DECREE OF THE MINISTER OF INDUSTRY AND TRADE
NO. 29/MPP/Kep/1/1997

THE PROVISIONS ON AND PROCEDURE FOR APPLICATIONS FOR FACILITIES
IN THE FRAMEWORK OF THE IMPLEMENTATION OF THE BASIC AGREEMENT
ON THE ASEAN INDUSTRIAL COOPERATION

THE MINISTER OF INDUSTRY AND TRADE OF THE REPUBLIC OF INDONESIA,

Considering:

• a. that in the framework of speeding up economic growth, industry and investment to face liberalized trade in ASEAN region, on April 27, 1996, the government of the Republic of Indonesia and Ministers of Economic Affairs in ASEAN signed the Basic Agreement on the ASEAN Industrial Cooperation Scheme, later ratified by virtue of Presidential Decree No. 51/1996;
• b. that to facilitate the implementation of the said basic agreement, and in line with the new organization structure of the Ministry of Industry and Trade, it is necessary to re-stipulate the implementation procedure;
• c. that to this end, it is necessary to issue a Decree.

In view of:

• 1. Government Regulation No. 1/1982 on the implementation of export, import and foreign exchange traffic (Statute Book No. 1/1982, Supplement to Statute Book No. 3210) as already amended by Government Regulation No. 24/1985 (Statute Book No. 33/1985, Supplement to Statute Book No. 3291);
• 2. Presidential Decree No. 96/M/1993 on Establishment of Development Cabinet VI as amended by Presidential Decree No. 388/M/1995;
• 3. Presidential Decree No. 2/1996 on Amendment to Presidential Decree Rl No. 15/1984 on Organizational Structure of the Ministries as has been amended Twenty Five Times, Lastly by Presidential Decree No. 61/1995.
• 4. Presidential Decree No. 51/1996 on the ratification of Basic Agreement on the ASEAN Industrial Cooperation Scheme;
• 5. Decree of the Minister of Industry and Trade No. 29/MPP/SK/2/1996 and No. 92/MPP.Kep/4/1996 on Organization and Work System of the Ministry of Industry and Trade.
• 6. Decree of the Minister of Industry and Trade No. 30/MPP/Kep/6/1996 on the Stipulation of the Types of Industries Being Fostered By Each Directorate General And The Authority To Grant Industrial Business Licenses And Industrial Estate Business Licenses within the Ministry of Industry and Trade;

Observing:

1. The agreement on the outcome of 28th meeting of ministers of economic affairs on September 12, 1996 regarding the implementation of the Basic Agreement on the ASEAN Industrial Cooperation by countries in ASEAN which will begin in November 1996;

2. Letter of the Coordinating Minister in charge of Production and Distribution No. 410/MK.PRODIS/9/1996 on the implementation of the Basic Agreement on the ASEAN Industrial Cooperation Scheme.

DECIDES

To stipulate:

THE DECREE OF THE MINISTER OF INDUSTRY AND TRADE ON THE PROVISIONS ON AND THE PROCEDURE FOR APPLICATIONS FOR FACILITIES IN THE FRAMEWORK OF THE IMPLEMENTATION OF BASIC AGREEMENT ON THE ASEAN INDUSTRIAL COOPERATION SCHEME.

Article 1

Referred to in this decree as:

