in Indonesia's GATS schedule, that 
foreigners have even greater rights to hold 100- percent equity in insura nce companies that are 
publicly listed.  Please confirm our understanding. 
•  Please provide any further information regarding Indonesia's plans to liberalize and improve 
its GATS offer for cross-border insurance (m odes 1 and 2), such as marine, aviation and 
transport, insurance auxiliary ser vices and intermediation thereof. 
(ii) Telecommunications 
Para 68, page 91 of the Secretariat’s report states  that Indonesia’s Telecomm unications Law allows 
majority foreign ownership in the telecommunica tions services sector.  We understand that, whereas 
Indonesia currently allows up to 95% foreign ownership for telecommunications services, your 
government is now reviewing its fore ign direct investment rules in this sector.  Is our understanding 
correct?  If so, what is the status of your government's review? 
QUESTIONS BY TURKEY  
WT/TPR/S/184 I. E
CONOMIC ENVIRONMENT  
(i) Growth, employment and poverty, Para 8 
According to the Secretariat Report, the steady rec overy in economic growth in recent years has not 
been accompanied by an increase in employment.  We understand from the Secretariat Report that the 
main reason of rising unemployment is the labor mark et rigidity which has been considered as one of 
the least favorable in the region in terms of standard indicators used by the World Bank. 
It is appreciated that the Indonesian Government has made employment creation  a central theme  of 
its economic program. In this context, we w ould like to ask the Delegation of Indonesia on 
Government’s  plans  to tackle th e rising unemployment in the country. WT/TPR/M/184/Add.1 
Page 48  
 
 WT/TPR/S/184 
II. T
RADE POLICY REGIME  
(iii) Bilateral Arrangements, Para 35 
Secretariat Report informs  that the Indonesian  Government has actively pursued  greater access to 
markets through bilateral agreements, during the review period. 
As an outcome of these efforts, we understand th at Indonesia has taken  a long way to a bilateral 
agreement with Japan, the largest trading partner. Moreover, it is noted that potential benefits and 
costs of free trade agreements  w ith some trading partners such as Pakistan, India and the US under 
examination. 
As two of the above mentioned countries are also pa rties to the APEC,  we would like to learn from 
the esteemed Delegation of Indonesia, how they  consider to create a balance between the 
commitments  of parties from  potential  bila terals  and  those stemming from the APEC. 
WT/TPR/S/184 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(iii) Tariffs, Para 20 
It is noted at the Secretariat Report that unde r its WTO obligations, Indonesia committed to bind 
94.6% of its tariffs at 40%. According to the Secr etariat Report, products, for which tariff  bindings 
exceed 40% or which remain unbound include autom obiles, iron, steel and some chemical products. 
With the above mentioned concerns in mind, we would like to ask Delegation of Indonesia about the 
Government’s approach to bind unbound non–agric ultural products as an outcome of the Doha 
Development Agenda. 
WT/TPR/S/184 III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(iii) Tariffs, Para 23 
According to the Secretariat Report, there is a considerable level of gap between the bound  and 
applied rates in Indonesia, which is much higher for agricultural products than for industrial products. 
How does Indonesian Government plan to tackle with this problem which is relatively high for 
transport equipments a nd footwear products? 
WT/TPR/S/184 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(v) Import prohibitions, restrictions and licensing, Para 31 
We have noted that products such as alcoholic beve rages, optical discs, rice, white crystal sugar, 
consumption salt are subject to non-automatic import license. 
Does Government of Indonesia consider to e liminate non-automatic import licenses on the above 
mentioned products?  WT/TPR/M/184/Add.1 
 Page 49 
 
 
  WT/TPR/S/184 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(v) Import prohibitions, restrictions and licensing, Para 33 
It is noted at the Secretariat Report that Indonesi a imposes "de facto" quantitative restrictions in 
imports of meat and poultry prod ucts, requiring an Importer Lette r  of Recommendation  which, 
according to the Secretariat Report  may affect the quantity allowed to be imported. 
We would appreciate  explanations by the Indo nesian Delegation of the reason of  such an 
implementation and if any complaint either by  importers or exporters received so far. 
QUESTIONS BY PAKISTAN  
1. What is the rationale for imposing ban on rice im ports during harvest seas on (January to June) 
and restricting the normal trade for imported rice? 
2. There is a barrier on salt import as well in the form of 50% local sourcing that violates the 
rules of WTO. Would Indonesia like to share justific ation for having such a trade restrictive measure? 
Is there any plan to remove such barrier? 
3. There are very strict and biased import licen sing requirements for the textile imports favoring 
import of raw fabrics over value added. Can Ind onesia explain reasons for such a bias? How does 
Indonesia look forward to tackle this issue so that the trading partners have fair market access in the 
textiles area? 
PREGUNTAS DE ARGENTINA  
WT/TPR/S/184, informe de la Secretaría II. R
ÉGIMEN DE LA POLÍTICA COMERCIAL :  MARCO Y OBJETIVOS  
8) Régimen de Inversiones Extranjeras 
Párrafo 43, página 37 
En el Informe se menciona que el Gobierno de Indo nesia ha elaborado, en 2006, un proyecto sobre 
una nueva ley de inversiones extranjeras, tendiente  a reemplazar el marco normativo anterior. ¿Podría 
Indonesia explicar cuáles son las modificaciones que este nuevo marco introduce en esta materia? 
III. P OLITICAS Y PRACTICAS COMERCIALES , POR MEDIDAS  
2) Medidas que Afectan Directamente a las Importaciones i) Procedimientos aduaneros 
Párrafo 12 y cuadro III.1, páginas 44 y 45 
En el marco de la adopción de me didas que favorezcan el clima de i nversión en el país, el Gobierno 
de Indonesia adoptó un paquete de políticas a princi pios de 2006, entre las que se incluyen algunas 
mejoras de los procedimientos aduaneros. ¿Podría  Indonesia profundizar en las medidas enumeradas 
en el Cuadro III.1 e informar en qué plazos tiene pr evista la implementación definitiva de la totalidad 
de esas medidas? WT/TPR/M/184/Add.1 
Page 50  
 
 ii) Valoración en aduana y normas de origen 
Párrafo 13, página 47 
El informe menciona que la Aduana aparentemente ap lica una lista de precios de control arbitrarios, 
en lugar del valor de la transacción, al determinar los derechos sobre ciertas importaciones de productos alimenticios. ¿Podría Indonesia explicar en qué consiste esta lista de precios de control 
arbitrarios?¿Podría manifestar la razón por la cu ál se aplica? ¿Podría detallar cuáles son los productos 
incluidos en esta lista? ¿Existe algún tipo de discrimin ación de acuerdo al origen de la mercadería al 
aplicar esta lista? 
iv) Otras cargas que afectan a las importaciones 
Párrafo 29, página 55 
¿Podría Indonesia indicar cuál es la tasa que estipula el Impuesto al Usuario de la Aduana 
(Penerimaan Negara  Bukan Pajak)? 
vii) Contratación pública 
Párrafo 43, página 59 
El informe menciona que la participación extran jera en las compras públicas está sujeta a ciertas 
condiciones, pero que además, en virtud de la des centralización regional, los gobiernos provinciales 
pueden establecer requisitos adicionales a las aplicadas a nivel nacional. ¿Podría Indonesia brindar estadísticas acerca de compras púb licas efectuadas a proveedores extranjeros durante el periodo bajo 
examen? ¿Qué tipo de condiciones adicionales podría  Indonesia solicitar en el caso de un gobierno 
provincial? 
4) Medidas que Afectan a la Producción y el Comercio 
i) Fiscalidad  
Párrafo 94, página 70 
El informe indica que, en 2006, el gobierno ha propu esto 3 nuevas leyes en materia de impuestos que 
afectan a la producción y el comercio. ¿Podría Indonesia profundizar en los temas de  estas nuevas leyes? 
ii) Asistencia a la producción Párrafo 100, página 72 
El informe menciona la existencia de una Ley fi scal que permite prestar asistencia a algunas ramas de 
producción nacional en forma de incentivos fiscales. ¿Podría Indonesia señalar en qué consisten los 
incentivos fiscales a los que hace referencia el info rme? ¿Podría exponer acerca de qué sectores de la 
industria pueden beneficiarse de est os incentivos?¿Podría informar si  existen estadísticas acerca de 
cuáles son los sectores que han sido beneficiados en mayor medida por esta Ley?  WT/TPR/M/184/Add.1 
 Page 51 
 
 
  IV. P OLÍTICAS COMERCIALES , POR SECTORES  
5) Servicios iii) Transporte marítimo 
Párrafo 77, página 113 
El informe menciona que la Ley de Industria Marítima permite que las líneas marítimas locales 
utilicen embarcaciones de origen extranjero bajo  ciertas condiciones cuando no haya de pabellón 
nacional disponibles. ¿Podría Indonesia aclarar espec íficamente cuáles son estas limitaciones? ¿Podría 
manifestar bajo qué condiciones se permite la  utilización de buques de bandera extranjera? 
QUESTIONS BY CHINA
 
1) Could Indonesia clarify its test and certification procedures for imported safety glass for 
automobiles and cement? Do they comply fully wi th the WTO/TBT rules of mutual recognition? Is 
Indonesia willing to provide any Member who so wishes with opportunities for further bilateral 
consultation in this regard in order to  facilitate the smoother flow of trade? 
2) It is noted that some Chinese trademarks , such as the "Jiang Dong" diesel engine, the 
"phoenix" bicycles, the "MARQUIS" water pump, "DAYANG" motorcycle are illegally registered in 
Indonesia by some local companies who used to be  import agents of the products of these Chinese 
brands. 
Could Indonesia explain how to solve these problems to  prevent counterfeit trademarks in future in 
conformity with TRIPs Agreement? 
3) Could Indonesia please clarify how many compan ies in Indonesia are working as agents of 
customs clearance for the imports in the form of cont ainer from China? Is it true that in addition to 
tariff and import VAT, importers have to pay for each container at the rate of 400-1000 USD to 
customs clearance companies? Is this phenomenon of  "grey customs clearance" part of official policy 
of Indonesian government? What can be done to str eamline the practice to the benefits of traders? WT/TPR/M/184/Add.1 
Page 52  
 
 REPLIES PROVIDED BY INDONESIA 
NEW ZEALAND
 
1. Development of the agricultural sector  (WT/TPR/S/184, p. 71, para. 12; WT/TPR/G/184, 
 p. 6, para. 7, p. 18, para. 68) 
 The Secretariat notes that productivity in Indonesia’ s agriculture sector has seen negative growth 
since the early 1990s, agriculture’s share of GDP decreased by around 3% between 2002 and 2005, and labour productivity in the sector is around one-fifth that of the rest of the economy.  At the same time, it employs 44% of the population, and its deve lopment is crucial to the government’s pro-poor 
policies. Given that the Secretariat report also not es that Indonesia has experi enced real GDP growth, 
that macroeconomic vulnerabilities have been decl ining and that there has been strong domestic 
demand over the past few years, could Indonesia co mment on the factors that have led to this 
situation, and what measures Indonesia has or will  be putting in place to develop the agricultural 
sector? 
 
Reply:
 
 
The fact of declining total factor productivity is not unique to Indon esia alone but is also observed in 
many other countries including developed countries. L abor productivity in agricultural sector is far 
lower than that the rest of the economy. This is  a direct consequence of the lower growth of 
agriculture GDP compared to the growth of agricu ltural labor. Sectoral migration of labor from 
agriculture to non-agriculture sector is not yet high enough so as to absorb surplus labor in 
agriculture. Long-term strategy to cope with this problem is by promoting pr oductivity growth for all 
agricultural commodities.  Priority programs along this  strategy are: (1) development of agricultural 
infrastructure; (2) promoting the capacity of farmer’s institution; (3) revitalizing agricultural 
extension system; (4) facilitate agricultural finan cial services; and (5) promote agricultural product 
marketing.  
2. Review of trade laws and regulations (WT/TPR/S/184, p. 21, para. 17)  
 
According to the Secretariat, Indonesia has begun "to review all rules and regulations related to 
imports and exports … to identify and rectify one rous bureaucracy and poorly conceived trade and 
investment policies."  New Zealand would be interested in receiving details of the review, including 
its current status, terms of reference, scope and which agencies are involved or lead the review.  
Given the implications of the results of this revi ew for trade, how and when does Indonesia intend to 
consult with trading partners on the draft results of the review? 
 
Reply:
 
 
Indonesia, especially Ministry of Trade has started to review its trade regulations, domestic 
and foreign, especially ones related with trade lic ensing. Ministry of Trade  is actively improving 
Indonesia's business regulation and licensing system. Reformation in the area of licensing is 
meant to support the improvement of the investment climate by providing a more certainty and 
reducing the high-cost economy. The reformation itself is meant to simplify the licensing 
procedures, reduced the maximum number of days to be granted a license and, wh ere possible, 
reduce the administration fee for a license. In March 2007, Ministry of Trade had launched the 
Trade Service Unit as a unit for providing assist ance in licensing nationally. Before the launched, 
MOT has evaluated its licensing procedures. By the result of the studies, MOT has simp lified 
5 regulations, revoked 2 regulations about business organization/association registration, 
transferring one regulation to Mini stry of Finance and amend 2 regulations about COO and SPEK.  
  WT/TPR/M/184/Add.1 
 Page 53 
 
 
  On the other hand, to shorten the bureaucracy in releasing export and import license, a Minister of 
Trade decree has been stipulated, which is Minister of Trade Decree Number 92/M-
DAG/KEP/3/2007. 
 
3. Investment policy  (WT/TPR/S/184, p. 33, para. 46) 
 
New Zealand was pleased to note the recent passage of the new Investment Law, with its national 
treatment provisions for foreign investors.  The S ecretariat states that the new law will shorten the 
"negative list" of sectors in which foreign investment  is prohibited.  New Zealand would be interested 
in learning more about the process for the implementation of this new law, including progress on 
formulating the negative list, and what it will mean in practice for investors and other stakeholders. 
 
Reply:  
 
In addition, to create conducive investment climate,  a new investment law has been stipulated (Law 
Number 25/2007). For the implementation of the new investment law, 3 (three) Presidential 
Regulations are in the process of enactment:  a.  Presidential Regulation regarding Procedu re and Implementation of one-stop services; 
b. Presidential Regulation regarding List of Busin ess Sectors that are Clo sed or Opened with 
Requirements of Investment;  
c. Presidential Regulation regarding Qualifications  and Requirements of Closed Business 
Sectors and Opened Business sectors with requirements.  
 
4. Services (WT/TPR/S/184, p. 84, para 49-51) 
 
The Secretariat notes that "trade barriers remain in many services sectors" (para 51) and that 
Indonesia’s existing GATS commitments "come w ith significant limitations on market access" 
(para 50).  In light of the new investment law,  is Indonesia taking any steps to further relax 
restrictions on the trade in services, particularly in mode 3 services? 
 
Reply:
 
 
Indonesia is still exploring on how to further impl ement the new investment law in particular those 
elements to attract foreign investors. 
 
5. Forestry (WT/TPR/S/184, p. 67, para. 2; p 77, para. 30, 31, Box IV.2; WT/TPR/G/184, 
p. 20, para. 85) 
 
Indonesia notes that "the ban on the export of logs is  used to support Indonesia’s forestry and wildlife 
conservation policy while a broader forest manage ment programme is being put in place."  New 
Zealand welcomes Indonesian efforts to deal with  the problem of over-exploitation of forests and 
particularly illegal logging.  We note, however, th e observation in the Secretariat’s report that such 
bans may not have the desired effect, and can potentially act as a subsidy to domestic processing 
industries.  Could Indonesia comment on how it is monitoring and evaluating its forestry policies and measures in terms of their effectiveness and efficacy , and to ensure that they do not affect other 
sectors of the economy and Indonesia’s trade policy? 
 
Reply:
 
 
Indonesia liberated its log export in 1999 as one of the deal under IMF’s Letter of Intent. This 
situation created a massive illegal logging and smuggling that further cause deforestation 1.08 million are per year approximately in the period  of 2000-2005. In order to reduce the negative WT/TPR/M/184/Add.1 
Page 54  
 
 impact mentioned above, Government of Indon esia, therefore, in 2002 enacted a Government 
Regulation No.34/2002 and a joint decree between  Minister of Forestry No.1132/KPts-II/2001 and 
Minister of Trade and Industry No. 292/MPP/Kep/10/ 2001. These regulations aimed to ban export of 
log. Afterwards, by issuing joint decree between  Minister of Forestry No. SK.350/Menhut-VI/2004 
and Minister of Trade and Industry No.598/MPP/Kep/9/2004 dated 24
 September 2004, Government 
of Indonesia banned export of sawn timber and railway sleepers made of wood.        
 However, with the intention of revitalizing forestry sector and enhancing competitiveness of 
cultivation forest products, nowadays, in acco rdance with article 122 of Government 
Regulation No. 6/2007, which states that, the author ization of export arrangement on forestry product 
is in the hand of Minister who is responsible to  trade matters under recomm endation of Minister of 
Forestry.    There is possibility to export log particularly for log t hat originated from cultivation forest in the case 
of saturated domestic market and the price of such log is depreciated. 
 
6. Meat import policy (WT/TPR/S/184, p. 54, para. 64)  
The Secretariat observes that "a new decree on import of meat of various species … is to be notified 
to the WTO."  Can Indonesia confirm that the Secretariat is referring to decrees 64/Permentan/OT.140/12/2006 and 27/Perm entan/OT.140/3/2007?  When will those new 
decrees be notified to the WTO?  Could Indonesi a provide an explanation for developing the new 
decrees and comment on how they meet the WTO principle of national treatment?  
Reply:
 
 
1. Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad; 
2. Minister of Agriculture Regulation: No. 27/Permentan/OT.140/3/2007 concerning revision of 
Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad. 
 
The objectives of these regulations are: 
 1. As a reference for business community to impor t and distribute  carcasses, meats and edible 
offal from abroad; 
2. As a guidance for the officers who responsible in controlling the importation of carcasses, 
meats and edible offal from abroad and their circulation in Indonesia; 
3. As a guidance for animal quarantine officers to take quarantine measure in importation 
ports; 
4. To have common understanding for all stakehold ers concerning how important to maintain 
the Indonesian free-status from zoonosis and qu arantine diseases as well as to protect the 
local consumer; 
5.  To prevent the possibility of zoonosis an d quarantine diseases entry from abroad; 
6. To guarantee the availability of meat through  importation and control of carcasses, meats 
and edible offal from reliable sources. 
 
7. Tariff policy (WT/TPR/S/184, p. 40, para 19, p. 43, para 25) 
 
New Zealand notes that the structure of Indonesia’s tariff is complex and that it embodies a degree of tariff escalation, especially for se mi-processed food, beverages and t obacco.  Given that these factors 
together have the effect of distorting trade and prov iding some uncertainty for importers, what steps is 
Indonesia considering to streamline and improve Indonesia’s tariffs?  WT/TPR/M/184/Add.1 
 Page 55 
 
 
  Reply:  
 
The so called " tariff escalation" fo r food, beverage, toba cco is not the main strate gy of tariff policy even 
though to some extend it show in tariff structure. With regard to the beverage tariff will be maintained for the purpose of preventing the people from moral hazard, to give for health and safety to the 
communities. In this case, there is no increase of tariff on these commodities.  
With the one of the target of Tariff Harmonization Program to have uniform tariff in 2010 as possible, 
these problems, hopefully can be solved. 
 
8. Tariff policy – dairy products  (WT/TPR/S/184, p. 45, table III.3; p. 40, para. 19) 
 
Indonesia’s average applied tariff rate on dairy pr oducts in 2006 was 5.6%, with bound in-quota rates 
of around 40%. Given the recent increase in world dairy prices does Indonesia plan to reduce tariffs 
on dairy products in the near term?    Reply:
 
 
Indonesia will further study this situation. 
 
9. Government procurement (WT/TPR/S/184, p. 49, para. 41 – 48) 
 
The Secretariat notes that Indonesia is trying to increase transparency of government procurement 
processes and that it has done this through various m easures, but that Indonesia is not a party to the 
WTO Government Procurement Agreement (GPA).  What is the likelihood of Indonesia joining the 
WTO GPA in order to further its aims of transpar ency and the use of good procurement practice?  
New Zealand notes that the 8 December 2006 revisi on of the GPA text includes (in Article IV) 
allowance for special and differential treatment to recognise the development needs of developing 
countries, and increased flexibility for transitional m easures.  We would be interested in Indonesia's 
views on the new Article IV.    
Reply:
 
 
Indonesia will further study this GPA .  
 The Secretariat notes that Indonesia continues to have conditions that limit the participation of foreign 
firms in government procurement contracts.  Are there any plans to remove these conditions or to 
increase the permissible foreign participation rate further? 
 
Reply:
 
 
For the time being, Government of Indonesia is s till focusing our government procurement policies 
and national development programs,  particularly on improvi ng open and fair competition . 
 
Prior to year 2000, GP’s market was fragmented into 432 districts, 33 provinces, and more than 
40 central line ministries. At the time, tender par ticipants’ notably small and medium enterprises 
were not allowed to participate in provinces and/or di stricts, where they were not originated from. 
 
Presidential decree number 80 year 2003 fosters mo re market-oriented competition and urges open 
and fair competition.  In the future, Government of In donesia expresses the intentions to assess and to adjust government 
procurement regulation toward internati onal best practices, standards, and guidelines.  WT/TPR/M/184/Add.1 
Page 56  
 
 10. Standards and other technical requirements  (WT/TPR/S/184, p. 52, para. 52, 54 and 56) 
 
The Secretariat’s report notes that the National Standardisation Agency of Indonesia (BSN) is 
responsible for all stages of the standards setting pr ocess, but that the development of draft standards 
is the responsibility of technical committees within  various ministries.  Once a draft standard is 
developed by a technical committee, what is th e process for approving the standard as a national 
standard (SNI)?  How does that process ensure al ignment between the basis of SNIs and relevant 
international standards as required by  the TBT Agreement Article 2.4? 
 
Reply:
 
 
The process of SNI development follo ws ISO/IEC Directive 1, 2004. In general, the process is divided 
into three phases, the first phase deals with pr ogramming and drafting which involve TC and the 
stakeholders. The second phase is enquiry and e-ba lloting involving TC and MASTAN (the Indonesia 
Standardization Society). The third phase is adopti ng and publication by BSN. At the second phase, 
the draft of national standard is uploaded into th e SISNI, information system for SNI, to be 
commented by the TC members as well as the me mbers of related interest group of MASTAN. This 
process takes 2 months, after which an electronic voting process takes place for "yes or no" balloting 
of final draft of national standard. If the draft approved then it will be adopted by BSN through a 
decree of the chairman and then published. If not ap proved, subject to proposal from the TC, the draft 
standard will become a Technical Specification. 
 
Within the constellation of the national standardi zation system (SSN), a commission called MTPS - 
the Technical Management Board for SNI developme nt was established in 2004. The function of 
MTPS among other is to recommend policies to BSN relating to SNI development. It is BSN policy, 
recommended by MTPS, that all new proposals fo r developing SNI have to be harmonized with 
international standard except for tho se national specific standards or due to fundamental climatic or 
geographic factors as well as due to fundamen tal technology problems. Likewise, all revised 
standards, resulting from the systematic review, have to be also aligned with international standards. 
BSN also requires all TCs under its auspices to program this harmonization until 2010.   The critical phase within the whole process is in standard programming. In this stage, the TC should 
indicate which international standards to be adopted  either identically or modified into a national 
standard. All new proposals that are not harmoni zed with international standards should be 
accompanied by justification for being different w ith international standards. All incoming proposal 
for new work items will be scrutinized by BSN, and those which are approved (in February) will be 
permitted to continue drafting the standards. Meanw hile, those which are not approved will be asked 
to be reviewed to meet the requirement and be pr oposed then for the second phase approval (August), 
or for next year program. The system we mentioned above is now in place and the implementation is 
continuously monitored for process improvement. 
 
11. Food standard requirements  (WT/TPR/S/184, p. 54, para. 62) 
 Page 54 of the Secretariat’s report records that all imported processed food products must be tested 
and approved by the National Agency for Drug and Food Control (BPOM), in an "overly complex, 
time consuming and costly procedure."  Given the e fforts that Indonesia is making to review its trade 
policies and make them less onerous and more tran sparent, does Indonesia have any plans to review 
these procedures?  In particular, has Indonesia considered recognition of alternative official 
certification that imported products meet Indon esia’s requirements and/or recognition of the 
equivalence of an exporting country’s regulator y controls for imported processed food products? 
  WT/TPR/M/184/Add.1 
 Page 57 
 
 
  Reply:  
 
• NADFC has a set of guideline standardization on criteria and registration of product for 
applicant which is transparent and simple.  In this guideline applicant shall provide 
information related to product specification such  as food ingredients, packaging materials, 
and control system apply, but if the applicant do not meet those requirements, it will caused 
time consuming. 
 
• Most processed food import must be registe red with the NADFC and food may only be 
released from customs after a food approval ha s been issued by NADFC or NADFC in each 
province. 
 
• The registration fee of food product in line with Government Regulation No. 17 year 2001 
regarding tariff of Non State Income that applie d in NADFC depends on its type of product 
and the ranging fees between IDR. 50.000 - IDR. 250.000,-. 
 SWITZERLAND
 
 
I. E CONOMIC ENVIRONMENT  
(2)  Recent economic developments (v)  Structural reforms  
• Para 21 and para 46 (II Foreign Trade Policy Regi me): There seems to be a consensus that 
Indonesia has adopted a forward-looking new i nvestment law. Some concern has been 
expressed, however, that the current drafting of th e "negative list" is lacking in transparency. 
Moreover, some fear the list may in fact  not reduce the amount of sectors foreclosed for foreign investment as it is merely a more formal  compilation of existing practice of exclusion, 
which has hitherto been applied informally. Therefore, we would like to know if Indonesia 
would be ready to draft a short "negative list"? 
 
Reply:
 
 The new proposed negative list seems to be longer than the previous one, but the fact is that it’s more 
specific with fewer sectors being listed. The inte ntion is to make clearer, more transparent and with 
no multi-interpretation. Closed and open business w ith requirement for investment, domestic and 
foreign decided based on the criteria of health, sa fety, defense and security, environment and culture, 
based on national interest. Those criteria could be brea kdown as follow: to maintain the civil society, 
to protect the bio diversity, to maintain the eco system balance, to supervise the use of toxicant 
materials, to avoid forgery and supervise the di stribution of un scheduled goods and services, to 
guard the national independency, to maintain the limited resources.  
 
II. T
RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(1)  Introduction  
 
• Para 4: We know that Indonesia is currently negotiating a bilateral trade agreement with 
Japan, and other bilateral agreements are under study. What are/will be Indonesia's priorities 
with regard to bilateral trade agreements, in terms of coverage, issues, and results to be 
achieved?  
 WT/TPR/M/184/Add.1 
Page 58  
 
 Reply:
 
 Japan is the trading partner and main investor for Indon esia, and Indonesia is the main recipient of 
ODA Japan. Market Access for Indonesian products to the largest export market represents 20% from 
the existing export, while Japan is the second largest importer for Indonesia (13%). 
Indonesia – Japan Economic Partnership Agreemen t/IJEPA gives market access certainty that are 
more preferential and broader compare to programs such as Generalized System of Preferences 
(GSP), and puts Indonesia in the same level with  other countries that has already have an agreement 
with Japan. IJ-EPA will accommodate numbers of ec onomic activity including energy and mineral 
resources, movement of natural p ersons, government procurement, in tellectual property, competition 
policy, improvement of business environment and pr omotion of business confidence. It will also 
accommodate numbers of capacity building projects to a number of activities that can increase 
Indonesia’s competitiveness in industry, agricu lture, fisheries, and forestry including collective 
initiative to promote manufacturing industry by Manufacturing Industry Development Center. The 
main factors of IJEPA elements that are agreed co vers Trade in Goods, Trade in Services, Customs 
Procedures, Investment,, Movement of Natura l Persons and Related Cooperation, Energy and 
Mineral Resources, Intellectual Pr operty, Government Procurement,  Competition, Improvement of 
Business Environment and Promotion of Bu siness Confidence  dan Cooperation.    
Although EPA Indonesia-Japan are Economic Partnersh ip that are expected to benefit both parties 
equally, but EPA also consider the unbalance economic  development between two parties. This is 
reflected in the coverage of fast track (Japan will liberalized tariff for approximately 80% tariff lines 
or 91% Indonesia’s export value to Japan. While I ndonesia by 35% for Japan’s export to Indonesia).   
 One of Indonesia’s interest in EPA is that EPA can increase Japan’s investment. Beside that, EPA will increase Indonesia competitiveness generally or in certain sectors: 
 
- Capacity building, specially in areas of product standardization and testing, sanitary and 
health standard for food and drinks products; 
- Skills and technology training in manufactur ing sector that will increase Indonesia’s product 
quality in the domestic and international market; 
- Programs of capacity building in energy, industry, agriculture, export and investment 
promotion, and Small Medium Enterproses development  
 
(2)  General constitutional and institutional framework 
(i)   Decentralisation  
• Para 8-10: Decentralization in Indonesia is re latively new and the TPR documents highlight 
certain concerns (notably uncertainty, complicat ed tax situation and internal trade barriers). 
What mechanisms are available to the Central Government in order to supervise local 
governments and to ensure the effec tive implementation of regulations?  
 
Reply:
 
 
The Law No. 22/1999 concerning decentralisa tion was then revised by stipulating the 
Law No. 32/2004 concerning the regional government. A ccording to this law, the central government 
is still mandated to govern 5 (five) functions — t hat are international politics, defense and security, 
justice, fiscal and monetary, and religion — while  provincial governments were given a secondary 
role—that covers public works, health, education and culture, agriculture, communication, industry 
and trade, capital investment, land, cooperatives and manpower affairs. In addition, there are some 
other mechanisms that provide the central governme nt to control the implementation of central 
government’s policies. One mechanism is that th e provincial government budget should be approved 
by the central government, not longer than 10 day s after submitted by the provincial government.  WT/TPR/M/184/Add.1 
 Page 59 
 
 
  Another mechanism is government regulation No .3/2007 concerning the obligation of regional 
government to submit the annual report of reg ional governance at the end of each year.  
 
(8)  Foreign Investment Regime 
(a)  Main regulatory developments 
 
• para 46: The new investment law provides fo r equal treatment for foreign and domestic 
investment. It also stipulates a technology transfer from companies employing foreign labour. Could this stipulation not lead to a discrimin atory burden to be borne mostly by foreign 
investors? Could new proposals for provisi ons imposing limitations on non-nationals working 
in the financial sector not lead to discrimination against certain banks?  
 
Reply:
 
 The purpose of the new proposals is to ensure t hat domestic banking professi onal could benefit from 
banking sector liberalization through transfer of know ledge in order to strengthen the banking system 
in Indonesia. Indonesia wants to ensure that the principle of transfer of knowledge through understudy, as stated in our commitment, is fairly reflected in the field through the implementation of 
this regulation. Notwithstanding its purpose, the new provisions will not  lead to discrimination. In fact, in relation to 
foreign service supplier, the new provisions gives mu ch more flexibility for  domestic banks which are 
controlled by non-nationals, foreign bank branch es, and foreign bank representative offices to use 
foreign professionals.   In that spirit, the regulation only limits the fo reign professional in the area of human resources and 
compliance, in line with domestic regulation. Ot her areas of banking professional are still open for 
foreign professional such as risk management and trea sury, in which Indonesia realized the supply of 
domestic professional is not sufficient. 
In this regard, Indonesia believes that this regul ation is still in line with our commitment in WTO. 
For transparency purposes, Bank Indonesia had circu lated the proposed draft of regulation to the 
stakeholder and received severa l comments on the draft of regula tion. Based upon such consultation 
Bank Indonesia has released Bank Indonesia Regul ation No. 9/8/PBI/2007 concerning The Use of 
Foreign Worker and Transfer of Knowledge Program in The Banking Sector. 
 
• para 46: With respect to the "negative list" , could the Indonesian authorities provide some 
indication on which sectors will be either newly opened or liberalized to foreign investment 
as a result of the new investment law ?  
 
Reply:  
 Investment to Indonesia is open for all sectors, ex cept ones in the negative list. The Government 
Regulation concerning the negative list will be legalized  as soon as possible, w ithin end of June to 
early of July 2007. 
 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2)  Measures Directly Affecting Imports (vi) State trading  
• para 40: SOEs account for roughly 40% of GDP. The report states that in the interest of 
efficiency, the Government plans to reduce the number of SOEs from 158 to about 80 and that much of this reduction is expected to take place through consolidation rather than 
divestiture. What are the main reasons for th e Government to chose the route of mergers 
rather than privatisation, notably taking into acc ount the fact that mergers can be very costly 
and bear a risk of failure? WT/TPR/M/184/Add.1 
Page 60  
 
 Reply:
 
 The privatization policy remains implemente d in this year and the upcoming years because 
privatization is a strategy in the rightsizing BU MN program. But with the consideration of current 
political and economic condition, the privatization policy is mainly pr ioritized for new shares selling 
so the fund collected will be received by the company and strengthen the SOE capital structure. 
 Besides that, Indonesia’s current political and economi c objective condition insists that privatization 
policy is done by still remaining Indonesia’s sha re owner majorities in severa l SOEs. While the main 
method used is by share selling through capital ma rket, both by Initial Public Offering and Secondary 
Offering. It is hoped that with this policy pattern , it will accelerate capital market protocol absorption 
that in turn will push the implementation of good corporate governance (GCG) in the SOEs. 
 Besides that, merger and holding policy are also strategies in the rightsizing BUMN program that are 
done to SOEs that has similarity, in operational or  scope of business, also after through a deep 
analysis. With those merger and holding, it is h oped that operation efficiency, economic scale 
recovery, synergy between SOEs, and a vast and che ap company’s growth can be achieved. Merger 
and holding policy will be done step by step and carefully so the possible risks faced can be 
minimized. 
 (vii) Government procurement 
 
• General: It seems that power plants shall be excluded from public tendering. Can the 
Indonesian Government confirm this information? If so, for what reasons? 
 
Reply:
 
 
Based on the Presidential Decree (No. 8/2006), revising Decree (No. 80/2003), established a 
procurement framework more consistent with int ernational public procurement practices by making 
the procurement process more transparent. According to the decree, all the governments 
procurement, including state own enterprise procur ement, should be tendering based on the certain 
threshold.  
 
• para. 43 and 46: this paragraph reports that in 2001 the Country Procurement Assessment 
Review identified the awarding of government contracts as a major source of corruption. Since then the central government has taken step s to address this situation. The report also 
relates to the decentralization reform under way. Will government procurement also be 
decentralised? If so, through which measures w ill the central government be in a position to 
ensure that its efforts to combat fraud will not be set back? 
 Reply:
 
 Procurement policy still in central government, but local government has authority to proceed 
procurement process.  
 
(viii) Contingency Measures 
(a)  Anti-dumping and countervailing measures  
• Para. 50 of the Secretariat's report suggests th at Indonesia had a rather frequent recourse to 
the anti-dumping instrument in recent years. Could the Indonesian authorities specify, when 
definitive anti-dumping duties have been impo sed, whether they apply the lesser duty rule? 
Also, could the authorities explain their re view practice once final anti-dumping measures  WT/TPR/M/184/Add.1 
 Page 61 
 
 
  have been imposed? In addition, is the possibilit y of price undertakings offered systematically 
to exporters in the course of anti-dumping investigations? 
 
Reply:  
 
Anti-dumping proceedings during 2002-2206 are the following: 
 1. Out of 8 initiated cases in 2002, 4 cases were t erminated in 2003 as well as 2 cases in 2004. 
As to the rest (2 cases), anti-dumping duties had been imposed in 2004; 
2. Out of 11 initiated cases in 2003, 3 cases were terminated in 2003 as well as 2 cases in 2004. 
As to the rest (6 cases), anti-dumping duties had been imposed to 4 cases in 2004 and 2 cases 
in 2005; 
3. Out of 5 initiated cases in 2004, 1 case termi nated in 2005. As to the rest (4 cases), anti-
dumping duties had been imposed to 2 cases in 2004 and 2 cases in 2006; 
4.  There was no initiation of investigation in 2005; 
5.  5 investigation had been initiated in 2006. 
 Rules of lesser duty had been applied to 5 cases in 2004.  Review proceedings during 2002-2006 are:  
1. Sunset review to 4 cases in 2002 and 1 case in 2003; 
2. Annual Review to 3 cases in 2005. 
 Under Government Regulation Nr. 34 of 1996, pri ce undertaking provisions are stated clearly and 
therefore exporters have the right to request it. 
 
However, during 2002-2006 there were no such undertakings requested by exporters. 
 
(ix) Standards and other technical requirements 
 
• para 60: we note than an increasing number of products require certificates for standards of 
Islamic purity (halal). How does the Government explain this recent trend? 
 Reply:
 
 Halal Food is the need for Moslem  society in general, not only in Indonesia but also in all other 
muslim countries. Halal Guideline was adopted by the Codex Alimentarius Commission (CAC) in 
1997 (CAC/GL 24 : 1997, General Guidelines for Use of the Term Halal). In Indonesia this is not a 
new trend but halal has its legal basis.  Halal can not be somehow considered as quality in ge neral term. It is a quality for faith which is not 
debatable. A product can not be cons idered as halal unless a preliminary audit is taken to identify the 
whole production process which has to be  complying with halal requirement. 
 Legal basis for halal :  
• Food Law No.7/1996 (Article 30.1 and 34.1); 
• Consumer protection Law 8/199;  
• Government Regulation (PP) No. 69/1999 on F ood Labeling and Advertisement, Article 3.2, 
10 and 1; 
• Fatwa Decision of MUI on Approval of Halal.  WT/TPR/M/184/Add.1 
Page 62  
 
 Organization responsible for Halal Food Certification is:
 
 
1.  The Ministry of Religion (Departemen Agama);    
2.  The National Agency for Food and Drug Control (BPOM); and,  
3.  Indonesian Ulama Council (MUI). 
 The process for Halal certification and related informa tion are available in request.  In addition to 
this information, LP POM MUI recognizes certific ates issued by approved organizations only for 
products produced in the country where the organizations located.  
 
There are still possibilities for LP POM MUI to ask s upporting documents to clarify the critical points 
of certain certified products. Indonesia is open for MoU with exporting country. There are 40 (forty) 
Halal Certifier Bodies in 16 countries approved by LP POM MUI. Until now certificate of Islamic 
purity (Halal) is still voluntary. In the case that products are necessarily us ed a label then a halal 
certificate is required.  The recent trend of increasing number of product re quires halal certificate appear because most of 
Indonesian are moslem and based on their belief they need to know it is halal or not. 
 
For more information please visit www.halalmui.or.id
 
 
(4)  Measures Affecting Production and Trade 
(i)  Taxation 
 
• In para. 93, the Secretariat's report indicates that the Indonesian Government expects tax 
revenues to increase from 13.3% of GDP in 2005 to 19% of GDP by 2009. At the same time, 
the report suggests that the Government is cons idering a reform of the corporate taxation to 
make Indonesia more competitive for investor s with respect to neighbouring countries 
(para. 94) and also has plans to reduce the top personal tax rate (para. 99). Could the 
Indonesian authorities indicate what specific new enforcement measures the authorities will 
consider to ensure that such an ambitious obj ective of raising tax collections by more than 
40% in terms of GDP in only a few year s can actually be achieved as planned?  
 
Reply:  
 
Specific new enforcement measures that Indonesia w ill consider to ensure the increase tax ratio shile 
lowering the corporate tax rate:  
 
1.  Enlarge tax base on potensial sectors. 
2. Modernizing tax administration to win the pe ople trust and to increase the voluntary tax 
compliance. 
3. Tax extensification by improving the quality  and the method of tax audit, such as 
implementing risk management and appliying audit sampling method. 
4. Tax axtensification by increasing the number of  taxpayers, individual taxpayers would be the 
first priority. 
5. Exploring tax potential by researching the potenti al sectors such as farming, agriculture 
industry, etc. 
 
• para 94: The report states that arbitrary a nd abusive tax-enforcement body are among the 
basic concerns of investors. It also states that the Government has proposed three new tax 
laws to improve this record. How do these laws address this particular problem of arbitrary 
treatment? Which steps can an enterprise undertak e when it assesses to be a victim of such an 
arbitrary treatment?  WT/TPR/M/184/Add.1 
 Page 63 
 
 
  Reply:  
 Concerning to the amendment of the three tax laws , the process of the General Provisions and Tax 
Procedures is finished and ready to be signed by the Government and Parliament, where the other 
two tax laws will be processed soon. 
 
Some changes in the amendement of the General Pr ovisions and Tax Procedures that intends to 
reduce the arbitary treatment are as follows :  1. When taxpayer disagree with auditor findings, he may file objection and pay only the amount 
that they are agree. 
2. The expiration of statutory period of assesment is shorten from 10 to 5 years. 
3. There is penalty for careless Tax Auditor. 4. Before closing tax audit, tax auditor is required to provide a closing conference. On the 
closing conference, Tax Auditor should presen t the reasonable argument on their adjusment. 
If the tax auditor failed to do so, the assesment would be invalid.  
 
(iii) Competition and consumer policy 
 
• In para. 106, the Secretariat's report indicates that following the 1997 fi nancial crisis and the 
IMF's insistence on the introduction of a number of policy reforms, the local-content requirements for automobiles were removed. Could the Indonesian authorities indicate 
whether they still maintain other trade-relate d investment measures or, whether, with the 
removal of this measure, all such trade-relate d investment measures have now been removed? 
 
