WORLD TRADE  
ORGANIZATION  G/TRIMS/W/70 
9 October 2009 
 (09-4907) 
Committee on Trade-Related Investment Measures Original:   English 
  
 
COMMUNICATION FROM THE EUROPEAN COMMUNITIES 
AND THE UNITED STATES 
 
Certain Indonesian Laws and Draft Implementing 
 
Regulations on Mineral and Coal Mining  
  
 The following communication, dated 9 October 2009, is being circulated at the request of the 
Delegations of the European Communities and the United States.    
_______________ 
 
  The United States and the European Commun ities have concerns regarding Indonesia's 
existing law, and its draft implemen ting regulations, applicable to investment activities in Indonesia's 
mineral and coal mining sector.  In particular, we have questions related to the disciplines in the 
Agreement on Trade-Related Investment Measures (TRIMs Agreement) and the General Agreement 
on Tariffs and Trade (GATT) 1994.     The law in question is the Law of the Repub lic of Indonesia, Number 4 of 2009 on Mineral 
and Coal Mining ("Mining Law of 2009").  We understand that at least three drafts of the 
implementing regulations have been prepared and ci rculated to some stakeholders in recent months 
("Draft Regulations").     Several provisions of the Mining Law of 2009 and the Draft Regulations raise concerns:   
 
Status of Draft Regulations 
 
 As an initial matter, we would be interested  to learn the current status of the Draft 
Regulations.  We also would appreciate Indonesia's circulation of a translated copy of the draft currently under consideration.    Local Content 
 
As we understand it:   
 
Article 39(2)(t) of the Mining Law of 2009 stat es that "A Production Operation IUP […] must 
contain at least the following provisions:  […] use of domestic goods, service and technology […]";    
Article 79(t) of the Mining Law of 2009 states that "A Production Operation IUPK […] must 
contain at least the following provisions:  […] use of domestic goods, services and technology and 
engineering capability and building design […]";   
 G/TRIMS/W/70 
Page 2  
 
  Article 106 of the Mining Law of 2009 states that "[a]n IUP and an IUPK holder must 
prioritize the utilization of local manpower and domestic goods and services in accordance with the 
laws and regulations"
1;  and,   
 
The Draft Regulations reiterate this requirement with minimal elaboration. 
 
• What does the requirement to "prioritize" the utilization of local manpower and domestic 
goods and services mean for a foreign investor?   
 
o If it means that a foreign investor can use non-local human resources, goods, services 
and technologies only when local human resources, goods, services and technologies are not available, who makes such a determ ination regarding the availability of local 
goods and services and on what basis is this decision made?   
 
o If this is not the correct interpretation of  this requirement, under what circumstances 
may non-local human resources, goods and services be used?   
 
• How is such a requirement consistent with Ar ticle III of GATT 1994, Article 2 of the TRIMS 
and paragraph 1 of the Annex?   
 
Export Restrictions 
 
As we understand it:   
 
Article 102 of the Mining Law of 2009 states that "[a]n IUP and an IUPK holder must 
increase the added value of mineral and/or coal  resources in carrying out mining, processing and 
refining and utilization of the minerals and coal";   
 
Article 103.1 of the Mining Law of 2009 states that "[a] production operation IUP holder and 
a production operation IUPK holder must carry ou t processing and refining of the mining product 
inside the country";    
The Draft Regulations would prohibit permit holders from exporting the minerals prior to 
local processing and refining;  and,   
The Draft Regulations would requi re the permit holder to fulfill a ll domestic needs for the mineral 
or coal before it is permitted to export any of those products.
2 
 
• Is our understanding correct the Mining Law and Draft Regulations woul d prohibit persons or 
entities holding valid permits from exporting unprocessed or unrefined minerals?   
 
o If so, how is such a provision consistent w ith Article XI of GATT 1994, Article 2 of 
the TRIMS and paragraph 2(c) of the Annex? 
 
o If our understanding is not correct, under wh at circumstances may permit holders 
export minerals that have not unde rgone processing or refinement?   
 
                                                      
1 NOTE:  it is our understanding that "IUP" and "IUPK" refer to mining permits.   
2 This appears to implement Article 5(1) and (2) of the Mining Law of 2009.  Article 5(1) states that 
"[…] the Government […] may stipulate policies on the priority of the use of minerals and/or coal for domestic interests".  Article 5(2) states that "The nations intere sts referred to in paragraph (1) may be carried out by 
controlling production and exports".    G/TRIMS/W/70 
 Page 3 
 
 
  • Is our understanding correct that persons or entities holding valid permits are prohibited from 
exporting any minerals or coal until it is determ ined that domestic needs have been met?   
 
o If so, who determines that domestic needs ha ve been met?  On what basis is that 
determination made?  How is such a pr ovision consistent with Article XI of 
GATT 1994, Article 2 of the TRIMS and paragraph 2(c) of the Annex?   
 
o If our understanding is not correct, under what circumstances are investors holding 
valid permits permitted to export minerals or coal? 
 
  
__________