DECREE OF THE MINISTER OF INDUSTRY AND TRADE
NO. 275/MPP/KEP/6/1999

CONCERNING
THE AUTOMOTIVE INDUSTRY

THE MINISTER OF INDUSTRY AND TRADE,

Considering:

• a. that in the framework of supporting and boosting the development of globally competitive automotive and automotive component industries as well as increasing the self-reliance of the automotive industry, it is necessary to stipulate the development pattern of automotive industries, especially automotive component industries, through the instrument of import duty, including tariffs of import duty on basic materials;
• b. that participation of Indonesia in the Agreement on Subsidies and Countervailing Measures and the Agreement on Trade Related Investment Measures (TRIMs) which constitute part of the Agreement Establishing the Word Trade Organization (WTO) as already ratified by Law No. 7/1994, needs to be followed up by adjusting national laws effective in the field of the automotive industry to the said international agreements;
• c. that in relation thereto, it is necessary to stipulate a decree of the Minister of Industry and Trade.

In view of :

• 1. Law No. 5/1984 on industrial affairs (Statute Book of 1984 No. 22, Supplement to Statute Book No. 3274);
• 2. Law No. 7/1994 concerning the ratification of the agreement establishing the World Trade Organization (Statute Book of 1994 No. 57, Supplement to Statute Book No. 3564);
• 3. Law No. 10/1995 on excise affairs (Statute Book of 1995 No. 75, Supplement to Statute Book No. 3612);
• 4. Government Regulation No. 17/1986 on the authority to regulate, foster and develop industries (Statute Book of 1986 No. 23, Supplement to Statute Book No. 3330);
• 5. Government Regulation No. 50/1994 on the implementation of Law No. 8/1983 concerning Valued Added Tax on goods and services and Sales Tax on luxury goods as already amended by Law No. 11/1994 as already amended several times the latest by Government Regulation No. 14/1998 (Statute Book of 1998 No. 24, Supplement to Statute Book No. 3733);
• 6. Government Regulation No. 13/1995 on industrial business licences (Statute Book of 1995 No. 23, Supplement to Statute Book No. 3596);
• 7. Presidential Decree No. 44/1974 on principles of organizations of ministries;
• 8. Presidential Decree No. 16/1987 on the simplification of procedures for the granting of industrial business licences (Statute Book of 1987 No. 22);
• 9. Presidential Decree No. 61/1998 on the status, tasks, organizational structures and working arrangements of ministries as already amended several times the latest by Presidential Decree No. 142/1998;
• 10. Presidential Decree No. 122/M/1998 on the establishment of the development reforms cabinet;
• 11. Decree of the Minister of Finance No. 222/KMK.01/1995 on the timetable of the decrease in import duty and surcharges on motor vehicles;
• 12. Decree of the Minister of Finance No. 36/KMK.01/1997 on incetives of import duty on the import of certain parts and accessories of motor vehicles for the assembly and/or the manufacturing of motor vehicles as already amended by Decree of the Minister of Finance No. 20/KMK.01/1998;
• 13. Decree of the Minister of Industry and Trade No. 30/MPP/SK/2/1996 on the determination of kinds of industries in the fostering of the respective directorate generals and the authority to grant industrial business licences and business licences of industrial estates within the Ministry of Industry and Trade;
• 14. Decree of the Minister of Industry and Trade No. 255/MPP/Kep/7/1997 on the delegation of authority to grant licences in the field of industry and trade within the Ministry of Industry and Trade;
• 15. Decree of the Minister of Industry and Trade No. 256/MPP/Kep/7/1997 concerning the provisions on and procedures for the granting of industrial business licences, expansion licences and corporate registry numbers;
• 16. Decree of the Minister of Industry and Trade No. 444/MPP/Kep/9/98 and No. 24/MPP/Kep/1999 on organization and working arrangement of the Ministry of Industry and Trade:

DECIDES

To revoke:

Decree of the Minister of Industry and Trade No. 114/M/SK/6/1993 on the stipulation of local content of motor vehicles or domestic components.

To stipulate :

THE DECREE OF THE MINISTER OF INDUSTRY AND TRADE ON THE AUTOMOTIVE INDUSTRY.

CHAPTER I
GENERAL PROVISIONS

Article 1

1. Motor vehicles with four wheels or more shall be motor vehicles as meant in Sub-Tariff Heading 8701.20, Tariff Headings HS 8702,8703,8704 and 8705.