Reply:
 
 
For the automobile, the local content requirement has been rem oved. Currently, the MFN tariff 
applied is in between 0 to 80 percent.  
 (iv)  Intellectual property rights (b)  Patents  
• General: There is some concern that a lack of transparency in the Indonesian legal system 
might result in unjustified revocations of existi ng patent rights and hence uncertainty in the 
industry as to patent enforcement or patent in terpretation. What kind of assurance to patent 
holders can the Government provide in this regard? 
 
Reply:
 
 
Up to date there have been only two patents which w ere revoked by the Directorate General of IPR. 
The ground of the revocation was that, for the fi rst patent, the patent holder failed to fulfill the 
obligation regarding the payment of annual fees as provided for in Article 115 (b) of the Patent Law, 
and that the granted patent was not novel. 
 
The provisions regarding the revocation of patent are regulated in Chapter VI (Article 88 – 98) of the 
Patent Law. Based on this Chapter, a patent can be revoked on grounds of the operation of law, the request of the patent holder, and by virtue of lawsuit.  WT/TPR/M/184/Add.1 
Page 64  
 
 COLOMBIA
 
 
Report by Indonesia (WT/TPR/G/184) 
 
I. I NTRODUCTION  
 
Paragraph 3.  " ... Industrial policy is oriented to fostering cluster groups, with selective use of 
incentives to support the development of Indonesia' s regions and deepen and diversify industrial 
production in the face of stiff international compe tition and a fast-changing business environment ... ". 
 
What types of incentive does the G overnment use to support the development of Indonesia's regions 
and deepen and diversify industrial production?  
Reply:
 
 
Indonesia does not provide any assistance or support in the form of financial incentive to support the 
development of Indonesia’s region. 
 
Which products or sectors of the economy  have benefited from these incentives? 
 
Reply:  
 
- Foot wear 
- Electronics - Agricultural tools  
 
How long have these ince ntives been in use? 
 
Reply:
 
 No data is available.  
IV.  T
RADE AND RELATED POLICIES  
B.  Trade developments and policy 5.  Non-tariff measures  
Paragraph 82.  " ... Indonesia has also been progressively eliminating non-tariff measures, in particular the use of import licences which is currently limited to dangerous materials;  explosives;  
ozone-depleting substances;  alcoho lic beverages;  salt;  propylene copolymers;  lubricant;  clove; 
textiles and textile products;  nitrocellulose;  machines and machinery;  optical discs;  and rough 
diamonds."  Are import licences required for all tariff headings  covering textiles, textile products, machines and 
machinery? 
 
Reply:
 
 Not all tariff headings covering textile, textile pr oduct, machine and machinery need import licenses. 
 
Does the Government intend, in the short or medium  term, to reduce the number of tariff lines subject 
to import licensing restrictions? 
  WT/TPR/M/184/Add.1 
 Page 65 
 
 
  Reply:  
 Actually, Government of Indonesia does not have rest ricted import licensing procedures expect for 
those products which are considered as dang erous products such as hazardous waste. 
 What is the trade policy rationale for continui ng to subject these products to import licensing 
restrictions? 
 
Reply:
 
 
To protect human, animal and plant life.  
V.  F
UTURE DIRECTIONS  
B.  Government programmes 5.  Non-tariff measures 
 
Paragraph 112.  " ... the Government is moving carefully but progressively toward even greater 
opening up of the economy by reducing tariffs and non-tariff measures, facilitating trade and 
encouraging investment.  In this the Government is confident that the new Investment Law and the 
implementing regulations, as well as the other components of the investment package, will contribute 
in an important way towards improving the investment climate ... ". 
 
Outside the special economic zones and industria l estates, does the new I nvestment Law or its 
implementing regulations provide for any type of tax, fiscal or customs incentive, or any other form of 
incentive, to attract foreign inv estors?  If so, what are they? 
 
Reply:
 
 The new investment laws provid e several incentives, whic h are fiscal facilities, rights over land, 
immigration and importing licenses. The fiscal fac ilities, includes investment allowance, carry 
forward loses and accelerated depreciation. Go vernment grants facilities to investors conducting 
capital investment activities. Such facilities may be gi ven to the investor who extends its business, or 
undertakes a new capital investment. The capital invest ment granted facilities has to fulfill at least 
one of the following criteria: employs many workers; is  classified as high-priority; is classified as an 
infrastructure development; undertakes transfer of technology; undertakes a pioneer industry; is 
located in a remote area, undeveloped area, border area, or other key area;  preserves the living 
environment; undertakes research, expansion, and i nnovation; associates with micro, small-scale, 
medium-scale or cooperative ente rprise; or is an industry that uses domestic capital goods or  
machines or equipment.  Facilities granted to the capital investment can be  in the following forms: income tax through 
reduction of net income to a certain level in a ccordance with the amount of capital investment 
conducted in a certain period of time; exemption from  or reduction of import duty on the import of 
capital goods, machinery, or other production eq uipment that cannot be domestically produced; 
exemption from or reduction of the import duty for raw material or supportive material for production 
in a certain period of time and meeting certain requirements.   Exemption from or suspension of Value Added Ta x on the import of capital goods or machinery or 
production equipment that cannot be domestically  produced during a certain period; accelerated 
decrease or amortization; reducti on in Land and Building Tax, partic ularly in certain sectors, in 
certain areas or regions or zones.  WT/TPR/M/184/Add.1 
Page 66  
 
 Exemption from or reduction of income tax in a cert ain amount and time period that shall be granted 
only to new investment In a pioneer industry, namely industry with wide scale application, which brings additional quality and high externality, intro duces new technology and gives strategic value to 
the national economy. Relief or exemption from impo rt tax for ongoing capital investment that is 
replacing machinery or other capita l goods. Further provisions regardi ng the grant of fiscal facilities 
are promulgated in a Regulation of the Minister of  Finance. The facilities shall be granted based on 
the national industry policies determined by the Government. The facilities shall not be granted to 
foreign capital investment which is not in  the form of a limited liability company. 
 Other than the facilities stipulated in Article 18,  the Government grants facilitated services and/or 
licensing to capital investment businesses, to obtai n: rights over land; immigration service facilities; 
and import service facilities. 
 
Report by the Secretariat (WT/TPR/S/184) 
 
III.  T
RADE POLICIES AND PRACTICES BY MEASURE  
(2)  Measures Directly Affecting Imports (ii)  Customs valuation and rules of origin 
 
Paragraph 13.  "Indonesia complies with the WTO Customs Valuation Agreement ... The valuation 
basis changed in 1997 from the prevailing market  value used in preship ment inspection to the 
transaction value plus certain costs and expenses.  However, Customs reportedly uses a schedule of 
arbitrary check prices rather than the transac tion value when assessing duties on certain food 
imports."  Could Indonesia please indicate whether the "check prices" referred to in the above paragraph are 
minimum prices? 
 
What are the criteria and procedure for est ablishing the schedule of "check prices"? 
 
How does Indonesia apply the check prices? 
 
Reply:
 
 Indonesian Customs has adopted Customs Valuation in  Customs Law. We maintain price database by 
collecting past import data and this database for internal reference only.  
Is Indonesia authorized by the Committee on Custom s Valuation to maintain prices that differ from 
the transaction value? 
 
Reply:
 
 Applications of Customs Valuation comply with  international agreement on Customs Valuation. 
 
(v) Import prohibitions, restrictions and licensing 
 
Paragraph 36.  "A September 2004 Ministry of Tr ade decree allows five  companies (importer-
producers) to import sugar.  It also states that the Ministry of Trade decides which companies can 
import sugar and how much.  According to the Gove rnment, sugar imports are regulated to protect 
domestic farmers from low prices.  Registered importe rs are obliged to absorb three-quarters of the 
sugarcane produced by small farmers."   WT/TPR/M/184/Add.1 
 Page 67 
 
 
  What procedure and requirements are used by the Ministry of Trade to decide  which companies are 
authorized to import sugar? 
 
Reply:  
 
The company could be authorized to  import sugar if the company has: 
 
 - approved trade license  - tax number 
- general import license 
 How does the Ministry determine how much sugar can be imported by each company? 
 
Reply:
 
 
Ministry of Trade determine the amount of s ugar to be imported based on market demand. 
 
How often does the Ministry of Trade issue the decree authorizing companies to import sugar? 
 
Reply:  
 
It depends on the need to supply the domestic demand. 
 
Are the companies that are authorized to import sugar State-owned or private? 
 
Reply:  
 
Both, State-owned and private companies  
What are the requirements for registering as a sugar importer? 
 
Reply:
 
 
The company must:   - have general import license   - tax registration number 
 - experience in sugar trading 
 - have an approved importer license  
 
Is this registration permanent or must it be renewed after a set period of time? 
 
Reply:
 
 
The license of import sugar is given for a set period of time and can be extended for another period of time. 
 
Paragraph 37.  "In March 2002, the Ministry of  Industry and Trade issued a decree requiring 
importers of certain critical products to obtain a sp ecial importer identificati on code number (NPIK).  
Importers of certain product categories must apply for a special importer identity card, without which 
products can be detained at port.  The goods include:   corn, rice, soybeans, sugar, textile and related 
products, shoes, electronics, and toys.  The authoriti es explained that this action was taken to stop 
large-scale smuggling of these products, which was hurting domestic producers." WT/TPR/M/184/Add.1 
Page 68  
 
 Is there any cost involved in obtaining an importe r identification code and a special importer identity 
card? 
 
Reply:
 
 
No.  
Approximately how long does it take to issue an im porter identification code and a special importer 
identity card? 
 
Reply:
 
 It takes ten working days, consistent with the ag reement of import licensing procedures of WTO. 
However, with the new improved one door service, to obtain above-mentioned documents could only 
take five working days. 
 How long are these two documents valid for? 
 
Reply:
 
 For Importer Identification Code Number (NPIK) , valid for five years and for special importer 
identity card ranged from one to five years depend on the products. 
 
Paragraph 38.  "The Minister of Industry and Trade issued a decree concerning Textile Import 
Arrangements on 23 October 2002.  Only companie s that have production facilities using imported 
fabrics as inputs for finished products, such as garm ents or furniture, may obtain import licences.  All 
authorized importers must seek approval from the Ministry for the amount and time schedule of their 
imports and must also report to the Ministry on  a regular basis ... Indonesia maintains that the 
regulations are designed to help curb smuggling."  How does Indonesia justify this measure which restrict s and distorts the textile market?  What amount 
of imports is approved by the Ministry for each company? Why are domestic traders who distribute 
textiles not authorized to import them? 
 
Reply:
 
 Indonesia believes that textile import arrangement does not restrict or disturb the textiles market. 
 
How far in advance must companies seek approval from the Ministry for the amount and time schedule of their imports? 
 
Reply:
 
 
Ten working days and the company should repor t the import realization in three months. 
 
What information must be included in the report that  is to be submitted to the Ministry on a regular 
basis by textile importing companies? 
 
Reply:  
 The regular report must include complete and specific  information, such as exporting country, name 
of company, HS number, volume, and value of import. 
  WT/TPR/M/184/Add.1 
 Page 69 
 
 
  Does the Ministry have the authority to reject a request for the approval of the amount and time 
schedule of textile imports?  If so, in what circumstances? 
 
Reply:  
 
Yes, if the company does not fulfil its obliga tion under the Minister of Trade decree. 
 
(vii) Government procurement 
 
Paragraph 42.  "The authorities estimate that government procurement in 2006 accounted for 30-40% 
of total government expenditure ... ". 
 Could Indonesia provide information on the per centage of government procurement contracts 
awarded to foreign companies in 2006? 
 
Reply:
 
 Indonesia will provide the replies later.  
In which sectors and for which products or servi ces were government procurement contracts awarded 
to foreign companies in 2006?  Reply:
 
 Indonesia will provide the replies later. 
 
(ix) Standards and other technical requirements (b) Sanitary and phytosanitary regulations  
Paragraph 62.  "All processed food pr oducts must be tested by the BPOM (National Agency for Drug 
and Food Control).  Under the 1998 Consumer Prot ection Law, a registration number (ML) must be 
obtained from the BPOM to import food products.   Following complaints that the ML-related 
procedures were time consuming and costly, the BP OM granted temporary MLs for food items that, 
according to the authorities, had already entered Indonesian territory, but had not received the 
approval from BPOM.  In July 2000, the Governme nt began to implement the Consumer Protection 
Law of 1998 by requiring registration of imported food products.  Importers must apply for a 
registration number from the BPOM.  This has proven to be an overly complex, time consuming, and 
costly procedure.  All imported food products must be tested by BPOM." 
 According to the above paragraph, applying for a registration number from the BPOM to import food 
products into Indonesia has proven to be an overly co mplex, time consuming, and costly procedure.  
In view of this situation, does the Government  have any plans to facilitate and streamline the 
procedure and prevent it from becoming a source of corruption? 
 
Reply:
 
 
NADFC has a set of guideline standardization on cr iteria and registration of product for applicant 
which is transparent and simple. In this guidelin e applicant shall provide information related to 
product specification such as food ingredients,  packaging materials, and do not meet those 
requirements, it will caused time consuming.  WT/TPR/M/184/Add.1 
Page 70  
 
 Since people always think that food to be consumed  should have important function such as safety and 
quality so that NADFC has to play her role underlini ng those basic factors as simply as possible that 
includes aspects of the procedural matters.  Most processed food import must  be registered with the NADFC and food may only be released from 
customs after food approval has been issued  by NADFC or NADFC in each province. 
 The registration fee for food product in line with  Government Regulation No.17 year 2001 regarding 
tariff of Non State Income that applied in NADFC depends on its type of product and the ranging fees 
between IDR.50.000 – IDR.250.000,-. 
 
(4) Measures affecting production and trade 
(i) Taxation 
 
Paragraph 97.  "Luxury goods tax is  applied at ... ;  40% on alcoho lic beverages, imported leather 
goods, imported precious metals, private aircraft, and firearms ... ". 
 Could Indonesia confirm whether the 40 per cent tax on luxury goods also applies to domestically 
produced leather goods? 
 
Reply:
 
 
Yes, this is fully consistent w ith article III of the GATT 1994. 
 
If not, this would constitute a form of discriminat ory practice against leathe r goods imported into the 
market as opposed to domestically produced good s.  Could Indonesia provide arguments for or 
against this assertion? 
 
Reply:  
 No discriminatory practice imposed between domestic and import products. 
 
(ii) Production assistance  
Paragraph 104.  'Administered prices' remain for a handful of commodities and services including 
petrol, electricity, liquefied petroleum gas, rice, cigarettes, cement, hospital services, potable/piped 
water, city transport, air transport, telephone charg es, trains, salt, toll-road tariffs, and postage.  The 
markets for essential foodstuffs such as sugar, cooking oil, wheat flour and soya beans were freed in 
1999."  Can "administered prices" be interpreted to mean prices subsidized by the Government? 
 
Reply:
 
 
No. 
 
Are "administered prices" for electricity, potable/pip ed water and telephone charges the same level for 
both households and industries and/or trade establishments?  Reply:
 
 Yes. 
  WT/TPR/M/184/Add.1 
 Page 71 
 
 
  What is the procedure for establishing "administered prices"? 
 
Reply:  
 Indonesia will provide the replies later. 
 
How often are "administered prices" updated?  
 
Reply:
 
 
The administered price updated ba sed on the market situation. 
 CHINESE TAIPEI
 
 Report by the WTO Secr etariat (WT/TPR/S/184) 
 
I. E
CONOMIC ENVIRONMENT  
(2) Recent Economic Developments (iv) Balance of Payments 
 
(Page 7, paragraph 18)  
 As indicated in the Report, capital inflow has increased, especially in the form of portfolio 
investments, attracted by favourable interest rate di fferentials and improvement in the risk premium.  
 
It is pleasing to note that the amount of investment in Indonesia to date from the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu is estimated to be in excess of US$ 13.5 billion. At this time, we do not anticipate any decline in fore ign and domestic investors’ confidence in Indonesia 
as a destination for their capital, nor any sudden pul l-out of portfolio investment that might trigger a 
huge outflow of capital in a short period of time.   In this context, we would appreciate knowing wh ether any preemptive measures are in place which 
aim to prevent a repetition of the 1997-98 Asian finan cial crises in Indonesia? Furthermore, if such a 
crisis were unfortunately to occur, while the I ndonesian government may protect itself from the 
impact of a huge outflow of capital, what kind of measures will it take to protect our investors’ 
interests in Indonesia, especially t hose in the manufacturing sector?  
 
Reply
: 
 It is important to note that Indonesian authorities have introduced institutional and structural reforms 
as well as sound macroeconomic policies so as to ensure macroeconomic stability while 
strengthening the banking sector during the post cri sis period. We have observed strong indication 
that current macroeconomic fundamental and banking sector condition have significantly improved in 
recent years. Such favorable condition has enh anced macro-economic resilience and facilitated 
sustainable economic growth while prudent fiscal poli cy contributed to improved debt sustainability.  
 - Strong economic growth and stable macroeconomic  condition were reflected in the average 
GDP growth of 5.6 percent in the last two yea rs, and almost 6 percent in the first quarter of 
2007, while inflation continued to decline reachi ng an annual rate of 6 percent in May 2007;  
 
- Main vulnerability indicators also improved significantly, among others, debt to GDP ratio 
declined from 151.2 percent in 1997/98 to 34.4 percent in April 2007 and short-term debt to 
reserves ratio decreased  from 138 percent to 44 percent; WT/TPR/M/184/Add.1 
Page 72  
 
 - Balance of Payments strengthened, buoyed by strong exports and large inflows of capital that 
let to foreign exchange reserves reaching USD50.1 billion in May 2007 as compared to only 
USD 16.4 billion in March 1998. We are confident that the amount of foreign exchange 
reserves is sufficient as a cushion fo r the unexpected capital outflows;   
 - The Government’s commitment to financial sect or reforms has continued in order to 
strengthen the financial system. Banking sector p erformance improved as reflected in higher 
CAR, LDR, profitability, credits growth and lower NPL. 
 
Pre-Crisis Crisis Period Recovery Period 
Main indicator 
1996 1997 1998 1999 2000 2002 2004 2006 2007* 
Total Asset (T Rp) 506.9 715.2 895.5 1006.7 1030.5 1112.2 1272.3 1693.5 1713.1 
Deposit Growth (yoy 32.2 32 56.2 -1.2 13.2 4.8 8.4 14.1 15.7 
Loan Growth (yoy) 23.7 34.3 22.6 -49.2 15.6 14.4 24.7 14.1 16.6 
Loan/Deposit (%) 109.3 111.1 87.2 44.9 45.8 49.1 61.8 64.7 65.8 
ROA (%) 1.2 1.4 -18.8 -6.1 0.9 1.9 3.5 2.6 2.7 
NPLs Gross (%) 10.5 8.3 48.6 32.8 18.8 8.1 5.8 7 6.7 
CAR (%) 11.8 9.2 -15.7 -8.1 12.7 22.5 19.4 20.5 21.2 
 
While maintaining and enhancing do mestic economic resilience, th e authorities are consistently 
making efforts to improve and deepen domestic  financial market, including foreign exchange market. 
 Bank Indonesia already introduced prudential me asures related to foreign exchange transactions 
aiming at minimizing the transaction of the ID R for speculative purposes. The IDR stabilization 
measures cover among others: limiting speculative foreign exchange transactions, prohibition on 
margin trading, provision of swap hedging fa cilities to investors, do llar swap intervention and 
improving regulation on the net open position. Market intelligent and monitoring system of the 
foreign exchange market has strengthened as the information on forei gn exchange transaction 
improved.  
 
With the above related foreign exchange measures in  the framework of free foreign exchange rate 
system, and complemented by the continued stre ngthening of macro-econom ic fundamental and sound 
banking condition, Indonesian economy is less vulnerable to external shock. 
 
The case of 2007 is seemingly different with w hat it had in 1997. Currently, Indonesia’s foreign 
reserves increased to US$ 50.1 billio n in May 2007 even after prepayment of US$ 7.8 billion to the 
IMF in 2006. While the external debt to GDP ratio improved from 151% in 1997 to 34.3% in 2006. However, we still precautious in the high portfo lio capital inflow and mana ge it through the more 
prudence financial sector policy, i.e: credit in formation center, implement risk management 
certification program, and speeding up banking consolidation.  
 
(v) Structural reforms  
(Page 9, paragraph 22) 
 
The Report indicates that reform of the labour law is  central to the Government's efforts to boost job 
creation and encourage investment.  
 We would appreciate receiving furt her details of the government’s labour law reform programme. In 
particular, we would like to know how Indonesia is planning to revise the provisions on severance 
payments and other regulations relating to labour af fairs?  Moreover, besides the labour law reforms, 
is Indonesia planning to take any other measures to increase the flexibility of its labour market?  WT/TPR/M/184/Add.1 
 Page 73 
 
 
  Reply:  
 According to Indonesia Medium-Term Developm ent Planning (2004-2009), one of the policy 
directions is to improve the manpower climate by  promoting a flexible labor market policy and by 
reforming industrial relations, which shall be based on the principle of justice and be conducive to 
productivity and innovation improvement . 
 
II. T
RADE POLICY REGIME :  FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime 
(a) Main regulatory developments 
 (Page 31 paragraph 43)  
 On 29 March, 2007, the Indonesian government re placed the Law on Foreign Investment of 1967 and 
the Law on Domestic Investment of 1968 with the New Law on Investment, No. 25/2007.  As one of 
the ten largest foreign investors in Indonesia, we  warmly welcome the recent passage of this new 
Investment Law.  
 
However, our business community in Indonesia often complains that current domestic labour 
regulations and tax laws are responsible for the disr uption of factory management and production.  We 
therefore take this opportunity to express our con cern in this respect, and to encourage Indonesia to 
please consider revising its labour and tax laws in or der to effectively improve the investment climate 
as a whole. 
 
Reply:
 
 Indonesia is currently in the process of reviewing the tax laws together with the parliament. In a 
proposed tax reforms, the target of benefit are as  follow: increasing the compliance, increasing the 
number of taxpayers, widening tax base and incr easing taxable revenues. Related with fiscal 
administrative reforms, there will be an im plementation of database and on-line system and 
improvement current large tax office. In the propo sed tax law, the government will provide incentive 
and pro-business deregulation as well as revising ta x procedure and administration, income tax and 
VAT together with a more legal certainty. Related wi th labor Law, the government is currently having 
an active discussion with the stakeholder to a ccommodate all interest and achieving the highest 
possible benefit for all. 
 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports (vi) State trading 
 
(Page 48, paragraph 40)   
It is stated that "State-owned enterprises (S OEs) are estimated to account for up to 40% of 
Indonesia’s GDP, reflecting their role  in the oil, gas and electricity industries, their continued 
presence in various other industries, including cement, fertilizer, steel and mining as well as in agricultural plantations, transportation,  banking, and telecommunications."  
 
Later in the same Report, (page 62, paragraph 108)  it is also stated that "Exempt from the law are 
small enterprises and cooperatives, as well as th e production and marketing of goods and services 
deemed vital to public welfare, and the state-owned companies."   WT/TPR/M/184/Add.1 
Page 74  
 
 Could Indonesia please elaborate further as follows: 
 (i) What is the justification for the exemptions  from the competition law applied to these state-
owned companies, given that they account for su ch a large share of Indonesia’s GDP and that 
their trade practices may affect domestic competition? 
 Reply:
 
 As explain in the Question (ii) below, the compe tition law will be applied to state-owned companies. 
 
(ii)  Does Indonesia (or the KPPU) plan to appl y the competition law to these state-owned 
companies in the future? If so, please provide details. 
 
Reply:
 
 
The exemption of Indonesian competition law is onl y applied for the monopoly rights of state owned 
company. In practices it means that any business ac tivities conducted by the state owned company is 
an object of competition law enforcement. W ithin seven years of Indonesian competition law 
implementation, the KPPU has already take measures to address state owned anticompetition 
activities such as in oil & gas industry, telecommunication sector, and seaport industry. 
 
(ix) Standards and other technical requirements (a)  Standards 
 
Mandatory standards 
 (Page 52, paragraph 56)  
 It is mentioned in the Report that there are 211 mandatory SNIs in Indonesia.  
 
Are these mandatory SNIs also technical regulati ons? Could Indonesia please provide a list of the 
coverage of these mandatory SNIs and the responsi ble authorities, in addition to those under the 
Ministry of Industry and Trade and Ministry of Energy and Mineral Resources?  Reply:
 
 In principle, all SNIs are voluntary when adopted. However when related to he alth, safety, security or 
conservation of environmental function, an SNI may be  referred in a technical regulation. Therefore, 
all specification/requirements in the standards referr ed in technical regulations become mandatory. 
The list of SNIs adopted into technical regulations is provided in Indonesian. The list of SNIs in 
English will be provided in due course.  
Testing and certification 
 (Page 53, paragraph 57)  
 Certification in Indonesia is conducted by domestic  organizations or laboratories accredited by the 
National Accreditation Body (KAN), or overseas orga nizations or laboratories that have mutual 
recognition agreements with the KAN.  
 Could Indonesia please provide a list of overseas or ganizations or laboratories that have mutual 
recognition agreements with the KAN? 
  WT/TPR/M/184/Add.1 
 Page 75 
 
 
  Reply:  
 
• KAN has a mutual agreement with the Bureau of  Product Standards (BPS) of the department 
of Trade and Industry (DTI) of the Republic of the Philippines on Product Certification and 
Approval Schemes. For the time being, KAN is  under process of preparation for MoU with 
UKAS (England);  
 
• Out of the organizations mentioned in the first bullet, KAN has not had mutual agreement 
with any other overseas CAB. However the system is open for any AB or CAB, if requested, for mutual recognition agreement. Lists of accreditation bodies as signatories of 
APLAC/ILAC MRA as well as PAC/IAF MLA are available at APLAC, ILAC, PAC, IAF 
websites.  
 IV. T
RADE POLICIES BY SECTOR  
(3) Mining and Energy  
 
(Page 79, paragraph 35)  
As indicated in the Secretariat Report and in the Government Report (WT/TPR/G/184, IV. TRADE 
AND RELATED POLICIES, C. SECTORAL POLICIES), pr ior to 2001, the state-owned oil and gas 
company, Pertamina, was the industry regulator. No w, following the reform and deregulation of 2001, 
BP MIGAS and BPH MIGAS have replaced Pertamin a as the regulatory agencies for upstream and 
downstream activities respectively.   
 Our questions are as follows: 
 
(i) Given the need for firms supervising the regul ation of upstream and downstream activities in 
the oil and gas industry to be in harmony with each other, how do BP MIGAS and BPH 
MIGAS coordinate their operations? 
 
Reply:
 
 BPMIGAS and BPH MIGAS have their own task and res ponsibility. The main task of BP MIGAS is to 
supervise Oil Company that has cooperation contract  with BPMIGAS. The supervision is related to 
the fulfilling of the cooperation contract. While the main task of BPH MIGAS is to supervise the 
supply and distribution of fuel which its classificat ion is decided by the Government, and also to 
supervise the gas distribution through pipes whic h include the supervision to a health business 
competition and tariff decision to pipe distribut ed gas. General Policy is still on the hand of 
Government c.q. Ministry of Energy and Mineral R esources. If there is an interaction between 
BPMIGAS and BPH MIGAS, the Government or Minister of Energy and Mineral Resources will 
specify appropriate policy that should  be done by both institutions.   
 
(ii) Moreover, how do these two organizations manage  to cooperate with Pe rtamina’s continuing 
dominant influence in the downstream sector?  
 
Reply:
 
 
Although Pertamina still has dominant role in the downstream sector, accordance to the change of 
Pertamina into corporate company in 2003, Pert amina has the same level with other companies 
either in down or up stream sector of oil and gas. 
 (iii)  Has the privatization of Pertamina, which we  note was "scheduled" for 2006, already been 
accomplished by the state-owned oil and gas company? WT/TPR/M/184/Add.1 
Page 76  
 
 Reply:
 
 Up to now, the privatization of Pertamina has not been accomplished yet.   
(iv)  Were there any difficulties or obstacles encount ered during the process of privatization? We 
would be very interested in learning about th e Indonesian government’s experiences with the 
privatization of Pertamina and the repectiv e measures taken, because we have plans to 
privatize our own state-owned oil and gas company as well. 
 
Reply:
 
 
Indonesia will provide an explanation later. 
 
(Page 79, paragraph 36)  
 The Report mentions that a policy is under developm ent to reduce exports of liquefied natural gas 
(LNG) from 2010 because of the growing need for dom estic LNG. All existing supply contracts will 
be honored, but extension and renewal thereafte r will be decided on a case-by-case basis.  
 When considering whether to extend or rene w an LNG contract, how would the Indonesian 
government ensure each individual LNG buyer is treated on an equal basis? 
 
Reply:
 
 The allocation of natural gas (including LNG) is decided by Government. The Government has 
determined Indonesian Gas Balance to allocate th e domestic and export needs. The export of natural 
gas (LNG) will be processed with a dom estic market obligation policy.   
 
(4) Manufacturing 
(i) Textiles and clothing  
(Page 81, paragraph 44)  
 
Please explain why only companies that have produc tion facilities using imported fabrics as materials 
for finished products may obtain import licences? Ho w does this regulation help curb smuggling, and 
not unduly restrict or distort trade? How is the us e of import licensing procedures to restrict textile 
imports and protect domestic produc tion would be consistent with  Indonesia's WTO commitments 
under Articles III and XI of the GATT 1994? 
 
Reply:
 
 
Textile industry is the sector which has an importa nt role for Indonesia’s economic growth, viewed 
both from export income and large absorption of em ployment. This sector is one the sector which 
seriously affected from economic crisis and also fa cing unfair competition issue with similar imported 
products. 
 
The implementation of producer-importer (Importir Produ sen/IP) provision is expected to be able to 
reduce import misuse that can create unfair comp etition for both domestic distribution and export. 
Verification at loading port is required for import that conducted by producer-importer. Such 
verification basically helps to reduce or prevent smu ggling in term of controlling the realization of 
import license where it is checked if the type, am ount, and specification of the shipped products are 
suitable with the one reported in the import document. 
  WT/TPR/M/184/Add.1 
 Page 77 
 
 
  (5) Services 
(iii) Transportation Air 
 
(Page 95, paragraph 80)  
As indicated, there are currently two state-owned air transport carriers, Garuda and Merpati, with 
market shares for domestic routes in 2006 of 20% an d 5% respectively; the Government is planning to 
privatize both.   
 Could Indonesia please provide us with details of the schedule for privatization of the above-
mentioned carriers? 
 
Reply:
 
 
Privatization of state-ow ned enterprises including the privatizat ion of State-owned air transport carri ers 
Garuda Indonesia and Merpati is not under Ministry of Transportation's responsibility. It is State 
Ministry for State Owned Enterprises responsibility. Ministry of Transportation is only responsible 
for technical aspect of transportation in Indonesia. As far as we know, the privatization of the said air transport carriers is still under discussion.  
Report by the Government of Indonesia (WT/TPR/G/184)  
III. I
NSTITUTIONAL FRAMEWORK  
B. I NSTITUTIONAL AND LEGAL REFORM  
 (Page 11, paragraph 29)  
 The Report states that "an online Certificate of Or igin facility was also launched in January 2006 as 
an integral part of the National Single Window.  In 2006, the Port of Batam had a pilot project to 
implement the National Single Window and in 2007 this  is being followed up by the port of Tanjung 
Priok, Jakarta.  By 2008, through the agreement in ASEAN, Indonesia has to fi nish its preparation for 
a National Single Window and start linking to the ASEAN Single Window (ASW) network.". 
 
As the National Single Window may have not been put into operation, we notice that currently different government authorities in Indonesia are in char ge of issuing certificates  of origin for exports. 
We would appreciate if Indonesia could: 
 (a) provide us with the list of those authorities i ssuing Certificates of Origin, and indicate which 
ones have already begun the operation of issuing online Certificates of Origin. 
Reply:
 
 There are 85 Regional Government Office (RGO) which authorize to issue Indonesian Certificate of 
Origin (COO). 23 RGO in 2006 have been ready to issue on line COO and 28 RGO in 2007 to issue 
on line COO. The List of the RGO as attached. Basi cally, the issuing agency for Certificate of Origin 
is Ministry of Trade, but the authority has been dele gated to the local authority with the issuance of 
Minister of Trade decree. At presen t, the issuance of Certificate of Origin conducted by 85 issuing 
agencies in local area from previous 193 issuing agencies. 
 (b) inform us of the timeframe of each phase  for setting up the National Single Window.  
 WT/TPR/M/184/Add.1 
Page 78  
 
 Reply:
 
 1. Setting up National Team for Preparation of NSW (March 2006); 2. Developing business process of ex port and import licenses (2006 – 2007); 
3. Piloting NSW in Batam (December 2006); 
4. Blue Print of Indonesia National Single window (June 2007); 
5. Preparing for National Application Service Provider (2007); 6. Piloting NSW in the Port of Tanjung Priok, Jakarta (December 2007); 7. Joining ASEAN Single Window (ASW) September (2008); 8. Full implementation of ASW for all ASEAN member countries (2012). 
 
In addition, soft Launching of Single Window has been done in Batam in 2006 and will be experimented in Tanjung Priok port in Desember 2 007. Tanjung Priok port is the largest port for 
export and import in Indonesia. 
 
IV. T
RADE AND RELATED POLICIES  
B. T RADE DEVELOPMENTS AND POLICY  
5. Non-tariff measures   
 
(Page 20, paragraph 83)  
Now that the ban on the export of sands has been implemented, we should be grateful for further 
clarification from the Indonesian government as to whether the restrictive measure applies to 
Singapore only, or to other countries as well, incl uding the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu?  Furthermore, will the I ndonesian government consider lifting this ban?  
 Reply:
 
 Basically, export ban on sand both land or sea; and top soil are pointed to all country, not only for Singapore. The main reason behind this regulation is  to prevent sea and seasho re destruction as well 
as fall down for the fishermen and fish breeding. Th e uncontrolled mining of land sand, land and top 
soil also could seriously harm the environment. To  date, Indonesia has not made a plan revoking the 
export ban since the environmental damage as the effect of land mining remain unsolvable.   C. S
ECTORAL POLICIES  
1. Agriculture 
 (Page 21, paragraph 90) 
 In Indonesia, BULOG, a state-owned agency, pr ocures and buys rice from farmers using the HPP 
(government procurement price).   
 
We would be grateful for a detailed description of  Indonesia’s procurement project for rice and the 
results of its implementation over the last three years? 
 
Reply:
 
 Governement procurement price (HPP) is a guarante d minimum price of rice for the farmers. Bulog 
on behalf of government will buy rice at a minimum price whenever the market failed to buy at the 
guaranted price. Presidential Decree (Inpres) No. 3/2007 stated that the government procurement 
price for rice, with maximum 14% moisture conten t and maximum 20% broken is IDR. 4000/kg at 
Bulog’s godown. For unhusked rice with maximu m 14% moisture content and maximum 3 % dirty  WT/TPR/M/184/Add.1 
 Page 79 
 
 
  
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HPP GKPHarga GKPmaterial content is IDR. 2600/kg at Bulog godown. While for unhusked rice with maximum 25 % 
moisture content and maximum 10 % dirty material cont ent is IDR. 2.035/kg at the rice milling level. 
 As a results of its implementation over the last three years, the total rice procured from domestic 
production for 2004-2006 is 2.096.609 ton, 1.529.718 ton and 1.434. 127 ton subsequently. Every year 
the government buys some 6-7% of national produc tion for national stock and rice sale for the poor. 
The results of the implementation of the rice poli cy shown that the average prices at rice producer 
markets were mostly above the government procurem ent price which reflects that farmers always 
received reasonable prices. (as shown in graph 1)  
Graph 1. UNHUSKED RICE PRICES (GKP) VS HPP 2003- 2007 
     
 
  
Notes  : Unhusked rice (GKP) prices start to grow up above HPP since August 2004 It 
indicates the increasing rice farmers’ welfare.  
 
3. Oil, gas and minerals 
 
(Page 23, paragraph 98)  
As stated, Indonesia has potential for further develo pment of green sources of energy, but the lack of 
infrastructure has limited the use of alternative en ergy resources and investment in the sector is 
needed.  
 
Are any incentives offered to invest ors in Indonesia’s green energy industry, and to foreign investors 
in particular?  Reply:
 
 
Indonesia will provide an explanation later.  
 
B. G OVERNMENT PROGRAMMES  
 
(Page 25, paragraph 111) 
 According to the Report, further privatization of state-owned enterprises is being considered, but it 
will take time to prepare some of the businesses for privatization. 
 WT/TPR/M/184/Add.1 
Page 80  
 
 We would appreciate knowing how long the prepara tion of these businesses is likely to take, and 
whether there will be any limita tions placed on foreign investors during the privatization process? 
 
Reply:
 
 
Indonesia is continuously discusiing the privatizati on process of State-owned Enterprises. However, it 
is difficult to determine the time to complete.  
ATTACHMENT: 
 
85 REGIONAL GOVERNMENT OFFICES WHICH AUTHORIZED TO ISSUE INDONESIAN CERTIFICATE OF ORIGIN  
 
No REGIONAL GOVERNMENT OFFICE 
1 Provincial Office of Nanggroe Aceh Darussalam 
2 District Office of Aceh Utara  
3 Provincial Office of Sumatera Utara                                                                                                                  
4 District Office of Asahan    
5 Medan Tobacco Cooperation                                                                     
6 Provincial Office of Sumatera Barat                                                                                                                                                                 
7 Provincial Office of Riau                                                                                                      
8 District Office of Kepulauan Riau                                                                                              
9 Municipality Office of Dumai                                                                                                                                                                                 
10 Municipality Office of Batam                                        
11 Batam Industrial Development Authority 
12 Provincial Office of Jambi                                                                                                                                                      
13 Provincial Office of Sumatera Selatan                                                                                                                                   
14 Provincial Office of Bengkulu                                                                                                                                                          
15 Provincial Office of Lampung                                                                                                                                                
16 Provincial Office of DKI Jakarta                                                                                                                                                                            
17 Municipality Office of Jakarta Selatan                                                                                                                                                                   
18 Municipality Office of Jakarta Pusat                                                                                                                                                                       
19 Municipality Office of Jakarta Timur   
20 Municipality Office of Jakarta Barat                                                                                                                                                                      
21 Municipality Office of Jakarta Utara                                                                                                                                             
22 Cakung Bounded Zone (KBN Cakung)                                                                                                                  
23 Tanjung Priok  Bounded Zone (KBN Tj. Priok)     
24 Marunda Bounded Zone (KBN Marunda) 
25 Provincial Office of Jawa Barat     
26 District Office of Bogor                                                                                                                     
27 District Office of Sukabumi                                                                                                                                
28 District Office of Bandung                                                                                                                                                  
29 District Office of Tasikmalaya                                                                                                                                                         
30 District Office of Cirebon                                                                                                                                                            
31 District Office of Purwakarta                                                                                                                                                                                 
32 District Office of Karawang                                                                                                                                                               
33 District Office of Bekasi                                                                                                                                                                                        
34 Municipality Office of Sukabumi                                                                                                                                                                          
35 Municipality Office of Bandung                                                                                           
36 Municipality Office of Cirebon                                                                                                                                                                              
37 Municipality Office of Bekasi                                                                                                                                                                                 
38 Provincial Office of Jawa Tengah                                                                                                                                                                           
39 District Office of Cilacap 
  WT/TPR/M/184/Add.1 
 Page 81 
 
 
   
No IPSKA 
40 Municipality Office of Surakarta                                                                                                      
41 Surakarta Tobacco Cooperation                                                                                                                                                                            
42 Provincial Office of DI Yogyakarta                                                                                                                
43 Provincial Office of Jawa Timur                                                                                                                                                                            
44 District Office of Banyuwangi                                                                                                                                                      
45 District Office of Pasuruan 
46 District Office of Gresik 
47 Laboratory for Quality Testing a nd Certification of Ex port Goods and Jember Tobacco  Cooperation  
48 Laboratory for Quality Testing and Certification of Export Goods and Surabaya Tobacco Cooperation  
49 Provincial Office of Kalimantan Barat                                                                                                       
50 Provincial Office of Kalimantan Tengah                                                                                                                                 
51 District Office of Kotawaringin Barat                                                                                                                     
52 District Office of Kotawaringin Timur                                                           
53 District Office of Kapuas 
54 Provincial Office of Kalimantan Timur 
55 District Office of Berau 
56 Municipality Office of Bontang                                                                                                                                                                             
57 Municipality Office of Balikpapan 
58 Municipality Office of Tarakan 
59 Provincial Office of Kalimantan Selatan 
60 Provincial Office of Bali 
61 District Office of Gianyar                                                                                                                                                                                      
62 Provincial Office of Nusa Tenggara Barat 
63 Provincial Office of Sulawesi Selatan                                                                                                        
64 Provincial Office of Sulawesi Tengah                                                                                                                                                            
65 Provincial Office of Sulawesi Utara                                                                                                                                
66 Municipality Office of Bitung                                                                                                                                                                    
67 Provincial Office of Sulawesi Tenggara 
68 Provincial Office of Maluku                                                                                                                                                                                   
69 Provincial Office of Maluku Utara                                                                   
70 Provincial Office of Papua                                                                                                                               
71 District Office of Merauke                                                                                                        
72 District Office of Biak Numfor  
73 District Office of Yapen Waropen 
74 District Office of Sorong 
75 District Office of Manokwari                                                       
76 District Office of Fak-Fak                                                                                                                                                                                       
77 Provincial Office of Banten 
78 District Office of Serang 
79 District Office of Tangerang 
80 Municipality Office of Tangerang  
81 Municipality Office of Cilegon                                                                                                                                        
82 Provincial Office of Kepulauan Bangka Belitung 
83 District Office of Belitung 
84 Provincial Office of Gorontalo                                                                                            
85 District Office of Indragiri Hilir 
 
*Directorate of Export and Import Facilitation, Ministry of Trade, 2007 
 
 WT/TPR/M/184/Add.1 
Page 82  
 
 23 REGIONAL GOVERNMENT OFFICE TO ISSUE ON LINE COO (2006) 
 
No REGIONAL GOVERNMENT OFFICE 
1. Provincial Office of Sumatera Utara                                                                                                                      
2. Provincial Office of Riau                                                                                                           
3. Municipality Office of Batam                                                                                                                                                   
4. Batam Industrial Development Authority 
5. Provincial Office of Sumatera Barat                                                                                                                                                                      
6. Provincial Office of Lampung                                                                                                                                                
7. Provincial Office of DKI Jakarta                                                                                                                                                                           
8. Cakung Bounded Zone (KBN Cakung)                                                                                                                  
9. Tanjung Priok  Bounded Zone (KBN Tj. Priok)                                                                                                                     
10. Provincial Office of Jawa Barat      
11. District Office of Bekasi                                                                                                                                                                                       
12. District Office of Bandung                                                                                                                                                  
13. District Office of Bogor                                                                                                                     
14. District Office of Cirebon                                                                                                                                                            
15. District Office of Tangerang 
16. Provincial Office of Jawa Tengah                                                                                                                                                                        
17. Provincial Office of DI Yogyakarta                                                                                                                
18. Municipality Office of Surakarta                                                                                                      
19. Provincial Office of Jawa Timur                                                                                                                                                                          
20. Provincial Office of Bali 
21. Provincial Office of Kalimantan Selatan 
22. Provincial Office of Kalimantan Timur 
23. Provincial Office of Sulawesi Selatan                                                                         
 
*Directorate of Export and Import Facilitation, Ministry of Trade, 2007 
  
28 REGIONAL GOVERNMENT OFFICE TO ISSUE ON LINE COO (2007) 
 
No REGIONAL GOVERNMENT OFFICE 
1. Provincial Office of Sumatera Utara                                                                                                                      
2. Provincial Office of Riau                                                                                                           
3. Municipality Office of Batam                                                                                                                                                   
4. Batam Industrial Development Authority 
5. Provincial Office of Sumatera Barat                                                                                                                                                                
6. Provincial Office of Lampung                                                                                                                                                
7. Provincial Office of DKI Jakarta                                                                                                                                                                     
8. Cakung Bounded Zone (KBN Cakung)                                                                                                                  
9. Tanjung Priok  Bounded Zone (KBN Tj. Priok)                                                                                                                     
10. Provincial Office of Jawa Barat      
11. District Office of Bekasi 
12. District Office of Bandung                                                                                                                                                  
13. District Office of Bogor                                                                                                                     
14. District Office of Cirebon                                                                                                                                                            
15. District Office of Tangerang 
16. Provincial Office of Jawa Tengah                                                                                                                                                                   
17. Provincial Office of DI Yogyakarta                                                                                                                
18. Municipality Office of Surakarta                                                                                                      
19. Provincial Office of Jawa Timur                                                                                                                                                                     
20. Provincial Office of Bali 
21. Provincial Office of Kalimantan Selatan 
22. Provincial Office of Kalimantan Timur 
23. Provincial Office of Sulawesi Selatan              
24. Municipality Office of Jakarta Selatan                                                                                                                                                            
25. Municipality Office of Jakarta Pusat                                                                                                                                                                
26. Municipality Office of Jakarta Timur   
27. Municipality Office of Jakarta Barat                                                                                                                                                               
28. Municipality Office of Jakarta Utara                                                                                                                                             
 
 *Directorate of Export and Import Facilitation, Ministry of Trade, 2007  WT/TPR/M/184/Add.1 
 Page 83 
 
 
  JAPAN  
 
The Government Report (WT/TPR/G/184) 
 
II. E CONOMIC ENVIRONMENT  
C. I NVESTMENT  
 
(Question 1: page 8, paragraph 13) 
 According to the Government report, Japan unde rstood that the Investment Law was passed in 
Parliament on 29 March and w as implemented in April 2007. 
 
