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.

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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, although 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 content requirements for telecommunications tools and devices. The United States poses the following questions with respect to the comprehensive review and the referenced measures.