Indonesia: Plans to increase local content requirements from 30% to 50% on capital and operational expenditures for implementing Broadband Wireless Access systems
Description
On 8 May 2009, the WTO communication No. G/TRIMS/W/61 was circulated at the request of the Delegation of the European Communities and the United States who are concerned about existing and new measures applicable to investment in Indonesia's telecommunications sector.
On 17 September 2009, the Indonesian Delegation at the WTO responded with the WTO communication No. G/TRIMS/W/63 and clarified the following points:
1) The concerned Degree No. 7 Year 2009 is still being formulated (it is not yet implemented!).
2) The Decree is not intended to regulate trade in goods. Instead, this regulation is a legal instrument in supporting the Government programme to utilize certain part of radio spectrum for implementing Broadband Wireless Access (
3) The Government selects the operator(s) through bidding process 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.
4) Failing to meet the local requirement (CAPEX and OPEX) is liable to penalties.
5) The local content (CAPEX and OPEX) must be increased from 30-40% to 50% in five years.
6) Domestic and foreign providers operating in the Indonesian territory are treated equally.
The April 2010 report of the U.S. Trade Representative under section 1377 of U.S. trade law (Review of Telecommunications Trade Agreements) states (without mentioning the Decree Number) that the following Indonesian regulations have been implemented:
1) In January 2009, a regulation stating that telecommunications providers applying for spectrum to supply wireless broadband services must adhere to local content requirements of 30-50 percent.
2) In October 2009, the Ministry of Communications and Informatics issued a decree requiring all telecommunications operators to expend a minimum percentage of their total capital expenditures for network development on locally sourced components or services.
GTA has not found official evidence for the implementation of the above regulations.
If implemented, the new local requirements seriously disadvantage foreign telecommunications equipment and service suppliers.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | Don't know |
| Is there any evidence that alternatives to the proposed measure were considered? | Don't Know |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | Don't Know |
| Was such evidence identified? | Don't Know |
| Is such evidence publicly available? | Don't Know |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | Don't Know |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | Don't Know |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | Don't Know |
| Did the government state its intention to review the measure within one year of implementation? | Don't Know |
Date Discovered: 15/06/2009
Implemented: No
Date of inception:
GTA Evaluation: Amber
Source:
1) Communication from the EC and US to the WTO (G/TRIMS/W/61) on 8 May 2009, including a unofficial translation of draft Decree
2) Communication from Indonesia to the WTO (G/TRIMS/W/63) on 17 September 2009.
3) April 2010 report of the U.S. Trade Representative under section 1377 of U.S. trade law (http://www.ustr.gov/sites/default/files/2010%2003%2025%201377%20REPORT%2...)
Government Response:
- 714 reads
