WT/TPR/M/278/Add.1 2 August 2013 (13-4152) Page: 1/265 Trade Policy Review Body 10 and 12 ...

265 Pages·2013·1.1 MB·English

WT/TPR/M/278/Add.1

2 August 2013
(13-4152) Page: 1/265
Trade Policy Review Body Original: English/Spanish
10 and 12 April 2013 anglais/espagnol
ingles/español

TRADE POLICY REVIEW
INDONESIA
RECORD OF THE MEETING
Addendum
Chairperson: H.E. Mr. Joakim Reiter (Sweden)

This document contains the advance written questions, and replies provided by Indonesia.1

Organe d'examen des politiques commerciales
10 et 12 avril 2013
EXAMEN DES POLITIQUES COMMERCIALES
INDONÉSIE
COMPTE RENDU DE LA RÉUNION
Addendum
Président: S.E. M. Joakim Reiter (Suède)

Le présent document contient les questions écrites communiquées à l'avance et les
réponses fournies par l'Indonésie.1

Órgano de Examen de las Políticas Comerciales
10 y 12 de abril de 2013
EXAMEN DE LAS POLÍTICAS COMERCIALES
INDONESIA
ACTA DE LA REUNIÓN
Addendum
Presidente: Excmo. Sr. Joakim Reiter (Suecia)

En el presente documento figuran las preguntas presentadas anticipadamente por escrito,
junto con las respuestas facilitadas por la Indonesia.1

1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.
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ASEAN
Report by Indonesia
pp. 3-5, Paragraph(s) 2.1 – 2.8
ASEAN notes Indonesia's efforts in overcoming the financial crisis where the economic trends up to
2011 showed a peak of 6.5% in growth. In doing so, Indonesia has also developed policies such as
the Masterplan for Acceleration and Expansion of Indonesia Economic Development (MP3EI) and
introduced Investment incentives. Specifically, Indonesia mentioned MP3EI will include 8 main
programmes consisting of 22 main economic activities.

Can Indonesia provide more clarification/elaborate on the indicative programs and activities
mentioned in the MP3EI?

Response:

To support the acceleration and expansion of economic development in Indonesia, the
Government has set a number of major programs in collaboration with key stakeholders
including government ministries and the private sector in development of MP3EI.
Base on stakeholders' agreement the focus of development was classified into 8 main
programs, i.e.: (1) agriculture; (2) mining; (3) energy; (4) industrial; (5) marine;
(6) tourism; (7) telecommunication; and (8) the development of strategic areas. The
eight main programs consist of 22 main economic activities, i.e.: (1) Shipping;
(2) Textiles; (3) Food – beverages; (4) Steel; (5) defence equipment; (6) palm oil;
(7) Rubber; (8) Cocoa; (9) Animal Husbandary; (10) Timber; (11) Oil & Gas; (12) Coal;
(13) Nickel; (14) Copper; (15) Bauxite; (16) Fishery (17) Tourism; (18) Food
Agriculture; (19) Jabodetabek (Jakarta, Bogor, Depok, Tangerang, Bekasi) Areas;
(20) Sunda Straits Strategis Area; (21) Transportation Equipment; (22) ICT.
These 22 main economic activities are designated based on the inherent potential and
strategic value of each of them. There are 6 economic corridors which are identified as
growth centers and are expected to boost economic development throughout the nation.
They are: (1) Sumatra Economic Corridor as a center for production and processing of
natural resources and the nation's energy reserves; (2) java Economic Corridor as a
driver for national industry and service provision; (3) Energy Reserves; (4) Sulawesi
Economic Corridor as a center for production and processing of national agricultural,
plantation, fishery, and oil and gas; (5) Bali – Nusa Tenggara Economi Corridor as a
gateway for tourism and national food support; and (6) Papua – Kepulauan Maluku
Economic Corridor as a center for the development of food, fishery, energy, and national
mining.
To support the development of the main programs in every corridor, the implementation
strategy will be directed to the strengthening of national connectivity, both locally and
internationally; and the strengthening of human resource capacity and national science
and technology.
Below is a mapping of the main economic activities of each corridor:
Mapping of Main Economic Activities For Each Corridors
Main-Economic Sumatra Java Kalimantan Sulawesi Bali-Nusa Papua-Kep.
Activities Tenggara Maluku
Shipping √ √
Textile √
Food-Beverages √
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Main-Economic Sumatra Java Kalimantan Sulawesi Bali-Nusa Papua-Kep.
Activities Tenggara Maluku
Steel √ √
Defence Equipment √
Palm Oil √ √
Rubber √
Cocoa √
Animal Husbandary √
Timber √
Oil & gas √ √ √
Coal √ √
Nickel √ √
Copper √
Bauxite √
Fishery √ √ √
Tourism √
Food Agriculture √ √
Jabodetabek √
(Jakarta, Bogor,
Depok, Tangerang,
bekasi) Area
Sunda Straits √
Strategic Area
Transportation √
Equipement
ICT √