(1) Please indicate when detailed rules and regulati ons regarding the Law plan to be established 
and also when the Law will be practically implemented. 
 
Reply:
 
 Indonesia is considering on implementing the regulation as soon as possible. For Indonesia, it is very 
crucial in order to enhance the investment c limate in order to boost the national economy.  
 (2) Please confirm Japan’s understanding that the Law is aimed at facilitating investment from 
foreign countries including Japan, not at introduc ing a new limitation of foreign investment. 
 
Reply:
 
 
Indonesia welcomes new investment (FDI) from a ll countries. There will be limitation for certain 
sectors which will be put in the negative list which for both domestic and foreign investment.  
 (3) (a) (In case that new regulations will be intr oduced to strengthen the limitation of foreign 
investment) If a negative list of the limitations  has already been determined, please provide 
the following information: 
 
1) specific sector where limitation was newly strengthened,  
 
2) specific outline and reason of th e strengthened limitation, and 
 3) the consistence with the WTO commitment.  
 
If a new negative list has not been determined, Japan w ould like to be informed of the future prospect 
for the decision.  Reply:
 
 Closed and open business with requirement for inve stment, domestic and foreign decided based on the 
criteria of health, safety, defense and security, en vironment and culture, based on national interest. 
Those criteria could be breakdown as follow: to main tain the civil society, to protect the bio diversity, 
to maintain the ecosystem balance,  to supervise the use of toxic ant materials, to avoid forgery and 
supervise the distribution of un scheduled goods and services, to guard the national independency, to 
maintain the limited resources. The mo re specific list will be decided soon.  
 WT/TPR/M/184/Add.1 
Page 84  
 
 III. I
NSTITUTIONAL FRAMEWORK  
B. I NSTITUTIONAL AND LEGAL REFORM  
 
(Question 2: page 10, paragraph 26)  
The Government report, along with the Secretar iat report (page 65, paragraph 119), states that 
Indonesia made a number of efforts to take measures to protect Intellectual Property Rights, resulting 
in the downgrading from Priority Watch List status  to Watch List status imposed on Indonesia by 
USTR on IPR-related issues in early 2007. Japan a ppreciates such efforts taken by the Indonesian 
Government. 
 
(1) Please indicate when the report on IP-relat ed data/activities will be announced, which the 
 National Team is now coordinating.  
 
Reply:
 
 
The team is now working for those related to IP-rel ated data/activities. We are committed to submit in 
the council for TRIPs those data/ activities soon after published. 
 
(2) Japan would like to be informed of the outlin e of the reports and the specific activities of the 
National Team (which, Japan guesses, is a ‘special task force’).     
 Reply:
 
 
Specific activities of the National Team: 
 
- to coordinate with Police, Judge, Attorney in order to protect IPRs; 
- to give awards to all people who have great efforts to protect IPRs; 
- to organize seminars, workshops in ord er to increase the public awareness and the 
importance of protecting IPRs. 
 IV. T
RADE AND RELATED POLICIES  
B. T RADE DEVELOPMENTS AND POLICY  
2. Tariff policy  
Question 3: page 19, paragraph 73-78)  
In response to the request from Japan, the Indon esian Government made commitments on a MFN 
basis to eliminate customs duties, gradually from January 2007 to January 2009, on still image digital 
cameras capable of moving image recording. This type of digital camera had previously been 
classified under the Indonesian national tariff line " 8525.40.30.00"or "Other di gital camera", before 
the entry into force of the new tariff harmonization in Indonesia in January 2007.  
 (1) Japan would like to be informed of the current Indonesian national tariff line 
(heading/subheading and its description) of th e aforementioned products (still image digital 
cameras capable of moving image recording) under the new tariff classification. 
 
Reply:
 
 Under the HS-2007, "Other digital Camera" is cl assified as 8525.80.20.19.  The applied MFN rate 
will be imposed until the year 2009 is 5%. 
  WT/TPR/M/184/Add.1 
 Page 85 
 
 
  (2)  Please inform the MFN rate of the products concerned until the year 2009. 
 
Reply:  
 
MFN rate for digital camera until 2009, from  The Finance Minister Regulation on Tariff 
Harmonization.  
 
No. Group of 
Industry BTBMI 
2004 2005 2006 2007 2008 2009 2010 Total of 
Post 
Tariff 
4. Electronics 0 0 0 0 0 0 5 133 
 and 5 5 5 5 5 5 5 283 
 Information 10 10 10 10 10 10 10 124 
 Technology 15 15 15 15 15 10 10 90 
 
Exemption :  energy saving bulb, signal equipment, gas stove, AC, ITA products, audio and video 
equipment ----- 248 pos tarif.  
The Secretariat Report (WT/TPR/S/184) 
 II. T
RADE POLICY REGIME :  FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime 
 IV. T
RADE POLICIES BY SECTOR  
(5) Services  
(ii) Telecommunications  
(Question 4: page 31-33 and 91, paragraph 43-47 and 68)  
According to the Secretariat report, Japan understood that the Investment Law was officially approved 
by Indonesia’s House of Representatives on 29
th March and was implemented in April 2007. Japan 
also understood that the government of Indonesia has been working to finalize related rules and 
regulations regarding the Law, such as a presi dential decree on business sectors where foreign 
investment is prohibited, and where forei gn investment is open under some conditions. 
 
The telecommunications sector is listed in the "business activity open to investment under the 
condition of a joint venture betw een foreign and domestic invest ors", under Presidential Decree 
No. 118 / 2000.  
 
Japan would like to know whether or not the govern ment of Indonesia has any plan to remove the 
telecommunications sector from the list for further liberalization.  Reply:
 
 The government is still engaged in reviewing foreign ownership  for the entire sector under the 
upcoming new Presidential Decree.  
 
(6) Trade Agreements and Arrangements 
(ii) Regional arrangements 
 
(Question 5: page 25-27, paragraph 26-34) 
 Please describe the recent progress in the implementa tion of Indonesia’s ‘behind the border issues’. WT/TPR/M/184/Add.1 
Page 86  
 
 Reply:
 
 Indonesia is continuously exploring Indonesia’s be hind the border issues. We will further submit the 
progress of these issues in the relevant committee. 
 III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports 
(iii) Tariffs  
(Question 6: page 39-41, par agraph 16, 19, 20, Box III.2) 
 
As a result of reducing tariff rates of non-agricultural goods, the average applied rate in 2006 is 9.2 %, 
while the average bound tariff rate is 35.8%. Japan is of the view that the gap between the applied and 
bound rates should be improved due to th e significant reduction of predictability. 
Please indicate specific views about this issue.  Reply:
 
 
Indonesia is ready to make commitment to reduce its bound rates considering a degree of flexibility 
to develop its industrial sector that is so important for jobs (and hence poverty alleviation). 
Moreover, Indonesia has commitment to reduce the applied tariff thr ough theIndonesia's tariff 
harmonization program. Besides, Indonesia also locked in the tariff reduction in the regi onal 
tariff agreement. 
 
(Question 7: page 39, paragraph 16) 
 
As Indonesia adopted the ASEAN Harmonized Tariff Nomenclature (AHTN), which increased the 
number of tariff lines from 2003 to 2004, the average a pplied tariff rate increased from 7.2% to 9.9% 
in 2004. According to the Government, the reason for this increase is explained as the merging of 
tariff lines with different tariff lines. 
 
(1) Please explain specific methods in which th e Indonesian Government took in the above 
mentioned process regarding the merging of tariff lines with different tariff lines. 
 Reply:
 
 The ASEAN Harmonized Tariff Nomenclature (AHTN)  was formulated to accommodate every ASEAN 
member country interest regarding the Harmonized System (HS).  The result for Indonesia was that 
the total tariff lines increased drastically from 7, 540 in 2003 to 11,163 in 2004.  Many products with 
high tariff rate had to be split, for instance, automotive and alcohol beverage products.  Beside 
splitting, there were also some merg ing case where two or more tar iff lines with different tariff rates 
had to merged.  In some merging, the rate cho sen was the highest one.  These cases brought about the 
increase of Indonesia’s average tariff rates from 7.24% in 2003 to 9.88% in 2004.  
 
Japan is of the view that the rapid increase in num ber of tariff lines also caused the escalation of the 
simple average applied rate.  
(2) Please indicate Indonesia’s view on how the ra pid increase in number of tariff lines caused 
the increase in the simple average applied rate.  WT/TPR/M/184/Add.1 
 Page 87 
 
 
  Reply:  
 The merging of tariff line with different tariff ra tes resulted in an overall increase in the simple 
average applied rate to 9.9% in 2004.  
 
(Question 8: page 39-40, paragraph 16, Box III.1)  Indonesia announced a medium-term tariff harmonizati on programme, which aims to move toward a 
‘low and uniform’ tariff rate and specifies the schedule of tariff reduction between 2005 and 2010. 
 
Please indicate specific schedules of reduci ng tariff rates by 2010 and after 2010. 
 
Reply:
 
 
100% tariff lines will be reduced to become 0% in 2010 and 263 tariff line is to be reduced to 0% in 
2012 there after. 
 
(3) Measures Directly Affecting Exports (ii) Export taxes  
(Question 9: page 56, paragraph 78)  
According to the Secretariat report, Japan understo od that the Government started imposing export 
tariffs on raw skins (25%). 
 
(1)  Please explain specific reasons for this export tariff at this juncture. 
 
Reply:
 
 25% raw skin and 15% wet bue export tariffs a re intended to increase domestic added value. The 
hope of increasing domestic added value is produc ing new product from the raw skin material. 
Indonesia is one of the producing countries for raw skin product, even though Indonesia is also 
importing raw skin to secure the domestic production. The motive of export retribution is to restrict 
export with the condition that many domestic indus try having difficulty to have the goods as raw 
material for their industry. Japan is of the view t hat such imposition of export tariffs possibly retards 
stable and effective export and import of raw skins.  
(2)  Please indicate in what terms this export tariff continues to be imposed.  Reply:
 
 Tariff policy of raw skin material is likely to be imposed as long as domestic  production and import of 
raw skin material could not meet with domestic  demand. The handicraft industries, one of the 
consumers of raw skin, possess the role of devel oping the small and medium enterprise sector and 
absorbing Indonesia labour. Export of processed skin is  not impose export tariff, furthermore if there 
is increasing capacity in processing of raw skin to processed skin in Indonesia and could meet with 
the quality requirement from processed skin industry,  therefore the export tariff policy will be review. 
Export retribution will be imposed if domestic supply for the goods hampered so that the industry who 
need the good having difficulty to get it.  
 WT/TPR/M/184/Add.1 
Page 88  
 
 (4) Measures Affecting Production And Trade 
(iv) Intellectual property rights  
(Question 10: page 64, paragraph 115)  
Please provide information on the number of cases infringing on intellectual property rights 
(regarding counterfeiting and pirated goods). 
 
Reply:
 
 
The compilation of data regarding cases on IPR had been submitted to the WTO Secretariat during 
the preparation of the report. 
 
IV. T RADE POLICIES BY SECTOR  
(3) Mining and Energy 
(i) Mining 
 
(Question 11: page 78, paragraph 32) 
 
The draft Law of mineral resource and coal is curre ntly under consideration in the Indonesian Diet. 
Japan understood that under the new Law, the Govern ment is reported to consider that refining 
process is required to the enterprise which mines the mineral resource.  
 As Japan imports many mineral resources such as nickel, copper and coal from Indonesia, Japan will 
have an interest and concern about  such regulations, if such require ments are posed to  the companies. 
 
In this light, Japan would like to be informed of the following questions: 
 1) current situation of deliberation in the Diet (timing of passing the draft Law through the Diet, 
schedule of implementing the Law),  
 
Reply:
 
 The Law will be implemented as soon as possible ac cording to the statement in the article of entry 
into force.  
2)  whether or not the refining process is required to the enterprise under the Law, and  Reply:
 
 Currently the Bill on Mineral and Coal is still in th e discussion in the Parliament (DPR). Under this 
New Law, Government of Indonesia c onsiders the added value of minerals. 
 3)  the consistency of such regul ations with the WTO Agreements. 
 
Reply:
 
 
We believe that the Bill will be consistent with WTO/GATT 1994 principles.   WT/TPR/M/184/Add.1 
 Page 89 
 
 
  (5) Services 
 (Question 12: page 84, paragraph 51) 
 
Japan understood that the government of Indonesi a has introduced a new licensing procedure, 
stipulating that telecommunications services operato rs using foreign satellites should acquire a radio 
station license and a landing right.  
 
Please provide information on the outline of the new license procedure and on the rules and 
regulations concerned. 
 
Reply:
 
 
Regarding foreign satellite operators, pursuant to Ministerial Regulation No.13 of 2005 and as 
revised by Ministerial Regulation No. 37 of 2006, and its implementing regulation Director’s General 
Regulation No. 37 year 2006, any foreign satellite inte nding to provide services in Indonesia territory 
should: 
 
a. Complete satellite coordination with In donesian satellite networks and systems and has to 
prove that it cause no harmful interference to Indonesian satellites and other networks in 
Indonesia; and 
b. Prove that there are equal opportunities to Indonesian satellites to operate in the foreign 
country whose government has filed said foreign satellite networks to ITU. 
 
For point b, above, a formal letter from said  foreign government is required, assuring equal 
opportunities to Indonesian satellit es to operate in their country.  
 
(5) Services (ii) Telecommunications  
(Question 13: page 90, paragraph 64 and footnote 30) 
 
Japan understood that the government of Indonesia has introduced a new scheme for universal service under Ministerial Decree No. 11, 2007, and has a dopted an auction system under which those who 
offer the least amount of subsidy will win as successful universal service providers.  
 
As for this new scheme, please provide information on the following points:  
  1) background of adopting such a bidding sy stem to select universal service suppliers, 
and 
   2) outline of this new scheme.  Reply:
 
 
The universal service obligation (USO) sche me involves the following mechanism: 
 
• Service Based Contract ( the selected USO providers have to serve, operate and 
maintain the network; 
• Multiyear contract; 
• The maximum tariff of universal service is PSTN Tariff; 
• A successful USO provider the one who has w on the bid based on least cost subsidy; WT/TPR/M/184/Add.1 
Page 90  
 
 • USO providers have the right to retain their operational revenues; 
• USO providers have the responsib ility for all operation risks. 
 (5) Services 
(iii) Transportation 
 (Question 14: page 94, paragraph 77) 
 
The Secretariat report states, "Government Regul ation No. 20 (1994) allows up to 95% foreign 
investment in shipping ventures".  This does not cl early explain the regulations on foreign investment. 
 
For this reason, Japan would like to request that the Indonesian government clarify the regulations on 
foreign investment for coastal and ocean-going trades, respectively. 
 Reply:
 
 
The Government Regulation No. 20 (1994) is the government regulation that stipulates foreign 
investment in Indonesia in general term. The conditio n stipulated in the regulation is not considered as 
binding commitment. The implementation of the said regulation is the domain of concerned ministries. 
Ministry of Transportation of Indonesia's policy with regard to foreign participation is 49% in maximum 
and foreign shipping company shall establish joint ven ture company with Indonesian Shipping Company to 
be able to operate in Indonesia. Indonesian position with regard to foreign participation in shipping is 
clearly states hi Indonesian's commitment in World Trade Organization, which is 49% foreign 
participation through joint ventures. 
 
Recently, Indonesia has a new in vestment law. To further expla in the law, the government w ill stipulate 
Government Regulation on investment which specifically explain the position of each sectors and area of 
activities which is opened with a condition, and closed for foreign investment, through consultation with 
the Ministry responsible for the sector. So the policy of foreign participation is the domain of the 
concerned ministry in Indonesia.  EUROPEAN COMMUNITIES
 
 I. E
CONOMIC ENVIRONMENT  
(v) Structural reforms 
 WTO Secretariat's Report, page 8, para. 21 
 
The government has prepared different policy packag es related to the investment climate and it has 
taken commendable steps to improve the investment and business environment. The EC welcomes the 
government's commitment to economic reform. A lthough the policy packages have been subject to 
public consultations, the specific regulatory measures foreseen in them are to a very large degree 
prepared and adopted in a non-transparent manner a nd without any prior public consultation. These 
and other regulations affecting tr ade and investment play an inst rumental role in ensuring that 
economic reform is implemented efficiently taking into account both public policy objectives and the 
wishes/concerns of business and other stakeholders. Th e EC believes that transparency, in the form of 
public consultation, is a key ingredient in ensu ring that policy and regulatory measures meet both 
public policy objectives and the interests and con cerns of business and other stakeholders, while 
paving the way for a wide acceptance and understanding before adoption. [ cf also question 18 ]. 
  WT/TPR/M/184/Add.1 
 Page 91 
 
 
  1. In this context, could Indonesia provide information on the specific measures it intends to 
take so as to improve transparency, and in par ticular, consultation with  stakeholders before 
the adoption of regulatory measures?  
Reply  
 
Indonesia has actively performed economic regulatory reform. There are three main objectives, which 
consist of three main packages, such: Investment  Climate Improvement (including renewing the 
Investment Law), Infrastructure building, and Financial Sector and Macroeconomics Policy. The 
main programs implemented are Legal and Regulat ory Changes: short and medium term, More short 
term and immediate for licenses, Reducing cost of doing business: transparency, efficiency and 
accountability principles, cutting red tape: simplific ation, deregulation and bureaucratic reforms, and 
Reducing "high cost of business transaction": trans parency, anti-corruption, using e-government. All 
of stages and process of regulatory reform has trough deep discussion with stakeholders.  
 Ministry of Trade especially, has started to revi ew its trade regulations , domestic and foreign, 
especially ones related with trade licensing. Ministry of Trade is actively improving Indonesia’s 
business regulation and licensing system. Reformation in the area of licensing is meant to support the 
improvement of the investment climate by providing a more certainty and reducing the high-cost economy. The reformation itself is meant to simplify  the licensing procedures, reduced the maximum 
number of days to be granted a license and, where possible, reduce the administration fee for a 
license. In March 2007, Ministry of Trade had launched the Trade Service Unit as a unit for 
providing assistance in licensing nationally. Befo re the launched, MOT has evaluated its licensing 
procedures. By the result of the studies, MOT has simplified 5 regulations, revoked 2 regulations 
about business organization/association registrati on, transferring one regulation to Ministry of 
Finance and amend 2 regulations about COO and SPEK. For Indonesia, For Indonesia, it is very crucial in order to enhance the investment and business climate. 
 
II. T
RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(5) Trade Policy Objectives  Sustainable development  
Indonesia's Report, page 5, para. 1 
 
2. Could Indonesia provide some information about how the issue of trade and sustainable 
development fits into its overall development strategies? Have any particular measures been 
taken since the last Trade Policy Review in 2003? 
 Reply:
 
 Indonesia has medium-term development planni ng and annual development planning that cover 
development issues and plans in every sector, in cluding trade sector. The recent medium-term 
development planning document covers the period of 200 4-2009. In this document, some policies are 
directed at trade issues, such as: reducing trans action costs of practices creating high-cost economy, 
ensuring certainty in business activities and enhancing law enforcement, strengthening the 
competitiveness of export products, increasing th e efficiency and effectiveness of the national 
distribution system,  simplifying the tax and custom s administration throuhg tax and customs reforms, 
promoting trade financing facilities, strengtheni ng anti-dumping safeguard institution,  etc. 
 
One of development programs implemented by Indon esia is Program for C ontrolling Pollution and 
Degradation of the Natural Environment. This pr ogram is aimed at increasing the quality of the 
natural environment in the effort to prevent degr adation and/or pollution of the natural environment WT/TPR/M/184/Add.1 
Page 92  
 
 that is situated inland, on sweet water and sea waters, and in air. Therefore, general public obtains 
good quality of natural environment.  Another development program is Program for conso lidating the utilization of the potential of forest 
resources. This program is aimed at utilizing forest  potentials in an efficient, optimal, just and 
sustainable manner, by establishing units for th e management of sustainable production forests that 
meet the principles of Sustainable Forest Management  (SFM) and are supported by competitive forest 
industries.  Indonesia also implements Program for The devel opment and management of marine resources. This 
program is aimed at managing and utilizing marine, coastal and small islands resources, in an 
optimal, just and sustainable manner, through  the integrated approach among various uses.  
 Trade and environment   
3. What mechanisms does Indonesia have in pl ace to ensure coordination of environmental 
policy and trade policy? 
 
Reply:
 
 Indonesia does not have a formal mechanism to coordinate environmental policy and trade policy. 
However, some policies have given opportunity and s pace to conduct such coordination, or to stress 
environmental issues in sectoral policy, including tr ade sector. Some of those policies are the use of 
Environmental Impact Assessment (AMDAL) on project level, and Strategic Environmental 
Assessment on the policy and program planning. Besi des those policies implementation, effort to 
coordinate and discuss trade and environmental related issues are also done by inter 
departments/sectors technical coordination by tech nical meeting and task force. Up to this moment, 
the above mention can be a coordination discourse of trade and environmental related issues. 
 
Trade and Labour 
 WTO Secretariat's Report, page 80, para. 39 
 
The Report states that the growth in the manufacturing sector was adversely affected by the crisis and fell to an annual average of around 5% in 2001-2005 with a corresponding decline in efficiency and 
productivity.  As a result, there were severe job losses in the labour-intensive industries, in particular 
those dealing with textiles, garments and leather manufacturing, footwear, and wood processing. 
 
4. What steps is Indonesia taking to train, retrain and reskill the labour force with a view to 
expanding industrial sectors in the face of globali sation? How is that incorporated into the 
overall trade and industrial policy? 
 
Reply:
 
 
Steps for improve train and skills the labour fo rce, The government of In donesia  participates in 
training programs and giving supporting training s programs of human resources in linkages of the 
management and production sy stem for better efficiency, technically pr oduction, quality control 
and research and development. Its purpose to improve efficiency and competitiveness in the 
international market. However, the industrial policy is to increase the competitiveness superiority 
as one of the indispensable conditions for the existen ce and the continuous growth for the industry of 
Indonesia in the free competition market of globalization era.  
  WT/TPR/M/184/Add.1 
 Page 93 
 
 
  5. As well as labour market flexibility, what me asures are being taken to implement core labour 
standards to ensure labour quality and productivity? 
 
Reply:  
 
The Government of Indonesia implements core labour standards to ensure labour quality and 
productivity. In this regard, Government of Indon esia assesses the conditions in order to meet 
competence and high quality and productivity thr ough training such as technical management, 
deaner production, save energy. 
 
WTO Secretariat's Report, page 4,  para. 8 and page 9, para 22  
The Report notes the view of the World Bank that Indonesia ranks least favourably in the region in terms of standard indicators of labour market ri gidities used by the World Bank in international 
comparisons.  It appears that planned revisions to labour laws are stalled as the Government attempts 
to strike a balance between the interests of workers and employers.  
 6. How does the Indonesian Government address la bour market rigidities which have been cited 
as one of the main causes of rising unemployment? 
 
Reply:
 
 
The Government of Indonesia has taken a lot of e fforts to balance between interest of workers and 
employers, in order to increase national producti vity. The labor law will be amended until all 
stakeholders agree to revise. Howe ver, the government will make l abor market more flexible. For 
instance, the government will make process of making regulation on severance payment. Another 
effort is making regulation on outsourcing.  
7. The general revision process being stalled, discussion nevertheless continued on, inter alia, 
the law's provision on severance payments and the ability of employers to outsource tasks. The EC would like to note that a satisfactory resolution of these discussions would help enhancing confidence in the business community, and thus fostering foreign investment. In 
this context, could Indonesia provide further details on the expected outcome of these 
discussions, in particular, regarding the chang es to the severance payments and the contract 
flexibilities to be introduced?  
 
Reply:
 
 
Will be submitted later  
8. Does the Government intend to introduce cer tain social safety net so as to reduce labour 
conflict in this context and expedite a mo re balance and pro-business labour reform?  
 
Reply:
 
 
As the Secretariat Report notes on page 4, paragr aph 9, the Government of Indonesia has had a 
social safety net program, and maintains one to date. In 2005 and 2006, the program was called the 
unconditional cash transfer (UCT) program. This  program lasted until 30 September 2006. Later 
after that, the Government introduces a new program called the Prerequisite Cash Transfer  (PCT).  
The principal difference between the two programs is that the UCT had no strings attached, whereas 
the PCT requires that cash recipients have to use th e disbursements for their children’s schooling and 
health.  The objective of the PCT is as a social safety net  for the poor, and to act as a catalyst for WT/TPR/M/184/Add.1 
Page 94  
 
 human resource development.  With this new program the Government expects that the labour conflict 
will be reduced and more labour skills are produced in  a manner conducive to business development.   
 
(6) Trade Agreements and Arrangements 
(ii) Regional Trade Agreements 
 
WTO Secretariat's Report, page 26, para. 28  
9. When does Indonesia expect to complete its full liberalization schedule within ASEAN? How 
much of the trade in goods would be liberalized by the end of the transition period?  
 
Reply:
 
 Indonesia will complete its full liberalization sch edule in 2010 according to the   ASEAN- 6 
commitment that has been agreed. Tariff of 8,619 pos t tariff (10 digit based on HS 2007) are expected 
to be eliminated, or 98.57% of post tariff (which is 8744 post tariff). 
 
10. Does Indonesia consider the possibility to in clude any product in the temporary exclusion 
list? 
 
Reply:
 
 
So far, Indonesia has not yet considered to incl ude any product in the temporary exclusion list. 
 WTO Secretariat's Report, page 26, para. 29  
 The report states that "Indonesia has submitted updat es on its NTM list together with the relevant 
supporting legislation".  11. Could Indonesia indicate where this information can be consulted?  
 
Reply:
 
 
In the CEPT-AFTA framework of commitments, Indonesia,  in this regards The Ministry of Trade, will 
request TTBM (englishnya blm tau), Ministry of Fi nance, to conduct preliminary coordination with 
relevant institutions. After approved by the related institutions, TTBM, Ministry of Finance, will then 
prepare the "Legal Enactment" (Regulation of Finance Minister) for the implementation. 
 
WTO Secretariat's Report, page 27, para. 32   
12. Does Indonesia aim at increasing the number of priority sectors to be considered under the 
framework of AEC?  If so, which ones?  
 
Reply:
 
 Regarding the elimination of NTB, ASEAN country in cluding Indonesia, related to the above mention 
information on NTM issues, ASEAN still undertaking discussion internally and could not socialize the 
regarding issues. We hope on August 2007 in Manila, Philippines, the final outcome of the discussion 
will be published after the approval by AEM.   WT/TPR/M/184/Add.1 
 Page 95 
 
 
  WTO Secretariat's Report, page 27, para. 33 
 
The Report states that Indonesia decided in Nove mber 2004 to include 400 products on its list of 
sensitive and highly sensitive goods to be exclude d from the FTA between ASEAN and China. In 
2005, the number was reduced to 351.  
 
13. Could Indonesia indicate the reason behind incl uding this selected group of products in the 
list of sensitive products?   
 
Reply:  
 
Indonesia put the selected group of products into Sensitive Track in order to prevent or cover the 
domestic products from unnecessary unstable co mpetitiveness of domestic price, regarding that 
Small Medium Enterprises which cover this sectors is quite have a dominant number in Indonesia, which this sector is vulnerable to be put in. The schedule of tariffs reduction in Sensitive Track under 
ASEAN – China FTA is still under negotiation, on wh ich particular matter, the amount of Sensitive 
List is 20%, where China interested to start the reduction in 2010 with end date 2012, and Highly Sensitive List in the amount of 50% in 2015. Indone sia has convey the initial list of Sensitive List304 
TL and Highly Sensitive List 47 TL (6 digit).  
 
14. When have these changes eff ectively entered into force? 
 Reply:
 
 
Early Harvest Program: 
 
 Indonesia has implementing the Early Harvest Program, 
 
• for import Tariff Duty reduction under ASEAN  - China FTA. notified by the decree of 
Minister of Finance No.355/KMK.01/2004 dated July 2 Is1 2004 
• and for import Tariff Duty reduction under Bilateral for Indonesia and China, 
notified by the decree of Minister of Finance No.356/KMK.01/2004 dated 
July 21st 2004. 
 
Normal Track: 
 
•  Legal Enactment by decree of Minister of Finance No. 56/PMK.010/2005 and 
No. 57/PMK.010/2005 dated July 7lh 2005 
•  Legal Enactment for reduction of Import Tariff duty Normal Track under ASEAN - 
China FTA by decree of Minister of  Finance No.2I/PMK.010/2006 dated 
March I5lh 2006 
•  Legal Enactment for reduction of Import  Tariff duty Normal Track under ASEAN - 
China FTA for 2007 is by decree of Minister of Fi nance No. 53/PMK.OI 1/2007 dated 
May 22nd 2007. 
 
Sensitive Track: 
 
 •  End rate and End date  
  o   Sensitive List (Sensitive List & Highly Sensitive List) with 304 Tariff Lines(6 
digit):  
  - 2012 = 20% 
-  Reduction to 0-5% in 2018 
 WT/TPR/M/184/Add.1 
Page 96  
 
 o....Highly Sensitive List, with 47 Tariff Lines (6 digit):  
        2015 = 50%. 
 
15. Have these changes been formally notified?  
 
Reply:  
 Legal Enactment for reduction of Import Tariff du ty Normal Track under ASEAN - China ITA for 2007 is 
by decree of Minister ofFinance No. 53/l'MK.OI 1/2007 dated May 22"
d 2007. 
 16. Where can the new list for sensitive products and highly sensitive produc ts be consulted?  
 
Reply:
 
 Tariffs Team Division (its members consist of officials from ministries) is the responsible agency for 
sensitive and highly sensitive products.  
17. What percentage of tariff lines and trade do the products covered by both lists – sensitive 
products and highly sensitive products- account for?  
 
Reply:
 
 
Table is as attached below.  
ASEAN-CHINA FTA MODALITY 
 
 
TRACK COVERAGE REMARKS 
Early Harvest Program (EHP) Coverage : Chapter 01-08 
Tariff :  0% by 2004 to 2006 Chapter 0 s/d 08 – Primary Products 
(0% tariff in 2006) 
Normal Track 40% tariff lines decreased from 0-5% in 
2005 
 60% tariff lines become 0% in 2007 
 NT 1 :  0% by 2005 to 2010 
100% tariff lines become 0% in 2010 
 NT 2:  0% by 201 2 263 tariff lines (6 digit) become 0% in 
201 2 
Sensitive Track SL:  max. 20% (201 2) 304 tariff lines become 20% in 2012 and 
0-5% in 201 8 
 HSL max. 50% (2015) 47 tariff lines will be decreased not less 
than 50% (agriculture, certain textile 
products, automotive and ceramic 
holds) 
 
WTO Secretariat's Report, page 27, para. 32  
18. In light of the ongoing bilateral negotiations with some key partners, could Indonesia indicate 
how it intends to ensure full consistency and coherence betw een the full implementation of 
ASEAN's schedules and the negotiations of bila teral agreements? How does Indonesia plan to 
ensure the creation of genuine building blocks?  
 
Reply:
 
 
The Ministry of Trade is in charge to negotiate in the ASEAN fora, also is in  charge with negotiation 
of bilateral agreement. As these tw o for a are in the authority of Minister of trade, Indonesia can 
guarantee that these activities would not create building blocks.  
  WT/TPR/M/184/Add.1 
 Page 97 
 
 
  (8) Foreign Investment Regime 
 WTO Secretariat’s report, page.33, para 46-47 
 
The Capital Investment Law adopted by the DPR on 29 March 2007 is a milestone in the 
Governments economic reform ag enda by providing a solid basis for improving the investment 
climate. Although the Capital Investment Law sets ou t some key principles, such as equal treatment 
between foreign and domestic investors, its ulti mate success will to a large degree depend on a 
number of implementing regulations. The EC is conc erned that the preparation of these implementing 
regulations is being done in a manner that is running contrary to the spirit of the new law. 
 
Firstly, the EC considers that the implementing re gulations are being prepared in a non-transparent 
manner without any wider public cons ultation. A number of these regulations will directly affect how 
investors will be treated under the new law, for ex ample the proposed integrated services, a new FDI 
negative list, the future role of BKPM etc. Without a prior public consultation there is a clear risk that 
implementation of the law will not meet investor expectations of a more  open and business friendly 
investment climate [ cf also question 1 ]. 
 19. Could Indonesia provide information on the sp ecific measures it intends to take to improve 
transparency, and in particular consultation with stakeholders before the adoption of 
implementing regulations?  
 Reply:
 
 Before the adoption of implementing regulations, the ministry in charge always conduct public consultation through website , seminars and or workshops.  
 
In addition,  the EC is also concerned that new FDI nega tive list will be more restrictive than the 
current one. The EC understands that the new FDI li st will be more extensive since it will reflect in 
more detail the actual regulatory s ituation in Indonesia, thus rendering it more transparent. The EC is 
also aware that there would be objective criteria to determine whether a sector would be closed or have restricted access for foreign investment. Nevert heless, the EC has received clear indications that 
a number of sectors see foreign equity limits decreased, for example: 
 
•  Maritime transport:  from 95% to 49%. 
•  Construction sector:  from 95% to 49%. For co nstruction consulting th e foreign equity cap 
would be reduced to 55%. 
•  Satellite and telecommunica tions:  from 95% to 35%. 
•  Logistics:  express delivery services from 49% to 35% and freight forwarders from 96% to 
65%. 
 Reply:
 
 
Recently, the government has been engaged in review ing foreign ownership of the entire sector under 
the upcoming new Presidential Decree, incl uding telecommunication services and express delivery 
services . 
 
Regulatory measures are also being taken to limit the number of foreign professionals that can work in, for example, the financial and broadcasted adver tising sectors. All these actions are contrary to the 
Government's objective of attracting foreign invest ment and will risk negating the positive momentum 
created by the new law. 
 WT/TPR/M/184/Add.1 
Page 98  
 
 20. Could Indonesia confirm that it does not inte nd to impose a more restrictive foreign direct 
investment regime, by in particular lowering foreign equity thresholds?  
 
Reply:
 
 
Recently, the government has been engaged in review ing foreign ownership of the entire sector under 
the upcoming new Presidential Decree, incl uding telecommunication services and express delivery 
services . 
 21. Could Indonesia explain more in detail the process and timing foreseen for the completion of 
the negative list as well as other implementing regulations of the new investment law?  
 
Reply:
 
 
The issue is still on the process of discu ssion inter ministries and stakeholders. 
 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports (i) Customs procedures  
Indonesia's Report, page 11, para. 29  
Setting Customs Reform high on the Government's agenda is essential provided it smoothes the flow 
of goods imported into and exported from Indon esia, limits smuggling and customs fraud and 
improves the customs services. According to the WT O Secretariat's Report (page 37), as part of the 
Investment Climate Policy Package, measures would be taken to accelerate the customs examination 
process through, inter alia, revised regulations relate d to the use of red and green lanes, supported by 
appropriate equipments and technology. Specific target s were also set for the reduction in the use of 
the red lane (down to 10% by December 2006). The Government's Report asserts that the time for 
customs clearance has been greatly reduced.  
22. Could the Indonesian authorities provide de tailed information on the measures taken to 
achieve the objectives described above? 
 
Reply:
 
 
In the modernization of our customs administratio n, the customs law has been revised in 2006. The 
major customs service o ffices have been equipped with x ray Container Scanner and priority channel 
has been provided to the high-compliance importe rs. To achieve a good customs clearance target 
time, there’s some action that had been done: amendment law No. 10 year 1995 about customs 
become law no. 17 year 2006,  administration impr ovement with modernization of service offices 
become main service office (Kantor Pelayanan Utama). 
 23. In addition, could Indonesia indicate whether the red lane's targets have been actually 
achieved?  
 
Reply:
 
 
Channelling systems on the clearance of goods are determined based on  risk management system. 
 Target to lower the red line has been made, but still there is some action to minimize the red line. 
  WT/TPR/M/184/Add.1 
 Page 99 
 
 
  WTO Secretariat's Report, page 37, para. 12  
A new regulation – the so-called Regulation of the Director General of Customs and Excise 
No. P-07/BC/2007dated 5 April 2007 on Ph ysical Inspection of Imported Goods-  related to the 
physical inspection of imported goods, issued in Ap ril 2007 and effective only a few days later, has 
proven to have contradictory effects with regard to  the stated objective of accelerating the flow of 
goods. A very large number of EC companies have comp lained that the regulation has directly led to 
more than doubled the goods passing the red lane , created severe delays  (between 3 and up to 
14 days) and high costs for inspections, demurrage, storage and rising stock levels (minimum one 
container has to be entirely stripped and unpacked). In  this regard, we would like to recall that before 
such measures are imposed, the Government needs to  ensure that port facilities and infrastructure are 
sufficient so as to not hinder the movement of goods. In addition, the EC understands that a new risk 
assessment system is being put into place.  24. Could Indonesia provide specific information on what concrete measures are being taken to 
rectify the current situation with excessive  and undue inspection of imported goods? 
 
