WORLD TRADE  
ORGANIZATION  G/TRIMS/W/63 
17 September 2009 
 (09-4381) 
Committee on Trade-Related Investment Measures Original:   English 
  
 
COMMUNICATION FROM INDONESIA 
 
Indonesia's responses to the European Comm unities and the United States' questions 
 
contained in document G/TRIMS/W/61  
 
 
 The following communication, dated 14 September 2009, is being circulated at the request of the Delegation of Indonesia.    
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  G/TRIMS/W/63 
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INDONESIA'S RESPONSES TO THE EUROPEAN COMMUNITIES AND THE UNITED STATES' QUESTIONS 
CONTAINED IN DOCUMENT G/TRIMS/W/61 
 
NO QUESTIONS FROM EC AND US INDONESIA'S RESPONSES 
1. With regard to Decree 38/PER/M.KOMINFO/9/2007, the 
application of local content is done through a self-assessment 
calculation in accordance with the "applicable provisions", 
Article 18 b (3). a. What are these applicable provisions?   
b. How are otherwise these local content requirements enforced? 
c. What will be the consequence for a company which fails to 
meet the local content requirement? 
d. Can Indonesia please explain how these local content 
requirements are consistent with Article II of the TRIMS and the annex? Decree No. 38/2007, as amended by the Decree No. 32/2008, is to 
provide guidance for development of telecommunication access in 
under-served/unserved areas which are considered as non profitable 
and not attractive by domestic and foreign companies.  Due to the above circumstances, the Governme nt initiates Universal Service 
Obligations (USO) programme to provide telecommunication service in those areas.  The Government selects operator(s) to execute the 
project(s) through bidding process.  Since the projects are funded by 
Government of Indonesia, this Decree does not fall within the scope of the TRIMs Agreement.  Moreover, Indonesia is not a party to the Government Procurement Agreement.   
2. a. With respect to the wireless broadband decree (Decree No.7 
Year 2009), please describe the manner in which the local content of the telecommunications equipment will be assessed. 
b. What will be the consequence for a company which fails to 
meet the local requirement? c. Have there been instances of enforcement actions taken under 
this provision? a. This Decree is not intended to regulate trade in goods.  Instead, 
this regulation is a legal instru ment in supporting the Government 
programme to utilize certain part of radio spectrum for implementing 
Broadband Wireless Access (BWA) system.  The Government selects 
the operator(s) through bidding pro cess and winner(s) of the bid shall 
fulfill certain requirements to use their capital expenditures (CAPEX) 
and their operational expenditures (OPEX) which is written in the 
regulation as local content.  The interpretation of "local content" will be elaborated in the draft of the Decree which is under formulation.  
In addition, this Decree is only ap plicable to company(ies) that won 
the bid.   b. A company that fails to meet the local requirement (CAPEX and 
OPEX) is liable to penalties under rele vant regulations.  However, the 
formula of evaluating non-compliance and calculating the penalties is 
to be elaborated in a draft Decree which is now under formulation.    
c. There is no example of enforcement of this regulation.  
   G/TRIMS/W/63
 Page 3NO QUESTIONS FROM EC AND US INDONESIA'S RESPONSES 
3. The wireless broadband decree (D ecree No.7 Year 2009) seems to 
contemplate that the local requirement will increase from 30/40 per cent to 50 per cent over the next five years. a. What is the schedule for this increase? 
b. Why does Indonesia consider this increase to be necessary? a. There is no specific timetable for complying with this 
requirement.  However, the local content (CAPEX and OPEX) must 
be increased from 30-40% to 50% in five years.   b. To allow operators to have a better time span in fulfilling their 
obligation to reach the 50% of th e local content (CAPEX and OPEX) 
requirement.   
4. Please explain the manner in which, in Indonesia's view, the local 
requirement of the wireless broadband decree (Decree No.7 Year 2009) is consistent with Ar ticle II of the TRIMS Agreement, 
and the annex (illustrative list).   The Government of Indonesia sel ects the operators that will 
implement the Broadband Wireless Access service which will be operated in the specific radio frequency band through a bidding process.  In that regard, the Decree 07/2009 provides provisions on requirement to use the CAPEX and OPEX (local content) of the 
operator.  The formula of calcula ting the CAPEX and OPEX will be 
regulated in the draft regulation which is now under formulation.  This Decree is not regulating the general public but only the winner of the bidding of the BWA.    
It is also not inconsistent with Article XI of GATT 1994 on General 
Elimination of Quantitative Restric tion because they do not regulate 
export and import restrictions or amount of export and import.   
 In view of the ANNEX of the TRIMs Agreement, this Decree does not regulate goods but CAPEX and OPEX.  This will be further 
explained in the draft telecommunication decree which is under 
formulation.    
5. a. What is the current status of the draft telecommunications 
decree? b. Is Indonesia of the view that this draft decree, as currently 
constituted, is consistent with Article II of the TRIMS Agreement 
and the annex (illustrative list) as well as Article III of the GATT? 
c. If so, what is the basis for this conclusion? 
d. If not, what steps are being taken to amend or withdraw this 
draft decree?   a. This draft is still being formulated. 
b. Yes.  Indonesia believes that Decree 07/2009 is not inconsistent 
with Article II of the TRIMs Agreement because it treats domestic and foreign providers operating in the Indonesian territory equally.  In 
view of the ANNEX of the TRIMs Agreement, this Decree does not 
regulate goods but CAPEX and OPEX.  This will be further explained 
in the draft telecommunication decree which is under formulation.   
  G/TRIMS/W/63 
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NO QUESTIONS FROM EC AND US INDONESIA'S RESPONSES 
6. Pursuant to article 5, paragraph 2 of the draft telecommunications 
decree, the government may employ a private survey institution to verify whether the local content requirement has been met.  Given the sensitive nature of the information being evaluated, how does 
Indonesia propose to ensure that such information is protected from 
public release?    The Indonesian Government respects the rights and obligations 
related to confidentiality of in formation and documents, and will 
therefore treat it in an appropriate manner.   
   
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