AUSTRALIA
SUMMARY
Page 10, paragraphs 23-24
The Secretariat Report notes that recent economic growth has been driven by services, even
though trade in services as a percentage of GDP has declined. Does Indonesia's Masterplan for
Acceleration and Expansion of Economic Development (MP3EI) contain any policies designed to
increase development of the services sector in Indonesia?
Response:
Basically, MP3EI contains policies designed to increase development of the services
sector in Indonesia. Implementation of MP3EI programs will be able to encourage
growth in the services sector, as well as to improve Indonesia's competitiveness, and
increase the nation's economic growth, in order to achieve the vision of Indonesia as a
developed country in 2025. These efforts will be conducted by:
 Improving regional economic potential through the development of six economic
corridors: (1) Sumatra Economic Corridor as Center for Production and Processing
of Natural Resources and As Nation's Energy Reserves; (2) Java Economic Corridor
as a Driver for National Industry and Service Provision; (3) Kalimantan Economic
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Corridor as a Center for Production and Processing of National Mining and Energy
Reserves; (4) Sulawesi Economic Corridor as a Center for Production and Processing
of National Agricultural, Plantation, Fishery, and Oil & Gas; (5) Bali – Nusa Tenggara
Economic Corridor as a Gateway for Tourism and National Food Support and
(6) Papua – Kepulauan Maluku Economic Corridor as a Center for Development of
Food, Fisheries, Energy, and National Mining.
 Strengthening National Connectivity, through: National Logistic System; National
Transportation System; Regional Development; and ICT.
 Strengthening Human Resources and National Science and Technology Capabilities.

Page 9, paragraph 18
We seek advice from Indonesia about when it intends to submit its next agricultural safeguards
notification?
Response:
Indonesia has submitted the notification concerning use of the Agricultural Safeguard
(Table MA:5) i.e.:
 G/AG/N/IDN/28 dated 17 July 2009 (2001-2008)
 G/AG/N/IDN/33 dated 15 February 2013 (2009-2011)