Reply:
 
 The channelling system are determined based on meas urable criteria. For example, the past record of 
the importers. Customs officer as field officer, besi de functioned as services also as watchers. The 
measure to do inspection with scrutinize is with  profile analysis (country of origin, Goods, 
Transportation means, importer name, forwarder, et c) also there is information from customs 
intelligent.  
25. Could Indonesia explain how risk assessment s are carried out and to what extent these 
inspections and risk assessments are in accordance with international standards as set out by 
WTO and WCO (please refer to relevant chapters and articles)?  
 
Reply:
 
 In general the implementation of risk assessment on inspection are carried out based on the standards 
set out by WCO risk assessment with special a ttention on country of origin, document, the goods 
categorized as restriction goods, etc.  
 (ii) Customs valuation and rules of origin  
 
WTO Secretariat's Report, page 39 , para. 13  
The Report states that "Customs reportedly uses a sc hedule of arbitrary check prices rather than the 
transaction value when assessing duties on certain food imports".  26. Could Indonesia clarify on what basis the transaction value is refused, and whether these 
practices are in compliance with the provisions set out in the WTO Agreement on Customs 
Valuation?  
 
Reply:
 
 
Article VII of GATT is fully applie d in determining the customs valuation. It has been adopted in 
Indonesian Customs Law. Therefore, transaction value is  the value that must be paid. So transaction 
value is rejecting if: there is no enough evidence to know how much the value from the goods sales/purchase. Tracing to all import document and document completeness. (M anifest, invoice, B/L, 
Packing List, Insurance, payment). WT/TPR/M/184/Add.1 
Page 100  
 
 27. In addition, could Indonesia indicate whic h food imports are affected by these practices? 
 
Reply:
 
 The method used on article VII GATT is applied to all imported goods. 
 
28. Is Indonesia planning to address this situati on? If so, what measures does Indonesia intend to 
take? 
 
Reply:
 
 
There will be no measures taken 
 
29. Is Indonesia encountering difficulties in fully implementing the WTO Agreement on Customs 
Valuation? 
 Reply:
 
 Practically, there are still some goods which a re declared by using suspicious price. 
 WTO Secretariat's Report, page 39, para. 15 
 
30. Could Indonesia explain in detail the state of play of the process of completing its regulations 
on preferential rules of origin under ASEAN CEPT and the ASEAN-China FTA?  
 
Reply:
 
 
Will be submitted later. 
 (iii) Tariffs  WTO Secretariat's Report, page 41 , para. 20 
 Indonesia committed to binding almost all of its tariffs at 40%. Textiles and clothing are bound at 
100% whilst the average applied rate is 10.8%.   31. Does Indonesia intend to bridge the gap between  the applied and bound tariffs for textiles and 
clothing? 
 
Reply:
 
 
Based on the Indonesia's commitment on bound tari ff, in schedule XXI, the bound tariff for Textile 
and Textile Products is maximally for 40% and not 100% as questioned. Indonesia is ready to make 
commitment to reduce its bound rates considering a degree of flexibility to develop its industrial 
sector that is so important for jobs (and hence poverty alleviation). Moreover, Indonesia is considering in reducing the tariff applied. In this regard, Indonesia will be c onsistent to follow its 
commitment under the schedule of applied MFN ta riff changes pattern formulated in Tariff 
Harmonization Program (THP) as stipulated in Minister of Finance Decree No. 591/PMK.01/2004 
and Minister of Finance regulations, No. 132/PMK.010/2005.  With this commitment, it can be 
assured that Indonesia will not change its applied tariff within the bindings.   WT/TPR/M/184/Add.1 
 Page 101 
 
 
  (iv) Other charges affecting imports 
 WTO Secretariat's Report, page 46, para. 28  
Indonesia wishes to boost its exports and improve co nditions for its manufacturing industry. Logistics 
and freight forwarding companies are an important li nk to facilitate the moveme nt of goods in and out 
of Indonesia.  According to the prevailing VAT regulation - Government Regulation No. 144 year 2000 regarding 
the Types of Goods and Services which are not Subject to Value Added Tax (elucidation of Article 13) 
- freight is not subject to VAT. In practice, ma ny tax auditors are still imposing VAT on invoices 
issued by international freight forwarding compani es, contradictory to what is the case in most 
countries world-wide. Importers in Indonesia are already paying VAT on the landing cost of their goods, which includes the international freight. The application of the law on VAT has thus led to a double taxation. The imposition of VAT on internati onal transport services also imposes a cost burden 
on Indonesian exporters, putting them at a competitiv e disadvantage compared to countries that do not 
undertake this practice.  32. Could Indonesia clarify whether it intends to  adopt international practice and remove VAT on 
international transport services? 
 
Reply:
 
 Considering the need to support the economic growth  by easing the burden of the movement of goods 
and international best practices, Indonesia is propo sing the Government Regulation on VAT of Port 
Services. Currently (June 2007), the draft regulation is in the final process to be taken into force. 
Basically, the Regulation will exempt VAT oblig ation on port services of international sea 
transportation, for both domestic and internationa l enterprise. The proposed regulation will come 
into force on the date of enactment.   Concerning the VAT on services rendered by Freight Forwarding Companies, it is not VAT on freight itself, because freight, both international and domes tic, is not taxable services. So VAT does not apply 
on freight itself.  
 However, when Freight Forwarding Companies rend ered services to exporters and or importers in 
unity package (includes service THC, freight, doc umentation arrangement, etc.) according to VAT 
Law, VAT is applied on a whole package of service. 
 
The European Commission and the Government of I ndonesia have agreed on a reciprocal basis not to 
impose VAT on port services for international traffic-  as laid down in Letter from Ministry of Finance 
No. 995/MK.04/1990 dated 20 August 1990. However, c ontrary to this agreement, Indonesia imposes 
VAT on port services (such as terminal and cargo ha ndling services) since 2005. Companies are even 
threatened to be retroactively imposed  VAT on these services since the year 2000. 
 
33. Could Indonesia provide information on wh at concrete measures, and within which 
timeframe, are being taken to exempt port servi ces from VAT and thus normalise the situation 
with regard to the existin g reciprocal agreement?  
 
Reply:
 
 Will be submitted later.  WT/TPR/M/184/Add.1 
Page 102  
 
 (v) Import prohibitions, restrictions, and licensing 
 WTO Secretariat's Report, page 46, para. 30-38  
Indonesia has been progressively eliminating the u se of import licences which is currently limited to 
dangerous materials, explosive oz one-depleting substances,  alcoho lic beverages, salt, propylene 
copolymers, lubricant, clove, textiles and textile  products, nitrocellulose, machines and machinery, 
optical discs, and rough diamonds.  34. Could Indonesia indicate the timeline for the phasing out of the restrictive import licensing 
 regime for these products, including textiles and clothing? 
 
Reply:
 
 Indonesia believes that import regulations for several  products are necessary in terms of Indonesia 
conditions are distinct from other countries in the use of above mention products. At this point, 
Indonesia having difficulties to convey informatio n regarding eliminating import licensing for 
sensitive product for a number of reasons, they are:  1) Hazardous Product 
 
a. The rising use of hazardous material as a result from science and technology 
development, therefore the misu se of above mention material could threaten the live 
of human; animal; plant and damage the environment. The import regulation on hazardous product is in line with Conven tion on the Prohibition of the Development, 
Production, Stockpiling and Use of Chemic al Weapons and on Their Destruction, as 
been ratified by Indonesia in Law number 6 year 199; 
 b. In terms to avoid and reduce the risk of misuse the hazardous product, therefore 
import of the product should be regulate and manage but still give the attention on 
flow of goods. 
 
2) Explosive Material, Nitrocellulose 
 
a. Explosive material and Nitrocellulose (NC)  are chemical products with sensitive 
content of nitrogen and commonly use for military purpose, also use by certain 
industry as raw material and complementary material; 
 
b. Because of the sensitivity, NC could be misuse for the  destructive purposes and 
security disturbance, therefore the use of  the product should be regulate and manage 
but still give the attention on flow of goods, especially importing good; 
 c. The non-conducive Situation of Secu rity development in Indonesia; 
 
d. Importers are not restricted for existing listed importer and producer importer. New 
applications are open and will be given listed importer and producer importer if the 
requirements fulfill. 
 
3) Ozone Depleting Substances (ODS) 
 At this point, Indonesia is in process of elimi nating the use of ODS. Howe ver many industries in 
Indonesia are using ODS as raw material and comp lementary material in which most of these 
products are imported from other countries.  WT/TPR/M/184/Add.1 
 Page 103 
 
 
  4) Alcoholic Beverage 
 Majority of Indonesian people are Moslem w ho did not consume alcoholic beverage, therefore 
alcoholic beverage is sensitive product t hat could cause security disturbance. 
 
5) Salt. 
 
a. Salt is strategic commodity as food product and industry raw material, therefore the 
activity in production, supply and distribution are important to support the welfare of 
salt farmer and to fulfill domestic industry needs; 
 
b. Domestic salt production at this point, in  terms of quality and quantity, could not 
fulfill domestic needs, especially as indust ry raw material, therefore importing salt is 
still needed. In terms of strategic value of salt that highly consume by public and 
domestic industry, therefore the import of salt need to be regulate.  
 
6) Lubricant 
  -  The libricant raw material with the post tariff of HS. 2710.19.23.00 can only be 
imported by the Producer Importer ( Impor tir Produsen/ IP) for the need of 
production with tariff of 0%; 
 
 -  Lubricant with the classification of Post Tarif 2710.00.920; 2710.00.930; 
2710.00.950; 2710.00.990; 3403.11.100; 3403.11.900; 3403.19.000; 3403.99.00 can be imported by importer that holds a General Importer Identity Number (Angka 
Pengenal Importir Umum / API-U). But th ere are a large number of cases in the 
misuse of HS number and imported lubricant quality, so to avoid a lost, the lubricant 
importer with the abovementioned classificati on is regulated with the necessity of 
putting a Listed Lubricant Number (Nomor Pe lumas Terdaftar / NPT) in the package 
as reccomended by the Director General of Oil and Gas, Ministry of Energy and Mineral Resources. The aim is to  avoid misuse of HS Number. 
 
7) Clove 
 In order to anticipate the substantial increase of  clove import which causes a decrease in domestic 
clove price and clove farmer’s income, and to  increase clove farmer’ s welfare, remaining 
consideration of the clove use industry. 
 
8) Textiles and Textil Products  Textile industry in Indonesia is a (padat karya) indus try that absorb a large number of labor. In order 
to maintain business climate in textile and product textile to be condusive and in order to prevent 
unfair trade practice (by smuggling), then import of textile and product textile meanwhile are still 
being regulated. 
 9)  Non-new Machines and Machinery  Indonesia’s economy generally is not conducive, th at causes a weak industry purchasing power in 
several sectors, specially in capital goods procu rement for machine and mach inery, so it is viewed 
necessary to make efforts in capital goods procuremen t that can be reached by  those industry by the 
continuity of non-new capital goods import policy. In the other hand, Indonesia is also developing the 
domestic machinery industry that still needs guida nce. The import regulation every year is being 
evaluated, to determine whether it will be continued or to be stopped. WT/TPR/M/184/Add.1 
Page 104  
 
 10) Machine, Machinery, Raw Ma terials, and Optical Disc 
 In order to support the protection of intellectual prop erty rights, especially in copy rights, then it is 
viewed necessary to impose import regularion for ma chine, machinery, raw materials, blank optical 
disc, and containable optical disc.   
 
11) Rough diamon  In regards to the UN resolution No. 55/56 dated December 1, 2002 about the undertake the misuse of 
diamond trade related to weapon conflict, then since January 1, 2003 it has been agreed the rough 
diamond export import mechanism in a form of  diamond certification schemes by the Kimberley 
Process Certification Scheme (KPCS).  In order to support Indonesia’s economy interest, specially with those related to the guidance and 
development of the national diamond industry and trade, it is viewed necessary that Indonesia 
participate in the KPCS following with the implementation of the rough diamond ecport import 
regulation policy. 
 
Under the above-mentioned licensing system, only on e or two import licences have been granted for 
the import of alcoholic beverages and only a limited number of distributors are allowed on payment of 
a substantial fee (at least USD 200.000 per year). We understand that in recent years the volume of 
imports has been severely restricted on a quota basi s and that to date in 2007 there have been no 
imports of alcoholic beverages as the quota has not yet been released.   35. We would appreciate Indonesia's view, with pa rticular reference to the limitations on the 
number of importers/distributors and the ove rall volume that can be imported, of the 
compatibility of this import licensing and quot a system with Indonesia's commitments under 
the WTO. 
 
Reply:
 
 Alcohol beverage import is related to the protection of the national moral, where most of Indonesian 
society is Moslem that are prohibit to consume alcohol beverage. Import licensing is still given to 
alcohol beverage, including fulfilling tourist need s and for foreigners that lives in Indonesia. 
 WTO Secretariat's Report, page 47, para. 38 
 The Report indicates that in 2002 Indonesia in troduced a decree concerning Textile Import 
Arrangements, whereby only companies that have  production facilities usi ng imported fabrics as 
inputs for finished products may obtain import licenses. In addition, all authorized importers must seek approval from the Ministry for the amount and time schedule of their imports and must also report to the Ministry on a regular basis.   
36. In light of the distortive effects to trade of these measures, could Indonesia indicate when it 
intends to abolish these requirements?  
 
Reply:
 
 
Textile industry in Indonesia is an industry that  absorbs a large number of labor. The employment 
issue is still being a burden in the economic growth  and the increase of people’s welfare. It has to be 
remembered that Indonesia has 225 million people, while Indonesi a are still in a recovery process 
caused by the continuing economic crisis.   WT/TPR/M/184/Add.1 
 Page 105 
 
 
  Indonesia continues to apply onerous importer's regi stration requirements in order to obtain an import 
licence for textiles. In March 2002, the Minister of Industry and Trade issued a decree requiring importers of certain critical products to obtain a special importer identifica tion code number (NPIK) 
and card, including textile and re lated products, in order to stop  large-scale smuggling of these 
products.  
 
37. Could Indonesia report on the effectiveness of  these measures so as to, for instance, halt 
smuggling? 
 
Reply:
 
 
The regulation that for several products, the importe r has to have a Special Importer Identity Number 
(Nomor Pengenal Importir Khusus / NPIK), is imposed to assure that importer’s identity is clear, 
including the company’s location and the scope of industry. In several smuggling cases, after being further analyzed, generally the location of importer is  not clear. NPIK is given after the company 
application has been verified. For products in which the importer is imposed by NPIK, the violation 
tends to decrease.  
38. When does Indonesia plan to abolish obligatory importer's registration ? 
 
Reply:
 
 
NPIK will be further reviewed to be then eliminat ed after the issue of ID  card, Importer Identity 
Number (Angka Pengenal Impor / API) become more di scipline that currently are still in process. The 
implementation of E-licensing that in the time will be integrated in a single window system will help 
prevent smuggling. The NPIK will then no longer needed. 
 
(vii) Government Procurement  WTO Secretariat's Report, page 49, para. 42 
 
39. Could Indonesia provide statis tics regarding Government Procur ement contracts attributed in 
2006 (or 2005), if possible in terms of supplie rs (local, foreign), of products, services and 
construction works?  
 
Reply
: 
 
Indonesia at this point still developing statistic in Government Procurement contract that could assist 
government to provide useful information in policy making. 
 
The EC welcomes Indonesia's efforts to carry out anti-corruption campaigns, aimed at strengthening 
the institution framework against corr uption, targeting also public proc urement.  However, substantial 
corruption still seems common in many procurem ent processes. Despite being a middle income 
country and being involved in an anti corruption campaign and having participated in the Working 
Group on Transparency at the WTO, Indonesia is not a signatory of the WTO Government Procurement Agreement (GPA) yet.   40. When does Indonesia plan to adhere to the WTO GPA?   WT/TPR/M/184/Add.1 
Page 106  
 
 Reply
: 
 
Indonesia will further study this GPA. 
 WTO Secretariat's Report, page 49, para. 43 
 
41. Are conditions for foreign pa rticipation described in this paragraph exhaustive at central 
level? What kind of other local or pr ovincial barriers are usually in place? 
 
Reply
: 
 
Those condition that describe in page 49, para 43, are not correct. Permissible foreign participation 
had been set above US$5 million since 2000. In this condition applies in all level, not just central level. There are nor additional barriers that set in local and provincial. 
 
WTO Secretariat's Report, page 49, para. 44 
 
42. What is the legal/economical basis for ex cluding State owned enterprises from government 
procurement regulations? 
 
Reply
: 
 
In order to avoid unfair practices and conflicts of interest 
 
WTO Secretariat's Report, page 50, para. 47 
 43. When will the draft next procurement law enter into effect? What kind of enforcement 
mechanisms is envisaged?  
 
Reply
: 
 Draft law is still being discussed at ministerial level. 
 
44. Has the pilot e-procurement system already been implemented? 
 
Reply
: 
 
Yes.  E-procurement system already been fully implemented.  
(ix) Standards and other technical requirements 
 WTO Secretariat's Report, page 52, para. 56  
Indonesia imposes since March 2005 mandatory standa rds and certification for tyres. The Indonesian 
standards are not in line with the international standard established by the UN/ECE WP 29 and thus 
contrary to Indonesia's obligations under Article  2.4 of the WTO TBT Agreement. Furthermore, 
Indonesia's certification system is excessive and does not recognise certification and testing carried 
out by accredited bodies in other countries. This is  leading to substantial costs to European tyre 
exporters (up to USD 250.000 for a type approval) . In view of finding a mid-term solution, the 
Government has indicated its commitment  to accede to the UN/ECE 1958 Agreement. 
 45. Could Indonesia inform about the concrete st eps the Government is taking to accede to the 
UN/ECE 1958 Agreement and according to which timeline?  WT/TPR/M/184/Add.1 
 Page 107 
 
 
  Reply : 
 Indonesia together with other ASEAN countries comm its to accede to UN/ECE 1958 through ASEAN 
Automotive Product Working Group.  In 2007, Indon esia joins UN/ECE as observer, while in 2008 
Indonesia will conduct discussions with related parties to select which UN/ECE agreement(s) suitable 
for Indonesia to join.     
WTO Secretariat's Report, page 53, para. 59 
 
We recognise Indonesia's, as every country's, need to protect consumer health and safety when setting 
sanitary and phytosanitary standards, as long as thes e are in accordance with international standards 
and guidelines. Furthermore, we see the enactment  of Ministerial Decree of the Ministry of 
Agriculture No. 482/Kpts/PD.620/8/2006 on "Importati on of Ruminant and its products from country 
or zone infected by bovine spongiform encephalopath y (BSE) into Republic of Indonesia" (foot note 
as well as headline was deleted so it is not clear that  this paragraph regards B SE) as an important first 
step in aligning Indonesia's regulations with the prevailing international standards. However, on 
several points the new Decree deviates from the OIE Terrestrial Animal Health Code. The OIE Code, which is based on international scientific evidence, allows a large number of products, including beef 
and beef products, to be traded freely regardless of the BSE status of a country. However, Indonesia 
continues to ban the import of these products and h as provided no scientific evidence to deviate from 
international standards. Indonesia thus continues to  impose an unjustified, according to its obligations 
under the WTO SPS Agreement, import ban on beef  and beef products from EC countries with 
controlled or undetermined BSE risk.   46. Could Indonesia provide information on what specific measures it intends to take and within 
which specific timeframe to fully align its regulation with the OIE Code, both in terms of 
which products should be allowed for import and as to the risk assessment methods, so as to 
comply with the WTO SPS Agreement? 
 
Reply
: 
 Animal/Meat 
A country which intends to export their beef, carcasses,  meats and edible offal to Indonesia has to be: 
 
a. free from Foot and Mouth Disease; 
b. free from Rinderpest; 
c. free from Rift Valley Fever; 
d. free from Contagious Bovine Pleuro-pneumonia (CBPP); 
e. free from Bovine Spongiform Encephal opathy/BSE (neglible BSE risk). 
 Indonesia will ban the exporting countries whic h have the above diseases until they have been 
declared as a free BSE-infected country by OIE. 
 
Legal basis: 
 
1. Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad; 
2. Minister of Agriculture Regulation: No. 27/Permentan/OT.140/3/2007 concerning revision of 
Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad. 
 WT/TPR/M/184/Add.1 
Page 108  
 
 47. What scientific evidence can Indonesia present to motivate its application of a more 
restrictive SPS regime, regarding trade of beef  and beef products, than current international 
standards? 
 
Reply
: 
 
Trade of Beef Importation of ruminants and its products from BSE- infected countries into the Indonesian Territory 
was prohibited as regulated in the Agriculture Ministerial Decree No. 445/Kpts/TN.540/7/2002. 
However, based on the risk analysis and OIE recomm endation on BSE, and in line with the current 
situation of diseases, a new regulation i.e. Agriculture Ministerial Decree No. 
482/Kpts/PD.620/8/2006 dated 22 Augu st 2006 has been released concerning the Import Requirement 
of Ruminant and its products from BSE-Infected C ountry or Zone into the Indonesian Territory. The 
Decree described in details the catego ry, BSE status and import requirements. 
 
The ban is applied until the exporting countries have been  declared as a free BSE-infected country by 
OIE. 
 
Trade of Beef Products  Agriculture Minister Decree No. 64/2006 on the Importation and Control of the Distribution of Carcass, Meat and Offal from Other Countries, the D ecree was enacted as an effort to maintain the 
Indonesian free-status from zoonosis  and quarantine diseases as well as to protect local consumers. 
 
(3) Measures Directly Affecting Exports 
(ii) Export taxes  
WTO Secretariat's Report, page 56, para. 78  
In 2005, the Government imposed export tariffs on raw skins (25%), white tanned hides (15%), and 
coal (5%).  48. On what basis is Indonesia applying the expor t taxes on raw hides and skins, and on wet blue 
leather? 
 
Reply
: 
 
The main objective of the regulation by restricting export of raw hides is to secure rawhides supply in 
Indonesia. 
 
49. When does Indonesia intend to dismantle, these measures?  
 
Reply : 
 
The Imposition export retribution will be revoked if th e condition achieved that the needs of the goods 
has been fulfilled in the domestic supply. 
 
IV. T RADE POLICIES  BY SECTOR  
(2) Agriculture  
 
WTO Secretariat's Report, page 71, para. 14 
 
Paragraph 14 indicates that "in 2003 the Government switched from an ad valorem  to a specific tariff 
in order to deal with under-invoicing practices in par ticular. In the case of rice, the tariff was set at a  WT/TPR/M/184/Add.1 
 Page 109 
 
 
  specific rate of IDR 430/kg in 2000 (with an ad valorem equivalent at around 30%)." In the course of 
switching from an ad valorem  to specific duty, was the level of duty changed (in ad valorem  
equivalent).  50. What is the impact of switching from an ad valorem  to a specific duty on import volumes?  
 Reply
: 
 
The advantage of applying specific duty are:  
1. Easier to implement; 
2. It is not influenced by foreign exchange fluctuation; 
3. More transparent. 
 Since the duty level has never been adjusted since 2000, whereas world rice price is increasing, then 
duty in ad valorem equivalent is declining. So far, there is no sign ificant impact on import volume by 
switching from ad valorem to specific duty.  Basically, the switching tariff from ad valorem to sp ecific was not merely based on the under-invoice 
practice (price and volume can be done both in ad valorem and specific tariff). Imposing the specific tariff is partly meant to be used as maintenance for the domestic price stabilization, 
simplification of the importing system . Sugar and rice are subject to import quota. Specific tariff is 
useful for a volatized price of agricultural products  which millions of fanners put their lives on it.  
 
WTO Secretariat's Report, page 72, para. 17 
 
Indonesia has notified to the WTO its domestic su pport measures as circulated in WTO document 
G/AG/N/IDN/26/Corr.1 of 27 November 2001.   51. Have any new domestic support programs been introduced or existing support schemes 
modified after the date of that notification?  
 
Reply
: 
 So far, there are no changes on domestic support. 
 
WTO Secretariat's Report, page 72, para. 19 
 
The Report indicates that " In January 2004, the Government announ ced that rice imports would be 
banned for six months to protect farmers duri ng the main harvest.  The ban was subsequently 
extended and remains in place as strong harvest s from 2004 to 2006 have reduced the need for 
imports ."  
 
52. Is this ban still in place and are ther e any intentions to remove the ban?  
 
Reply
: 
 Rice import regulations were imposed mainly dur ing harvesting periods to protect paddy price at 
farm level. However, domestic prices’ situation was not getting better; therefore Indonesia imposed 
policy on regulating the import until the end of year 2006. Despite the fact that rice import regulation is in place, the need to import rice is review ed regularly based on do mestic supply and demand 
balance. In 2006, the GOI imported 438 thousand tons of rice.   WT/TPR/M/184/Add.1 
Page 110  
 
 53. In addition, which article in the WTO Ag reement serves as a legal basis for this ban? 
 
Reply
: 
 Indonesia is not banning the import of agricultural  products. In order to maintain the supply of 
agricultural products domestically, Th e GOI manage the import as follow; First, import is able to be 
done outside the harvesting season, during on e month before harvest until two months after 
harvest. For specific rice such japonica, could be imported thr oughout the year. 
 
(5) Services 
 
WTO Secretariat's Report, page 84, para. 49-51  Postal and courier services  
 54. Could Indonesia provide more information on the objective pursued with a draft new postal 
law, and timing expected for the discussion and adoption of such a law?  
 Reply
: 
 The main thrust of the new Postal Law Draft is to  revise relevant provisions that constrain fair 
competition. The Parliament is still studying the Draft.  
55. Could Indonesia confirm that ongoing reform s, notably with regards to the investment 
negative list, will enable companies to pursue their operations under the current conditions 
that determined their choice to invest in I ndonesia (in particular ownership rules under which 
foreign companies may control 95% stakes in freight forwarding company and 49% stakes in 
courier services)?  
 
Reply
: 
 
The government is still engaged in reviewing foreign ownership  of the entire sector under the 
upcoming new Presidential Decree, including courier services. 
 
Distribution services 
 
56. How many people work in the distribution sector  and what has been the evolution in the last 
years? 
 
Reply : 
 
The Number of people works in distribution sector (transportation and trade) for the last six years 
(2002-2006) is 84.089 people. 
 
57. How much of the FDI attracted by Indonesia in the last years has been in the distribution 
sector? 
 Reply
: 
 
The total amount of FDI in distribution sector  in Indonesia for the last six years is 
US $ 9,109.30 million.  WT/TPR/M/184/Add.1 
 Page 111 
 
 
  58. What is the existing legi slation and regulation applic able to retailing services?  
 
Reply : 
 The existing policy regarding retailing services are as follow: 
 
a. Joint Decree between Minister of Industry and Trade with Ministry of Domestic Affairs 
number 145/MPP/Kep/5/97 – Number: 57 year 1997 regarding The Structuring and Developing Modern Market and Shopping Complex; 
b. Minister of Trade Regulation regarding Supply and Distribution of Subsidies Fertilizer;  
c. Minister of Trade Regulation re garding Sugar Trading Inter-Island; 
d. Minister of Trade Regulation re garding Log Trading Inter-Island; 
e. Minister of Trade Regulation regarding Di stribution and Supervision for Hazardous Product. 
 
59. Could Indonesia indicate prospects and timing for the existing framework to be modified 
(including through the Presidential Decree on "The Management and Fostering of Modern 
Markets and Modern Stores)?   
 
Reply
: 
 
At this point, we are in the final phase of completing the President Decree regarding Structuring and 
Developing Traditional Market, Shopping Centre and Modern Store.  
Construction services 
 
60. Could Indonesia provide information about the existing legislation and regulation applicable 
to foreign equity limitations for construction services? Is there any change of existing 
conditions under c onsideration?  
 
Reply
: 
 
Will be submitted later. 
 
Environmental services 
 
61. Could indonesia provide information on whethe r foreign equity limitations are in place for 
environmental services, including wastewater and waste management services and remediation 
services?   
 
Reply : 
 Will be submitted later. 
 
(i) Financial services 
 
WTO Secretariat's Report, page 85-86, para.55 
 
62. Could Indonesia provide additional explanations  on plans for privatisation in the financial 
sector? 
 
Reply
: 
 Will be submitted later. WT/TPR/M/184/Add.1 
Page 112  
 
 63. Could Indonesia provide additional informati on on plans for new limitations on expatriate 
jobs in the financial sector, and on the cross-border supply of supporting services?  
 
Reply
: 
 
Propose Regulation regarding The Use of Fore ign Workers and Transfer of Knowledge in 
Banking:  The purpose of the new proposals is to ensure t hat domestic banking professi onal could benefit from 
banking sector liberalization through transfer of know ledge in order to strengthen the banking system 
in Indonesia. Indonesia wants to ensure that the principle of transfer of knowledge through 
understudy, as stated in our commitment, is fairly reflected in the field through the implementation of 
this regulation.  Notwithstanding its purpose, the new provisions will not  lead to discrimination. In fact, in relation to 
foreign service supplier, the new provisions gives mu ch more flexibility for  domestic banks which are 
controlled by non-nationals, foreign bank branch es, and foreign bank representative offices to use 
foreign professionals.    In that spirit, the regulation only limits the fo reign professional in the area of human resources and 
compliance, in line with current domestic regulati on. Other areas of banking professional are still 
open for foreign professional such as risk manageme nt and treasury, in which Indonesia realized the 
supply of domestic professional is not sufficient.  In this regard, Indonesia believes that this regul ation is still in line with our commitment in WTO. 
 
For transparency purposes, Bank Indonesia had circu lated the proposed draft of regulation to the 
stakeholder and received severa l comments on the draft of regula tion. Based upon such consultation 
Bank Indonesia has released Bank Indonesia Regul ation No. 9/8/PBI/2007 concerning The Use of 
Foreign Worker and Transfer of Knowledge Program in The Banking Sector. 
 Propose Regulation regarding Risk Management Application on the Use of  Information 
Technology by Bank: 
 The purpose of the regulation is to ensure the effe ctive implementation of risk management in the use 
information technology by banks. This incl udes board and senior management oversight, adequate 
risk management policies and procedures, risk identific ation, measurement, m onitoring and control, 
and internal control system. 
 The regulation also covers the right of bank supe rvisor to have access to bank’s information, to 
ensure the integrity of bank’s data and the security of the system used, as well as to protect bank 
secrecy.   
With regards to outsourcing of information t echnology by banks, the propose provisions covers 
3 main areas which includes transaction pro cessing, data center, and disaster recovery plan. 
 In this regard, Indonesia believes that this regul ation is still in line with our commitment in WTO. 
 
For the transparency purposes, Bank Indonesia has circu lated the proposed draft of regulation to the 
stakeholder and received several comm ents on the draft of regulation. Currently, Bank Indonesia is 
still in the process of finalization of this regulation. 
  WT/TPR/M/184/Add.1 
 Page 113 
 
 
  64. Could Indonesia please provide an update on the state of play in regard to its planned new 
insurance law, and its plans for estab lishing a financial supervisory agency? 
 
Reply : 
 
We have been studying degree and modes of libera lization of insurance sector adopted by other 
countries thus far, we conclude that Indonesia has reasonably opened the sector. We also believe that 
we still need to enhance the capac ity building of the domestic players in order to be more prepared 
for international competition. At present, more liber al offers are not in our vision. However, we will 
continually explore possibilities to table bett er commitments for the sector in future. 
 
(ii) Telecommunications 
 WTO Secretariat's Report, page 90, para. 65  
65. Could Indonesia confirm whether the provi sion of universal service includes also the 
provision of mobile services?  
 
Reply
: 
 The government of Indonesia has introduced a new scheme for universal service obligation (USO) 
under Ministerial Regulation No. 11, 2007, inter alia adopting an auction system under which those 
who offer the least amount of subsidy will become  the successful USO providers. The auction will be 
announced at the end of July 2007. 
 66. How many foreign services providers are currently present in Indonesia? 
 
Reply
: 
 
Currently there are more than five foreign teleco mmunications service providers in Indonesia, 
Singtel, STT, Telecom Malaysia, Hutchinson, Maxis, and others.  
67. Could Indonesia provide some detailed info rmation on the framework for granting licenses 
for the provision of satellite services?  
 
Reply
: 
 Regarding foreign satellite operators, pursuant to Ministerial Regulation No.13 of 2005 and as 
revised by Ministerial Regulation No. 37 of 2006, and its implementing regulation Director’s General 
Regulation No. 37 year 2006, any foreign satellite inte nding to provide services in Indonesia territory 
should:  a. Complete satellite coordination with In donesian satellite networks and systems and has to 
prove that it cause no harmful interference to Indonesian satellites and other networks in 
Indonesia; and 
 b. Prove that there are equal opportunities to Indonesian satellites to operate in the foreign 
country whose government has filed said foreign satellite networks to ITU. 
 For point b, above, a formal letter from said  foreign government is required, assuring equal 
opportunities to Indonesian satellit es to operate in their country. 
 WT/TPR/M/184/Add.1 
Page 114  
 
 68. Is it among Indonesia's objectives to encourage the provision of satellite services by foreign 
operators? 
 
Reply
: 
 
Yes. It has been clarified in point 65 above.  
69. Could Indonesia indicate whether legislative or regulatory changes are considered at present 
for the provision of satellite and/or other telecommunication services? If yes, does Indonesia consider that existing licenses, notably foreign, could be affected?  
 Reply
: 
 We still retain Telecommunication Law number 36 of 1999 and other telecommunications legal 
regulations. Any future changes will be announced through our website: http://www. postel.go.id. 
 
WTO Secretariat's Report, page 91, para.69  
70. Could Indonesia provide more information on th e type of tariffs increase that it has attempted 
to set?   
 
Reply
: 
 Based on the Ministerial Regulation No. 09 and No. 11 year 2006, the government sets the formula to 
calculate tariff.  
 
WTO Secretariat's Report, page 92, para.71 
 
71. Could Indonesia provide explanations on its decision to limit the number of VoIP service 
providers? 
 
Reply
: 
 
The Government has no longer restricted the number of VOIP providers, and right now there are 19 (nineteen) licensed VOIP operators.  
 
WTO Secretariat's Report, page 93, Box IV 
 72. Could Indonesia clarify further the statemen t (source: Ministry of Industry and Trade and DG 
for Telecommunications RI) that "It is clear th at Indonesia's fixed-line policy is more liberal 
than its commitments under the GATS"? 
 
Reply
: 
 
Under Telecommunications Law year 2006, Indonesia has guided reforms for antimonopoly and spirit 
toward competition in any telecommunications services and to end monopolies. Indonesia also has 
made some progress by opening of basic telecommunications services to foreign companies. It lifted Telkom's and Indosat's respecti ve monopolies on domestic and international services in 2002 as the 
first step towards introduction to full competition.  
  WT/TPR/M/184/Add.1 
 Page 115 
 
 
  (iii) Transport 
 WTO Secretariat's Report, page 94, para 77-78 
 
Government Regulation No. 20 (1994) allows up to 95% foreign investment in shipping ventures. 
However, it is understood that pursuant to a letter of  the Minister of Communications addressed to the 
Capital Investment Coordinating Board (B KPM) (No. PM.303/2/5/ PHB-2005 dated 
19 August 2005), the 95% limit is be ing revised downwards to 49%.  
 73. Could Indonesia confirm and clarify the legal situation concerning this initiative? 
 Reply
: 
 
The Government Regulation No. 2C (1994) is the government regulation stip ulates foreign investment 
in Indonesia in general term. The condition stipulated  in the regulation is net considered as binding 
commitment The implementation of the said regulation, is this domain of concerned ministries. Ministry of 
Transportation of Indonesia's policy with regard to foreign participation is 49% in maximum and foreign 
shipping company shall establish joint venture company with Indonesian Shipping Company to be able to 
operate in Indonesia. Indonesian position with regard  to foreign participation in shipping is clearly 
states- in Indonesian's commitment in World Trade Or ganization, which is 49% foreign 
participation through joint ventures. 
 
Recently, Indonesia has a new investment law. To  further explain the law, the government w ill stipulate 
Government Regulation on investment which specifically explain the position of each sectors and area of 
activities which is opened :with a condition, and closed for foreign investment, through consultation with 
the Ministry responsible for the sector. So the policy of foreign participation is the domain of the concerned ministry in Indonesia 
 
International practices demonstrat e that Terminal Handling Charges,  for moving containers between 
container terminals and ships, are levied on a commercial basis and correspond to the services 
rendered in order to reflect the true costs of us ing port facilities. It is understood, however, that 
Indonesia considers a regulatory role is necessary in the setting of Terminal Handling Services.  
 
74. Could Indonesia explain its position? 
 
Reply
: 
 
Based on Indonesian existing regulations, which are Law No. 21/1992 on Shipping, Government Regulation 
No. 69/2001 on Port affairs and Minister of Tran sportation's Decree No. 72/2 005 on Type, Struct ure and 
Categorization on Tariff for Port Services in Sea Ports, it is stipulated that port corporation determines 
tariff amount of port services in sea ports managed by port corporation after having informed the 
tariff amount to port users directly related with services of vessels and/or cargo and/or passenger. The 
tariff must be consulted to the Minist er for Transportation before imposition. 
 
In this regard, on October 2005, Indonesian Port Corporations (PT. (Persero) Pelindo I, II HI and IV) 
sent letter to the Minister of Transportation to report the result of agreement amongst PT. (Persero) Pelindo 
I, II, III and IV with port user associations and requested to reduce the Container Handling Charge (CMC). 
After receiving this proposal, Minister for Transportation sent letter on 28 October, 2005 to PT (Persero) 
Pelindo I, II, III and IV stating that Ministry of Transportation principally could a ccept and agree the 
proposal to reduce the Container Handling Charge (CHC) as requested and to be effective from 
November 1, 2005. 
 WT/TPR/M/184/Add.1 
Page 116  
 
 In connection with the reduction of CHC, Indonesi an National Shipowners' Association (INSA). on 
October 28, 2005, sent letter to Minister of Tr ansportation and requested Minister of Transportation to 
determine the tariff of Terminal Handling Charge (THC) to be reduced. Furthermore, on 
October 31, 2005 Minister of Transportation sent letter to INSA stating the reduction tariff of CHC. 
 
Based on the above explanation, the reduction of Container Handling Se and Terminal Handling 
Charge was based on Indonesian exSLg regulati ons and was implemented through long discussion 
involving various related institutions and stakeholders. 
 
The objective of the Indonesian Government's policy is  to bring efficiency to both shipping and port 
industries, and especially to redeem high economic cost and to cut the unnecessary charges in ports. 
 (iv) Tourism  WTO Secretariat's Report, page 96, para 81-82 
 75. How much of the FDI attracted by Indonesia in  the last years has been in the tourism sector? 
 
Reply
: 
 Will be submitted later. 
 
76. Could Indonesia describe the existing plans to  promote the tourism sector, and what measures 
the government is taking to ensure effective non-discrimination of foreign services suppliers? 
 
Reply
: 
 
Will be submitted later. 
 
77. Could Indonesia explain its plans for improving  professional education and training related to 
the tourism sector? 
 
Reply : 
 
Will be submitted later. 
 
78. Could Indonesia elaborate on its assessment of the effect of the tourism sector in overall 
economic growth and employment, and in particular in other economic sectors like 
construction, transport, computer serv ices, education and professional training? 
 
Reply : 
 
Will be submitted later. 
 
79. What is the existing legislation applicable  to tour managers (professionals accompanying 
groups of tourists in their travel through the country) and tourist guides? What plans is the 
government considering to reduce or eliminate discrimination of foreign services suppliers in 
these fields? 
 Reply
: 
 
Will be submitted later. 
  WT/TPR/M/184/Add.1 
 Page 117 
 
 
  EUROPEAN COMMUNITIES – REPL IES TO FOLLOW-UP QUESTIONS  
 
Question 1:  
Indonesia affirms that they hold in-depth discussion s with stakeholders at all stages and processes of 
the regulatory reform. Could Indonesia describe mo re in detail how this process is conducted, for 
instance in terms of the format followed and if a formalised process is undertaken? Does this process 
also involve the foreign businesses? 
 
Reply:
 
 
In preparing a regulatory reform, the Government of Indonesia refers to th e Law No.10 of the year 
2004 concerning the Formulation of Law and Re gulation which states that public, including 
stakeholders has the full right to express their views on the draft regulation prepared by the 
Government of Indonesia. During the process, the Government of Indonesia invites business sectors 
to be involved in the discussion of the prepared  draft. This can take pl ace at the time when the 
Government is preparing the draft or when the dra ft itself is being discussed in the Parliament. The 
Government disseminates the draft to the public and the stakeholder through mass media. This is 
important for the Government to have a feed back or input from the public or stakeholders. In 
addition, the Government also hold a meeting/s with Chamber of Commerce or other agencies 
concerned, to provide an opportunity for busin ess society including foreign businesses to address 
their interests.   
 Question 6: 
 
Considering that the draft regulation on severance payment has been publicly rejected by all parties on 
the labour market and that the Government's recen tly issued policy package on economic reform does 
not contain any efforts to revise current labour market legislation, what steps and under what 
timeframe does Indonesia intend to improve the labour market rigidities, which are pointed out as one 
of the obstacles to creating a conducive invest ment climate and to reducing unemployment? 
 