2. Motor vehicles with two and three wheels shall be motor vehicles as meant Tariff Headings 8711 and 8703.

3. Motor vehicles in the Completely Knocked Down (CKD) condition shall be motor vehicles broken down into parts, including accessories, which have the main characteristics of the relevant motor vehicles.

4. Motor vehicles Incompletely Knocked Down (IKD) condition shall be motor vehicles not broken into incomplete parts and not having the main characteristic of the relevant motor vehicles.

5. Components of motor vehicles shall be part motor vehicles needed for making motor vehicles functional.

6. Components of motor vehicles in the incompletely broken down condition shall be components of motor vehicles which are broken down into several sub-components and do not have the main characteristics of the relevant components.

7. Basic materials shall be materials which can be used and/or needed for manufacturing various kinds of components of motor vehicles with technical specification and/or sizes already adjusted to the need of components to be manufactured.

8. Special automotive industry shall be activities to manufacture and/or install special equipment at motor vehicles so as to become motor vehicles as meant in Tariff Heading HS 8705.

9. Special automotive assembly manufacturers shall be industrial companies which are established and operated in Indonesia as well as having industrial business licences to produce special motor vehicles.

10. Component manufacturers shall be industrial companies which are established and operate in Indonesia as well as having industrial business licences to produce components of motor vehicles.

11. Automotive assembling manufacturers shall be industrial companies which are established and operate in Indonesia as well as having industrial business licences to produce motor vehicles.

12. Minister shall be the Minister of Industry and Trade.

13. Director General shall be the Director General having tasks, functions and authority to foster the automotive industry.

CHAPTER II
FOSTERING OF INDUSTRY

Part One
Automotive Assembly Industry

Article 2

Automotive assembly manufacturers shall be fulfill the following requirements :

• a. having industrial business licences;
• b. at least undertaking activities of welding, painting, assembly of main components of motor vehicles so as to become motor vehicles as well as executing quality tests and control.

Part Two
Component industry

Article 3

Component manufacturers shall fulfill the following requirements :

• a. having industrial business licences;
• b. having adequate equipment to manufacture components in accordance with the kinds of components to be manufactured.

Part Three
Raw materials and components for manufacturing purpose

Article 4

(1) Automotive assembly manufacturers in their production activities can use motor vehicles imported in the CKD or IKD condition.

(2) The broken down degree of motor vehicles which are in the CKD condition shall be further stipulated by the Director General.

(3) The broken down degree of motor vehicles which are in the IKD condition shall be further stipulated by the Director General.

(4) Component manufacturers in their production activities can use raw materials and sub-components and certain component manufacturers can use certain components in the IKD condition, basic materials and sub-components.

(5) The kinds of certain components and their broken down degree as meant in paragraph (4) shall be further stipulated by the Director General.

Part Four
Domestic motor vehicles

Article 5

(1) Motor vehicles produced in the country shall be included in the kinds of motor vehicles as meant in Tariff Headings HS 8701,8702,8703,8704,8705 and 8711.

(2) Especially for motor vehicles as meant in Tariff Heading HS 8704, the maximum load per axle shall be in accordance with the provisions in force.

Part Five
Registration of types

Article 6

(1) Every motor vehicle to be produced and imported shall have its type registered in accordance with the provisions in force.

(2) Every automotive assembly manufacturer already securing an industrial business licence and/or automotive importing companies, shall register the kinds of motor vehicles to be produced and/or imported.

Part Six
Standardization

Article 7

(1) Every component produced in the country or imported shall fulfil the quality standards according to the Indonesian National Standard (SNI) or relevant standards in force.

(2) Every motor vehicle assembled in Indonesia shall be obliged to apply the SNI of Motor Vehicle Identification Number (SNI.09-1411-1989 or its revision).

(3) Every motor vehicle assembled/manufactured in the country and/or imported shall fulfil the provision on the threshold value of emission/exhaust gas as stipulated by the State Minister for Environmental Affairs.

Part Seven
Technology

Article 8

Four-wheel motor vehicles which can be manufactured in and imported to Indonesia shall be motor vehicles with the right hand drive technology.