3 TRADE POLICIES AND PRACTICES BY MEASURE
3.1 MEASURES DIRECTLY AFFECTING IMPORTS
3.1.2 Customs valuation and rules of origin
Page 34, Paragraph 3.13
Indonesia has indicated it uses the transaction value as the basis for customs valuation. We would
greatly appreciate information on the percentage of valuation cases considered by Indonesian
Customs that use the transaction value method, i.e. what percentage of the total number of
valuation cases considered by Indonesian Customs, per year, use the transaction value method?
Response:
Based on the data from the last 3 years (2010-2012), the average percentage of Import
Declaration which the transaction value was accepted is 93% of all declarations. Toward
the rejection of the customs value, the percentage of companies which lodge objection
to DGCE is only 0.76% of total declaration, and after decision has been handed by DGCE,
the percentage of case submitted to the tax court is only 0,15% of total declarations.
Based on the above data, we may conclude that the Customs Value of 98.85% of total
Import Declaration is approved by both sides (DGCE and importer).
Page 34, Paragraph 3.13
Indonesia has indicated that the concerned authorities maintain a database of market prices that is
regularly updated. We would greatly appreciate if Indonesia could provide some information on the
purpose of the database, i.e. how and under what kind of circumstances does Indonesia use the
database?
Response:
The database is arranged based on the data from import customs value in which the
transaction value has been accepted. The database is not a list of market prices.
Indonesia customs is using customs value database as a basis reference whether a
transaction value provided by the importer is reasonable or not. It is also used as one of
the data resources for determining customs value based on method II (identical goods),
method III (similar goods), and method VI (fallback).
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Page 34, Paragraph 3.16
Indonesia has indicated that challenges to customs decisions, including valuation, classification
and penalty issues, must be forwarded to the Director General Customs and Excise (DGCE).
Importers may then appeal the DGCE decision to the Tax Court.
We would appreciate some clarification on these procedures:
 Is the initial appeal to the DGCE an administrative appeal?
 Is the appeal to the DGCE an appeal to a higher or independent authority?
 Is the subsequent appeal to the Tax Court a judicial appeal? If this is not the case, is there a
further step for judicial appeal in the Indonesian review and appeal process?
Response:
The objection procedure is stipulated in the Customs Law. The Objection being proposed
to the Director General of Customs and Excise is an administrative objection to the
higher structural level.
The appeal procedure on objection decision provided by Director General of Customs and
Excise is stipulated in Law on Tax Court. An appeal is lodged to the tax court and the
decision of the tax court may be reviewed by the Supreme Court in a Judicial Review
procedure.
3.1.4 Other charges affecting imports
3.1.4.2 Luxury Tax
Indonesia applies a "luxury sales tax" on some domestically manufactured and imported motor
vehicles as follows (selected categories of interest):
 Motor vehicles of 1,500 to 2,500 cc with a capacity of fewer than 10 passengers - Tax rate
20%
 Sedans or station wagons with a cylinder up to 1,500 cc - Tax rate 30%
 Motor vehicles other than sedans and station wagons with a cylinder up to 1,500 cc - Tax
rate 60%
 Sedans and station wagons with a capacity of more than 3,000 cc - Tax rate 75%
It is Australia's, as well as much of the international automotive industry's view, that engine
capacity should not be a key determinant of whether a vehicle is described as "luxury" or not.
Moreover, we note that engine capacity is not a key determinant of either the environmental or
fuel consumption aspects of a vehicle's operation. Australia's view is that a taxation regime based
on engine capacity would tend to deny access to Indonesian consumers to vehicles that often
contain state of the art engine efficiency, environmental performance and safety features.
Will Indonesia consider adjusting its "luxury sales tax" regime to reflect more holistic criteria of
what should be classed as a luxury vehicle?
Response:
The objection procedure is stipulated in the Customs Law. The Objection being proposed
to the Director General of Customs and Excise is an administrative objection to higher
organizational level.
The appeal procedure on objection decision provided by Director General of Customs and
Excise is stipulated in the Law on Tax Court. An appeal is lodged to the tax court and the
decision of tax court may be reviewed by the Supreme Court in a Judicial Review
process.
Based on the monitoring of the Indonesian automotive market price shows that there is
a positive correlation between the engine capacity (cc) and prices.
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A high price is indicative of a luxury goods, and could only be purchased by high-income
groups. Thus, until now we consider the engine capacity as still relevant in term of a
basis for determining the amount of luxury tax to be levied.
3.1.5 Import prohibitions, restrictions, and licensing
3.1.5.3 Import Licensing
Page 45, Paragraph 3.37
Can Indonesia please provide advice about its intention to submit an updated notification on its
import licensing covering the years 2008 onwards?
Response:
Yes, we will submit an updated notification shortly.
Page 45, Paragraph 3.39
Australia notes that the number of products subject to import licensing has increased significantly
over the review period, including new requirements on food and other agricultural products. Can
Indonesia provide advice on the policy basis for this significant increase? Does Indonesia consider
that these new arrangements have contributed to food price inflation within Indonesia? Are these
new arrangements consistent with Indonesia's food objectives given the role of imports in ensuring
that consumers can access a broader range of products at more competitive prices?
Response:
 The policy basis for such provision is based on consumer protection needs, and food
safety regulations.
 We believe that food price inflation is caused by several factors, and not just due to
such arrangements.
 Yes, we are of the view that this arrangement is consistent with our policy objectives