Reply:
 
 
To improve the labour market rigidities, the governme nt has always considered all relevant elements 
in implementing regulation that makes business clim ate more conducive. All stakeholders have been 
involved contributing their views. The stakehol ders, called as The Tripartite Consultative Body 
(TCB), comprised of representatives of the uni ons and the employer organizations as well as 
representatives of government a re also involved in the process of policy making.  
 Question 8: 
 
Since the cash transfers are meant to  be a safety net for people below the poverty line, in what respect 
can they be said to help preventing labour conflicts?  Reply:
 
 The cash transfer program is aimed at providing  a safety net for people below poverty line. Most of 
recipients of that program are community, regardless of their employment status. Therefore, there is 
no directly connection between cash tr ansfer program and l abour conflicts. 
 WT/TPR/M/184/Add.1 
Page 118  
 
 Question 11:  
 
Could Indonesia's NTM list be obtained from Tim Ta rif dan Bea Masuk (Team for Tariff and Import 
Duty) as of today? Could this information be consulted online?   Reply:
 
 No, Tim (team) Tariff dan Bea Masuk is not in charge with NTM’s. 
 
Question 12:  
 
We would like to pose again this question since th e text provided was not answering our question. 
 
Reply:
 
 
Actually, there are various kinds of NTM Policies. Those policies are handled by related Ministries 
such as Ministry of Trade, Ministry of Forestry, Ministry of Industry, etc. 
 
Question 19: 
 
Could Indonesia provide a more detailed account of  how this public consultation takes place? For 
example, could Indonesia indicate how well in advance before issuing of a new regulation the 
consultation is undertaken – in this regard, we note that some domestic business associations 
complain that for very complex issues they someti mes get only a few days to prepare a position. In 
addition, could Indonesia indicate whether the drafts of regulations are publicly available, and if so, 
where they can be obtained? Could Indonesia confirm which Ministries have launched online 
consultations?  
 
Reply:  
 In the process of formulating the draft regulation, the Government of Indonesia also an obligation to 
disseminate and inform the draft to the public seeki ng their views. The process of drafting a new Law 
or Regulation in the Parliament will take about 1 (one) year and it is considered a sufficient to 
provide an opportunity to public, in presenting thei r comments or views. The dissemination is done 
through news paper, television, radio, etc. For on line publication, most of the draft of Laws and 
Government Regulations are published at the we bsite of Ministry of Justice, and for online 
consultation, every ministry has its own officia l website and can be reached through email.  
 
Question 20: 
 
Could Indonesia confirm that foreign ownership th resholds in the mentioned sectors will not be 
decreased? 
 
Reply:
 
 
Based on President Regulation No.77 of 2007 regarding the List of Closed and Open with Condition 
Business in Investment, the foreign thresholds for investment in Open with Condition Business are 
hereby attached.  This Regulation (Negative List of Investment-NLI) was signed on July 3, 2007. The 
NLI limits foreign equity of the questioned bus inesses of Satellite (65%), Telecommunication 
Networks (49%), Construction Services (55%), Mar itime Transport (49%), aims at adjusting with the 
sectoral laws and regulation. Thus, implementi ng regulation has provided a legal certainty and 
transparency to improve for their business climates.  
  WT/TPR/M/184/Add.1 
 Page 119 
 
 
  Question 21:  
Could Indonesia elaborate further on which stakehol ders are being involved in the discussions? Has 
the general public been able to have their say on the investment law? Since the law aims for equal 
treatment of domestic and foreign investors, to wh at extent has the foreign business community been 
involved in this consultation process? 
 
Reply:
 
 On the creation of the investment Law, Indonesi a has conducted public consultation with all 
stakeholders, both government agencies and private sect ors and civil society. Consultation is done by 
the drafting team before and during the legislati on process in the parliament from March 2006 to 
April 2007.  The stakeholder includes the Interna tional Chamber of Commerce, as the representation 
of foreign business community. The consultation wa s also conducted with the business communities 
abroad by both government representatives and member of the parliament. 
 
Question: 
 
We have also received clear indications that the Ca pital Investment Co-ordinating Board (BKPM) will 
maintain its approval function in that foreign inv estments have to go through verification before 
applying for a business license. Coul d Indonesia clarify the intended ro le of BKPM in the investment 
initialising process? Will investors be obliged to go through one-stop shops in order to start up their 
investments or will this be an optional exercise?  
Reply:
 
 
Based on the Investment Law No.25 of 2007, in article 30 stated that: 
 1) The Government and/or regional governments sh all ensure business certainty and safety in 
capital investment activities. 
2) Regional governments shall implement capital in vestment activities which fall within its 
authority, except such capital investment as  falls within the Government‘s area. 
3) The implementation of capital investment by regional government shall be based on criteria 
of externality, accountability, and efficiency. 
4) The implementation of inter-provincial cap ital investment shall be a Government matter. 
5) The implementation of inter-regency/city capita l investment shall be a provincial government 
matter 
6) The implementation of capital investment in  one regency/city shall be a regency/city 
government matter. 
7) In the implementation by government of capita l investment, the authority of the Government 
covers: 
a. capital investment related to natural res ources that are not renewable with a high 
risk of environment destruction 
b. capital investment in national scale high-priority industry 
c. capital investment related to the inte gration and communication function among 
regions or across provinces 
d. capital investment related to the implemen tation of the national defense and security 
strategy WT/TPR/M/184/Add.1 
Page 120  
 
 e. foreign capital investment and investors using foreign capital, capital from a foreign 
government based on an agreement between the Government and foreign government; and 
f. Other capital investment sectors which a re Government responsibility based on law. 
8) For capital investment which is the responsibility of Government as set out in paragraph (7), 
the Government shall either implement itself, delegate to the governor as the Government 
representative, or delegate to a regency/city government. 
9) Provisions for the distribution of governmental power in capital investment shall be regulated 
further by Government Regulation. 
 Regarding the procedure of one stop service invest ment (the government is currently still drafting 
Presidential Regulation for One Stop Service). Investors who have already formed a legalize 
institution of company (limited company), should go through one stop shops or other form of agency 
that will operate as OSS in order to start up th eir investments initializing process. The OSS will be 
located in regency to handle investment in its region.    If the form of investment is cross-provinces, the OSS will be in the Indonesia Investment Coordination 
Board (BKPM); if it’s cross-regency the OSS will be in provincial investment au thority or other form 
of agency in provincial level which dea ling with the investment initializing process.  
 
Furthermore, Law No. 25 of 2007 concerning Investment  clearly figures out 2 (t wo) main roles of the 
Investment Coordinating Board (BKPM) relating to investment activity throughout Indonesia. Firstly, 
coordinating of the implementation of investment pol icy inter Government Ins titutions/Agencies; inter 
Government with Central Bank; inter Central Gove rnment and Local Government as well as inter 
Local Governments. Secondly, undertaking investme nt services according to the law and regulation 
under a concept of a One Door Integrated Investment  Services. This concept will be implemented by 
BKPM with the involvement of representatives of rel ated sectoral departments/ agencies’ officers that 
have competency and authority. Under this concept, an investor will only come to a one place for 
obtaining investment approval except other related implementation that should be requested at the 
local government at the investment location, and  thus this will certainly cut off a lengthy 
administrative process. In addition, a Presidentia l Regulation concerning the implementation of a 
One Door Integrated Investment Services is now  being formulated and will be finished soon. 
 
Question 23: 
 
Could Indonesia provide us with an approximate fi gure regarding the percentage of total goods which 
currently pass through the red lane?   
Reply:
 
 
The Percentage of imported goods which pass thr ough red line are vary in every Indonesia Customs 
Office. However, as representation, 28% of impor ted goods pass red chann el in Tanjung Priok 
Customs Office in 2006. 
 
Question 24:  
 
Could Indonesia describe what measures are undertaken  to oblige the port operators to have adequate 
facilities to ensure that the enactment of the new customs law and subsequent regulations are done 
without disrupting the smooth flow of goods or delaying customs clearance processes (such as storage 
facilities, number of container x-ray scanners etc.)? 
  WT/TPR/M/184/Add.1 
 Page 121 
 
 
  Reply:  
 Government has designed a comprehensive reformation on facilities and infrastructure as listed in the 
Presidential Instruction No.3 year 2006 on improvem ent of investment regulation. The Presidential 
Instruction regulates to speedy the cargo clearan ce process in the port. The implementation of 
reformation and its responsibility shall be done by each institution. It is expected that this 
simultaneous reformation can push the whole improvement.  
 
Question 25: 
 
Could Indonesia describe in more detail how the current customs regulations are in line with WTO 
and WCO practices? For instance, even for low ri sk importers with low risk goods, the physical 
inspection rate is 10%, meaning that at least one whole container has to be unloaded and inspected according to the latest regulation.  Reply:
 
 On customs clearance, WCO Risk Management Guid e has been adopted. This adoption is very 
important to ease controlling the movement or c onsignments across nationa l border and to ensure 
that goods are comply with Customs Law No.1 7 year 2006. Customs Administration facilities and 
controls flow of goods by applying red, green and  priority channel. As ex plained in the previous 
answer, priority and green channel are applied for low risk importer/low risk commodity. Imported 
goods which pass through green channel require docum ents examination. On the other hand, neither 
physic nor document examination required for impor ted goods that pass through priority channel. 
 
Question 32: 
 
Although the VAT is applied to a whole package of ser vices, this is still contradictory to international 
practices. Does Indonesia intend to revise existing VAT laws with a view to r ectifying this situation? 
 
Reply:
 
 
As we previously mentioned, both domestic and in ternational freight services are not subject to VAT 
under the existing VAT law. Since the freight forwarders can not separate freight services component from the overall services rendered, the Directorate General of Taxes is currently considering the 
possibility of implementing Other Values (Deemed Ta x Base) as the Tax Base of VAT, by putting into 
account only the percentage of services that subj ect to VAT (therefore, excluding the freight service 
portion from the tax base).  
 Questions 34 and 35: 
 
Indonesia seems to invoke the public morals exception of GATT to justify the restrictions on imports 
of alcoholic beverages.  However, in terms of import for tourist needs and foreigners living in 
Indonesia , what are the grounds for considering that a qua ntitative restriction implemented through an 
import licensing system as the one described is necessary for the protection of public morals in 
Indonesia in the sense of Article XX(a) GATT?  
 What are the criteria applied for the definition of su ch restrictions, in terms of decision of available 
quotas for each year? We note the fact that there have been no imports to date in 2007 . This raises our 
concerns that there may be a de facto quantitativ e restriction which would be contrary to GATT 
Article XI (and Article 4.2 of the Agreement on Agriculture).  
 WT/TPR/M/184/Add.1 
Page 122  
 
 Reply:
 
 The controlling of production, distribution and sale of  alcoholic beverages, are considered as to 
secure a peaceful, discipline, life of the public. Such  action is undertaken in the form of imposing 
quota and limiting the number of importers. We appointed two companies as the importer and distributor of such beverages, which are: 
 
1. PT. Perusahaan Perdagangan Indonesia /PPI (Pe rsero); importing alcoholic beverages for 
hotel, pub, restaurant and the member of Indonesian Hotel and Restaurant Association 
(IHRA) or locally known as Perhimpunan Hotel dan Restoran Indonesia (PHRI); 
2. PT.  Sarinah (Persero) was tasked to import alcoholic beverages for duty free shop. The 
entitled buyers of duty free shop are: 
 
• Members of diplomatic corps 
• Expert staff in International Institution 
• People who are going to travel abroad 
• People who just arrived from traveling abroad  
 
To date, (until June 2007) these companies have not  made a proposal for importing such beverages 
due to the adequate stock and the declining demand . The declining demand of such beverages is in 
fact as the result of certain local government regul ations that disallow people to drink alcoholic 
beverages in public area.  
 
Question 42: 
 
Could Indonesia clarify in what way unfair practi ces and conflicts of interests are avoided by 
excluding state-owned enterprises from government procurement regulations? 
 
Reply:
 
 According to the Presidential Decree No.80/2004, State-owned enterprise is not excluded from the 
government procurement regulations. State-owned en terprise has the same opportunity with private 
company in dealing (bidding) w ith procurement of government. 
 
Question 45: 
 
Since the accession to the UN/ECE 1958 Agreement does not automatically mean that relevant 
chapters of the Agreement have to be chosen imme diately. Could Indonesia elucidate if tyres will be a 
priority chapter to adopt of the UN/ECE Agreement? 
 
Reply:
 
 Till date, the status of Indonesia in the UN/ECE  1958 is still an observer and has not yet been a party 
in this UN Body. However, we are now considering th at tyres will be a priority chapter to adopt of the 
UN/ECE agreement.  
 Question 46: 
 
According to existing regulations, beef can be im ported from countries with negligible BSE risk as 
well as from countries with controlled BSE risk but from zones with negligible BSE risk. 
Furthermore, we consider this is a violation of the WTO SPS Agreement, since it allows trading of 
almost all beef products with negligible, cont rolled or undetermined BSE risk. Could Indonesia  WT/TPR/M/184/Add.1 
 Page 123 
 
 
  confirm that it will not make the mentioned regulatio ns even stricter, since Indonesia's reply stipulates 
that only beef products from countries declared free from BSE (which according to the OIE code is not equal to negligible BSE risk) can be imported into Indonesia? 
 
Reply:
 
 
We confirm that regulation as contained in Minister of Agriculture Decree No. 482/Kpts/PD.620/2006 will not even stricter sinc e Indonesia only import me at from the zone free 
BSE (negative approach).   
 
Question 47: 
 
Could Indonesia refer to its scientific evidence wh ich has to be submitted in case the import regime 
should be stricter than envisaged in the WTO SPS Agreement? Where such scientific evidence could 
be obtained?  Reply:
 
 The scientific evidence could be obtained at : Directorate for Veterinary Public Health Directorate General Livestock Production Ministry of Agriculture 
Jl. Harsono R.M. No. 3 Pasar Minggu  
Jakarta 12550  PO Box 1108/Jks Indonesia Phone +62217815580 
Fax +62217815583 
Website : ditjennak@deptan.go.id  Question 54: 
 
Could Indonesia elaborate on whether the creation of fair competition also includes providing more 
opportunities for private players to enter the postal market? 
 
Reply:
 
 The current regulation has facilitated private players to participate in postal industry, but only with 
limited coverage. Government of Indonesia and the Par liament are now on the process of drafting the 
Bill of Postal Law that will grant a greater opportunity to private players and eliminate the monopoly of state-owned enterprises at once.   In sum, according to the existing Postal Law No. 6 of 1984, the exclusivity right still remains in PT. 
Pos Indonesia, the state-owned postal operator. The company has the right to send/deliver letters, 
aerogramme and postcards which incurred costs are paid by the customers. Private companies have 
only the right to send/deliver other item than t hose three items, namely parcel, printed matter, 
newspaper, money, etc. 
 
Questions 55 and 59: 
 
As requested already in the follo w up remark to question 20, could Indonesia confirm that foreign 
ownership thresholds in the men tioned sectors will not be decreased? 
 WT/TPR/M/184/Add.1 
Page 124  
 
 Reply:
 
 Presidential Regulation No. 76 of 2007 on Negative List of Investment (NLI) was signed on July 3, 2007. The NLI limits foreign equity of the questioned businesses of Satellite (65%), 
Telecommunication Networks (49%), Construction S ervices (55%), Maritime Transport (49%), with 
the aims to adjust with the sectoral laws and regulations, give a legal certainty and transparency, and 
this is also in line with Indonesian Governmen t’s commitments to the international agreements  
 
Question 63: 
 In what way does the introduction of the Bank of Indonesia Regulation 9/8/PBI/2007 create more 
flexibility for domestic banks which are controlle d by non-nationals, fore ign bank branches and 
foreign bank representative offices, to use foreign professionals? 
 
Reply:
 
 
Bank Indonesia regulation No.9/8/PBI/2007 states t hat a bank which 25% or more of its shares are 
owned by non-nationals, may be able to use forei gn professionals for the position of Commissioner, 
Director, Executive Officer and or Technical Expert s/Consultant. This Provision is similar for banks 
which less then 25% of its shares are non-national s but is controlled by the non-nationals.  
 
The above provisions are quite flexible compared to  the provision for banks which are controlled by 
nationals. These national banks may only use fo reign professionals for the position of technical 
expert/consultant.  
 
Question 64:   
 
We would like to repeat this qu estion given that the reply provided  refers to liberalisation of the sector 
instead of the plans of establishing a financial supervisory agency.  
Reply:
 
 
With regard to the establishment of an FSA in I ndonesia, last year the supervisory agency for non-
bank financial institutions and that of the capita l market have been merged into a single body under 
the Ministry of Finance. As for plans to m erge the banking supervisory agency with this body 
currently it is still being discuss by all parties involved.  
Question 73:  
Indonesia explains that the Ministry of Transporta tion's policy with regard to foreign participation 
being capped at 49% is permissible despite Gove rnment Regulation No. 2C (1994) establishing a 
ceiling of 95%. The EC does not consider that th e arbitrary interpretation of this Government 
Regulation by different Ministries offers an accepta ble environment in which foreign investors can 
provide services. In addition, it do es not seem compatible with the spirit of the new capital investment 
law to render the business climate more transparent and accountable for foreign investment. The EC is 
interested to be kept fully inform ed on developments in this respect. 
 In addition, press reports from June 2007 indicate that  the Minister of Transportation has welcomed 
an initiative by PT Pelabuhan Indonesia (Pelindo) to buy  back a 51% stake in PT  Jakarta International 
Container Terminal (JICT) from a Hong Kong bu siness group, Hutchison Port Holdings (HPH) 
Group, despite the latter's unwillingness to sell their st ake. Can Indonesia explain how such a policy is 
compatible with the Ministerial Decision of 15 April 1994 on negotiations on Maritime Transport 
Services (confirmed by the Decision on Maritime Transport Services of 28 June 1996), in respect of  WT/TPR/M/184/Add.1 
 Page 125 
 
 
  which WTO Members have undertaken to apply a sta ndstill provision to the maritime sector in order 
not to make market access more restrictive?   The EC seeks reassurance that Indonesia will not restrict further market  access to the maritime 
transport sector, especially in light of the Minist ry of Transportation's policy initiative to develop 
25 international ports over the next few years in orde r to facilitate the country's growing foreign trade. 
 
Reply:
 
 As you may aware, the Government of Indonesi a has issued the Law No. 25 year 2007 regarding 
Capital Investment dated 26 April 2007. This La w is further explained with the Presidential 
Regulation No.76 year 2007 dated 3 July 20 07 regarding "Criteria and Conditions for the 
Formulation of Business Activities which are Cl osed and Opened with conditions for Capital 
Investment" and Presidential Regulation No.77 yea r 2007 dated 3 July 2007 regarding "List of 
Business Activities which are closed  and Opened with Conditions for Capital Investment". According 
to the said presidential Regulation, it is clearly listed that foreign investment for maritime transport, 
including international passenger and freight, car go handling services as well as port facilities are 
maximum 49%. The new law on Capital Investment toge ther with its presidential Regulations are the 
legal basis for foreign investment in Indonesia includ ing in maritime transport sector. It is also inline 
with the Indonesian offer to the World Trade Or ganization (WTO) on maritim e transport. For foreign 
investment came to Indonesia before the issuance of this new Capital Investment Law, the can 
maintain its investment status as before. 
 With regard to press report on the initiative of PT. Pelabuhan Indonesia (Indonesian Port 
Cooperation), to buy back the 51% stake of Hu tchinson Port Holdings (HPH) group on Jakarta 
International Container Terminal (JICT), it is considered to be purely business matters for the two 
companies. 
 
On the EC statement regarding the Ministry of transportation’s policy initiative to develop 
25 international ports over the next few years, p resently the Ministry of transportation of Indonesia 
has been conducting study on this matter in coordina tion with related institution such as the Ministry 
of Trade, regional government as well as private se ctors. The revised number of ports which are open 
for international trade is not yet decided up to now . It is not our intention to have more restricted 
policy. However, it is more on our effort to re nder appropriate services and facilities as international 
ports. 
 
HONG KONG, CHINA  
 
Anti-dumping (AD)  (WT/TPR/G/184, P. 13-15, Paras. 39-50; and WT/TPR/S/184, P. 25, Para. 25) 
 
1. We note that "Indonesian Government has take n serious steps to respond to allegations of 
dumping by foreign government against Indonesia exports".  We are interested to know what 
specific steps the Indonesian Gove rnment has taken in such cases.  
 
Reply
:  
 
Ministry of trade established a directorate (Direktorat Pengamanan Perdagangan/DPP) under 
Directorate General for International Trade Cooperation with a specific tasks of defending 
Indonesian exporter facing remedy actions taken by  foreign government. The DPP has its own task 
such as: 
 WT/TPR/M/184/Add.1 
Page 126  
 
 - Assisting exporters facing the AD allegation. 
- Involved in the investigation process to monitor to what extend the investigation 
conducted in fully consistent with AD Agreement. 
- Involved in every hearing conducted by the foreign authority to express the 
government views. 
- To provide legal advice to exporters in par ticular SMEs in fu lfilling the questions. 
 
2. In relation to the stance of Indonesia on the current WTO regime on AD, we note that while it 
has expressed concern about certain implem entation issues of AD, its position on the AD 
negotiations under DDA was not mentioned in the Government Report, unlike what it did for 
other major DDA subjects.  Would Indonesia share with us its position on the AD 
negotiations under DDA? 
 
Reply
: 
 
- Indonesia consider the importance of Rules negotiation to further clarify and improve AD 
Agreement, SCM Agreement and Fishery Issues; 
- Our view is that in the future we need to ha ve AD Agreement that could not easily abused or 
misused and to avoid the proliferation of  AD action against the same products. 
 
Investment  
(WT/TPR/S/184, P. vii - viii, Para. 8; and P. 33, Para. 46)  
3. We note that a new legislation was submitted to the Indonesia’s parliament in March 2006 to 
further liberalise investment and it is expected that the legislation would be enacted in 2007.  
The objectives of the legislation include shorte ning the "negative list" of sectors whereby 
foreign investment is prohibited, and resolv ing regulatory overlaps between central and 
regional authorities.  Grateful for an update on the latest development. 
 
Reply
: 
 
The Law No. 25 of 2007 concerning Investment re gulates that Central dan Regional Governments 
shall provide business certainty and and security in  the implementation of investment. Furthermore, 
the authority of Central and Regional Government s do not overlap because Regional Government is 
only to organize investment affairs under thei r authority, except for those organized by the 
Government. 
 
The Investment Law was passed in  Parliament on 29 March and was implemented in April 2007. 
Closed and open business with requirement for inve stment, domestic and foreign decided based on the 
criteria of health, safety, defense and security, en vironment and culture, based on national interest. 
Those criteria could be breakdown as follow: to main tain the civil society, to protect the bio diversity, 
to maintain the ecosystem balance,  to supervise the use of toxic ant materials, to avoid forgery and 
supervise the distribution of un scheduled goods and services, to guard the national independency, to 
maintain the limited resources. 
 
Financial services – Banking 
 
(WT/TPR/S/184, P. 88 - 89, Para. 60 & Table IV .12)  
4. It is stated in the Secretariat Report that fo reign interest in the banking sector has been strong 
and by end 2005, foreign investors owned an  estimated 40% of Indonesia’s banking sector 
assets.  We would like to know Indonesia’s exis ting regime for foreign provision of banking  WT/TPR/M/184/Add.1 
 Page 127 
 
 
  services via modes 1 and 3, particularly whether improvements have been made in 
comparison with the level of commitments undertaken in its existing GATS schedule of 
specific commitments.   
 Reply
: 
 As stated in Indonesia’s Schedule of Commitment since the Uruguay Round, there is no limitation on 
mode 1 in banking services in Indonesia. 
 
On Mode 3, it is our view that the existing regime of foreign provision is quite liberal. Foreign equity 
participation is allowed up to 99 %, no limitati on on the establishment of foreign bank branch and no 
geographical limitation in which foreign bank c an operates. The existing regime is an autonomous 
liberalization that Indonesia undertakes from banking reform commitment with the IMF during the 
period of Indonesian banking crisis in 1998. 
 
In general, it is our view that liberalization ha s the potential to provide significant benefit to the 
overall economy. The gain in market access to new service market, technological development, global 
economic integration followed by an increase in inte rnational trade would allow countries, especially 
developing economies, to improve export earnings and employment opportunities for their nationals 
as well as increase the efficiency of the econom y by permitting efficient resources allocation. 
However, in order to reap the benefit of liberaliza tion certain pre-conditions within the economy must 
be satisfied. Among the most important pre-conditio ns relates to the establishment of a competitive 
and level playing field both in terms of market efficiency and institutional capacity.  
 
Hence, it is based on this view that Indonesia’ s approach with regard to trade liberalization is 
strategic in nature. Instead of full liberalization, Indonesia opted for a more gradual approach to market liberalization, which takes into account the interest of domestic stakeholders and the 
restructuring as well as reform effort curren tly being carried out in the economy.  
 
Despite the adoption of a gradual approach towards liberalization, we are in the opinion that 
Indonesia’s has already made signif icant improvement  in its WTO commitments of the banking 
sector. As can be seen in Indonesia’s initial offer,  foreign control of a domestic banking institution 
that was previously absent have been allowed. In addition, Indonesia has increase the geographic 
market that a foreign bank can operate in dom estically.  This extension in geographic market 
provides substantial increase in new business segmen ts as well as economic opportunities for foreign 
– service suppliers, since all of those citi es are major economic centers in Indonesia. 
 
Indonesia would also like to reiterate its commitmen t to progressive liberalization with the view that 
the DDA negotiation will be come up with the balance outcome, both in services negotiation as well 
as the negotiation being conducted in other sector such as agriculture and NAMA. 
 
Financial services – Insurance 
 
(WT/TPR/S/184, P. 89, Para. 61)  
5. As noted from the Secretariat Report, foreign insurance companies can hold up to an 80% 
stake in a local insurance comp any in Indonesia, whereas with  respect to Indonesia’s GATS 
commitments, entry limitations are accompanied by restrictions on foreign equity below the 
level of the status quo.  We would like to know  the prospect for Indonesia to bring its GATS 
commitments on insurance services in line with its more liberal regime in its future offers for 
the current round of services negotiations. 
 WT/TPR/M/184/Add.1 
Page 128  
 
 Reply
: 
 We have been studying degree and modes of libera lization of insurance sector adopted by other 
countries thus far, we conclude that Indonesia has  reasonably opened the sector.We also believe that 
we still need to enhance the capac ity building of the domestic players in order to be more prepared 
for international competition.At p resent, more liberal offers are not in  our vision. However, we will 
continually explore possibilities to table bett er commitments for the sector in future. 
 
Telecommunications services 
 
(WT/TPR/S/184, P. 90 - 91, Paras. 65 & 68) 
 6. As set out in the Secretariat report, pursu ant to the extensive reforms undertaken in the 
telecommunications sector in the past few year s, majority foreign ow nership is allowed for 
basic telecommunications services, and there is  very little that would impede a foreign 
investor from entering the Indonesian valued -added telecom market.  Would Indonesia 
consider reflecting its liberalisation efforts in the sector in its future services offers, 
particularly in terms of the reduced forei gn equity limitations and an expanded scope of 
value-added services? 
 
Reply
: 
 
The government is still engaged in reviewing foreign ownership  of the entire sector under the 
upcoming new Presidential Decree.  
 
AUSTRALIA  
 
II. T RADE POLICY REGIME  
(6) Trade Agreements and Arrangements  
(i) Multilateral agreements  Outstanding Notifications 
 
The report by the Secretariat notes (WT/TPR/S/184, page 22, paragraph 21) that for the period under 
review, Indonesia has not submitted the notifica tions required under the Agreement on Agriculture. 
Notifications are important to the WTO membership in terms of both transparency and Member’s obligations.   Can Indonesia confirm that for the period under re view, there were no changes to policies or 
administrative arrangements that required ad hoc  notifications to be submitted to the WTO under the 
Agreement on Agriculture? 
 
Reply:
 
 
Indonesia confirms that there will be no changes to  the policies and administrative arrangement.  
 
Indonesia has not submitted a domestic support notif ication for the years 2001, 2002, 2003, 2004 and 
2005. When will Indonesia provide WTO members with an opportunity to review its domestic support 
notification for these years? 
  WT/TPR/M/184/Add.1 
 Page 129 
 
 
  Reply : 
 No changes on domestic support, and Indonesia is  committed to notified its domestic support for 
review in due course. 
 Indonesia has not submitted a market access notification for the years 2001, 2002, 2003, 2004 and 
2005. When will Indonesia provide WTO members with an opportunity to review its market access notification for these years? 
 
Reply
: 
 
No changes on market access, and Indonesia is committe d to notify its market access for review in 
due course.  
 (8) Foreign Investment Regime 
 
Investment environment 
 
Indonesia has made commendable progress in consolida ting democratic and political reforms, and has 
generated strong macroeconomic performance in re cent years. The Government released three well-
targeted policy reform packages in 2006 covering in frastructure, investment and the finance sector, 
and held its second Infrastructure Conference in November 2006. Australia supports the Indonesian 
Government’s efforts to invigorate its investment  environment and deliver gains in infrastructure 
development, employment genera tion and poverty elevation.   
 
Reply
: 
 
I. In 2006 Indonesia has release three policy packages, they are (i) Policy Package on 
Investment Climate (Preside ntial Decree No.3 year 2006 ); (ii) Policy Package on 
Infrastructure; and (iii) Policy Package on Fi nance Sector. In 2007, Indonesia issued 
Presidential Decree No.6 year 2007 regardi ng Policy Package on Real Sector and 
Empowering Micro, Small, and Medium Enterpri ses. The decree consists 4 (four) main 
sectors, which are (i) Investment Climate; (ii) Finance Sector Reformation; 
(iii) Infrastructure Development Acceleration;  and (iv) Empowering Micro, Small, and 
Medium Enterprises. This package is integrated  and linked with 3 (three) earlier package.  
 II. Unlike three earlier packages wh ich are created separately, this year package created under 
one Presidential Decree so at the end it deli ver one whole explanation regarding government 
economy policy, facilitate process of coordi nation and evaluation, also transparency. 
 III. Next steps for 2007 (policy package) 
 1. Policy on Finance Sector  
The policy covers five policies group, which are Stability in Finance System; Banking 
Finance Institution; Non-Banking Finance Ins titution, Capital Market; and others finance 
sector such as development expenditure and STE performance. 
 2. Improvement Policy on Investment Climate  
The policy is directed to improve investment po licy on three aspects which are: strengthening 
institutional capability and synchronizing regula tion between central and region; to ease flow 
of goods and custom pr ocedures; and taxation. 
 WT/TPR/M/184/Add.1 
Page 130  
 
 3. Policy on Expediting Infrastructure Development  
The policy will direct infrastructure policy on rounding off the rules of legislation; 
strengthening the Institution; and improving the management on infrastructure development. 
 4. Policy on Empowering Micro, Small, and Medium Enterprises (UMKM)  
This is the new policy as a respond to manage the emerging number of UMKM that reach 
44,69 million. UMKM believe to be one of the national economy pillar which potentially 
support national economy; absor b labor; contribute to Gross Domestic Product; and 
contribute to export earning. 
 
Government will take certain measures to UMKM through: 
 1) Improving Market Access through Financial Source;  2) Developing Entrepreneurship and Human Resource; 3) Improving Market Access O pportunity of UMKM Products; 
4) Reforming the Regulation. 
 
What are the next steps in the refo rm process? What is planned in relation to labour market reform? Is 
the Indonesian Government planning revis it the planned revision of labour laws?   
 
Reply
: 
 
Indonesia has not considered to revisit it labour laws. 
 
Australia remains concerned that new draft mining legislation may create legal uncertainty for current and future foreign investors in the Indonesian mi ning and resource sector. Draft provisions that would 
replace existing Contracts for Work with a mu ltiple licensing system could create legal and 
operational uncertainty, particularly for existing ope rators. Furthermore, proposed provisions dealing 
with forestry, land rehabilitation and the revo cation of undeveloped oil and gas licences will 
potentially create operating uncertainty and place a dditional financial burdens on investors.  
 When is the mining law expected to be finalised? What licensing will be required? How will the new 
legislation interact with envir onmental and forestry laws? Will the new law insist upon in-country 
processing of extracted resources? Will existing r esource lease holders be required to divest 
undeveloped concessions? Would Indonesi a consider retaining existing Contract for Work schemes in 
any revision of its mining legislation?  
 
Reply
: 
 
The bill of Mineral and Coal is still in the final pr ocess of discussion with the parliament. This bill 
accommodates the new changing situation of new era such as globalization, democratization, human 
right and environmental protection. Government of Indonesia hope that it can increase the investment 
in developing mineral and coal sector in Indonesia. 
 
Australia has an expectation that any revisions to  the Negative Investment List (NIL) are aimed at 
invigorating Indonesia’s investment environment.  How does Indonesia propose revising the NIL to 
open new sectors to foreign investment? Can Indonesi a confirm that there are no planned additions to 
the list or sectoral regulations th at may limit foreign investment? 
 
Reply : 
 Indonesia welcomes new investment from all countri es. There will be no limitation of investment 
except ones on the negative list which applied for both domestic and foreign investment. Closed and  WT/TPR/M/184/Add.1 
 Page 131 
 
 
  open business with requirement for investment, domes tic and foreign decided based on the criteria of 
health, safety, defense and security, environmen t and culture, based on national interest. Those 
criteria could be breakdown as follow: to maintain the civil society, to protect the bio diversity, to 
maintain the ecosystem balance, to  supervise the use of toxicant materials, to avoid forgery and 
supervise the distribution of un scheduled goods and services, to guard the national independency, to 
maintain the limited resources. The more  specific list will be decided soon.  
 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports (iii) Tariffs 
 
Tariff Harmonisation Program 
 
Australia notes from the WTO Secretariat report (WT/ TPR/S/184, page 39, para graph 17 and page 71, 
paragraph 13 and table IV.4) that the first phase of Indonesia’s Tariff Harmonisation Program, 
announced on 1 January 2005, increased tariffs on 96 tariff product lines and decreased tariffs on 143. 
Tariffs on some horticultural product lines – such as mandarins, carrots and potatoes – increased from 
5 per cent to 25 per cent, impacting on Australia n exports of these goods. Tariff increases under the 
Program have not always reduced imports. For exam ple, Indonesian statisti cs indicate that the total 
mandarin imports for 2005 increased by 24 per cent.   
Is Indonesia planning to review changes introduced  under tariff harmonisation prior to their scheduled 
elimination in 2010? If so, what would be the scope  of such a review and will bilateral trading 
partners be consulted? 
 
Reply
: 
 
Indonesia is still consistent with the scheduled of tariff harmonization 2005-2010. Indonesia is adjusting its tariff based on the capacity of the local industrial competitiveness. In addition, under the first phase of Tariff Harmonization Program, In donesia has increased the tariff rate on these 
products temporarily until year 2008.   The tariffs will be reduced to 20% in 2009 and 10% in 2010.  
In this case, Indonesia will be consistent to im plement the pattern of tariff changes formulated under 
Tariff Harmonization Program.  
 The reason why the total mandarin imports for 2005 increased is because under ASEAN-China FTA, 
Indonesia and other ASEAN Countries have put the mandarin products under category Early Harvest 
Package with the tariff had to be eliminated to be 0% in 2006. 
 
(vii) Government procurement  Government procurement relating to forest products 
 
The Secretariat report notes that Indonesia has revise d its government procurement regime to increase 
domestic sourcing, reduce corruption and bring its pr ocurement framework into line with international 
public procurement practice (WT/TPR/S/184, page ix , paragraph 16). Could Indonesia please provide 
details and criteria of any g overnment procurement policies relating to forest products? 
 
Reply
:  
 
Indonesia will provide the replies later. 
 WT/TPR/M/184/Add.1 
Page 132  
 
 (ix) Standards and other technical requirements  
 Regulations relating to the import of agricultural products 
 
Australia notes the section of the Secretariat re port (WT/TPR/S/184, page 53, paragraphs 59-70) 
regarding Sanitary and Phytosanita ry regulations.  Australia rec ognises its close relationship with 
Indonesia on agricultural and biosecurity issues.  Australia is, however, concerned about the 
introduction of new regulations restricting access for pr oducts that Australia has a long term history in 
exporting to Indonesia. While recognising Indonesia’ s sovereign rights to protect its population from 
unsafe food products and pests and diseases of qua rantine concern, the introduction of such 
regulations has the potential to undermine agricultu ral exporter confidence in the Indonesian market. 
 
Reply
: 
 According to: 
 
1. Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
 Importation and Control of carcasses, meats and edible offal circulation from abroad.  2. Minister of Agriculture Regulation: No. 27/Permentan/OT.140/3/2007 concerning revision of 
Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad. 
 These regulations aim to prevent the possibility of zoonosis and quarantine diseases entry from 
abroad and also to maintain the Indonesian free- status from zoonosis and quarantine diseases as well 
as to protect the local consumers and also to guaran tee the availability of meat through importation 
and control of carcasses, meats and ed ible offal from reliable sources. 
 As long as the countries comply to the above regul ations and that countries are declared free BSE 
and FMD-infected country by OIE, they are welcomed  to export their livestock products to Indonesia. 
 
In particular, Australia notes the new import regula tions for meat and edible offal products. The new 
regulations, established for food safety reasons, halted the well-established bilateral trade in a range of 
offal products. Australia has, as a part of its advocacy  efforts on this issue, sought clarification on 
means to resolve this trade impass e and allow trade in these products to resume. Can Indonesia advise 
of plans to review these import regulations, including timing? 
 
Reply
: 
 
Indonesia has not yet had any plan to review the import regulation. 
Australia is also concerned about proposals fo r new regulations governing food safety issues for 
products of plant origin. Such regulations, if intr oduced, have the potential to significantly affect 
Australian exports of the wide range  of plant products, including hortic ulture and grains. Australia has 
a long history as a supplier of high-quality, safe food and agriculture products to Indonesia. Can 
Indonesia outline its rationale for these regulations, its intentions in relation to the timing of 
introduction and potential exclusion of suppliers? 
 
Reply : 
 
Indonesia will provide the replies later. 
  WT/TPR/M/184/Add.1 
 Page 133 
 
 
  IV. T RADE POLICIES BY SECTOR  
(2) Agriculture and Forestry (ii) Main Developments  Medium-Term Development Plan 
 
Indonesia’s Medium-Term Deve lopment Plan (MTDP) 2004-09 (WT/TPR/S/184, page 71, 
paragraph 11) identifies the main constraints to grow th in the agriculture sector. As part of the MTDP, 
the Indonesian Government has initiated a plan to re vitalise the agriculture sector with the objective of 
achieving annual average growth of about 3.5 per cent during 2004-09 and increasing the incomes and 
well-being of farmers. 
 Has Indonesia undertaken any analytical studies to asses s the constraints to growth in the agriculture 
sector? If so, what were the conclusions of these st udies? Can Indonesia please provide Australia with 
more detail on the plan to revitalise the agriculture sector including any policy or legislation 
developments? Australia notes that the agriculture  sector’s share of GDP has decreased annually since 
2004. Can Indonesia please inform Australia of ch anges in average farm incomes over the period 
since the plan was implemented? Is Indonesia under taking a mid-term review or evaluation of the 
plan?  
 
Reply
: 
 
Based on several studies,  major constraints to agricultural sect or growth are: (1) limited land 
resources coupled with high rate of land conversi on; (2) slow down in development and dissemination 
of agricultural technology; (3) domination of sm all farmer coupled with weak farm institution; 
(4) insufficient agricultural infras tructure; (5) declining farm incen tives.  Agricultural revitalization 
is intended to cope with these pr oblems, with priority programs are: (1) development of agricultural 
infrastructure; (2) promoting the capacity of farmer’s institution; (3) revitalizing agricultural 
extension system; (4) facilitate agricultural finan cial services; and (5) promote agricultural product 
marketing. 
 
Australia notes that Indonesia considers high depe ndence on rice consumption to be one of the main 
constraints on growth in the agriculture sector  (WT/TPR/S/184, page 71, paragraph 11). Can 
Indonesia please explain how high dependence on ri ce consumption constrains growth in the 
agriculture sector? 
 
Reply : 
 
Rice is major component in Indonesian diet, even though the level is declining  overtime . At the 
production side, rice sector has been one of major co ntributor to agricultural growth. Therefore, it is 
understandable if substantial resources devoted to this  sector. In the future, agricultural development 
in Indonesia is directed to be more diversified,  inline with the emerging market demand and the 
countries comparative advantage. 
 
(iii) Selected items 
 
The Secretariat report notes that, at the end of the 1990s, BULOG’s mandate to stabilize prices and monopoly powers were removed (WT/TPR/S/184, page 73, paragraph 21 and page  75, paragraph 22).  
Can Indonesia outline how the role of BULOG has ch anged? What is BULOG’s current role in the 
international purchase and procuremen t of rice and other commodities? 
 WT/TPR/M/184/Add.1 
Page 134  
 
 Reply
: 
 
Bulog is just an executing state owned company  to do whatever the government assignment is 
instructed to this state enterpri se. The policy for importing or not importing rice for the country is still 
in the hand of the government. Bulog did not ha ve any monopoly power to do import any commodity. 
However, Bulog’s mandate to stabilize producer prices especially rice is still in place in order to 
improve the farmer’s welfare. Recently, Bulog is also  assigned to stabilize rice prices at consumer 
level when the prices grow  up at unaffordable  level for generally ordinary people. In 2007, two 
letters from Minister of Trade, i.e. No. 70/M-DAG/1/2007 of 25 January 2007 and  No. 147/M-
DAG/2/2007 of 14 February 2007, has assigned the President Director of Bulog to do rice sale for 
the people to stabilize the rice prices at desired c onsumer price level. Any task can only be carried out 
by Bulog after receiving an assignment letter from the government. Import of rice can also be 
conducted on behalf of the government. The nu mber of volume, time and designated unloading 
locations are also decided by the government. 
 