Article 9

(1) Automotive assembly manufacturers and/or component manufacturers executing training, research and development activities in the field of automotive technology shall obtain taxation facilities in accordance with laws in force.

(2) Automotive assembly manufacturers and/or component manufacturers undertaking trade mark registration as mark holders or mark licensees shall be given legal protection in accordance with laws in force.

CHAPTER III
IMPORT AND ASSEMBLY OF MOTOR VEHICLES

Part One
Motor vehicles in completely knocked down condition

Article 10

(1) Four-wheel motor vehicles which are in the completely knocked down condition shall at least contain 4 (four) components, viz. propeller, transmission, axle and chassis and/or body.

(2) Two-wheel motor vehicles which are in the completely knocked down condition shall at least contain 4 (four) components, viz. propeller with or without transmission, wheels and parts, chassis and handlebar.

(3) Motor vehicles which are in the CKD and IKD conditions can only be assembled (manufactured) by automotive assembly manufacturers already securing industrial business licences.

Part Two
Motor vehicles other than in completely knocked down condition.

Article 11

(1) The import of Motor vehicles other than in completely knocked down condition which are classified into Tariff Headings HS 8701,8702,8703,8704, 8705 and 8711 shall fulfill the following requirements :

• a. securing Vehicle Identification Numbers (VIN or NIK) for countries of origin of manufacturers, which at least certify countries of origin, manufacturers, type specifications and manufacturing years;
• b. attaching certificates of type tests from authorized institutions in countries of origin of motor vehicle manufacturers;
• c. having registration identities of types which are issued by the Director General;
• d. attaching letters of statement on guaranty for quality and after-sale service which are effective in Indonesia from importers;
• e. fulfilling other requirements in accordance with the provisions in force.

(2) The Director General shall further stipulate provisions on the import of motor vehicles as meant in paragraph (1).

Part Three
Certain components in incompletely knocked down condition

Article 12

The certain components in the incompletely knocked down condition as meant in Article 4 paragraph (4) can only be assembled by component manufacturers having industrial business licences.

Part Four
Basic materials

Article 13

Component manufacturers having industrial business licences can import basic materials as meant in Article 1 point 7.

Part Five
Special motor vehicles

Article 14

Manufacturers of special motor vehicles having industrial business licences can import goods and basic materials for manufacturing the special motor vehicles as meant in Article 1 point 8.

CHAPTER IV
MOTOR VEHICLE REGISTRATION NUMBER

Article 15

Motor vehicles to which registration numbers (STNK) can be issued shall be motor vehicles produced by the automotive assembly manufacturers as meant in Article 1 points 9 and 11 and imported motor vehicles as meant in Article 11, whose types have already been registered and which have Vehicle Identification Numbers (VIN) as meant in Article 6, Article 7 paragraph (2) and Article 11 of this decree.

CHAPTER V
SUPERVISION

Part One
Reporting

Article 16

(1) Every manufacturer as meant in Article 1 point 10 shall be obliged to convey periodical reports once in 6 (six) months on the realisation of import and production to the Director General.

(2) Every manufacturer as meant in Article 1 points 9 and 10 shall be obliged to convey periodical reports once in 6 (six) on the realisation of import of basic materials and components, production of motor vehicles as well as VIN of the respective motor vehicles to the Director General.

(3) Every importer importing the motor vehicles as meant in Article 11 shall be obliged to convey reports on the realisation of import of motor vehicles along with VIN of the respective motor vehicles to the Director General.

Part Two
Post Audit

Article 17

(1) Supervision over the implementation of the provisions as contained in Articles 10, 12, 13 and 14 of this decree shall be conducted by the post audit method.

(2) The post audit supervision as meant in paragraph (1) shall be further stipulated by the Minister.

CHAPTER VI
SANCTIONS

Article 18

Automotive assembly manufacturers, component manufacturers and special motor vehicle manufacturers which fail to implement or violate the provisions in this decree shall be liable to the revocation of industrial business licences.

Article 19

Automotive importer companies which fail to implement or violate the provisions in this decree shall be liable to sanctions in accordance with the provisions in force.

CHAPTER VII
CONCLUSION

Article 20

This decree shall come into force as from July 1, 1999.

For public cognizance, this decree shall be published by placing it in State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
On June 24, 1999
THE MINISTER OF INDUSTRY AND TRADE
sgd
RAHARDI RAMELAN