4 TRADE POLICIES BY SECTOR
4.4 AGRICULTURE, FISHERIES AND FORESTY
4.4.3 Trade policy instruments
Page 77, Paragraph graph 4.13
Australia is a significant exporter of food and agricultural products to Indonesia. In light of this,
can Indonesia please provide advice on the legal basis of its quantitative restrictions as identified
in the Secretariat Report, namely rice, sugar, salt and animals and animal products? Can
Indonesia confirm whether it has notified these quantitative restrictions? If not, when does
Indonesia intend to do so?
Response:
Indonesia does not apply quantitative restriction but rather regulates import by taking
into account the harvesting period in the country.
Page 77, Paragraph 4.16
Australia is seeking further information on measures applied to Indonesia's imports for agricultural
products that Australia has a long term history in supplying to Indonesia. This includes beef and
live cattle; the Secretariat report states that Indonesia lowered its import quotas for boxed beef
from 73,000 tonnes in 2010 to 32,000 tonnes in 2013. A similar policy was applied to cattle.
Australia understands this decrease in imports has been implemented to improve self-sufficiency.
Notwithstanding this, the import restrictions appear to have raised prices for consumers in
Indonesia. Media suggests that there is a large beef shortage domestically, with many feedlots
running under capacity. Can Indonesia please confirm this? How are the restrictions on imports of
beef consistent with Indonesia's stated objective of increasing beef consumption per capita?
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In addition, pricing signals from the domestic market indicate that the cost of meat is inflated due
to limited supply. Can Indonesia please confirm this?
What plans does Indonesia have to address the current restrictions on imports and improve the
efficiency of the domestic industry and distribution system?
On horticulture, the Secretariat Report notes that Indonesia has introduced an import quota
system on fresh and processed fruits and vegetables. Australia understands that this system
includes new Ministry of Trade (MoT) regulation 30/2012 and 60/2012, and the Ministry of
Agriculture (MoA) regulation 60/2012. Can Indonesia confirm that the primary purpose of these
measures is to effect seasonal import bans to a number of horticulture products?
Response:
Data on domestic production and consumption is used to estimate import requirements.
Imports are conducted to meet domestic demand as well as to keep the balance
between production and consumption.
National demand is determined based on SUSENAS (The National Socioeconomic
Survey). An increase in domestic demand will increase import.
Based on SUSENAS, the national production of beef is sufficient to meet national
demand. The high cost of beef in the domestic market is not due to insufficient supply.
The long distance between production sites and market place may contribute to the high
cost of beef.
There are no quantitative restrictions on imports.
The GOI is planning to improve the infrastructure supporting the agribusiness systems
(from production to marketing) such as transportation etc.
Indonesia does not have the intention to limit imports, however, time considerations
based on the time when the harvest of the horticultural products occur are aimed at
achieving and maintaining a balance between supply and demand
4.7 SERVICES
4.7.1 WTO and other agreements
Page 84, Paragraph 4.47
Section 4.2 on page 12 of Indonesia's Report outlines Indonesia's efforts to increase foreign
investment, including through the use of "clear regulation for domestic and foreign investment"
and the negative investment list. Table 2.3 starting on page 26 of the Secretariat's Report outlines
the current permissible foreign investment limits (2010), which are often significantly higher than
the foreign equity limits in Indonesia's GATS schedule (as outlined in paragraph 4.47 of the
Secretariat's Report). Where there is an existing investor in Indonesia who complies with the
current negative investment list, does the Indonesian Government retain the right to require that
investor to reduce their foreign equity to the limit listed in Indonesia's GATS schedule if, at any
time, Indonesia changes the negative investment list? Or would such a change to the list apply
only to investments made subsequent to the change?
Response:
Indonesia adopts the dual approach in its liberalization regime, i.e. autonomous
liberalization (by negative investment list or DNI for Daftar Negatif Investasi) which is
based on prevailing domestic regulations and Indonesia's international trade in services
commitment under both the GATS and various FTA's.
The first approach will be reviewed if necessary, taking into account the economic needs
and the development in particular sectors in DNI, whereas the second approach is
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binding, in the sense that there is a mechanism to modify commitments based on the
agreed procedures.
In that case, all sectors being covered in the new DNI will effectively come into force by
virtue of such new DNI. There will be so-called 'transition periods' for sectors being
affected by new regulation.
WT/TPR/G/278
2 ECONOMIC AND TRADE ENVIRONMENT
2.1 MAIN ECONOMIC AND POLICY ENVIRONMENT
Page 4, Paragraph 2.6
MP3EI calls for the establishment of industrial clusters throughout the archipelago linked by
improved transport and ICT services. Will all of these industrial clusters be in provincial capitals
with international air and/or seaports, allowing access by foreign-owned logistics service suppliers?
Response:
According to MP3EI, the development of the centre of economic activity is done by
expanding industry cluster and special economic zone (Kawasan Ekonomi Khusus/KEK)
as well as the enhancement of connectivity between economic centres and centres of
economic growth along with essential backbone infrastructure. The integration of centre
of economic activity and connectivity creates Indonesia's economic corridor.