CANADA  
 
Report by the Government (WT/TPR/G/184)  Part IV – Trade and Related Policies, (B) Tr ade Developments and Policy, (5) Non-tariff 
measures, paragraph 85, page 20 
 
Canada notes that Indonesia intends to introduce a compensation tax to be paid by mining and logging 
companies which is related to environmental damage and also to finance re-forestation, which will be 
implemented by local communities.  
1. Would Indonesia please provide Canada with more information regarding the planned tax, 
including details related to objectives, rationale  and implementation, as well as a timetable for 
its introduction? 
 
Reply
: 
 
The planned tax is still being discussed in the pa rliament. We are committed to provide written 
explanation to committee and all WTO membe rs soon after the tax law introduced.  
 
Part IV – Trade and Related Policies, (C) Se ctoral Policies, (3) Oil, gas and minerals, 
paragraph 100, page 23 
 
2. (a) Could Indonesia please provide informat ion regarding new regulations in place,or any 
 being planned, which address mi ning and environmental issues? 
 
Reply : 
 
Bill on Mineral is still being discussed in the Parliament (DPR) 
 
(b) Is there a requirement to conduct an environmental assessment of proposed mining 
 projects in place or under consideration?  
 
Reply : 
 
For sure. Every activity in the mining and energy sect or which is predicted to have an impact to the 
environment have to be completed the environm ental study [either Amdal (Environmental Impact 
Statement) or UKL/UPL (Environmental Manageme nt Effort/Environmental Monitoring Effort)].  WT/TPR/M/184/Add.1 
 Page 135 
 
 
  Laws and regulations which regulate related to the environment are: 
 
• Law No 11 of 1967 concerning to the Basic principles of Mining; 
• Government Regulation No 32 of 1969 jo. Government Regulation No 75 of 2001; 
• Law No 22 of 2001 Concerning to the Oil and Gas; 
• Government Regulation No 11 of 1979 con cerning to the Safety on the Oil and Gas 
Refinery; 
• Government Regulation No 17 of 1974 con cerning to the Inspection in the Offshore 
Oil and Gas Exploration and Exploitation; 
• Besides, Government regulation No 27 of 1999 concerning to the Environmental 
Impact Statement; and, 
• State Minister of Environment Regulation No 11 of 2006 concerning to the activity 
which must be completed with Environmental Impact Statement. 
 
(c) If 'yes', which level of government conducts such assessments?  
 
Reply : 
 
Proponent submit the EIS and the assessment will be  conducted by Bapedal (Environmental Agency). 
 
(d) Could Indonesia also provide informati on regarding the criteria utilized in the 
assessment? 
 Reply
: 
 
Criteria for the activity which need EIS based on th e State Minister of Environment Regulation No 11 
of 2006. For doing assessment in the mining and  energy sector there is a Minister Regulation 
No 1457 of 2000 concerning to Guidelines of En vironmental Management in Mining and Energy. 
 
(e) Could Indonesia please explain the appro ach, including measures used, to protect an 
environment around a mining site or area. For example, how does Indonesia provide for protection of land, water, etc. around a site or area? 
 Reply
: 
 Stated on the environmental regulations; for mini ng activities is clearly stated on the Minister of 
Mining and Energy No 1211 of 1995 concerning to the Prevention of Environmental destruction in 
the Mining area. 
 
(f) Do laws or regulations exist which re quire reclamation of mined-out sites?  
 
Reply
: 
 
Yes, and the legal basis of the reclamation of mined-out sites are: 
 
• Minister of Mining and Energy Regulation No 1211 of 1995; 
• Director General of Mining Decree No 336 of 1996 concerning to the Reclamation 
Bond. 
 WT/TPR/M/184/Add.1 
Page 136  
 
  (g) If 'yes', what party/parties are required to  pay the costs associated with a reclamation? 
 
Reply
: 
 
Proponent  
 
Report by the Secretariat (WT/TPR/S/184)  Part II - Trade Policy Regime: Framework and Objectives; (8) Foreign Investment Regime, 
paragraph 44, page 31 
 
The Report by the Secretariat st ates that "A Presidential Decree in 2000 (Keppres No. 118/2000) 
updated the classification of restricted investment sectors under: sectors that are totally closed to 
investment, both domestic and foreign; sectors that  are closed completely to foreign investment; 
sectors that are open to foreign investors but with the requirement that the foreign investor setup a 
joint venture with an Indonesian entity; and sector s that are open to foreign investment but with 
specific requirements. (Table II.4)"   3. (a) Could Indonesia please indicate how often the negative list is reviewed?  Additionally, Canada would like further informa tion on the conditions for joint ventures between 
foreign and domestic investors.  
 
 (b) Is there a specific percentage of  domestic equity participation required? 
 
 (c) If so, does this vary by sector?  
 
 (d) Are there any other conditions for joint ventures?   
 
Reply
: 
 
The negative list will be reviewed every three years . Basically, there is no specific percentage of 
domestic equity participation requires, except whic h listed on the negative list and vary by sectors. 
There’s no other condition for joint-ventures . 
 Part III - Trade Policies and Practices by Meas ure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 121, page 65 
 Canada notes that, according to the Secretariat Report under the Patent Law, "the term of [patent] 
protection remains 20 years with a possible two-year extension".   
 
4. Could Indonesia please explain on what grounds  such an extension would be granted?  
 
Reply
: 
 Indonesia had actually already made  a correction on the draft report of the Secretariat on this matter. 
Based on the current Patent Law, the term of patent protection is only for 20 years without any possibility of extension.  
  WT/TPR/M/184/Add.1 
 Page 137 
 
 
  Part III - Trade Policies and Practices by Meas ures, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 122, page 65 
 In light of comments in the Secretariat Report th at "the standards for excluding from patentability 
inventions that are contrary to the public interest appear broader than the st andards enumerated in the 
TRIPS Agreement."  
 
5. Could Indonesia please provide additional informa tion regarding public interest exceptions to 
patentability in Indonesian law in light of Article 27 of TRIPS?   
 
Reply
: 
 Article 7 of the Law of the Republic of Indonesia No. 14 of 2001 regarding Patent ("Patent Law") 
provides that a patent shall not be granted to an Invention regarding: 
 
a. any process or product of which the announcement and use or implementation 
contravenes the prevailing rules and regulations , religious morality, public order or 
ethics; 
 
b. any method of examination, treatment, medi cation, and/or surgery applied to humans  
and/or animals; 
 
c. any theory and method in the field of science and mathematics; or 
 
d. i. all living creatures, except micro-organism; 
 ii. any biological process which is es sential in producing plant or animal, 
 except non-biological process or microbiological process. 
 The above provisions comply with  Article 27 of the TRIPS Agreemen t and are not broader than the 
standards enumerated in the said article.  
 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 122, page 65  
Canada notes that, according to the Secretaria t Report under the Patent Law "an inventor must 
physically produce a product or utilize a process in Indonesia in order to obtain a patent for the 
product or process."    
6. (a) Could Indonesia please provide additional  information regarding this requirement in 
 light of the provisions of Article 27 of TRIPS? 
 
(b) Is continued production or utilization of  a patent in Indonesia a condition for 
maintaining a patent after it is granted?   
 
Reply
: 
 Article 27 of the TRIPS Agreement provides for pat entable subject matters. The Indonesian Patent 
system does not require the physical production of a product or the utilization of a process in 
Indonesia as the requirement to obtain a patent. How ever, Article 17 of the Patent Law provides that 
a Patent holder shall be obliged to make products or to use the process that has been granted a 
Patent in Indonesia. The objective of this provisi on is to ensure the balance of rights and obligation of 
the patent holder as mentioned in Article 7 of the TRIPS Agreement. Further, continued production or 
utilization of a patent in Indonesia is NOT a conditi on for maintaining a patent. However, Article 17 WT/TPR/M/184/Add.1 
Page 138  
 
 of the Patent Law which regulates the possibilities of production at the regional scale and Article 75 
which regulates compulsory licensing are the alter natives where the implementation of the relevant 
patent at the national scale cannot be done.  
 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 121 and 123, pages 65 and 66 
 The Secretariat Report states that the "use of an i nvention by a third party before the granting of a 
patent, including the period during which an ap plication is under review" does not constitute 
infringement.  On the other hand, the Secretariat Report also states that "[u]nauthorized use of a product or process invention that is the subject  of a pending application constitutes patent 
infringement". These two statements appear contradictory.  
 
7. Could Indonesia please clarify if the use of inventions before the granting of a patent 
constitutes patent infringement? 
 
Reply
: 
 
Indonesia could not prevent infringement before the gr anting of patent because the patent shall not be 
conferred on its owner of the exclusive rights. The use of inventions before the granting of a patent 
constitutes patent infringement. However, the Pate nt Holder can only bring a lawsuit after his 
application is granted a patent. 
 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade, (iv) Intellectual Property, paragraph 123, page 66 
 
The Secretariat Report states that "[t]he import of patented products or goods made under a patented 
process does not constitute infringement."  
 
8. Could Indonesia please provide additional inform ation regarding this measure particularly in 
light of the provisions of Article 28 of TRIPS?  
 
Reply
: 
 
The import of patented products  or goods made under a patente d process does not constituted 
infringement as long as the third party have approval from the owner of the patent for the interest of 
education, research, and clinical trial, analysis with a normal exploitation of the patent. (Law No. 14/2001, article 16.3 )   
The import of patented products  or goods made under a patente d process does not constitute 
infringement, nor does use of an invention by a thir d party before the granting of a patent, including 
the period during which an application is under review.  It is clear that the import of patented produc ts or goods made under a patented process does not 
constitute infringement before the granting of a patent
. 
 Hence, in this matter, there is no contradi ction with Article 28 of the TRIPS Agreement.  
 
Part III - Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade, (iv) Intellectual Property, paragraph 123, page 66 
 
The Secretariat Report states that "[l]aw No. 14/2001 stipulates that infringers of patent rights may be imprisoned for up to four years and may be fined up  to IDR 500 million.  Infri ngers of small patents  WT/TPR/M/184/Add.1 
 Page 139 
 
 
  may be imprisoned for up to two years and fined up to IDR 250 milli on.  Anyone, including patent 
consultants and officers, who divulges information on patent applications may be imprisoned for up to 
five years."   
 
9. Could Indonesia please provide  additional information regarding what kind of infringement 
would qualify for this kind of enforcement and whether there are also civil remedies available 
to rights holders that would permit them to sue for infringement and to obtain damages and 
injunctions? 
 Reply
: 
 Article 130 of the Patent Law provides that any p erson who deliberately and without rights infringes 
the rights of a Patent Holder by committing any of th e acts as referred to in Article 16 shall be 
sentenced to imprisonment of at most 4 (four) years and/or a fine of at most IDR 500,000,000.00 (five 
hundred million Indonesian rupiahs).  Article 131 of the Patent Law provides that any person who deliberately and without rights violates 
the rights of a Simple Patent holder by committing any of  the acts as referred to in Article 16 shall be 
sentenced to imprisonment of at most 2 (two) years and/or a fine of at most IDR 250,000,000.00 (two 
hundred and fifty million Indonesian rupiahs).  The acts provided for in Article 16 includes:  a)  in the case of product-Patent: makes, uses,  sells, imports, rents out, delivers, or makes 
available for sale or rental or delivery of the Patented product;  
 b)  in the case of process-Patent: uses the Pate nted production process to make products). 
 Article 132 of the Patent Law provides that any p erson who deliberately fails to fulfill the obligations 
as referred to in Article 25 paragraph (3), Ar ticle 40 and Article 41 shall be sentenced to 
imprisonment of at most 2 (two) years. The act referred to in these articles is to preserve the 
confidentiality of the invention and all documents of application.  
 
With regard to civil remedies on this kind of infrin gement, Article 118 of the Patent Law provides that 
a Patent Holder or a licensee is entitled to bri ng a lawsuit for damages through the Commercial 
Court against any person who deliberately and without rights performs any acts as referred to in 
Article 16 on the Patent Law.  
 
Part III - Trade Policies and Practices by Meas ure, (4) Measures Affecting Production and 
Trade, (iv) Intellectual Property, paragraph 125, page 66 
 
Canada notes that, according to the Secretariat Repor t the trade mark law "provides for the protection 
of well-known marks, but offers no administrative procedures or legal grounds  under which legitimate 
owners of well-known marks can cancel  pre-existing registrations".  
 10. Could Indonesia please provide additional information regarding this requirement in light of 
the provisions of Article 16 of TRIPS?  
 
Reply
: 
 
Article 6 of the Indonesian Law No. 15 of 2001 re garding Marks ("Trademark Law") paragraph (1) a, 
provides that an application for registration of mark shall be refused if the relevant mark has a WT/TPR/M/184/Add.1 
Page 140  
 
 similarity in its essential part or in its entirety with a well-known Mark ow ned by another party for 
the same kind of goods and/or services.  The owner of a well-known mark can bring a lawsu it for the cancellation of a registered mark in 
accordance with Article 68 which reads as follows: 
 
(1) A lawsuit for the cancellation of a registered  Mark may be filed by any interested arty based 
on the grounds as referred to in Ar ticle 4, Article 5 or Article 6; 
 (2) An owner of unregistered Mark  may file a lawsuit as referred to in paragraph (1), after filing 
an Application at the Directorate General; 
 (3) The lawsuit for cancellation as referred to in paragraph (1) shall be filed at the Commercial 
Court. 
 
Where the plaintiff or the defendant resides outside the territory of the Republic of Indonesia, 
the lawsuit shall be filed at th e Commercial Court in Jakarta.  
 Part IV -Trade Policies by Sector, (3) Mining and Energy, (i) Mining, paragraph 32, page 78 
 
The Report notes that there exists a high level of legal uncertainty for investors and operators linked 
to domestic challenges in implementing a new re gulatory framework.  As a result, exploration 
spending by mining companies has declined 90% since 1997.  11. (a) Does Indonesia have any new initiativ es or measures planned which are intended 
 to foster greater certainty for firms? 
 Reply
: 
 
Identifying Local Government regulation whic h contradictive with Central Government. 
 
Canada has learned that Indonesia intends to re-direct central government authority over the mining 
sector entirely to the provincial governments.   
 
(b) Could Indonesia please indicate whether this change is planned and, if so, when it is 
expected to occur? 
 
Reply : 
 As stated in the Government regulation No 75 of 2001 concerning to the Revision of Government 
Regulation No 32 of 1967 : Especially for Mining, the authority of issuing license:  
• Bupati/Major since the mining area is in th e Kabupaten area or < 4 mile offshore; 
 
• Governor if the mining area is located in  two Kabupaten but there is no cooperation 
 between them or for offshore between 4 – 12 mile; 
 
• Minister since the mining area is located in two Province but there is no cooperation 
 between them or >12 mile offshore. 
  WT/TPR/M/184/Add.1 
 Page 141 
 
 
  Canada understands that Indonesia may require mi ning companies to put aside a part of their 
production for the domestic market to ensure dom estic supply at affordable prices, utilizing an 
approach similar to that which exists for crude palm oil.   
 (c) Could Indonesia please confirm if this appr oach is to be adopted, the details of the 
measure if planned, including timing for its introduction? 
 
Reply
: 
 
It will be regulated by the government regulation. 
(d) Does Indonesia's regulatory framework inco rporate the subject of mining safety in 
any laws or regulations?  If 'yes', can Indonesia please provide details, including which level(s) of governments are authori zed to establish these laws and regulations? 
Further, what enforcement strategy is utilized? 
 
Reply
: 
 Yes, mining safety in several laws and regulations.  Part IV - Trade Policy by Sector; (3) Mining and Energy (ii) Energy, paragraph 35, page 79 
 The Report by the Secretariat states that "In Oc tober 2001, the House of Representatives passed a new 
oil and gas bill to liberalize the sector" and that "The Government is aiming to boost investment and 
production and, the major regulatory changes introdu ced since 2001 are an important step in this 
regard.  Foreign firms have entered the oil ma rket, particularly in exploration and production
2, and 
private companies are now allowed to open retail outlets for fuel; Pertamina's monopoly on importing 
and distributing fuel has been lifted, and refining, storage, and transport have been liberalized."   
 Canada notes that in many sectors the Indonesian ma rket is liberalized (e.g. 2001 new law on Oil and 
Gas) and that Indonesia has been branding itself as open for business.  However, Indonesia has 
offered very limited commitments for energy services in its current GATS offer.  
In particular we highlight the importance of t echnical testing and analysis services (CPC 8676), 
services incidental to mining (CPC 883) and rela ted scientific and technical consulting services 
(CPC 8675).  12. In this light, could Indonesia please indicat e whether it will be taking steps to bind its 
domestic regime for energy services under the GAT S?  If not, could Indonesia please explain 
why?  
 
Reply
: 
 Bill on energy will regulate services, even though servi ces are already mentioned in the various 
mining, oil and gas regulations. 
 Part IV - Trade Policies by Sector; (5) Services;  (i) Financial Services; paragraph 52, page 84 
 
Paragraph 52 indicates that Indonesia has bound its multilateral commitments under the GATS at less 
than status quo in the financial sector. Canada not es that Indonesia has entered the following headnote 
                                                           
2 Amongst these are the China National Offshore Oil Corporation (CNOOC), Italian firm ENI, Petronas of 
Malaysia, and U.S.-based companies Unocal, Conoco Phillips, and ExxonMobil. WT/TPR/M/184/Add.1 
Page 142  
 
 in its banking commitments: "Limitation on national tr eatment in terms of taxation which is specified 
in Horizontal Measures is not applied on the Banking Sub-sector."  13. Could Indonesia please clarify whether there ar e special tax rules that apply to Indonesia’s 
financial sector? 
 Reply
: 
 There is no special tax regulation applied for fi nancial services. Nonetheless, SoC on banking sector 
clarifies that the differential treatment in term of  withholding tax to non resident for income derived 
from interest, royalties, dividend and fee service pe rformed in Indonesia as specified in horizontal 
measures is not applied in the banking sector. This commitment, however, should be read in 
conjunction with the existing tax law which class ify tax payer as "resident" or "non-resident". 
Residency is determined on the basis of place of in corporation. A corporation is therefore considered 
"resident" if incorporated in Indonesia and non-resi dent if otherwise. Additionally, Non Indonesian 
individual who is residing in Indonesia more than 183  days is also classified as a resident. The equal 
treatment in term of taxation is applied for no n Indonesian company/individual if they are classified 
as a resident.   Part IV - Trade Policies by Sector; (5) Services;  (i) Financial services; paragraph 55, page 85 
 Paragraph 55 states that the Government has conti nued its agenda for economic reform with plans to 
strengthen the financial sector.  14. Could Indonesia indicate whether it is curre ntly considering allowing foreign insurance 
branches to operate in the Indonesian insurance sector? 
 Reply
: 
 We still believe that our country needs full commitm ents to better protect our consumers and more 
foreign direct investments to strengthen our local market. For this reason, we do not consider allowing foreign insurance branches to operate in Indonesia, except in the fo rm of joint venture. 
 
Part IV - Trade Policies by Sector; (5) Services ; (i) Financial Services; (a) Banks, paragraph 58, 
page 87 
 
Paragraph 58 indicates that Bank Indonesia has take n steps towards fully co mplying with the Basel 
Core Principles and has plans to gradually im plement the revised capital framework for banks 
(Basel II).  15. (a) Could Indonesia provide an overview of  its current capital requirements for foreign 
  bank branches and joint venture banks? 
 
Reply
: 
 There are 2 issues that Indonesia would like to clarify with regard to capital requirement, first of all 
is the paid-up capital and the second is capital ade quacy ratio, which is more related to Basle II 
requirement. 
 
For joint venture Bank, as this bank is locally in corporated in Indonesia, there is no differentiation 
between joint venture bank and domestic bank in both ty pe of capital requirement. Paid-up capital is 
3 trillion Rupiahs and joint venture bank should ha ve at least 8% of capital adequacy ratio. 
  WT/TPR/M/184/Add.1 
 Page 143 
 
 
  For foreign bank branch, the paid-up capital will be replaced by Net Head Office Fund (NHOF). 
However the amount NHOF is the same, which is  3 trillion Rupiahs. Foreign bank branches also 
obliged to maintain capital adequacy ratio at least 8%.  
 
Paragraph 58 also states that Bank Indonesia rele ased the Indonesian Banking Architecture plan in 
2004, which sets out the direction and structure of the Indonesian banking system over the next 
5-10 years.  
(b) Could Indonesia indicate whether the Banking Architecture plan may result in any 
changes to Indonesia’s existing ATM regime?  
 Reply
: 
 The Indonesia Banking Architecture is not related to the existing ATM regime in Indonesia.   
The existing ATM regime in Indonesia treats ATM as a cash activity outside the banks office, in which 
bank obliged to report such activities to Bank Indo nesia yearly on its plan regarding opening of a new 
ATM. 
 
Part IV - Trade policies by Sector, (5) Services,  (ii) Telecommunications, paragraph 71, page 92 
 The Secretariat notes that the Government of Indon esia has chosen to restrict entry for Voice over 
Internet Protocol (VoIP) to five companies.  16. (a) Could Indonesia explain why it has limited entry for VoIP providers?  
 (b) Does Indonesia intend to examine and/ or remove this limitation in future? 
 
Reply
: 
 The Government has no longer restricted the number of VOIP providers, and right now there are 19 (nineteen) licensed VOIP operators.  
 
Part IV - Trade Policies by Sector, (5) Serv ices, (iv) Tourism, paragraph 82, page 96 
 
The Secretariat Report states that th e Government of Indonesia is also  involved in travel agencies and 
local hotel groups.  
  
17. (a) Could Indonesia please explain the nature of such involvement is?  
 
Reply
: 
 
The involvement of the Government of Indonesia is limited in providing facilitate such as general 
infrastructure.  
The Secretariat Report also notes that the Indonesian  Culture and Tourism agency has overall control 
over the promotion of tourism.   
(b) Could Indonesia please explain the agency's scope of control is? 
 WT/TPR/M/184/Add.1 
Page 144  
 
 Reply
: 
 
Actually, Ministry of Culture and Tourism has the aut hority to control promotion of tourism but is 
limited as coordination.   
Other Questions
: 
 
Environmental services 
 
18. (a) With respect to environmental service s, Could Indonesia please explain if foreign 
  service suppliers are currently a llowed to operate in the market? 
 
Reply : 
 Yes, the following the provision and general requirement for foreign services which had been 
regulated by Investment Coordinating Board (BKPM), foreign services suppliers are allowed to 
operate in the market. There are no special requirements for foreign services suppliers in 
environmental services sector.  
 
(b) If so, for what activities? 
 
Reply
: 
 There are no restrictions and "Negative Li st" in environmental services sector.  
 
(c) If not, are there any plans for liberalization in the future? 
 Reply
: 
 
Indonesia is still studying this program (liberalization). 
 
Engineering services 
 
With respect to Engineering services, Indonesia' s GATS Schedule of Specific Commitments includes 
limitations on market access for the cross-border supply of services (Modes 1/2) such that the 
following services are unbound for government-funde d projects: advisory and consultative 
engineering services (CPC 86721) and engineering design services for industrial processes and 
production (CPC 86725).   
 Could Indonesia please elaborate on the definition of "government-funded projects" that are unbound 
under their GATS market access commitments, and pr ovide examples of these types of government-
funded engineering projects that have been carried out in Indonesia? 
 
Reply
: 
 
The project activity is fund by government in partial. 
  WT/TPR/M/184/Add.1 
 Page 145 
 
 
  CANADA – REPLIES TO FOLLOW-UP QUESTIONS  
 
Engineering services 
  
Original Question:   
 
With respect to Engineering services, Indonesia' s GATS Schedule of Specific Commitments includes 
limitations on market access for the cross-border supply of services (Modes 1/2) such that the 
following services are unbound for government-funde d projects: advisory and consultative 
engineering services (CPC 86721) and engineering design services for industrial processes and 
production (CPC 86725).   
 1. Could Indonesia please elaborate on the defi nition of "government-funded projects" that are 
unbound under their GATS market access commitmen ts, and provide examples of these types 
of government-funded engineering projects that  have been carried out in Indonesia? 
Reply
: 
 
According to the Article 7 of Presidential Decre e No. 80 Year 2003, the definition of "government 
funded projects" are :  1. Project which partially or fully funde d by national or local government budget 
 
2.  Project which partially or fully funded by fo reign loan or grant, that consistent with the 
 requirements on good/services supply set up by grant or loan providers  
 3. Investment projects in Bank Indonesia, state- owned legal entity, state-owned enterprises, and 
local government-owned enterpri ses which partially or fully funded by national or local 
government budget projects. 
 Follow-up Question:
 
 
Is there a prescribed percentage share of governme nt funding defined to qualify a project as a 
"government-funded project"? What is the overa ll volume of projects that are considered 
"government-funded projects" in the construction and engineering services sectors per year?   
Reply
 
 
In 2007 the total budget allocated to Ministry of Public Works  is IDR 24.960.000.000.000 and 
82.17% of the total is allocated for physica l works with the average of 80-90% per year. 
 
BRAZIL  
 
1) In document WT/TPR/S/184 paragraph 122, it is stated that the standard for excluding from 
patentability inventions that are contrary to the public interest appears broader than the 
standards enumerated in the TRIPS Agreement."  Brazil will be interested in the view of the 
Indonesian on this issue?  
 
Reply : 
 
Article 7 of the Law of the Republic of Indonesia No. 14 of 2001 regarding Patent ("Patent Law") 
provides that  
 WT/TPR/M/184/Add.1 
Page 146  
 
 A patent shall not be granted to an Invention regarding: 
 
a. any process or product of which th e announcement and use or implementation 
contravenes the prevailing rules and regulations , religious morality, public order or 
ethics; 
 
b. any method of examination, treatment, medi cation, and/or surgery applied to humans  
and/or animals; 
 c. any theory and method in the field of science and mathematics; or 
 
 d.  i. all living creatures, except micro-organism; 
ii. any biological process which is essential in producing plant or animal, 
except non-biological process or microbiological process. 
 
The above provisions comply with  Article 27 of the TRIPS Agreemen t and are not broader than the 
standards enumerated in the said article. 
 
2)  Paragraph 122 mentions the existence of a "r equirement that an inventor must physically 
produce a product or utilize a process in Indonesia in order to obtain a patent for the product 
or process". Does the Indonesian Government sh are the view contained in the Secretariat 
Report on this issue?  
 
Reply
: 
 Article 27 of the TRIPS Agreement provides for pat entable subject matters. The Indonesian Patent 
system does not require the physical production of a product or the utilization of a process in 
Indonesia as the requirement to obtain a patent. How ever, Article 17 of the Patent Law provides that 
a Patent holder shall be obliged to make products or to use the process that has been granted a 
Patent in Indonesia. The objective of this provisi on is to ensure the balance of rights and obligation of 
the patent holder as mentioned in Article 7 of the TRIPS Agreement. Further, continued production or 
utilization of a patent in Indonesia is NOT a condition for maintaining a patent.  
 
3) Could Indonesia please inform whether cases of misappropriation of biodiversity by the 
granting of patents have been identified? Are there remedies in Indonesian legislation to 
prevent the occurrence of such cases? 
 
Reply
: 
 No cases on misappropriation of biodiversity by the granting of patent have been identified. 
 At present Indonesia does not have any legislation which specifically regulates the protection of 
biodiversity and remedies of its misappropriation. A national intellectual property working group on 
utilization of genetic resources, traditional knowle dge and expression of folklore (GRTKEF) has been 
established with the tasks, among others, to conduc t a thorough assessment and to prepare draft of 
legislation relating to the intellectual property protection on the utilization of GRTKEF. 
 
4) Could Indonesia indicate its views on access and benefit-sharing regarding patents of 
pharmaceutical products and processes based on the use of viral material? 
  WT/TPR/M/184/Add.1 
 Page 147 
 
 
  Reply : 
 Indonesia shares the view on the importance of th e access and benefit-sharing regarding patents of 
pharmaceutical products and processes based on the use of viral material.  
 5) Are there cases in which Indonesian exports have been denied access to foreign markets as a 
result of the undue registration of Indonesian common names abroad? 
 
Reply
: 
 
There is no official record so far.  
 
KOREA  
 
I. T RADE POLICES AND PRACTICES BY MEASURE  
 
Delays in Customs Procedures and Lack of Transparency of Customs 
Authorities (WT/TPR/S/184, p. 37, para.12) 
 
• Minor discrepancies between the description of goods in customs' declaration papers and the 
goods themselves frequently result in delays in th e customs process in Indonesia. In addition, 
there have been delays in the customs process w ithout clear explanation of the reasons of the 
delays by the customs authorities. These delays bring about additional costs to exporters. As a 
result, this lack of transparency in the cu stoms procedures acts as a burden to exporters. 
 
Reply : 
 
Indonesia will provide the replies later. 
 
•  Korea hopes that Indonesian customs clearance procedures would be more efficient and 
transparent. In this respect,  does the Indonesian government have any plans to make the 
customs procedures more efficient by enhancing transparency and streamlining the procedures? 
 Reply
: 
 The smoothness of  flow of goods  depend on the natu re of the goods themselves, customs declaration 
and supporting documents.  
 
VAT refunds on the exporting companies  (WT/TPR/S/184, p. 60, para. 96)  
 
• According to the Indonesian Value Added Ta x (VAT) law, exporting companies should be 
refunded VAT within one year after the payment of VAT levied on their exports. However, 
there have been many delays in refunding VAT by the Indonesian tax authorities. 
 
• Also, Indonesian officials have not provided a clear reason for the delays in refunding VAT, 
and the regulations on refunds are not carried out in a transparent ma nner. This lack of 
transparency in refunding procedures cons titutes an undue burden for exporting companies 
 
• Korea hopes that the Indonesian tax author ities implement the refunding procedure 
stipulated in the VAT law in a more fair a nd transparent manner. In this regard, Korea WT/TPR/M/184/Add.1 
Page 148  
 
 would appreciate it if Indonesia provides explana tion for plans, if any, to reform the tax 
regulations including the improvement of the governance of the tax system.  
 Reply
: 
 For the purpose to speed-up the refund claim proces s, Director General of Taxes has released DGT’s 
Regulation No. PER-122/PJ/2006, August 15, 2006, concerning Timeframe and Procedures on VAT 
and Sales Tax on Luxurious Goods Refund.  
 Timeframe is as follows: 
a. One month, for taxpayers who meet certain criteria (Golden Taxpayers). The certain criteria 
such as filing their annual tax returns on time in  the last two years, no more than 3 times late 
in filing their monthly tax returns in th e last year, and have no tax arears, etc. 
b. For Taxpayers who engaged in certain activities (e xportation of goods an d or deliver taxable 
goods and or taxable services to withholding agent of VAT): 
 
• Two months, for "low risk" taxpayers (manufacturers which 75% out of their sales 
are produced by their own machines, listing companies, or State or Local Government Owned Enterprises)  
• Four months, for "non-low risk" taxpayers. 
 
c. Twelve months, for other than a, b, or ta xpayers who engaged in certain activities and golden 
taxpayers who were being tax field audited. 
 Under the new DGT’s Regulation, the timeframe is firm because it is calculated starting one month 
after the due date of submiting documents obligations.  
 It is different from the previous regulation, wh ere the timeframe calculation started after all 
dicuments are submitted by taxpayers (uncertain timeframe).  
 
UNITED STATES  
 II. T
RADE POLICY REGIME :  FRAMEWORK AND OBJECTIVES  
 
(8) Foreign Investment Regime 
 
• WT/TPR/S/184, Page 31, Paragraph 44 (Table II.4):  Section Three of table II.4 (Investment 
Negative List) refers to joint-venture requireme nts for certain sectors.  However, given the 
horizontal limitation of 49 percen t on foreign equity, this list appears to be incomplete.  Are 
there other sectors (e.g., professional services) that should be listed here?  
 Reply
: 
 Indonesia will further study this issue. 
 
•  WT/TPR/G/184, Paragraphs 2, 5, 13, et. al.; WT/TPR/S/184, page 8, paragraph 21:  
Throughout its report, Indonesia refers to its new Investment Law (March 2007), but provides 
no details.  Please describe the main features of the new Investment Law and provide details 
regarding the following:  
 
• Does it remove the horizontal 49-percent equity cap?  WT/TPR/M/184/Add.1 
 Page 149 
 
 
  • Are audiovisual services now open to foreign investment? 
• Have joint-venture requirements been changed for professional services? 
• When does Indonesia expect to issue Im plementing Rules and Regulations or a 
Negative List? 
• Will potential investors still need pre-approval for investments and which 
government entity will manage the process?   
• Does the Investment Law address the issue of de-centralization?  What authority over 
foreign investment is granted to provincial and local governments? 
 Reply
: 
 
Basically, investment to Indonesia is open for all sectors, except these secto rs in the negative list 
which will be determined soon. Closed and open business with condition for investment, domestic and 
foreign decided based on the criteria of health, sa fety, defense and security, environment and culture, 
based on national interest. Those criteria could be b reakdown following the criteria: to maintain the 
civil society, to protect the bio diversity, to main tain the ecosystem balance, to supervise the use of 
toxicant materials, to avoid forgery and supervise the distribution of un scheduled goods and services, 
to guard the national independency, to maintain the limited resources. The more specific list will be 
decided soon. Indonesia is considering on impl ementing the regulation as soon as possible. 
Indonesia, considers it very crucial in or der to enhance the investment climate. 
 
The new proposed negative list seems to be longer than the previous one, but the fact is that it’s more 
specific with fewer sectors being listed. The inte ntion is to make clearer, more transparent and with 
no multi-interpretation. Closed and open business w ith requirement for investment, domestic and 
foreign decided based on the criteria of health, sa fety, defense and security, environment and culture, 
based on national interest. Those criteria could be brea kdown as follow: to maintain the civil society, 
to protect the bio diversity, to maintain the eco system balance, to supervise the use of toxicant 
materials, to avoid forgery and supervise the di stribution of un scheduled goods and services, to 
guard the national independency, to maintain the limited resources. 
 
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(1) Introduction  
• WT/TPR/S/184, Para 8, page 36:  The Secretariat’s report mentions support programs that 
appear to contain import-substitution elements.  We are concerned that Indonesia appears to 
maintain prohibited subsidies that should have been eliminated as of January 1, 2003.  We 
also note that Indonesia last notified its subsid ies under Article 25 of the SCM Agreement in 
1995.  When does Indonesia intend to submit a new subsidies notification? 
 
Reply
: 
 
Indonesia considers that the support program does not contain Import-substitution elements and 
therefore not prohibitted subsidies. Indonesia comm its to further notified these new subsidies to the 
committee on Subsidies and CVM.   (ii) Customs valuation and rules of origin 
 
• In paragraph 13, page 39 of its report, the Secr etariat highlights that "Customs reportedly uses 
a schedule of arbitrary check prices rather than  the transaction value when assessing duties on 
certain food imports." 
 WT/TPR/M/184/Add.1 
Page 150  
 
 • Does Indonesian Customs plan to publicize its methodology or a current list of 
reference prices? 
 
Reply
: 
 
Price list for internal reference only. Article VII of GATT Valuation fully adopted in our Customs 
Law.   
 
(v) Import prohibitions, restrictions, and licensing 
 
• WT/TPR/S/184, Page 46, Paragraph 30:   The Secretariat’s report notes that Indonesia has 
been progressively eliminating non-tariff measures.  In particular, import licenses are now 
limited to several products. What is Indonesia’ s timeframe for completely eliminating these 
measures?  When does Indonesia intend to eliminate import licensing requirements for machines and machinery? 
Reply
: 
 
The present applied import licensing has a residual char acter that relate to the concern intended to 
protect health, security, safety, environment and mo ral which are allowed under WTO rules. General 
provision states that only a new product can di rectly be imported by importer without having a 
license to import, in other word  a new machine and machinery are allowed to be imported with no 
import license. Specifically for used or non-ne w machine and machinery, importer must have a 
license to import such products. This term is  considered to fulfill the industry needs and under 
supervision of the authorities to ensure the domestic industry grows normally. This regulation will be 
reviewed annually.  To prove that the machine is non-scrap that du mped to Indonesia, verification or technical 
investigation in the loading country must be done before shipping.  
 
The permitted importers are only for direct-used and recondition industry.  
 
•  WT/TPR/S/184, Page 46, Paragraph 31: The Secretariat’s report states that import licenses 
are non-automatic for nitrocellulo se, precursors, and optical discs .  What is the process for 
obtaining import licenses for these products?  
 
Reply
: 
 
NitroCellulose  That Nitro Cellulose (NC) is a chemical  subst ance containing sensitive nitrogen which constitutes a 
raw material  of explosives widely used for milita ry need and raw material or auxiliary material for 
the production need of certain industries and other pur poses; that due to the sensitive characteristic, 
NC can be misused for destructive purposes and distur bing security so that the procurement of the 
substance needs to be controlled without discourag ing the supply of the substance, particularly 
imported production; Import NC can be applied by IT or IP In order to secure recognition as IP-NC, 
companies must submit applications to the Director  General of Foreign Trade by enclosing certain 
documents which basically identified the com pany or recommended the company. The imported 
substance can only be used for the own production process and is prohibited to  be transacted/traded 
or transferred.  WT/TPR/M/184/Add.1 
 Page 151 
 
 
  Precursor 
 As it is widely known, precursor has multi usage not  only for the medical  purpose but also can be 
used in in the production of narcotics and psychotropic inflicting losses on human life and health of  people thus eventually being able  to threaten national resilience; 
 
For the above mentioned reasons, importation of precu rsor needs to be strictly controlled and it can 
only be imported by companies having status as IP-Precursor or status as IT-Precursor. 
 To obtain status as IP-Precursor, companies sha ll submit written application to DG of Foreign Trade 
attaching documents which indicating the iden tity of the companies and recommendation from 
relevant authorities. The issuance of the license or rejection of the application will be done not later 
than 15 (fifteen) working days as from the date of receipt of application  Optical disc 
 
To support the protection of intellectual property rights, particularly copyrights and to encourage 
better conducive business-climate in the optical di sc industry, it is deemed necessary to control  
import of machines, machinery apparatuses, ra w materials, empty and filled optical discs;  
 Those products can only be imported by com panies having approved as Registered Importer of 
Optical Disc. In order to secure the appointment as  Registered Importer of Optical Discs, companies 
shall submit written application to the Director Ge neral by enclosing the following documents: 
 a Copy of Industrial Business License/Industria l Registry Number or other equivalent business-
licenses from the authorized institution; 
 
b Copy of Importer Identity Number (API);  c Copy of Corporate Registry Number (TDP);  d Copy of Taxpayer Code Number (NPWP); 
 
e Recommendation from the Director General of Metal, Machine, Textile and Multifarious 
Industries, Ministry of Industry, for the import of machines and machinery apparatuses; 
 f Recommendation from the Director General of  Agro and Chemical Industries, Ministry of 
Industry, for the import of raw materials and empty optical discs; 
 g Recommendation from the Director General of Intellectual Property Rights, Ministry of Law 
and Human Rights, for the import of filled optical discs; 
 h Statement of the plan for the import and dist ribution of machines, machinery apparatuses and 
optical discs or the plan for the need of raw materials for a production year and/or the plan 
for the need of empty optical discs and/or filled optical discs in one year, which is signed by 
the personnel in charge of company; 
 i Copy of license from holders of copyright for the import of filled optical discs. 
 
The importation of machines, machinery apparatu ses, raw materials, empty optical discs and filled 
optical discs shall be subject to technical verific ation or surveillance in countries where the goods are 
loaded.  WT/TPR/M/184/Add.1 
Page 152  
 
 •  Please clarify the import license requirements (Regulation No 37/2006 and 38/2006) 
pertaining to imported seeds.  The regulations could be interpreted as requiring imported seed 
to be produced in Indonesia within two years of  market introduction.  Is the requirement 
limited to certain products, such as hybrid rice seeds?  Please explain. 
 
Reply
: 
 
The requirement is not only limited fo r certain seeds but all kind of seeds. 
 Legal basis:  
1. Minister of Agriculture Regulation: No. 37/Permentan/OT.140/8/2006 concerning testing, 
assessing, releasing and drawing varieties;  
2. Minister of Agriculture Regulation: No. 38/Permentan/OT.140/8/2006 concerning 
importation and exportation of seeds.  
 
Seeds import such as soybean, corn and hybrid paddy must have Special Importer Identity Number 
(Nomor Pengenal Importir Khusus /NPIK). Corn and soybean import  does not need import license, 
but there will be quarantine investigation to prevent the entrance of other plant disturbance organism 
to Indonesia. Meanwhile, for paddy breed, recomme ndation from Directorate General of Food Plant, 
Ministry of Agriculture must be obtaine d before the issue of import license.  
 
•  WT/TPR/S/184, page 47, Paragraph 33:  Th e Secretariat’s report indicates that Indonesia 
continues its September 2000 ban on imports of chicken parts in order to assure consumers 
that imports are halal  (produced in accordance with Islamic practices).  Please describe 
Indonesia’s halal certification process. 
 
