  
  
G/TRIMS/Q/IDN/6  
13 March  2020 
(20-2018) Page: 1/2 
Committee on Trade -Related Investment Measures  Original:  English  
 
  
INDONESIA – COMPREHENSIVE REVIEW OF LOCALIZATION MEASURES  
QUESTIONS FROM THE UNITED STATES  
The following communication, dated 5 March 2020, is being circulated at the request of the 
Delegation of United States . 
 
_______________  
 
 
As we have noted in meetings of the WTO Committee on Trade -Related Investment Measures, we 
remain concerned about the expanding use of local content requirements, a lthough there are some 
positive signs. For example, as noted in meetings of the Committee, Indonesia has agreed to 
undertake a "comprehensive" review of its local content policies, although the status of that review 
is not clear. Further, in 2019 Indonesia  issued a new regulation on retail and franchising (Minister 
of Trade Regulation 71/2019) that may remove the requirement that franchisors and franchisees 
source at least 80 % of their equipment and inventory domestically. However, the actual language 
of that measure is ambiguous. There are also troubling instances of the ongoing use of local content 
requirements. In September  2019 Indonesia issued two measures (KOMINFO Regulations 9/2019 
and 10/2019) that appear to reinforce, and potentially expand, local c ontent requirements for 
telecommunications tools and devices. The United States poses the following questions with respect 
to the comprehensive review and the referenced measures.  
Question 1  
Comprehensive Review of Local Content Policies  
1. The United States and other Members have long been concerned about the expansive and 
expanding use of local content requirements by Indonesia across a broad range of sectors, 
including telecommunications, mobile technology, energy, agriculture, retail, and franchising.  In 
response to these concerns, Indonesia agreed to undertake a "comprehensive" review of its local 
content policies.  Can you please provide us with a report on the status of this review, including 
when you expect it to be concluded?  
Question 2 
Retailing and Fr anchising – Minister of Trade Regulation 71/2019  
1. Article 18 of Minister of Trade Regulation 71/2019 requires franchise operators to 
"prioritize the use of goods and/or services produced domestically, as long as they meet 
the goods and/or services quality standards in writing by the Franchisor."  
a. What is meant by "prioritize" the use of domestic goods and/or services?  
b. What is meant by "quality standards?" Are companies free to specify the quality 
standards they require inputs to meet?  
c. If not, who determines whether the quality standards can be met by local inputs?  G/TRIMS/Q/IDN/6  
- 2 - 
  d. Is there a process for retailing companies to seek an exemption from the 
requirement to prioritize local inputs?  
e. What are the legal consequences if Indonesia determines that a retailing c ompany 
has not sufficiently "prioritized" domestic content?  
2. Additionally, other measures that require 80 % of retail merchandise to be made up of 
domestic goods (such as MOT Regulation 47/2016) continue to remain in force.  
a. Given the changes to MOT Regulatio n 71/2019, does Indonesia intend to amend or 
revoke these measures?  
Question 3 
Telecommunications – KOMINFO Regulations 9/2019 and 10/2019  
1. Article 4 of KOMINFO Regulation 9/2019 states: "Wavelength division multiplexing 
telecommunications tools and/or devi ces, as referred to in Article 1, must meet local 
content levels, in accordance with statutory provisions." Article 1 states that "wavelength 
division multiplexing telecommunication tools and/or devices  … consist of: a. 
coarse -wavelength division multiplex ing telecommunication tools and/or devices; and b. 
dense -wavelength division multiplexing telecommunication tools and/or devices."  
a. What are the local content levels to which Article 4 refers?  
b. Please provide further details about the products that fall with in the scope of these 
provisions, including HTS numbers?  
2. Article 4 of KOMINFO Regulation 10/2019 states: "Each internet protocol network 
telecommunications tool and/or device as referred to in Article 1 paragraph (2), must 
meet local content levels, in acc ordance with statutory provisions." Article 1 
paragraph  (2) states that "Internet protocol network telecommunication tools and/or 
devices  … are telecommunication tools and/or devices whose main function is to operate 
on layer 3 or up to layer 7."  
a. What are the local content levels to which Article 4 refers?  
b. Please provide further details about the products that fall within the scope of these 
provisions, including HTS numbers?  
__________  