The development of Indonesia's economic corridor aims to create and elevate the
competitiveness of Indonesia's economy, and directed at increasing productivity and the
value added of human resources through the sustainable extension and creation of
supply chain from up to downstream.

There are 6 economic corridors namely Sumatera, Kalimantan, Java, Bali-NusaTenggara,
Sulawesi, Papua-Maluku with the respective industry cluster centralized in capital of
each province, so that the sea and airport are accessible by foreign services suppliers.
(Jawaban Dit. Jasa)

BRAZIL
PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT
III. TRADE POLICIES AND PRACTICES BY MEASURE
Measures directly affecting imports
(8) Sanitary and Phytosanitary Measures
Page 53 (paragraph 3.70)
According to the report by the Secretariat, over the review period, Brazil raised specific trade
concerns on Indonesian import restrictions on i) poultry meat and on ii) beef and recognition of the
principle of regionalization.

Questions:

Brazil has been negotiating an International Sanitary Certificate for the export of poultry meat to
Indonesia. After many bilateral attempts to solve this issue, Brazil raised, in 2009 and 2011,
specific trade concerns on Indonesian import restrictions. Please explain the reason for these
restrictions, indicate whether they are consistent with Article 2 of the SPS Agreement and inform a
deadline for the conclusion of the negotiations, in order to prevent undue delay.

Response:
Indonesia does not restrict imports of poultry meat as long as they meets all safety
requirements and halal products (OR).

In October 2006 and February 2007, Brazil raised specific trade concerns regarding Indonesian
regulations that were not compatible with Article 6 of the SPS Agreement, in particular the
principle of regionalization, as in the case of foot-and-mouth disease. The Indonesian Law
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No. 18/2009, from February 2009, would finally be in line with the mentioned principle. However,
in September 2007, the Indonesia's Constitutional Court nullified certain provisions of Law
No. 18/2009, removing the recognition of the principle of regionalization. Brazil raised STCs again
in October 2010 and October 2011. Please indicate whether Indonesia intends to adapt its
legislation in order to be consistent with the aforementioned principle and the Article 6 of the SPS
Agreement. Please indicate whether policies related to food self-sufficiency may affect decisions on
this matter.

Response:

The amendment was made on the basis of Constitutional Court decision No. 137/PUU-
VII/2009 on 27 August 2010 that the phrase "importation of animal products from
disease-a free zone" was amended as "importation of animal products only from a
disease-free country.

