Global Trade Alert

On 15 January 2009, the Indonesian Ministry of Industry passed regulation 04/M-IND/PER/1/2009 concerning the guidelines on the utilization of local products for development of electricity infrastructure. The law included a procurement preference in the infrastructure construction process.
According to article 12 of the new regulation, the following preferences should be taken into account:

• '(1) the users of goods and services in the electricity infrastructure construction are required to give a price preference to domestic goods and services providers.
• (2) The price preference as mentioned in paragraph (1) shall be proportional to the Domestic Component Level 'TKDN' of the domestically owned goods and services of the company.
• (3) The magnitude of the price preference mentioned in paragraph (2) is given to:
• a. the domestic procurement financed with local founds which is at most 30% above the Cost Insurance and Freight (CIF) of the lowest bid of imported goods and does not include customs duties;
• b. the domestic procurement financed with foreign loans and grants which is at most 15% above Cost Insurance and Freight (CIF) of the lowest bid of imported goods and does not include customs duties: or
• c. a contract service work carried out by a national contractor which is at most 7.5% above the lowest bid price of foreign contractors.' (own translation)

This regulation came into force on the day of its issuance, i.e. on 15 January 2009. This article was left out in the regulation's amendment 48/M-IND/PER/4/2010 on 14 April 2010 and is therefore no longer implemented.