Reply
: 
 
1. Halal meat means meat is required (although only voluntary) under the Islamic law and 
should fulfill the following conditions: 
 a. Has been originated from lawful land animal according to Islamic law which then 
proceeded to halal slaughtering; 
b. Has been originated from any premises  in which only perform halal production of 
poultry meat/poultry meat products; 
c. Has not been prepared, processed, trans ported or stored using any appliance or 
facility that was non free from anything unlawful according to Islamic Law; 
d.  Dos not consist of or contain anything which is considered to be unlawful according 
to Islamic Law; and, 
e.  Has not in the course of preparation,  processing, transportation or storage been in 
direct contact with any food and or subst ances that fail to satisfy point (c) and 
(d) above. 
 
2. Halal slaughtering means slaughter of all lawful land animals according to Islamic Law and 
fulfill the following conditions:   a. The person should be a Moslem who is  mentally sound and knowledgeable of the 
Islamic slaughtering procedures; 
 b. The animal to be slaughtered should be lawful according to Islamic law; 
 c. The animal to be slaughtered should be a live or deemed to be alive at the time of 
slaughtering;  WT/TPR/M/184/Add.1 
 Page 153 
 
 
   d. The phrase "Bismillahi Allahu Akbar" should be invoked immediately before the 
slaughter of each animal; 
 e. The slaughtering device should be sharp and should not be lifted off the animal 
during the slaughter act; 
 f. The slaughter act should sever the trache a, esophagus and main arteries and veins of 
neck region . 
 
•  WT/TPR/S/184, Page 47, Paragraph 34:   The Secretariat’s report indicates that Indonesia has 
maintained a ban on imported rice since 2004.  In light of current shortages in domestic production, will Indonesia lift its ban?  What  alternative policies are under discussion?  
Reply
: 
 
Rice import regulations were imposed mainly dur ing harvesting periods to protect paddy price at 
farm level. However, domestic prices’ situation was not getting better; therefore Indonesia imposed 
policy on regulating the import until the end of year 2006. Despite the fact that rice import regulation is in place, the need to import rice is review ed regularly based on do mestic supply and demand 
balance. As an example, in the case of end 2006, b ecause of dry season, it was predicted that the 
government rice stock would reduce to be about 500 thousands ton whereas in fact, the safe 
government rice stock must be around 1 million ton. So that government decided to import 
438 thousand ton to fulfill the rice s hortage for government stock and also  to stabilize rice price. This 
policy is an alternative solution to fill th e gap between domestic needs and rice self-support 
programme (swasembada beras). In the condition that domestic rice production are not able to fulfill 
the needs, rice import regulation will remain applied,  specially with the lower international price 
compare to the domestic price, the import will hamp er the effort to increase domestic rice production. 
 
(ix) Standards and other technical requirements 
 
•  We encourage Indonesia to revise its SPS regula tions to conform to the World Animal Health 
Organization’s (OIE) recommendations.  With this in mind, when will the Director General of 
Livestock Services (DGLS) reopen the Indonesian to market to U.S. cattle and products from 
cattle of all ages?  
 
Reply
: 
 
The ban is still applied until the exporting countries ha ve been declared as a free BSE-infected 
country by OIE.  Beside that Government has implemented a regulatio n on the importation of beef cattle for fattening 
purposes. The maximum of body weight is limited up  to 350 kg and the minimum fattening period is 
60 days after quarantine. It is expected that it will minimize the residual effects of Growth Promoting 
Hormones (GPH). Import of beef cattle is still required due to the fact that the total population of beef 
cattle in Indonesia is limited and unable to meet the domestic demand. It is expected that import of 
beef cattle will support the development of local b eef industries including the small and medium scale 
industries. However, such importatio n has to be carefully conducted to protect the local beef industry 
and consumers from possible entry of infecti ous diseases (zoonosis) and to support Government 
Program in maintaining the Foot and Mouth Di sease (FMD)-free status as recognized by the OIE 
(Office International des Epizooties).   WT/TPR/M/184/Add.1 
Page 154  
 
 (4) Measures Affecting Production and Trade 
(iv) Intellectual property rights  
•  WT/TPR/G/184, page 10, paragraph 26 :  In discussing its institutional and legal reforms, the 
Indonesian government refers to steps it has taken to improve enforcement of intellectual 
property rights protection.  We understand that  Indonesia ratified the WIPO Performances and 
Phonograms Treaty (WPPT) in 2005.  When will the government pass the necessary 
implementing legislation?  Please provide an update. 
 
Reply
: 
 
This specific regulation is needed to implemen t the WPPT which have been ratified by Indonesia. 
Indonesia has actually anticipated the impact of prov isions of the WPPT before the ratification of the 
Treaty by including the provisions on neighbor ing rights, right management information and 
technological control measures in Law Number 19 of 2002 regarding Copyright ("the Copyright 
Law") paragraphs 25 – 28. 
 
Patents 
 
•  Has Indonesia enacted, or is it currently cons idering enacting, any legislation to protect 
undisclosed data pertaining to new pharmaceu tical and agricultural chemical products 
submitted to government authorities as a requi rement for marketing approval from unfair 
commercial use, as required by TRIPs Article 39.3?  
 
Reply : 
 
The protection of undisclosed data is regulated by Law No. 30 of 2000 regarding Trade Secret. In this 
context, Indonesia has enacted the legislation to protect undisclosed data pertaining to new 
pharmaceutical and agricultural chemical produ cts submitted to government authorities as a 
requirement for marketing approval from unfair commerci al use, as required by TRIPs Article 39.3, 
which stated in Law No. 30 year 2000, article 2 and 3.  
 
•  WT/TPR/S/184, Page 66, paragraph 123:   The Secretariat’s report indicates that Indonesia’s 
Patent Law contains compulsory licensing provisi ons and limits patent protection to products 
that are made in Indonesia.  What are the situ ations in which a compulsory license could be 
issued?  What is the process and procedur e the government undertakes before issuing a 
compulsory license?  Please clarify this phrase: the law "limits patent protection to products 
that are made in Indonesia".  Does this mean  that if a patented product is not made in 
Indonesia it is afforded greater protection? 
 Reply
: 
 
A compulsory license is granted where  
 1. A patent has not been implemented in Indonesia after 36 (thirty six) months since the date of 
grant; 
2.  If  implementation of a patent cannot be done  without infringing another/other patents; 
3.  A patent is implemented in manners that  are contrary to the public interests 
 Additionally, the Patent Law requires that a compulsory license may only be granted if:  
a.  The person filing the request can provide convincing evidence that he:  WT/TPR/M/184/Add.1 
 Page 155 
 
 
  1. Has the ability to personally and fully implement the relevant Patent; 
2. Has his own facilities to readily implement of the relevant Patent; 
3. Has made efforts in a sufficient period of  time to acquire a License from the Patent 
Holder on the basis of normal terms and conditions but did not succeed. 
 
b.  The Directorate General is of the opinion th at relevant Patent can be implemented in 
Indonesia on a feasible economic scale and can be of benefit to the majority of the society. 
 For a compulsory license which is granted on the ground that the patent is not implemented in Indonesia in the expiration of a period of 36 (thirty six) months commencing from the date of grant of 
a Patent, it does not have any influence to the validity of the patent 
 With regard to the Secretariat Report (Document WT/TPR/S/184, Page 66,  paragraph 123) which 
mentioned that the law "limits patent protection to pr oducts that are made in Indonesia", that does not 
mean that a patented product which is not made in Indonesia is afforded greater protection. For 
detail, please refer to Indonesia’s response to th e questions of Canada (number 5) on the related 
subject. 
 
Copyright 
 
•  Paragraph 116 of the Secretariat’s report states that Optical Disc regulation entered into force 
in October 2004 and that Optical Disc regulations entered into effect in April 2005.  How do 
those two regulations differ? 
 
Reply
: 
 
Government Regulation No 29 of  2004 regarding High Technology Production Facilities for Optical 
Discs was stipulated and came into force on 5 Octob er 2004. In the implementation of the regulation, 
companies or producers of optical discs that had not given production code on  their products were 
given a period around 6 months to do so. 
 
Enforcement 
 
•  Through the implementation of its OD regul ations, Indonesia has conducted a number of 
significant raids, but there is not much info rmation on prosecutions as a result of these raids 
nor information on the disposition of the in fringing goods and equipment and implements 
used to manufacture the infringing goods.  Please provide an explanation for this. 
 
Reply : 
 
The compilation of data regarding cases on IPR had b een submitted to the US during the process of 
Special 301 Review. Such compilation had also been submitted to the WTO Secretariat during the preparation of the report.  
By law, the disposition of infringing goods and equi pments can be done after the issuance of final 
decisional by the court. During the period from the seizure of the infringing goods and equipments to the issuance of the final decision by the court, such goods and equipments are kept by the relevant 
enforcement agencies. 
 WT/TPR/M/184/Add.1 
Page 156  
 
 IV. T
RADE POLICIES BY SECTOR  
(2) Agriculture and Forestry (ii) Main developments  
•  In paragraph 14, page 71, the Secretariat repor t states that "the tariffs on rice and sugar were 
raised when BULOG's monopoly over imports was eliminated."  We understand that in 
February, 2007, BULOG was authorized to im port 1 million tons of white rice due to a 
significant drop in domestic rice production. 
 
• Is BULOG the only importer eligible to receive an import license?  If other importers were 
issued the license, please provide details as to what companies or entities they were and how 
the licenses were allocated.  Do these compani es have purchasing independence or must they 
cooperate with BULOG? 
 
Reply
: 
 
BULOG is not the only importer eligible to have an import license. Any company can apply for a 
license from the Ministry of Trade; i.e Director Gene ral of International Trade Cooperation, as stated 
under The Minister of Industry and Trade Decr ee No. 9/MPP/Kep/1/2004 dated 10 January 2004. 
The company can purchase inde pendently and no obligation to cooperate with BULOG. 
 (4) M
ANUFACTURING  
(i) Textiles and clothing 
 
•  Para 44, page 80:  The Secretariat’s report states that average MFN tariff protection has 
remained at an average level of 10.8% and si nce 2002, tariffs have been accompanied by the 
introduction of a Minister of Industry and Tr ade decree on Textile Import Arrangements.  
Only companies that have production facilities using imported fabrics as inputs for finished products, such as garments or furniture, may obtain import licences.   
 
• In light of trading partners’ repeated statements  of concern about the trade restrictive effects 
of Indonesia’s textile decree, what steps has Indonesia taken to eliminate the decree? 
 
Reply
: 
 
Indonesia is in the stage of improving its textile i ndustry sector from the effect of economic crisis. The 
effort to restructurize textile industry is still on going with the objective to increase the industry’s 
efficiency and competitiveness. In the time when the performance and competitiveness of Indonesia’s 
textile industry has been improved, the t extile import regulation might be reconsider. 
 
(5) Services 
 
• W/TPR/S/184, Page 88, Paragraph 60:   The report indicates that foreign investors can own up 
to 99 percent of the paid-up capital in nati onal commercial banks, bot h listed and unlisted. 
Please provide information on any plans Indonesia ma y have to reflect this liberalization in its 
GATS offer. 
 
Reply : 
 The existing regime is an autonomous liberalizati on that Indonesia undertakes from banking reform 
commitment with the IMF during the period of Indonesian banking crisis in 1998.   WT/TPR/M/184/Add.1 
 Page 157 
 
 
  In general, it is our view that liberalization ha s the potential to provide significant benefit to the 
overall economy. The gain in market access to new service market, technological development, global 
economic integration followed by an increase in inte rnational trade would allow countries, especially 
developing economies, to improve export earnings and employment opportunities for their nationals 
as well as increase the efficiency of the econom y by permitting efficient resources allocation. 
However, in order to reap the benefit of liberaliza tion certain pre-conditions within the economy must 
be satisfied. Among the most important pre-conditio ns relates to the establishment of a competitive 
and level playing field both in terms of market efficiency and institutional capacity.   Hence, it is based on this view that Indonesia’ s approach with regard to trade liberalization is 
strategic in nature. Instead of full liberalization, Indonesia opted for a more gradual approach to 
market liberalization, which takes into account the interest of domestic stakeholders and the 
restructuring as well as reform effort curren tly being carried out in the economy.  
 Despite the adoption of a gradual approach towards liberalization, we are in the opinion that 
Indonesia’s has already made signif icant improvement  in its WTO commitments of the banking 
sector. As can be seen in Indonesia’s initial offer,  foreign control of a domestic banking institution 
that was previously absent have been allowed. In addition, Indonesia has increase the geographic 
market that a foreign bank can operate in dom estically.  This extension in geographic market 
provides substantial increase in new business segmen ts as well as economic opportunities for foreign 
– service suppliers, since all of those citi es are major economic centers in Indonesia. 
 
Indonesia would also like to reiterate its commitmen t to progressive liberalization with the view that 
the DDA negotiation will be come up with the balance outcome, both in services negotiation as well 
as the negotiation being conducted in other sector such as agriculture and NAMA. 
 
•  WT/TPR/S/184, Page 89, Paragraph 61:  The re port notes that the insurance sector is not 
healthy from a prudential standpoint and that insolvent insurance comp anies are still allowed 
to operate.  What plans does Indonesia have to  restructure or end the operations of such 
companies to help ensure the financ ial stability of its insurance market? 
 
Reply
: 
 
We withdraw licenses of 5 (five) life insurance companies and 3 (three) general insurance companies 
early April this year. They were insolvent companies. We still con tinue strengthening our insurance 
regulations and implementing them more consiste ntly to ensure the soundness of our insurance 
sector . 
 
•  The report notes that foreign companies can  hold up to an 80-percent stake in a local 
insurance company.  We also understand, as expressed in Indonesia's GATS schedule, that 
foreigners have even greater rights to hold 100- percent equity in insurance companies that are 
publicly listed.  Please confirm our understanding. 
 
Reply : 
 
Our existing regulations allow the presence of forei gn investors in the insura nce sector only in the 
form of joint venture company. At least one Indonesian citizen or one Indonesian legal entity must be present as a shareholder of the company.  Nevertheless, from capital market perspective, it is allowed for foreign companies to hold 100 percent 
stake in local companies.  WT/TPR/M/184/Add.1 
Page 158  
 
 • Please provide any further information regarding Indonesia's plans to liberalize and improve its 
GATS offer for cross-border insurance (modes 1 an d 2), such as marine, aviation and transport, 
insurance auxiliary services and intermediation thereof.      
 
Reply
: 
 
We are still studying modes and degree of liberalizat ion adopted by other countries for cross-border 
insurance supply. At present, we do not have any intention to tender new commitment for cross-
border insurance. 
 
(ii) Telecommunications 
 
•  Para 68, page 91 of the Secretariat’s report states that Indonesia’s Telecommunications Law 
allows majority foreign ownership in the tel ecommunications services sector.  We understand 
that, whereas Indonesia currently allows up to 95% foreign ownership for telecommunications 
services, your government is now reviewing its foreign direct investment rules in this sector.  Is our understanding correct?  If so, what is th e status of your government's review?   
 
Reply
: 
 
The government is still engaged in reviewing foreign ownership  for the entire sector under the 
upcoming new Presidential Decree.  
 
TURKEY  
 
WT/TPR/S/184  I. ECONOMIC ENVIRONMENT: 
(i) Growth, employment and poverty, Para 8 
 
According to the Secretariat Report, the steady rec overy in economic growth in recent years has not 
been accompanied by an increase in employment. We understand from the Secretariat Report that the 
main reason of rising unemployment is the labor mark et rigidity which has been considered as one of 
the least favorable in the region in terms of standard indicators used by the World Bank. 
 
It is appreciated that the Indonesian Government has made employment creation a central theme of its 
economic program. In this context, we woul d like to ask the Delegation of Indonesia on 
Government’s  plans  to tackle th e rising unemployment in the country. 
 
Reply
: 
 The Government has set expansion on employment as its top priority by way of accelerating economic 
growth. Policy package to accelerate the developmen t of real sector has been introduced. In this 
regards, the Government continues its unwavering e fforts to strengthen financial sector and improve 
conducive climate for investments that would lead to significant employment creation. While policy 
package on financial reforms and on improvement of  investment climate have been introduced and 
implemented, the Government has proposed SME reforms to accelerate economic activity as these 
SMEs play a multi-dimensional role including in cubating the entrepreneurs that are the source of 
future growth and employment. Policy program and  action plan to empower the small and medium 
enterprise has been prepared aiming at reducing unemployment and poverty.  
  WT/TPR/M/184/Add.1 
 Page 159 
 
 
  In relation to the empowerment of small and me dium enterprises (SMEs) and Cooperatives, related 
measures have been directed to create  employment as the following:  
 
- Enhancing institutional capacity and access fo r SMEs and cooperatives to financial 
resources and other productive resources, fo r instance by providing alternatives 
financing schemes for thes e kind of enterprises; 
- Enhancing the capacity, capability and busin ess efficiency of SMEs and cooperatives 
by developing consultancy services for small and medium industries and facilitate them to start the business; 
- Protection and supports for the devel opment of micro financial institutions; 
- Strengthening micro financial institutions; 
- Strengthening of partnership between big enterprises and SME and cooperatives; 
- Providing sufficient support on infrastruc tures including for tho se in rural area. 
 
Particular attention has also been placed on e nhancing labor productivity. Measures related to this 
issue among others: 
 
-  Developing and introducing appropr iate technology for local labor; 
- Revitalization of labor training centre; 
- Providing  consultancy  services for farmers and fisherman;  
- Enhancing labor competency through the stre ngthening of education and training for 
labor and developing competency standard for workers.  
 
To conclude that the rising unemployment in the co untry, in the medium-term strategy, Indonesia is 
directing the manpower policies at:   - Creating formal employment opportunities, at the highest possibility;  - Providing supports ensuring that info rmal workers are able to move from low 
productivity employment to higher produc tivity employment. These supports are very 
essential for ensuring  informal workers to  gradually shift to formal employment 
opportunities. Additionally, training of workers shall be continued to facilitate such 
movements.  
 WT/TPR/S/184 
 
II. T
RADE POLICY REGIME  
(iii) Bilateral arrangements, Para 35  
Secretariat Report informs that the Indonesian G overnment has actively pursued greater access to 
markets through bilateral agreements, during the review period. 
 As an outcome of these efforts, we understand that Indonesia has taken a long way to a bilateral 
agreement with Japan, the largest trading partner. Moreover, it is noted that potential benefits and 
costs of free trade agreements with some trading partners such as Pakistan, India and the US under 
examination.  
As two of the above mentioned countries are also pa rties to the APEC,  we would like to learn from 
the  esteemed Delegation of Indonesia, how they  consider to create a balance  between the 
commitments of parties from  potential  bilaterals  and  those stemming from the APEC. 
 WT/TPR/M/184/Add.1 
Page 160  
 
 Reply
: 
 
2005 APEC Leaders Declaration in  Busan has the objective to pave the way the Bogor Goals 
(liberalization of trade and investment) an d to encourage the successful of the D oha Round. In line 
with those ideas, APEC economy has proposed 14 RT As/FTAs chapters model measures. It is agreed 
that the drafts would be in plai n language (not legal text). The Model Measures would serve as the 
reference for APEC member econom ies negotiating high quality FTAs and reiterated the non-binding 
and voluntary nature of the model measures, bearing in mind that they will not prejudice the 
positions of APEC members in their existing and future RTAs/FTAs negotiations. 
 
In their development in 2005 APEC already conclude chapter Trade Facilitation and in 2006 
APEC conclude six (6 ) chapters (Market A ccess for Trade in Goods, Technical Barri ers to Trade, 
Transparency, Government Procurement, Dispute Settlement and Cooperation) and endorsed by 
APEC Leaders in 2006. During the series of APEC meeting in 2007, elev en (11) chapters model 
measures are extensively discussed by economies and to ensure to achieve a consensus result. It 
is hoped to finalization and to be concluded that  could be endorsed by AP EC Ministers and Leaders 
in September 2007. Those chapters are Safeguards , Anti Dumping Measures, E-Commerce, Sanitary 
and Phytosanitary Measures, Subsidies and C ountervailing Duties, Rules of Origin and Origin 
Procedures, Environment, Temporary Entry for Business Persons and Competition Policy. 
 
APEC Committee on Trade and Investment (CTI) Ch air urged all economies to bear in mind the 
nature and status of the model measures with flexi bility that will enable me mbers to make progress. 
Indonesia Experiences 
 
In the developing of model measures in the margin  of APEC, Indonesia is actively participating in 
discussing for promoting the highly RTAs/FTAs as well as discussing, sharing the ideas and 
exchange views to occur the highly promoting RTAs/FTAs. Indonesia also active partici pant in 
the seminar or workshop on RTAs/FTAs model measures. 
 
To secure and improve the market access, Indonesia as well as other member APEC economies has 
entered into negotiations for FTAs and RTAs with ma in trade partner. Indonesia believes that the 
FTA can attract more investment and strengthen c ooperation for capacity building. Developing 
negotiations in some chapte rs is not always an easy task because of the different approaches taken by 
dialogue partner to free trade agreements. Realizin g that the FTA has opportunities to enhance the 
competitiveness and more over to achieve the employment opportunities and stre ngthen overall 
relationship because the nature of  FTA should be comprehensive. 
 
Japan for Indonesia is as long-standi ng economic and development partner and has largest export 
market, important investor, biggest bilateral donor , high degree of economic  complementary and as 
developed country. Japan has source of capacity transfer and also has concluded EPA/FTA with a 
number of other developing countries, so it can be  learned more experience from other source to do 
the EPA with Japan. 
 
Concluding the EPA with Japan means answeri ng the realization of APEC Bogor Goals and the 
progress of ASEAN Free Trade Area (AFTA) where right now ASEAN and Japan are still entering to preparing the modalities. For Indonesia, it is as a stepping stone to engage for bilateral FTA negotiation with other developed country.  
  WT/TPR/M/184/Add.1 
 Page 161 
 
 
  WT/TPR/S/184 
 III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(iii)  Tariffs, Para 20  
It is noted at the Secretariat Report that unde r its WTO obligations, Indonesia committed to bind 
94.6% of its tariffs at 40%. According to the Secr etariat Report, products, for which tariff bindings 
exceed 40% or which remain unbound include autom obiles, iron, steel and some chemical products. 
 With the above mentioned concerns in mind, we would like to ask Delegation of Indonesia about the 
Government’s approach to bind unbound non–agric ultural products as an outcome of the Doha 
Development Agenda.  
 
Reply
: 
 
As the Doha Development Agenda is still ongoing, I ndonesia is still exploring the tariff lines to be 
kept as unbound according to paragraph 8b of the July Package.   WT/TPR/S/184  III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(iii) Tariffs, Para 23 
 
According to the Secretariat Report, there is a considerable level of gap between the bound and 
applied rates in Indonesia, which is much higher for agricultural products than for industrial products. 
 
How does Indonesian Government plan to tackle w ith this problem which is relatively high for  
transport equipments a nd footwear products? 
 
Reply : 
 There is a considerable level of gap between the bound and applied rates fo r agricultural products. 
The average of bound tariff is 47% and applied tariff 8. 7%. It is related to the low purchasing power 
of Indonesian. Some agricultural are food products. Indonesia until now  still imports most of staple 
food. In order to that people can afford that kind of staple food, government then reduces the tariff. However in line with the government program to increase the agriculture production, government 
increase tariff of some agricultural produc ts such as rice, oranges, chicken, etc.  
 
WT/TPR/S/184  III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(v) Import prohibitions, restrictions and licensing, Para 31 
 We have noted that products such as alcoholic beve rages, optical discs, rice, white crystal sugar, 
consumption salt are subject to non-automatic import license. 
 
Does Government of Indonesia consider to e liminate non-automatic import licenses on the above 
mentioned products? 
 WT/TPR/M/184/Add.1 
Page 162  
 
 Reply
: 
 Until now, Indonesia has no plan to eliminate non-automatic import licenses for the above products because rice, sugar and salt are produced by small farmers. For alcoholic beverages, it related to 
security factor and religion (the majo rity of Indonesian are Moslem).  
 
WT/TPR/S/184  III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(v)  Import prohibitions, restrictions and licensing, Para 33 
 It is noted at the Secretariat Report that Indonesi a imposes "de facto" quantitative restrictions in 
imports of meat and poultry products, requiri ng an Importer Letter of Recommendation, which 
according to the Secretariat Report may affect the quantity allowed to be imported.  
We would appreciate explanations by the Indo nesian Delegation of the reason of such an 
implementation and if any complaint either by  importers or exporters received so far. 
 
Reply
: 
 This regulation (requirement of an Importer Lette r of Recommendation) doesn’t mean to restrict 
quantitative importation. The reason of this requi rement is only for SPS and halal reason. The 
exporter which intends to export their meat and poult ry products to Indonesia have to be clear for: 
 - Their origin country which must be free from some infected disease such as: Foot and Mouth 
Diseas, Rinderpest, Rift Valley Fever, Contagious Bovine Pleuro-pneumonia (CBPP) and 
Bovine Spongiform Encephalopathy/BSE (neglible BSE risk). She must be declared as a free 
BSE-infected country by OIE;  
 - They Slaughter the animal by halal certifier bodies in their country which already have the 
approval from AIFDC – ICU/LP POM MUI.  
 
PAKISTAN  
 
1. What is the rationale for imposing ban on rice imports during harvest se ason (January to June) 
and restricting the normal trade for imported rice? 
 
Reply : 
 
According to Presidential Instruction No. 3/2007 c oncerning rice policy, importation of rice can be 
done if domestic rice availability is not sufficient  to fulfill domestic demand, to supply government 
rice stock and to stabilize domestic rice price ( it is usually happen during the dry season or time 
before harvest). Since during harvest season, the ava ilability of rice is more than sufficient which 
cause the rice price falls, so that the government re stricts rice import to stabilize domestic rice price. 
 
In early 2006 for example, facing the harvest season, it was estimated that the availability of rice is 
about 34.9 million ton while the cons umption is 30.8 million ton so that there is surplus 4.1 million 
ton. It means the domestic production could fulfill the domestic demand. Rice is produced by more 
than 12 million farmers. If government didn’t make restriction in importing rice during that season, 
the price could falls and the 12 million rice farmers and their families would suffer.   WT/TPR/M/184/Add.1 
 Page 163 
 
 
  However at the end of 2006, because there is no harvest (dry season), it was predicted that the 
government rice stock will reduce to be about 500 th ousands ton whereas in fact, the safe government 
rice stock must be around 1 million ton. So that go vernment decided to import 438 thousand ton to 
fulfill the rice shortage for government st ock and also to stabilize rice price. 
 
Government of Indonesia policy on rice aims to  increase poor farmer wealth and national economy 
stability. The growth of national economy gives effe ct on the existing rice sector policy that intended 
to increase rice production. 
 
The rice policy objectives are to encourage the u se of certify top-quality rice seed, balance fertilizer 
for farmer activities, minimize the lost after ri ce harvest, facilitation by minimizing the decrease of 
irrigation land and rehabilitation land, and rehabilitate main irrigation system.  
 
2. There is a barrier on salt import as well in the form of 50% local sourcing that violates the 
rules of WTO. Would Indonesia like to share jus tification for having such a trade restrictive 
measure? Is there any plan to remove such barrier? 
 
Reply : 
 Indonesia at this point is reordering domestic salt industry and need special attention from 
government because of salt believe to be the strate gic commodity for industry raw material. At the 
end, production activity, supply and distribution of salt are very vital for public health trough 
iodization program, increasing the income and wealth  of salt farmer, and to meet domestic industry 
supplies.  
 
The domestic salt production in terms of quality and quan tity, at this point still could not meet with 
salt domestic supply, especially for industry as raw material. Therefore, import of salt considers to be 
necessary. The strategic value of salt that consum e widely by public and domestic industry, therefore 
salt importation should be regulate.  
 
3. There are very strict and biased import licen sing requirements for the textile imports favoring 
import of raw fabrics over value added.  Can Indonesia explain reasons for such a bias? How 
does Indonesia look forward to tackle this issue so  that the trading partners have fair market 
access in the textiles area? 
 
Reply
: 
 
Textile industry considers to be the vital sector to Indonesia economy and sector which absorb huge 
amount of labour. Furthermore, textile industry sector one of the sector that effected by 1996 
economy crisis. Textile industry sector also had to  face unfair competition from import of similar 
product. The implementation of pr oducer importer regulation expected to minimize import facilitation 
misuse that could lead to unfair co mpetition in domestic market and export. 
 WT/TPR/M/184/Add.1 
Page 164  
 
 ARGENTINA  
 
WT/TPR/S/184, report by the Secretariat  
 
II. T RADE POLICY REGIME :  FRAMEWORK AND OBJECTIVES  
(8) Foreign Investment Regime  
Paragraph 43, page 31 
 
The Report mentions that in 2006, the Government  of Indonesia produced a new draft law on foreign 
investment aimed at replacing the previous le gal framework.  What modifications does the new 
framework introduce in this area?  
Reply:
 
 
The new investment law has unified two investment laws ie foreign and domestic investment law. The 
new law is more comprehensive compare with the previous laws. The new investment law has 
provisions regarding incentives to attract investors.   III. T
RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures Directly Affecting Imports 
(i) Customs procedures  
Paragraph 12 and Table III.1, page 37 
 
As part of an effort to improve the investment cl imate, the Government of Indonesia issued a package 
of policies in early 2006, including certain impr ovements of customs procedures.  Could Indonesia 
elaborate on the measures listed in Table III.1 and give  us an idea of the time-frame for the definitive 
implementation of all of these measures?  
Reply:
 
 
In order to accelerate the flow of import produc ts, steps that have and are being taken covers: 
 1. Electronic Data Interchange (EDI) on processing import, export and manifest 
documents; 
2. Decentralization of Customs approvals to local Customs Offices; 
3. Preparation on the National Single Windows (the piloting project will be delivered on 
December 2007); and 
4. X-Ray Container Scanner based on risk management.  
 
(ii) Customs valuation and rules of origin 
 
Paragraph 13, page 39 
 
According to the Report, Customs reportedly uses a sch edule of arbitrary check prices rather than the 
transaction value when assessing duties on certain food imports.  What, exactly, is this schedule of 
arbitrary check prices?  Why is it used?  What pro ducts are included in the schedule?  Is there any 
discrimination according to the origin of the goods in using this list? 
  WT/TPR/M/184/Add.1 
 Page 165 
 
 
  Reply:  
Indonesian Customs Law has fully adopted Articl e VII of GATT/ WCO Agreement on Customs 
Valuation. We maintain database on Cust oms Declaration submitted as references. 
(iv) Other charges affecting imports 
Paragraph 29, page 46 
What is the rate of the Customs User Fee (Penerimaan Negara Bukan Pajak)? 
Reply:  
Customs User Fee (Penerimaan Negara Bukan Pajak) are in the amount of IDR 30.000,- (thirty 
thousand Rupiah) up to IDR 450.000, - (four hundred fifty thousand Rupi ah). It depends on the type of 
documents (import, export or manifest) and also  the number of items stated on the documents. 
(vii) Government procurement 
Paragraph 43, page 49 
According to the Report, foreign participation in  procurement contracts is subject to certain 
conditions, but at the same time, owing to regi onal decentralization, provincial governments can 
introduce requirements in addition to those establishe d at the national level. Could Indonesia provide 
statistics on government contracts awarded to forei gn suppliers during the period under review? What 
kind of additional conditions established by a provincial government could Indonesia impose? 
Reply:  
Indonesia is still in the process of developing the da ta statistic, therefore the accurate data is not 
available. 
(4) Measures Affecting Production and Trade 
(i) Taxation 
Paragraph 94, page 59 
According to the Report, in 2006 the Government proposed three new tax laws affecting production 
and trade.  Could Indonesia elabor ate on the content of these new laws? 
Reply:  
In the proposed tax law, the government will pr ovide incentive and pro-business deregulation as well 
as revising tax procedure and administration, income tax and VAT together with a more legal 
certainty. 
(ii) Production assistance 
Paragraph 100, pages 60 and 61 The Report mentions a tax law that allows the G overnment to assist some domestic industries through 
tax incentives.  What are these tax incentives?  What sectors of industry are eligible for these 
incentives?  Are there any statistics concerning the sectors that have most benefited from this Law? 
 WT/TPR/M/184/Add.1 
Page 166  
 
 Reply:
 
 Tax incentive as any tax provision granted to a qualified investment project that represents a favourable deviation from the provis ions applicable to investment in any kind of sectors or subjects of 
tax (see table below). 
 
Certain Business Sector 
No. Business Sector 
1. Category for Other food Industry  
2. Category for Textile and Clothing Industry  
3. Category for Pulp and Paper Industry 
4. Category for Based Chemical Industry  
5. Category for Other Chemical Industry 
6. Category for Rubber and Products of Rubber 
7. Category for Products of Porcelain  
8. Category for Iron and Steel Raw Metal Industry  
9. Category for Non Iron Raw Metal Industry 
10. Category for Machine and Machinery Industry  
11. Category for Electrical Motor, Generator, and Transformator Industry  
12. Category for Electronic and Telemathics Industry  
13. Category for Land Haul Transportation Industry 
14. Category for Ship and Boat Manufacture and Repairment Industry 
15. Category for Non Iron Raw Metal Manufacturing Industry 
 
Certain Business Sector and Province 
No. Business Sector Province 
1. Category for Food processing industry Maluku, North Maluku, Papua, West Papua, North 
Sulawesi, South Sulawesi, Central Sulawesi, Southeast 
Sulawesi, West Sulawesi, and Gorontalo. 
2 Category for Agro base Natural Resources process indu stry North Sulawesi, South Sulawesi, Central Sulawesi, 
Southeast Sulawesi, West Sulawesi, and Gorontalo. 
3. Category for Packaging and Box from Paper and Carton 
industry  Outer Java 
4. Category for Products of Plastic Outer Java 
5. Category for Cement, Camphor, and gypsum industry  North Sulawesi, South Sulawesi, Central Sulawesi, 
Southeast Sulawesi, West Sulawesi, Gorontalo, West Nusa 
Tenggara, and East Nusa Tenggara. 
6. Category for Furniture industry group Outer Java 
7. Fish sea capturing and processing Provin ces that are contiguous with Hindian Ocean: 
Nanggroe Aceh Darusalam; North Sumatra; West 
Sumatra; Bengkulu; Lampung; B anten; West Java; Central 
Java; Yogyakarta; East Java; Bali; West Nusa Tenggara, 
East Nusa Tenggara, Maluku, and Papua. 
8. Sea Crustacea capturing and processing Prov inces that are contiguous with Hindian Ocean: 
Nanggroe Aceh Darusalam; North Sumatra; West 
Sumatra; Bengkulu; Lampung; B anten; West Java; Central 
Java; Yogyakarta; East Java; Bali; West Nusa Tenggara, East Nusa Tenggara, Maluku, and Papua. 
9. Sea Mollusca Capturing and processing Provin ces that are contiguous with Hindian Ocean: 
Nanggroe Aceh Darusalam; North Sumatra; West 
Sumatra; Bengkulu; Lampung; B anten; West Java; Central 
Java; Yogyakarta; East Java; Bali; West Nusa Tenggara, East Nusa Tenggara, Maluku, and Papua.  WT/TPR/M/184/Add.1 
 Page 167 
 
 
  IV. TRADE POLICIES BY SECTOR 
(5) Services (iii) Transportation (sea) 
 
Paragraph 77, page 94 
 
The Report states that the Industrial Shipping Law allows local shipping lines to use foreign flag 
vessels under certain conditions when local flag t onnage is not available. Could Indonesia explain 
specifically what these limitations are? Under what conditions is the use of foreign flag vessels 
permitted? 
 
Reply:
 
 
As stated in Article 5 of the Government Regul ation No 17 Year 1988 regarding Shipping operation, 
the National Shipping Companz can use foreign flag vessel on a rental basis for a certain period of 
time or route or based on another agreements. The national shipping company that used foreign flag 
vessel obliged to report to the appointed Minister  or authority. The license of shipping is also 
considered as a vessel flag exemption requirement. 
 
CHINA  
 
1)  Could Indonesia clarify its test and certification procedures for imported safety glass for 
automobiles and cement? Do they comply fully with the WTO/TBT rules of mutual recognition? Is Indonesia willing to provide an y Member who so wishes with opportunities 
for further bilateral consultation in this regard  in order to facilitate the smoother flow of 
trade? 
 Reply:
 
 In preparing those technical regulations, we comp ly with the provisions of the WTO-TBT Agreement. 
We have notified the technical regulations on 24 November 2006, giving a two-month period for 
comments.  The system for accreditation and certific ation in Indonesia is open to any accreditation 
body, if requested for MRA.  For your informa tion, Indonesia’s accreditation body, KAN, is a 
signatory of APLAC/ILAC MRA for testing/calibra tion laboratories, APLAC MRA for inspection 
bodies, as well as PAC/IAF MLA for quality manag ement system/environmental management system. 
Therefore, Indonesia is willing to have an MRA and welc ome for bilateral consultation in this regard.  
 2)  It is noted that some Chinese trademarks , such as the "Jiang Dong" diesel engine, the 
"phoenix" bicycles, the "MARQUIS" water pump, "DAYANG" motorcycle are illegally 
registered in Indonesia by some local companies who used to be import agents of the products 
of these Chinese brands.  
 
 Could Indonesia explain how to solve these pr oblems to prevent counterfeit trademarks in 
future in conformity with TRIPs Agreement? 
 
Reply:
 
 Indonesia fully considers the importance of protecti ng IPRs in order to implement TRIPs Agreement. 
Indonesia solves the problem of counterfeit trademarks by through: 
 1. Forming a national TEAM to enhance the Public awareness regarding IPRs; 
2. In coordination with Police, Judge and Attorney. 
 WT/TPR/M/184/Add.1 
Page 168  
 
 3)  Could Indonesia please clarify how many comp anies in Indonesia are working as agents of 
customs clearance for the imports in the form of container from China? Is it true that in 
addition to tariff and import VAT, importers have to pay for each container at the rate of 400-1000 USD to customs clearance compani es? Is this phenomenon of "grey customs 
clearance" part of official policy of Indonesi an government? What can be done to streamline 
the practice to the benefits of traders? 
 
Reply:
 
 It is about 200 Customs brokers across the country. Customs Administration does not charge fee from 
Customs broker or importer, except import duty and related taxes (ie, VAT). 
  WT/TPR/M/184/Add.1 
 Page 169 
 
 
  RESPONSES TO THE QUESTIONS POSE D ORALLY BY MEMBERS DURING  
THE FIRST TPR MEETING DAY (29 JUNE 2007)  
  
1. New Investment Law 
(Question posed by Swiss, El Salvador, Dominican Republic, Columbia, Japan, US, and 
EU) 
 
Reply:
 
 
On the issue of the Indonesia new investment law as enacted in Law No. 25 of 2007, we fully consider 
that since the economic crisis, direct investment can plays a key role to create job opportunity, 
develop infrastructure, and increase economic growth which ultimately will increase people’s social 
welfare. For this purpose, the GOI has taken steps to create a more conducive of its domestic 
investment climate by improving several measures of  its investment regime. In this context, the 
Government has taken several important measures in ter-alia, the Government has enacted a New 
Law No. 25 of 2007 concerning Investment and also Government Regulation No. 1 of 2007 
concerning Income Tax Facility of Investment of Certain Business Fields and or in Certain Areas. 
Along with this policy, the Government is undertak ing a revise to its Investment Negative List and a 
One Door Integrated Investment Services aimi ng at providing legal certainty and simplifying 
procedure. The negative list that will be soon issued in July next month. Th e negative list comprises of 
closed and open business with some  conditions. The share of negative list is relatively small which is 
only 1 percent of the total economic activities. Shortly , the close list based on the certain criteria, 
such as, health, safety, defense and security, en vironment, culture, and national interest while the 
open with condition list based on the criteria of  protection of natural resources, protection and 
empowerment of micro, small and medium size enterprises and cooperatives, supervision of 
production and distribution of goods, increase d technological capac ity, domestic capital 
participation, cooperation with en terprises appointed by government. 
 
