INDONESIA – LOCAL CONTENT REQUIREMENTS FOR 4G LTE
equipment and mobile
DEVICES
Replies to Questions from the united states[1]
The following communication,
dated 15 April 2015, is being circulated at the request of the Delegation of Indonesia.
_______________
We refer to the United
States' questions contained in document G/TRIMS/W/148
dated 26 March 2015, Indonesia
hereby wishes to provide the following clarifications:
Question 1
Is our
understanding above of the two regulations correct? Are there aspects of the
regulations we have misunderstood and/or omitted?
Reply
We thank the delegation of the United States of America for its interest and
attention on our plan to move up the value-chain of manufactured products by
requiring companies investing in Indonesia to develop domestic
manufacturing. This plan is intended to strengthen Indonesia's role and further
integrate itself into the global value chains. This plan will only apply for 4G/LTE sector, equally and
non-discriminatorily between domestic and foreign investors.
In undertaking this plan, Indonesia, as a law abiding member of the WTO,
will ensure that due process will be upheld in line with all the WTO provisions
and Indonesia's
commitments, particularly the principles of transparency, inclusiveness, and
non-discrimination. This includes a series of consultations with all
stakeholders, such as telecommunications' operators, investors, and
associations.
Question 2
How is
credit towards local content calculated for a foreign company when it manufactures
a 4G enabled device in Indonesia using
Indonesian equipment or inputs? How is credit towards local content calculated
for a foreign company when it manufactures a 4G enabled device in Indonesia using foreign equipment
or inputs?
Reply
The
local content calculation is subject to Ministerial of Industrial Regulation
Number 69 Year 2014 on Conditions and Calculation Method of Local Content for
Electronics and Telematics Industry.
Question 3
What would
be the consequences for a foreign company if it were to sell 4G enabled equipment in Indonesia that
does not meet the local content threshold?
Reply
As mentioned in our response to the first question, the plan to move up
the value-chain of manufactured products in 4G/LTE sector is still being formulated in which the
substance has yet to be finalized.
Question
4
Would Indonesia
please describe the tax incentive that a foreign investor may receive if it
exceeds the minimum local content thresholds? Under what conditions can
manufacturers benefit from that incentive? Is the incentive the same for
Indonesian-owed manufacturers as it is for foreign-owned manufacturers?
Reply
Please
refer to our response in question number 3.
Question 5
When does Indonesia
anticipate that KOMINFO will finalize the regulations?
Reply
It could not be determined since it is still under discussion.
__________