• 1 . The AICO Scheme shall be a scheme of industrial cooperation within ASEAN as referred to in the Basic Agreement on the ASEAN Industrial Cooperation Scheme (AICO) already ratified by virtue of Presidential Decree No. 51/1996.
• 2. AICO Agreement shall be the agreement made by at least two participating ASEAN member countries and respectively one or more participating companies in the participating countries.
• 3. Participating countries shall be ASEAN member countries agreeing to participate in AICO Agreement by giving a privilege to participating companies.
• 4. Participating companies shall be industrial companies set up and operating in ASEAN member countries fulfilling tile provisions in Article 2 (1) and Article 3 of the Basic Agreement.
• 5. Certificate of Eligibility, hereinafter referred to as COE, shall be a certificate issued by ASEAN Secretariat to obtain tariff facilities in the framework of AICO Agreement.
• 6. AICO Products shall be the products referred to in COE and given in the participating countries. The said products may be in the form of:
• a. "AICO Final Products" shall be the products constituting Final Products not needing further processing;
• b. "AICO Intermediate Products" shall be the products used as raw materials to produce AICO Final Products;
• c. "AICO Raw Materials" shall be the materials used to produce intermediate and or Final Products of AICO.
• 7. The Level of Preference Tariff shall be the level of tariff applied to the import of AICO products and ranging between 0 -5%.
• 8. Director General for Fostering of Industries shall be the director general whose tasks and functions pursuant to Decree of the Minister of Industry and Trade No. 44/MPP/Kep/9/1998 joint No. 24/MPP/Kep/I/1999 on the organization and the working system of the ministry of industry and trade and the director general for fostering of industries in other technical ministries receiving delegation pursuant to the provision in Government Regulation No. 17/1986.
• 9. Secretary General of other technical ministries shall be Secretary General outside the ministry of industry and trade.
• 10. AICO application form shall be a list of completion pursuant to the provision already jointly stipulated by ASEAN countries and application forms can be made by prospective participating companies themselves in the format as set forth in the attachment to this decree.

Article 2

(1) Facilities in the framework of AICO Agreement can be granted to participating companies in Indonesia fulfilling all the requirements as follows:

• a. participating companies shall in the form of statutory bodies;
• b. being established and carrying out their activities in Indonesia;
• c. at least 30% of its shares are owned by:
• i) on or more Indonesian national(s) and or Indonesian legal entities whose all capital are owned by Indonesian nationals; or
• ii) on or more Indonesian legal entity(ies) whose composite shareholding by Indonesian nationals is at least 30%.
• d. requirements as meant in paragraph (1) letters a and b must be presented in the form of official documents.

(2) Deviation from this minimum limit of 30% as stipulated in paragraph (1) letter c of this Article is allowed, if the Participating Company in Indonesia meets one of more of the following provisions:

• a) The Participating Company conducts its activities in the Eastern Area of Indonesia;
• b) Cumulatively, 40% of Participating Company ownership is controlled by companies within ASEAN scope and 15% of such an ownership must be controlled by national companies;
• c) The Participating Company produces capital components and /or goods
• d) 50% of the materials for processing supplied from the results of industries applied for to the ASEAN Secretariat are small and moderate.
• e) Requirements as contemplated in paragraph (2) letters a. b, c and d must be served in the form of formal document.

(3) Participating companies and their partner companies in other participating ASEAN countries must mutually utilize their resources, complement each other industrially or undertaking industrial cooperation in the transfer of technology, training, licensing, consolidated purchases, management, sales and marketing and other forms of cooperation.

(4) To present official documents to support the requirements set forth in Article 2 paragraphs (1) and (2) hereof.

Article 3

(1) AICO products shall encompass all products beyond those set forth in the General Exception in the Common Effective Preferential Tariff (CEPT) Article 9B and must fulfill the provision of the Rules of Origin of CEPT scheme.

(2) Approval on AICO products shall be given on the basis of HS of 8 digits or more.

Article 4

(1) AICO participating companies shall file a letter of application for participation in the AICO scheme to the General Secretariat with copies to be addressed to the relevant Director General for Fostering of industries concerned and to the Director General of Customs and Excise of the Minister of Finance.

(2) AICO participating companies being fostered by other technical ministries shall file a letter of application for participation in AICO scheme to the Secretary General of relevant Technical Ministries and the Director General of Customs and Excise.