2. Import Policy  
 (Questions posed by Japan, India, Australia, EU and  Pakistan)   
Reply
: 
 As some countries raised questions on the impo rt policy in particular those related to the 
Prohibitions, Restrictions, and Licensing. In this context, the Government only prohibits importation 
of certain products  due to the following reasons such  as hazardous wastes  as contained in Minister 
of Trade Decree  No. 231/MPP/Kep/7/1997 as this  is consistent with  Basel Convention,  
Psychotropic - Law No. 5 of 1997, Narcotics - Law No. 22 of 1997, Chemical weapon materials/substances - Law No. 6 of 1998 ; Ozone depleting substances as contained in Minister of Trade Decree No. 24/M-DAG/PER/6/2006 and Mont real Protocol. Indonesia would assure members 
that the Government of Indonesia has continued to  reduce the number of products subject to import 
restrictions, prohibitions and licensing requirements . Currently, 141 tariff lines are subject to import 
licensing restrictions, down from 1,112 tariff lines in 1990.   
 Approval of Producer Importer license and/or  Regi stered Importer license are  required by to import 
these kind of products. Any company has the right to apply and obtain approval as Producer Importer 
or Registered Importer as long as they are able to meet the requirements. Recommendation from 
certain related ministry institution or ministries is  required to obtained the approved importer. The 
procedure for application and all the requirements a re made available for public for transparency 
purpose. The products fall to this category are al coholic beverages, lubricants, explosives, certain 
dangerous chemical compounds, ozone depleting substances, nitrocellu lose, precursor, optical disc, 
rough diamonds, rice, sugar, cloves, textile and t extiles products and salt. Under  such licensing WT/TPR/M/184/Add.1 
Page 170  
 
 system, import of certain products remains undisturbe d, like sugar, due to the fact that import of 
sugar in 2006 has reached 1,493,514 tons and de monstrated the increase from 1,063,857 tons in 
2004. Import of rice also demonstrates similar figures where import in 2006 reached  438,108 tons 
while in 2004 was still at the amount of 236,867 tons.  
3. Customs Procedures, Valuation and Clearance.  
(Questions posed by US, Cana da, Norway, Korea and Turkey) 
 Reply:
 
 
Custom Procedures 
 Some members are of the view that Indonesian Cust om Administration Customs administration is not 
transparent. In this regard, Indonesian has taken steps to reform the customs law is one of the 
Indonesian Government agenda. The purpose is to  provide smoothness the flow of goods in a 
transparent manner. Under the revised customs law,  heavy punishment will be applied to both, 
customs officer and importer/exporter involve in the violation against Customs Law. We believe that 
this custom policy  will lead to a more transparent and simple procedure. The next step is decentralize  
some customs approvals to local customs offi cer in order to cut bu reaucracy barriers which 
ultimately  simplify procedure. Customs administr ation introduce priority channel besides green and 
red channel. In red channel, customs administr ation conducts physical examination. In green 
channel, customs conducts document examination. A nd in priority channel, importer submits import 
declaration and obtains customs approval withou t physical and document examination.  In some 
major customs office, customs authorities are equippe d with an x-ray container scanner. The x-ray 
scanner utilization is based on risk management. By using this equipment, customs authority can 
detect import goods in the container without having physical examination. It has fasten and smoothen 
the flow of goods.  
 Valuation  With respect to the valuation system, the Go vernment of Indonesia Government has adopted 
Article VII of GATT / WTO regarding Customs Val uation Agreement. Actually, in imposing import 
duty, customs valuation is based on transaction valu e which is the actual price paid or payable for the 
goods when sold for export to the importing country . In addition, customs authority maintain price 
database that are derived/collected from various im port price of the same product for a certain period 
of time. Customs authority in local customs offi ce uses the price database as reference. This price 
database is to counter price importation that is suspected to be conducted under invoicing practice, 
or stated import price is significantly below the lo wer price of the product.  Under the Customs Law, 
importer has the right to appeal again for the val uation made by customs authority for the subjected 
goods. 
 
4. Tariffs, Exemptions and Preference; Bound Tariffs, Quotas. 
 (Questions posed by Argentina, New Zealand, Korea and the US) 
 
Reply
:  
 
Tariffs 
 
In order to increase the compe titiveness, the government has issu ed some policies that have 
significant changes on import duty tariff structure. Th e policies were stipulated in two programs, 
namely:  1. The schedule of tariff reduction program for the period of 1996 to 2003.  WT/TPR/M/184/Add.1 
 Page 171 
 
 
  2. Tariff Harmonization Pro gram for the period of 2005 to 2010. 
 The tariff reduction program had been implemented follo wing the schedule stipulated in the Minister 
of Finance Decree No. 378/KMK.01/1996. The schedul e was formulated by adopting the across the 
board approach. With this approac h, tariff reduction was not done by a product or an industry 
interests, but it was based on the applied rate of import duty tariff in May 1995. To accommodate 
national economic interests, some products however w ere excluded from the general schedule of tariff 
reduction program, among others agric ulture, chemicals, plastics, metals, alcoholic beverages and 
automotive, including products which were relate d to moral and security items. The tariff reduction 
schedule for these products was stipulated in th e Minister of Finance Decree No. 542/KMK.01/l997. 
The implementation of the tariff reduction pr ogram had changed Indonesian tariff structure 
significantly. In 1995, the average tariff rates we re 15.48% with tariff rates ranging from 0-10% 
covered 3.832 tariff lines or 51.88% of the total 7.386 tariff lines. In 1996, the year when the program 
was first launched, the average ta riff rates declined to 13.01% and tariff rates ranging from 0-10% 
increased to 4.071 or 56.06% of the total 7.264 tar iff lines. By the end of the tariff reduction program 
(2003), the average tariff rates was 7.24% and the composition of tariff rate ranging from 0-10% 
covered 6.285 tariff lines or 83.35%  the total 7.540 tariff lines.   In 2004, one year after the tariff reduction prog ram lapsed, Indonesia adopted the new tariff 
classification under "ASEAN Harmonized Tariff Nomenclature" (AHTN) as part of Indonesian 
commitment under AFTA. The ASEAN Harmonized Tar iff Nomenclature (AHTN) was formulated to 
accommodate every ASEAN member co untry interest regarding the Harmonized System (HS).  The 
result for Indonesia was that the total tariff lines incr eased drastically from 7,540 in 2003 to 11,163 
in 2004.  Many products with hi gh tariff rate had to be split, for instance, automotive and alcohol 
beverage products.  Beside splitting, there were al so some merging case where two or more tariff 
lines with different tariff rates had to be merged.  In some merging, the rate chosen was the highest 
one.  These cases brought about the increase of Indonesia’s average tariff rates from 7.24% in 2003 
to 9.88% in 2004. In this year, the average tariff rates were 9.88% and the composition of tariff rates 
between 0-10% covered 8.387 tariff lines or 75.13% of the total 11.163 tariff lines. 
 As the continuation of the tariff reduction progr am, Indonesia introduced a new tariff policy which 
was called the Tariff Harmonization Program for the period of 2005- 2010. The approach used in the 
formulation of this program was different from th at of the tariff reduction program. Under sector 
approach, all products are grouped into 18 sectors and each sector had its own tariff adjustment 
schedule in two patterns, general and special pattern.  The objective of the Tariff Harmonization Progra m was to set up the 2010 tariff which are: 
(1) Harmonized, from upstream to downstream produc ts, (2) low, and (3) uniform. The program was 
formulated in two stages. The first stage (2005) covers agricultural, fishery, mining, pharmaceutical, 
ceramics and steel products, and the second stage incl udes the other products that had nod been 
covered in the first stage.  The first Tariff Harmonization Program was stipulated  in two Minister of Finance regulations, i.e. 
No. 591/PMK.010/2004 concerning the Tariff Ha rmonization Program for the period of 2005—20l0 
and No. 600/PMK.010/2004 concerni ng the change of tariff as the implementation of Tariff 
Harmonization Program for the year 2005.  The second Tariff harmonization program was stipulated in two other Minister of Finance 
regulations. In the Minister of Finance decree No. 132/PMK.010/2005 it was determined the second 
Tariff Harmonization Program for the period of 2005—2010. Its implementation in 2006 was 
stipulated in the Minister of Finance decree No. 133/PMK.0l0/2005.  WT/TPR/M/184/Add.1 
Page 172  
 
 The implementation of the first Tariff Harmoniza tion Program had changed In donesian average tariff 
rates to 9.86% and the composition of tariff rate  between 0-10% covered 8.400 tariff lines or 75.19% 
of the total 11.171 tariff lines in year 2005 and of the second Tariff Harmonization Program had 
changed Indonesian average tariff rates to 9.45% and the composition of tariff rate between 0-10% 
covered 8.365 tariff lines or 74.87% of the total 11.173 tariff lines in year 2006. 
 
To increase the efficiency and the co mpetitiveness of domestic industries, Indonesia is implementing 
the tariff exemptions or concessions in accordance with Indonesian Customs Law (Law No. 10/1995). 
The importation of raw materials, component, or ma chineries that are used by a certain industrial 
sector can be exempted from import duties based on  the objective assessment. Some industries that 
have been granted the tariff exemptions or concessions were aircraft maintenance, public 
transportation, energy, and telecommunication. In a ddition, Indonesia is also implementing the Duty 
Drawback System on exported items. This policy is stipulated in the Minister of Finance decree No. 580/KMK.04/2003.  
Preferences 
 Regarding tariff preferences, Indonesia has particip ated and already impl emented its commitment 
under two schemes of free trade area regionally, i.e.  ASEAN Free Trade Area (AFTA) and with dialog 
partner under ASEAN-China Free Trade Area (ACFTA).  
Under Common Effective Preferential Tariff or CEPT Scheme for AFTA, Indonesia has committed to 
implement the AFTA commitments.  Indonesia has taken  measures to reduce its tariffs and renewed 
the schedule of tariff reduction for AFTA by the year of 2006, which includes 11,173 tariff lines 
(MFN) and 11,034 tariff lines (CEPT).  Based on th is AFTA commitments, Indonesia tariff rate 
ranges from 0 to 5% and  the simple average tariff rate is 1.93% with the composition of tariff rate 
0% covers 6,735 tariff lines or 60.28% of the tota l 11,034 tariff lines. Indonesia has also committed 
under ASEAN-China FTA, to reduce its tariffs, and renewed the schedule of tariff reduction for 
ACFTA by the year of 2006, which includes 8.097 tariff lines among 11.173 MFN tariff lines. Under 
WTO commitments, over 93% of tariff lines are bound,  which lends a marked degree of predictability 
to the tariff.  Indonesia commits to increase th is figure in the future. Regarding tariff quotas, 
currently, Indonesia does not implement any tariff quotas. 
 
5. Other Charges Affecting Imports Including VAT 
 (Question posed by Korea).  Reply
: 
 
Considering the need to support the economic growth  by easing the burden of the movement of goods 
and international best practices, indonesia is pr oposing the government regulation on vat of port 
services. Currently (june 2007), the draft regulation is  in the final process to be taken into force. 
Basically, the regulation will exempt vat oblig ation on port services of international sea 
transportation, for both domestic and internationa l enterprise. The proposed regulation will come 
into force on the date of enactment. Concerning the vat on services rendered by freight forwarding 
companies, it is not vat on freight itself, because freight, both international and domestic, is not taxable services. So vat does not apply on freight itself.    WT/TPR/M/184/Add.1 
 Page 173 
 
 
  6. Standards, Labeling, Testing, and SPS Measures 
 (Questions posed by EU and India) 
 
Reply : 
 
With regard to standards, conformity assessment procedures, and technical regulations, Indonesia 
commits to fulfilling its obligations under the WTO TBT Agreement. Standards development process 
is now improved by allowing a broader stakehol der participation through an IT based system called 
SISNI.  Alignment with international standards is encouraged in the earlier stage of standards 
development process through BSN policies.  This is  to ensure that all new/revised standards are 
harmonized with international standards.  C onformity assessment scheme is managed by KAN 
(Komite Akreditasi Nasional), which is now th e signatory of some APLAC/ILAC MRA as well as 
PAC/IAF MLA. Indonesian commitmen t to the WTO TBT Agreement is also applied in the field of 
conformity assessment.  By using internationa lly agreed conformity assessment procedures, the 
system and its implementation could be mutually ac cepted among parties. Thus, the system enhances 
the development of MRA for testing and certification among Indonesia and interested parties. 
Although recently KAN has not had mutual agreemen t with overseas conformity assessment bodies 
(CAB), the system is open for any CABs or accreditation bodies for MRA.  With regard to technical regulations, Indonesia also encourages the implementation of Good 
Regulatory Practices (GRP) together with related provisions in the WTO TBT Agreement to 
regulators. Some ministries are now revising their t echnical regulations issued  before 1995; this 
includes the content of technical regulations, stand ards, and conformity assess ment procedures to be 
in line with the provisions of the WTO TBT Agreement.   Legal basis of SPS measures on meat importation:  
 
1. Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning 
Importation and Control of carcasses, meats and edible offal circulation from abroad; and 
2. Minister of Agriculture Regulation: No. 27/Permentan/OT.140/3/2007 concerning revision of 
Minister of Agriculture Regulation: No. 64/Permentan/OT.140/12/2006 concerning Importation and Control of carcasses, meats and edible offal circulation from abroad. 
3. Minister of Agriculture Decree: No. 482/ Kpts/PD.620/8/2006 concerning the import 
requirement of ruminant and its products from BSE-infected country or zone into Indonesian 
territory 
 The objectives of  regulating and controlling of impo rtation of beef, carcasses, meats and edible offal 
are: to prevent and maintain the Indonesian free- status from zoonosis and quarantine diseases as well 
as to protect the local consumers and to guarantee th e availability of meat  through importation and 
control of carcasses, meats and edible offal from reliable sources. A country which intends to export 
their beef, carcasses, meats and edible offal to Indonesia should have been declared as a free  infected 
zoonosis diseases country  by OIE.  
 
Indonesia has launched the program to fulfill domes tic meat demand from domestic sources. Meat 
production is predominantly small resource poor farmers.  In the short run, while improving domestic 
livestock production system,  meat import is still n eeded. Along this line, it is necessary to protect 
domestic production system from infestation of zo onosis diseases transmitte d through meat import 
from other infected countries. WT/TPR/M/184/Add.1 
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 7. Agriculture and Forestry 
(Questions posed by China, New Zealand, Pakistan, the US) 
 
Reply
: 
 
Agriculture Policies 
 Labor productivity in agricultural sector is far lower than that of the rest of the economy. This is a 
direct consequence of the lower growth of agricultu re GDP, compared to the growth of agricultural 
labor. Sectoral migration of labor from agricultu re to non-agriculture sector is not yet high enough to 
absorb surplus labor in agriculture. Long-term strate gy to cope with this problem is by promoting 
productivity growth through:   (1) Development of agricultural infrastructure;  (2) Promoting the capacity of farmer’s institution;  
(3) Revitalizing agricultural extension system; and  
(4) Promoting agricultural product marketing.   While fulfilling food demand is of cr itical important in the short r un, in the long run promoting 
diversification toward high value commod ities will be an appropriate strategy. 
 
Forestry 
 Illegal logging and its illegal trade have been a seri ous problem in Indonesia.  Indonesia has shown 
its seriousness in the efforts of co mbating illegal logging practices. For this purpose, the President of 
Indonesia has introduced an Instruction No. 4/2004. Since the Forest Law Enforcement & 
Governance (FLEG) East Asia Mini sterial Conference held in Bali, Indonesia September 2001, 
Indonesia has taken  the following steps:  
- On 13 December 2003, Ministry of Forestry and MI TI set up new institution called BRIK. The 
aim of BRIK is to strengthen the control of jo int decrees issued by two ministers in examining 
the legalities of the forestry products doc uments and make endorsement before forestry 
products to be exported. 
- MoU between Ministry of Forestry and PPATK (Money Laundering Center) to analyze money 
laundering link to the illegal logging activities 
- The appointment of Special Forest Police (SPORC) in 10 provinces. 
 
The main activities in combating illegal logging are pre-emptive (e.g. P.R and capacity building local 
people; preventive (forest control and surveillan ce); repressive (field op erational with national 
police). On the issue of  timber legality standard and its verification system, on 4 April 2006, the Minister of Forestry stipulated a Decree Numb er 70/MENHUT-II/2006 to set up national steering 
committee and multi-stakeholder working groups Decree Number 63/KUM-II/2006 for wood legality 
standard harmonization. Indonesian Ecolabelling Institu te (lEI) has been in volved in the multi 
stakeholders in Indonesia (the Ministry of Forest ry, business association, academicians, certification 
body and NGOs) has facilitated development and harmonization of the legality standard.   
 The draft of the harmonized standard has been derived from the result of MoU UK-Indonesia and 
TFF’s draft on legality standard, which is  the result of  comparative study from: 
 
1) Keurhout Protocool for the validation of claims  of legal timber in particular with a view on 
legal origin (TFF); 
2) The requirements for ‘verified legal’ in WWF ’s Nusa Hijau conditio ns of participation 
(NTTA);  WT/TPR/M/184/Add.1 
 Page 175 
 
 
  3  The "OLB (Origine et Legalite des Bois) cer tification and control system: origin and legality 
of timber" (eurocertifor). 
 The result of repressive operation by forest po lice Ministry of Forestry is as follows:  
 
In 2005 : 1.493 suspects; 281.491 m3 logs; 36.084.7 m3 sawn  timber. Heavy equipment 45 units; 
container 179 units; In 2006 : 423 suspects; 454.486 logs; 4.257.846 m3 sawn timber; heavy equipment 6 units; tug boat 2 units; saw mill 3 units. Result of repressive action by national police: Papua (2005): 186 suspects, 35.402 logs, 53.208.8 m3 logs,   329.610.18 m3 sawn timber; heavy machineries 680 units; Papua (2006): 315 suspects; 572.380  logs; 3 tug boats; 41 ships; 71 trucks; 
122 heavy machineries On 10 July 2006, Mi nister of Forestry issued decree number 
p.51/MENHUT/2006 to improve administrative work of  wood from private forest that will guarantee 
the legality of the logs harvested. On 29 August 2006, Minister of Forestry issued decree no. P-
55/MENHUT-ii/2006 to  achieve  better  administrati ve  work  of sustainable  forest  management 
especially in forest products distribution monitoring  system, which  will  guarantee  the legality  of  
the  logs  harvested. The decree is also as  technical guideline of chain of custody 
 Rice  Rice has been a major source of income and does provides employment for around 17 millions farm 
household. Increasing productivity and competitiveness of this commodity is one of priority 
development agenda.  This is accomp lished, among other, through the setting up of procurement price 
at the farm level coupled with import regulation,  in order to provide reasonable incentive to the 
farmers.  On the other hand, to stabilize rice price at the retail level, the n eed to import rice is 
reviewed regularly and the quantity is determined ad ministratively by the government. For instance, 
in 2006 BULOG import rice 438 thousand tons and in  2007 is planned to import another 1 million 
tons of rice.  Therefore, with this policy in place, paddy price at the farm level is protected and at the 
same time rice price at the retail level is also st abilized.  Further impact of rice price increase to the 
needy and poor consumer can also be controlled. 
 
8. Contingency Measures 
 (Questions posed by China)  
 
Reply
: 
 
Unfair foreign pricing and government subsidi es may distort the free flow of goods and adversely 
affect business of domestic industry. In the other si de, the only surge of imports may also cause or 
threaten to cause serious injury to domestic industry. When that happens to Indonesia, as one of the 
major global market, the Government of Indon esia represented by KPPI (Indonesian Committee on 
Safeguard) and KADI (Indonesian Committee on AD) c an take enforcement actions to give temporary 
protection to domestic industry. KPPI and KADI are the institutions which are responsible on 
enforcing Indonesia trade remedy laws (Decree No. 84 of the President of the Republic of Indonesia 
in 2002 regarding safeguard for domestic industry caused by the surge of import and Government 
Regulation No. 34 in 1996 regarding Antidumping  and Countervailing Duties). These institutions are 
also responsible on enforcing WTO agreements (Anti Dumping Agreemen t, Agreement on Subsidy 
and Countervailing Duties, and Safeguard Agreement) to prevent unfairly traded imports and to 
safeguard the competitive strength of Indonesia in dustry.  Since 2002 until 2006, Indonesia has 
imposed 15 antidumping measures out of 29 of antidumping initiations. While at the same period, 
Indonesia only imposed one safeguard measure out of  3 safeguard initiations. Both of those unfair 
imports and market disruption by significant increase quantities of imports may be a subject of trade 
remedy measures after investiga tions have been conducted in compliance of the WTO Rules.   WT/TPR/M/184/Add.1 
Page 176  
 
 9. Indonesia and Doha Development Age nda (DDA), Regional and Bilaterals,  
 (Questions posed by Pakistan, China, Swiss)  Reply
: 
 
Multilateral – WTO Doha Development Agenda  Indonesia has been an active participant in the WT O Doha Work Programme, in its own right and as 
a member of the G20 and the G33.  The G-33 st ressed that success in the negotiations would be 
measured by the contribution made to developmen t.  Focussing mainly on agriculture the G33 
Meeting stressed the potential of the negotiation  to benefit the world’s small and vulnerable, 
resource-poor farmers. For Indonesia, the nego tiations on agriculture and non-agricultural market 
access are critical.  In agri culture, there is a need to concretise the solution to the problems faced by 
poor farmer in the developing countries through th e Special Products (SPs) and Special Safeguard 
Mechanism (SSM) modalities.  
 
In services, Indonesia emphasizes that agreement on this issue should not erode developing countries’ flexibilities that were so carefully negotiated in the Uruguay Round. Negotiation in services must 
allow developing countries to liberalize sectors at the pace that correlate with their levels of 
development. In this context, sequencing and on goi ng requisite changes in do mestic institutions and 
regulations are important in the services liberalization process.   
 The protection of intellectual property rights is cr ucial for an environment that is conducive to 
innovation.  However, it is important that this be seen in the context of th e greater need to protect 
welfare, as in the case of access to affordable drugs and technologies, as well as providing some 
protection to traditional knowledge.  The differen t needs and capacities of developing countries have 
been recognised in the GATT and WTO since 1955 as th e basis for special and differential treatment. 
Addressing these development needs and capacities was rightly central to the Doha Ministerial 
Declaration, and Indonesia looks forward to full im plementation of the promises of Doha in the post-
Doha Work Programme of the WTO. Indonesia would wish to see Special & Differential Treatment 
being more precise, effective and operational.  Equally  important are the various issues related to 
implementation of the results of the Uruguay Ro und, where deadlines have repeatedly been missed 
and problems have only partially been resolved.  Trade Facilitation, Indonesia supports the 
negotiations to facilitate trade. In this respect, it w ould be useful to have further clarification of GATT 
Articles V (Freedom of Transit), VII (Valuation for Customs Purposes), and X (Publication and 
Administration of Trade Regulations).  Indonesia c onsiders that a successful ou tcome may need to be 
supported with the provision of technical a ssistance and capacity building for the developing 
countries.Trade and Environment, Indonesia su pports the negotiation to enhance mutual 
supportiveness between trade and environment.  Indonesi a is of the view that trade liberalization 
needs to be positive for trade, environment, and development. Indonesia has made 58 (fifty-eight) 
notifications in various areas, and has outstanding obligations to submit 36 notifications.  However, 
because of the complexity of notification requi rements, a lack of human capacity and the periodical 
staffing changes (tour-of-duty) of responsible offic ials, fulfilment of the notification obligation has not 
been progressing well yet. In order to resolve this pr oblem, Indonesia is trying to enhance the staff 
capacity and to improve coordinati on between domestic agencies in order to complete its outstanding 
notifications.  
Regional   
ASEAN Economic Integration, twelve priority integration sectors were identified for accelerated 
economic integration (Agro based, wood based, Textile and Apparel, Automotive, Electronic, 
Healthcare, e-ASEAN, Tourism, Rubber based, Air Travel, Fisheries and Logistic Services).  Steps 
towards policy integration include in the ‘horizon tal’ areas (e.g., customs, including the ASEAN  WT/TPR/M/184/Add.1 
 Page 177 
 
 
  Single Window); standards; rules of origin; non-tari ff measures; and the liberalization of trade in 
services. Indonesia is country coordinator for th e wood based and automotive sectors. At the 
12t ASEAN Summit, the Leaders affirmed their strong commitment to accelerate the establishment of 
an ASEAN Community by 2015 as envisioned in th e ASEAN Vision 2020 and the ASEAN Concord II 
and signed the Cebu Declaration on the Establishmen t of ASEAN Community by 2015.  In particular, 
the Leaders agreed to hasten the establishment of  the ASEAN Economic Community by 2015 and to 
transform ASEAN into a region with free movemen t of goods, services, investment, skilled labour, and 
freer flow of capital. Several Memb er Countries took on the coordinator  role for each sector.  Each 
priority integration sector has a roadmap, whic h combines specific initiatives of the sector and the 
broad initiatives that cut across all sectors such as tr ade facilitation measures. Integration of Services 
Liberalisation towards 2015.  
 ASEAN is seeking to establish RTAs with partners such as China, Japan, Korea and CER members 
(Australia and New Zealand), and India. At the ASEAN Summit in 2002, ASEAN members and China signed a framework agreement to be gin negotiations in 2003 to create the world’s largest FTA with a 
combined market of 1.7 billion people. Subsequently, The ASEAN and Chinese Economic Ministers 
signed the Trade in Goods Agreement and Disput e Settlement Mechanism Agreement under ASEAN-
China FTA (ACFTA) on November 2004, which then  launched the goods implementation through 
Early Harvest Programme on July 2004 which consis ts of agricultural produc ts. The gradual tariff 
elimination for products in Normal Track starte d in 2005 and end on year 2015. Finally, just recently 
on January 2007, the ASEAN Economic Ministers a nd The Chinese Foreign Affairs Minister signed 
the Services Agreement. At the first  package of services agreement.  
 The Framework agreement between ASEAN  and Korea was signed by the Leaders on 
December 2006. At the same time, The ASEAN and Korea Economic Ministers signed the Dispute 
Settlement Mechanism Agreement of ASEAN-Korea  FTA (AKFTA), and afterward, on August 2007, 
the Trade in Goods Agreement was also signed by  the Ministers. Negotiations for AKFTA services 
and investment are still on going and expected to be fi nalized within this year. The implementation of 
goods agreement is expected to start on June 2007 upon completion of dom estic ratification from 
each party. The FTA negotiations with CER (A ustralia and New Zealand), Japan and India are 
targeted to conclude at the end of 2007, and implemented on early 2008. . Furthermore, it is also expected that ASEAN and the EU will launch the ASEAN-EU FTA negotiations.  
 
Other than FTAs negotiations, ASEAN also involved in cooperation under Trade and Investment Framework Arrangement (TIFA) with United Stat es, Trade and Investment Framework (TIF) with 
Australia, and in the process of establishi ng ASEAN-Canada Trade and Investment Cooperation 
Arrangement (TICA). Indonesia plays an important  role as the country coordinator for ASEAN 
countries in dealing with ASEAN consultations with United States and Canada. 
 Regarding Asian Pacific Economic Cooperation (APEC ), Indonesia is committed to implementing 
APEC’s voluntary target of open and free trade , as well as services and investment for developing 
country members by 2020, as set out in the Bogor Declaration of 1994. APEC economies are to 
achieve their targets on a voluntary and non-binding basis ("concerted unilateral liberalization"). In 
order to develop a high-quality RTAs /FTAs, Indonesia contributed in  designing Model Measures of 
the minimum requirement for RTAs/FTAs on non-bind ing basis. Based on the Individual Action Plan 
(IAP) peer review process of 2005, it was consider ed that Indonesia was already over half way to 
achieving the Bogor Goals. Indonesia indicated in th e IAP 2005 that, inter alia, tariff rates would be 
reduced, while import and export restricti ons would be further eliminated. 
 
As a member of Asian-Europe Meeting (ASE M), Indonesia will take part in implementing the 
Leaders’ vision of deepening the partnership to fa ce future challenges, broadening the perspective 
through marking out focussed areas for action, and reinforcing the institutional mechanism by forging a stronger partnership as outlin ed in the Helsinki Declaration. WT/TPR/M/184/Add.1 
Page 178  
 
 In line with its policy of establishing closer economic  relations with countries in the Asian region, 
Indonesia has been negotiating with Japan since mid 2005 to establish a bilateral Economic Partnership Agreement that covers  goods, rules of origin, customs procedures, investment, services, 
movement of persons, competition policy, en ergy and mineral resources and cooperation. These 
negotiations are in the final stage and it is expected to  be completed in 2007.  Indonesia is also in the 
process of negotiating Preferential Trade Agreement w ith Pakistan, and exploring the possibility to 
negotiate PTA/FTA with India and Iran.   10. Export Restrictions (Prohibitions and Taxes)  (Question posed by Turkey) 
 
Reply
: 
 Export licensing, prohibitions and restrictions were  maintained to ensure protection of natural 
resources and endangered species, promote higher valu e added down stream industries, up grade the 
quality of export products; and prov ide an adequate supply of essential products. Before 2005, export 
approval requirements had to be met for certain produc ts such as live bovine animals, live fish, lead 
and bauxite ores/concentrate, urea fertilizer, unpr otected wild animals and plants, unprocessed 
silver/gold, waste/scrap of metals. Indonesia also conducted licensing for coffee, textiles and clothing, 
rubber, veneer and plywood,  or similar laminat ed wood, teakwood, and mixed rattan and semi 
prepared rattan. In terms number of prohibited, restricted and licensed items, those consists only a 
very small percentage of the total number of items  according to HS classification. The remaining 
items are free to export without permit or license.  Export taxes remains one of the implemented instru ments to control export of certain products for 
determined purpose like securing domestic supply or increasing domestic value added in the down 
stream industries. 
 11. Intellectual Property Rights.  (Question posed by China, Brazil, Dominican Republic and Turkey)  Reply
: 
 
Since the ratification of the Agreement Establishing  the World Trade Organization in the year of 1994 
through Law Number 7, the serious commitment and progress of the Indonesian Government towards 
the provision and development of a proper intellectual property (IP) system has been noticed.  
Among the many achievements in the last few years, the following are milestones in the history of the 
IP system in Indonesia:  
 a. In the field of legislation and law enforcement 
 Various laws and legislations in the field of IP have been set up, which among others include the 
setting up of the National Task Force to prevent IPR vi olation.  This then has been followed up by a 
significant number of activities on combating IP piracies and counterfeiting that were successfully 
conducted.  This certainly shows the strong commitment of all enforcement agencies in Indonesia to effectively 
enforce the IP system in the country. 
 Meanwhile, further major improvemen ts so as to provide an IP system which fulfill the need of the 
Indonesian society are still continuing to be t horoughly assessed and undertaken.  These include:  WT/TPR/M/184/Add.1 
 Page 179 
 
 
  - the finalization of various Government Regula tions to support the implementation of the 
existing IPR laws, 
- the ratification of TRIPs’ revision relating to public health, 
- the assessment to ratify the ne w (Singapore) Trademark Law Treaty, the Madrid Protocol, the 
newest Hague Agreement, as well as 
- the possibility to set up a sui generis system on IP protection regarding the utilization of 
traditional knowledge, expression of folklore, and genetic resources. 
 Such a sui generis system is expected to cover th e protection regarding the following delicate issues 
namely: misappropriation, disclosure requirement, a ccess to genetic resources, as well as a fair and 
equal benefit sharing. 
 b. In the field of Institutional Development: 
 The following progress have been und ertaken so as to ensure the proper and effective IP system: 
 
• The development of an integrated autom ation (information technology) system;  
• The streamlining administrative procedures;  
• The empowerment of the Provincial Offices of the Ministry of Law and Human Rights to 
receive IP applications.  
 c. In the field of Cooperation, Capacity Building, and Public Awareness: 
 
- For the last 4 years, various cooperation on the field of IP has been intensified, both 
nationally as well as internationally. 
- Further, series of education programs and p ublic awareness campaigns on IP have been 
conducted regularly in many big cities in almost all provinces. 
- The public education program covers quite a br oad subjects, ranging fr om: an introduction 
on IP in general such as the use of IP to  support SMEs and how can we maximize creativities 
and creations, to a more specific and complicated ma tters such as IP protection in the digital 
era and the important role of law enforcers in IP enforcement; and involve in various 
participants including: SMEs; industries; associ ations; univer-sities; law enforcers: polices, 
prosecutors, judges, lawyers, and practioners. 
 
In the last 2 years, some of the education prog rams and public awareness campaigns have not been 
initiated by the DGIPR, but funded and organized by various IP stakeholders (private and 
government institutes).  This shows the fast grow ing of awareness and needs from the public towards 
IP. Almost each university has set up IP centre/clinic  that assist the university in managing its IP. To 
suit with the needs, each of law enforcement agencies (the police, prosecutor, judge, and custom) is 
developing IP training programs. As understood, so me of the public education programs on IP 
formed as the implementation of cooperation with various foreign institutions. Those institutions are: 
World Intellectual Property Organization (WIPO) , European Community - ASEAN Cooperation on 
Intellectual Property (ECAP), Japan Internati onal Cooperation Agency (JICA), ASEAN Working 
Group on IP (ASEAN-WGIP), IP Expert Group of APEC (IPEG-APEC), IP-Australia, US Patent and 
Trademark Office (USPTO), etc. 
 
Regarding the implementation of Doha Declarati on on TRIPS and Public Health paragraph 6. 
Indonesia considers the importance of its paragraph 6 that WTO members have already agreed in the 
Hongkong Ministerial Conference, in 2005. We are of the view that the decision on this specific 
subject is a reflection of the willingness of WTO memb ers to have a final solution in the matter.  As a 
follow up of the said Hongkong agreement Indonesia is now in the stage to finalize the process of the 
acceptance which hopefully can be done before the target date. Indonesia is of the opinion that WT/TPR/M/184/Add.1 
Page 180  
 
 member countries could pledge their commitmen t to signing its protocol before hands to make 
everything in order. With regard to access and bene fit-sharing on patents of pharmaceutical products 
and processes based on the use of viral material, we are of the view on the importance of the access 
and benefit-sharing of the use of viral material based  on transparent, fair and equitable international 
mechanisms, including benefits arising from the co mmercial and other utilization of viral material 
with the originating countries on mutually agreed terms.  
 12. Macroeconomic Policy and Sustainable Development  (Questions posed by Nigeria and Columbia)  
Reply
 
 Taking advantage on the momentum of high economic gr owth averagely 6% in the last three quarters, 
Government together with Parliament projected ec onomic growth of 6.3% in 2007 and 6.8% in 2008. 
The level of open unemployment currently reached 10.4% or 11.1 Million in 2006, already decline to 
9.7% or 10.5 Million in 2007. The Government target  for unemployment declines further to 8-9% in 
2008. The acceleration of economic growth and une mployment reduction at the end will reduce the 
level of poverty from 17.75% in 2006 to 15-16.8% in 2008.  
 The new package (Presidential In struction No.6/2007 dated 12
th June 2007), covers: 
 
1. Investment climate improvement 
 The policy is directed to improve investment policy on three aspects which are: strengthening 
institutional capability and synchronizing regula tion between central and region; to ease flow 
of goods and custom procedures; and taxation 
2. Financial Sector reformation 
 This covers five policies group, which are St ability in Finance System; Banking Finance 
Institution; Non-Banking Finance Institution,  Capital Market; and others Finance Sector 
such as development expenditure and STE performance  
3. Acceleration of infrastructure development 
 This will direct infrastructure policy  on roun ding off the rules of legislation; strengthening 
the institution; and improving the mana gement on infrastructure development. 
4. Empowerment of SME’s 
 This ia as a respond on rounding off the rules of  legislation; strengthening the institution; and 
improving the management on infrastructure development. 
 Government will take certain measures to SME’s through: 
 
1. Improving Market Access through Financial Source; 
2. Developing Entrepreneurship and Human Resource; 
3. Improving Market Access Opportunity of SME’s Products; 
4. Reforming the Regulation. 
 
The first three is the continuity while the empower ment of SME’s is the extension of the several 
programs from the Investment Climate Policy Package improvement of 2006. 
 Based on the experience, currently Indonesia emphas ize on the importance of implementation and 
effectiveness of the supervision and monitoring of the policy inside the President Instruction. 
Therefore, President of Indonesia assigned Minist er of Coordinating Economic Affair to supervise the 
implementation of the instruction to be more ef fective. For that purpose, Minister formed a 
supervision team which include external team and go vernment team to evaluate, dialog and survey of 
the implementation progress.   WT/TPR/M/184/Add.1 
 Page 181 
 
 
  The Government also has strong co mmitment to financial sector reform s in order to build a stronger 
financial system. Banking sector performance has im proved as reflected in higher CAR, LDR, 
profitability and credits growth and lower NPLs. Ban ks well capitalized with CAR at around 21% as 
of April 2007 far above the required level of 8%, LDR improved to 65,8%, while non-performing 
loans (NPL) was easing to 6.7% (gross), while credit expansion reached 16.6%.  
 
On the fiscal front, the Government remains committ ed to pursue prudent fiscal policy by continuing 
to feature reduced deficits aimed at lowering th e central government foreign debt burden. There has 
been remarkable progress on debt reduction as re flected in the report by the secretariat.  
 
Some important measures to enhance fiscal consolida tion includes: continued tax and custom reforms 
to increase revenue, streamlined exp enditures and preparations for me dium term budget and treasury 
reforms including performance and mul ti years budget, treasury single account.  
 Prudent monetary and fiscal policies are imperative to improve business confidence in Indonesia so 
as to speed-up the current economic recovery and to lay the stronger ground for sustainable 
development in the future with the expansion on employ ment as the top priority. In this regard, the 
Government continues its unwavering efforts to strengthen financial sector and improve investment 
climate that would lead to significant employ ment creation. While policy package on financial 
reforms and on improvement of investment climat e have been introduced and implemented, the 
Government has proposed SME reforms to accelera te economic activity as these SMEs play a multi-
dimensional role including incu bating the entrepreneurs that are the source of future growth and 
employment. Policy program and action plan to empow er the small and medium enterprise has been 
prepared aiming at reducing unemployment and po verty. On the financing side, Indonesia has had a 
long experience and widely known micro finance and rural credit activities. Hence, Bank Indonesia 
further supports the micro enterprises to get better ac cess to finance their activities, such as providing 
the information regarding the prospective micro enterprise to the banking industries and providing 
special prudential regulations for micro financing.    13. Structural Reform Including Labor Market Reform  (Question posed by Nigeria, Taiwan and the EU)   
Reply
: 
 The Government has set expansion on employment as its top priority by way of accelerating economic 
growth. Policy package to accelerate the developmen t of real sector has been introduced. In this 
regards, the Government continues its unwavering e fforts to strengthen financial sector and improve 
conducive climate for investments that would lead to significant employment creation. While policy 
package on financial reforms and on improvement of  investment climate have been introduced and 
implemented, the Government has proposed SME reforms to accelerate economic activity as these 
SMEs play a multi-dimensional role including in cubating the entrepreneurs that are the source of 
future growth and employment. Policy program and  action plan to empower the small and medium 
enterprise has been prepared aiming at reducing unemployment and poverty.  
 
In relation to the empowerment of small and me dium enterprises (SMEs) and Cooperatives, related 
measures have been directed to create  employment as the following:  
 
- Enhancing institutional capacity and access for SMEs and cooperatives to financial resources 
and other productive resources, for instance by providing alternatives financing schemes for these kind of enterprises; 
- Enhancing the capacity, capability and business efficiency of SMEs and cooperatives by 
developing consultancy services for small and medi um industries and facilitate them to start 
the business; WT/TPR/M/184/Add.1 
Page 182  
 
 - Protection and supports for the devel opment of micro financial institutions; 
- Strengthening micro financial institutions; 
- Strengthening of partnership between big enterprises and SME and cooperatives; 
- Providing sufficient support on infrastruc tures including for tho se in rural area. 
 
Particular attention has also been placed on e nhancing labor productivity. Measures related to this 
issue among others: 
 
- Developing and introducing appropria te technology for local labor; 
- Revitalization of labor training centre; 
- Providing  consultancy  services for farmers and fisherman; 
- Enhancing labor competency through the stre ngthening of education and training for 
labor and developing competency standard for workers. 
 
14. Energy 
 (Questions posed by Japan, China and Equador)  Reply
: 
 
Petroleum and Gas 
 Under the 2001 deregulation and reform, regulatory authority was transferred to DG of Oil and Gas 
in Ministry of Energy and Mineral Resources and to  two new regulatory agencies for upstream and 
downstream activities. Oil and Gas exploration tradi tionally took place through Production Sharing 
Contract with Pertamina. These are now with  the government through BP Migas, the upstream 
industry regulator, while BPH Migas supervise dow nstream regulation. Pertamina’s downstream 
monopoly (since 1971) was lifted in 2005. The govern ment is aiming to boost investment in 
production and the major regulatory changes introdu ced since 2001 are an important step in this 
regard. Private companies are now allowed to open  retail outlet for fuel. Distributing fuel and 
refining, storage and transport have been liberalized. 
 
Gas general policies are to create a conducive investment climate to maintain the sustainability of gas 
supply and development of its infrastructures. Na tural gas development and utilization should be 
based on economic principles. To expand natural gas  infrastructure development step by step and 
scheduled, according to natural gas distribution and pipeline transmission development master plan, 
which is relied on natural gas res ource and natural gas utilization ma ster plan in consumer sector. In 
order to guarantee natural gas supply, access enhan cement would be needed to obtain natural gas 
from outside of the country. Biofuel. In order to fulfill the Presidential Re gulation No. 5 of 2006 
concerning to the National Energy Policy stated that by the year of 2025, the use of alternative energy 
(renewable energy) is approximately 17% of nati onal energy consumption, Government of Indonesia 
create biofuel development program. This program is  aimed to reduce the subsidy of BBM, reduce 
import of crude and BBM, also to be exported if there is an excess of domestic consumption. There 
are three track strategy in Biofuel development: (i) pro growth which is  generating and enhancing 
economic growth (ii) pro job in which this program can create job opportunity (iii) pro poor which 
can enhance welfare and poverty reduction.  
15. Mining. 
 (Question posed by Japan)  Reply
: 
 The bill of Mineral and Coal is still in the final pr ocess of discussion with the parliament. This bill 
accommodates the new changing situation of new era such as globalization, democratization, human  WT/TPR/M/184/Add.1 
 Page 183 
 
 
  right and environmental protection. Government  of Indonesia hopes that it can increase the 
investment in developing mineral and coal sector in Indonesia.  There are many substances contained in this mineral and coal bill such as: 
 
- the clarification of authority between central  government, provincial government and   
district or Kabupaten/Kota; 
- there are only two types of license in mining activity which are exploration license and 
operational license;  
- there is not contract between mining company and the government anymore, according to this 
bill, if there is a contract, the contract shoul d be between mining company and state owned 
company; and 
- value added of minerals and coal.  
 value added minerals and coal through export limitation for mining raw materials. Mining 
materials must be processed in Indonesia, both for companies that has appeal for mining 
license, or other parties that has established/obtai n mineral refinery or for those that just/will 
establish mineral refinery. 
 
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