IV - TRADE POLICIES BY SECTOR
(4). Agriculture, Fisheries and Forestry
Page 75, paragraph 4.11 and page 77, paragraph 4.13
The report by the Secretariat states that Indonesian "agriculture policy priorities are driven by
concerns over food self-sufficiency, food consumption and production diversification, value-added
and competitiveness, and the welfare of farmers" and that "import requirements imposed for food
safety, SPS, and cultural reasons appear to have become more stringent".
Questions:
1) Please indicate how Indonesia intends to harmonize its concerns over food self-sufficiency
with free trade of food.
2) Please explain why import requirements imposed for food safety, SPS and cultural reasons
became more stringent and indicate whether concerns over food self-sufficiency were taken
into account in redefining those requirements."
Response:
Answer will be provided later.

CANADA
Part III. Trade Policies and Practices by Measure
3.1 Measures directly affection imports
3.1.3 Tariffs; 3.1.3.2 Applied MFN tariffs; paragraph 3.19, page 35

Could Indonesia explain why it has chosen to subject more tariff lines to specific tariff rates (from
27 tariff lines in 2006 to 65 tariff lines in 2012)?
Response:
To simplify the calculation imposition and surveillance duties on these products.
3.1.3.2 Applied MFN tariffs; paragraph 3.20, page 36:
Could Indonesia provide details concerning tariff lines, that were previously duty free, where tariffs
were raised to 5%?
3.1.4.3 Excise Tax; paragraphs 3.33-3.34, page 44:
Could Indonesia explain how the excise tax on ethyl alcohol with a content of 5% or more, and on
low-grade domestically produced tobacco is consistent with its GATT obligations (including National
Treatment obligations)?
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Response:
Essentially, the calculation of excise tax for imported tobacco commodities are not based
on quality, but tax rates based solely on the type of product with one rate applicable for
each type.
The differential tax rates between domestic and imported products only in low quality
and low price commodities, considering that segment only filled by a home (micro)
industry.
The regulation of alcoholic beverage excise tax is not discriminatory because in case of
product specification there are several differences between imported and domestic
alcoholic beverages on quality, raw material, production processing, price and market
segmentation (imported product are more premium class than local product). By
imposing of excise tax and import duty, imported product will gain several advantages
which are:
a. They will get higher quality for similar category (different domestic market
segmentation)
b. The specific tariff rate system will make the calculation of excise tax and import
duties simpler and faster, and also will avoid disputes on custom valuation.
It gives more guarantees for excellent levels of hospitality services by Indonesia
tourism industry through maintaining imported alcoholic beverage availability.
3.1.5.3 Import licensing; Paragraphs 3.37-3.40, Page 45:
Could Indonesia provide additional details regarding the application of import licensing measures
for imports of horticultural products and animal and animal products?
Response:
All information regarding the application of import licensing measures for imports of
horticultural products and animal and animal products.
Does Indonesia view these measures as being consistent with its WTO obligations?
Response:
GOI requires that certain products be subject to import licensing requirements for
justified reasons. These include: protection of human, animal and plant life and health,
discouraging the importation of goods with very low standards, consumer protection,
and security. Such licensing requirements are applied on a non-discriminatory basis,
thus there is no exception. The import licensing requirements have caused some delays
but measures are being taken to ensure that such delays can be brought to minimum.
Furthermore, the such policy does not intent to be permanent but it intends to be
temporer policy.
3.2 Measures directly affecting exports
3.2.2 Export prohibitions, restrictions, and licensing
3.2.2.1 Export prohibition; Paragraph 3.78, Page 55:

Canada notes that Indonesia will prohibit mining companies from exporting mineral ore products
as of 2014, when they will be required to undertake refining activities onshore.
Could Indonesia explain how it will ensure that this measure will be consistent with paragraph 1 of
GATT Article XI (General Elimination of Quantitative Restrictions)?
Response:
The government does not have intention to prohibit export of mineral and other mining
product. What we do is to restrict export of them due to environmental reasons.