(3) The participating companies as meant in paragraphs (1) and (2) shall be obligated to complete AICO form of application as attached to this decree and provide the following explanation about:

• a. the background and motivation of the companies to participate in AICO scheme;
• b. a more specific explanation about the benefit which the companies shall derive from participation in the AICO scheme;
• c. the investment needed in implementing the AICO scheme;
• d. a copy each of a corporate registration certificate and an Industrial Business License (IUI) or an industrial registration certificate;
• e. Documents or evidences of partnership for mutual utilization of resources, complementary industrial relations or industrial cooperation;
• f. a power of attorney as an authorized official on behalf of an applying company (if filed through a proxy);
• g. a Profile of the Participating Company encompassing among others information about the types of products, capacity, number of employees and so forth.

(4) Within not later than 10 (ten) working days after the application is in complete order as required in Article 2 of this Decree, the Director General shall pass on the said application to the Director General for Fostering of Industries concerned or the Secretary General of other Technical Ministries with carbon copies thereof to the ASEAN Secretariat.

(5) Within not later than 30 (thirty) working days, Director General for Fostering of Industries concerned or the Secretary General of other Technical Ministries must give their opinions about the application as meant in paragraph (4) to the Secretary General.

(6) The Director General for Fostering of Industries concerned or Secretary General of other Technical Ministries shall calculate the amount of the Preference tariff and submit it to the Secretary General.

(7) Within 10 (ten) working days after receiving the opinions from the Director General for Fostering of Industries concerned or Secretary General of other Technical Ministries, the Secretary General shall give his opinion to ASEAN Secretariat.

(8) On the basis of the notification of the Secretary General as meant in paragraph (6), the ASEAN Secretariat shall issue a COE and present it to the Secretary General.

(9) The Secretary General shall present the COE to the participating companies with copies to the Director General of Customs and Excise, the Director General far Fostering of Industries or the Secretary General of other Technical Ministries and the Director General of International Trades.

(10) A Participating Company already obtaining a COE may file an application in writing to the Minister of Finance by enclosing a COE to obtain a Preference Tariff in the form of a Decree on the Granting of Facilities with copies to the Secretary General and the Secretary General of Other Technical Ministries.

(11) The amount of the Preference Tariff to be granted shall be stipulated by the Minister of Finance, in this case the Director General of Customs and Excise, on the basis of the proposal from the Secretary General.

Article 5

(1) A participating company being fostered by the Ministry of Industry and Trade that already receives facilities in the framework of AICO agreement shall be obligated to give a periodic report on the development of its activities every 6 (six) months as from the issuance of a Decree on the Granting of Facilities to the Director General Fostering of Industries concerned, with copies to the Secretary General, the Secretary General of Other Technical Ministries, the Director General of International Trade and the Director General of Customs and Excise.

(2) A Participating Company being fostered by other Technical Ministries tat already receives facilities in the framework of AICO agreement shall be obligated to give a periodic report on its activities every 6 (six) months as from the issuance of a Decree on the Granting of Facilities to the Director General of International Trade with copies to the Secretary General, the Director General of Customs and Excise.

Article 6

(1) A Participating Company failing to perform its obligations as meant in Article 5 shall be given a written warning.

(2) The written warning as meant in paragraph (1) shall be issued by the Director General for Fostering of Industries concerned of Director General for Fostering of Industries of Other Technical Ministries, shall he given 3 (three) times within a period of 3 (three) months.

(3) If the warning as meant in paragraph (2) is ignored, at the suggestion of the Director General for Fostering of Industries concerned or the Secretary General of Other Technical Ministries, then, in this case the Secretary General shall propose to the Minister of Finance in this case the Director General of Customs and Excise to suspend the Preference Tariff and reimburse the postponed import duties.

Article 7

Further implementation of this Decree shall be regulated by the Secretary General.

Article 8

This decree shall take effect as from the date of stipulation.

Stipulated in Jakarta
On January 30, 1997
MINISTER OF INDUSTRY AND TRADE
Sgd
T.ARIWIBOWO