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LAW OF THE REPUBLIC OF INDONESIA
No. 5/1984

CONCERNING
INDUSTRIAL AFFAIRS

PRESIDENT OF THE REPUBLIC OF INDONESSIA,

Considering:

• a. that the objective of national development is to realize an equitable and prosper community that is distributed evenly on material and spiritual basis based on Pancasila, and that the essence of the National Development is Development of Indonesian People in a whole, therefore the implementation basis of the National Development is Pancasila and the 1945 Constitution;
• b. that direction of long term development in economic sector in the national development is the achievement of balanced economic structure that contains advanced industrial ability and strength that is supported by powerful agricultural strength and ability, and constituting the step-stone for Indonesian nation to grow and develop on its own strength;
• c. that in order to achieve the goals of development in economic sector in the national development, industry plays a determinative role and, therefore, need to be increasingly developed in balanced and integrated manners by increasing community participation actively and utilizing optimally all of natural, human, and fund resources that are available;
• d. that based on the foregoing and to provide strong basis for arrangement, enhancement, and development of industry on established and continuous basis, and unavailability of legal sets that are comprehensively able to base them, it is necessary to establish Law on Industrial Affairs;

In view of :

• 1. Article 5 paragraph (1), Article 20 paragraph (1), Article 27 paragraph (2), and Article 33 of the 1945 Constitution;
• 2. Law Number 7 of 1960 on Statistics (Statute Book of 1960 Number 109, Supplement to Statute Book Number 2048);
• 3. Law Number 12 of 1967 on Fundamentals of Cooperatives (Statute Book of 1967 Number 23, Supplement to Statute Book Number 2832);
• 4. Law Number 1 of 1970 on Occupational Safety (Statute Book of 1970 Number 1, Supplement to Statute Book Number 2918);
• 5. Law Number 5 of 1974 on Fundamentals of Administration in Regions (Statute Book of 1974 Number 38, Supplement to Statute Book Number 3037);
• 6. Law Number 4 of 1982 on Basic Provisions of Living Environment Management (Statute Book of 1982 Number 12, Supplement to Statute Book Number 3215);
• 7. Law Number 20 of 1982 on Basic Provisions of Security Defence of the Republic of Indonesia (Statute Book of 1982 Number 51, Supplement to Statute Book Number 3234);

With the approval of
THE HOUSE OF PEOPLE'S REPRESENTATIVES

DECIDES:

To stipulate:

LAW ON INDUSTRIAL AFFAIRS

CHAPTER I
GENERAL PROVISIONS

Article 1

Referred to in this Law as:

• 1. Industrial affair is a setting and all activities relating to industrial activities.
• 2. Industry is an economic activity that processes raw materials, basic materials, semi-finished goods, and/or finished goods into goods of higher value for its usage, including design activity and industrial engineering.
• 3. Industrial groups are main parts of industrial activities, namely upstream industrial group or referred also as basic industrial group, downstream industrial group, and small industrial group.
• 4. Industrial branch is a part of an industrial group which has the same general characteristics in the production process.
• 5. Industrial type is a part of an industrial branch that has the same specific characteristics and/or its result is final in the production process.
• 6. Industrial Business sector is an activity field that relates with industrial branch or industrial type.
• 7. Industrial company is a business entity that conducts activity in industrial business sector.
• 8. Raw materials are all materials that are obtained from natural resources and/or that are obtained from human efforts for further utilization.
• 9. Industrial basic materials are raw materials, either processed or unprocessed, that can be utilized as production means in industry.
• 10. Semi-finished goods are raw materials or basic materials that have experienced one or several stages of industrial process which can be processed further into finished goods.
• 11. Finished goods are goods out of industry that are either ready for use for final consumption or ready for use as production tools.
• 12. Industrial technology is methods in the processing that are applied in industry.
• 13. Applied technology is a technology that is proper and useful to a process to generate an added value.
• 14. Industrial design is an industrial activity that relates with establishment planning of industry/factory as a whole or in parts.
• 15. Industrial engineering is an industrial activity that relates with planning and manufacturing of factory machines/equipments and other industrial devices.
• 16. Industrial standards are provisions on production results of industry that, in one side, relate with shape, dimension, composition, quality, and others and, on the other side, relate with method of processing, method of drawing, method of testing and others.
• 17. Industrial standardization is uniformity and application of industrial standards.
• 18. Industrial setting is composition system and arrangement in the broadest meaning for industry.

CHAPTER II
BASIS AND OBJECTIVES OF INDUSTRIAL DEVELOPMENT

Article 2

Industrial development is based on economic democracy, confidence in own ability and strength, benefits, and living environment preservation.

Article 3

Industrial development is purposed to:

• 1. improve people's welfare and prosperity on equitable and evenly distributed basis by utilizing funds, natural resources, and/or cultivation results and by paying attention to the balance and preservation of the living environment;
• 2. increase the economic growth gradually, change the economic structure to be better, advanced, healthy, and more balanced as an effort of realizing stronger and wider basis for the economic growth in general, and to provide added value for the industrial growth in particular;
• 3. improve ability and mastering and to encourage the creation of applied technology and to grow up the confidence in the ability pf national business world;
• 4. increase community participation and ability of economically weak groups, including crafters, in order to play active roles in industrial development;
• 5. widen and spread evenly the employment opportunity and business opportunity, and to increase the roles of industrial cooperatives;
• 6. increase foreign exchange revenue through improving export of quality national production results, in addition to foreign exchange saving through preference of use of domestic production results, in order to reduce dependence on foreign countries;
• 7. develop industrial growth centres that support regional development in the framework of realization of Wawasan Nusantara;
• 8. support and strengthen the dynamic national stability in the framework of strengthening the national defence.

CHAPTER III
INDUSTRIAL DEVELOPMENT

Article 4

(1) Industrial branches that are important and strategic for the state and controlling the public deed shall be controlled by the state.

Provision as contemplated in paragraph (1) shall be regulated further by Government Regulation.

Article 5

(1) The government determines industrial business sectors that are categorized as small industrial group, including industries that use traditional skills and industries producing art articles, that can be operated only by Indonesian Nationals.

(2) The government determines industrial types that are specifically reserved for small industrial activities that are conducted by entrepreneur society for economically weak groups.

(3) Provisions as contemplated in paragraphs (1) and (2) shall be regulated further by Government Regulation

Article 6

The government determines industrial business sectors for investment of capital, both domestic and foreign capitals.

CHAPTER IV
ARRANGEMENT, ENHANCEMENT,AND DEVELOPMENT OF INDUSTRY

Article 7

The government conducts arrangement, enhancement, and development of industry, to:

• 1. realize industrial development that is better, healthier and effective;
• 2. develop good and healthy competition and to prevent unfair competition;
• 3. prevent centralization or control of industry by one group or individual person in the form of monopoly that harms the community.

Article 8

The government conducts arrangement, enhancement, and development of industrial business sector on a balanced, integrated, and directed manner in order to strengthen the national industrial structure in every stage of industrial development.

Article 9

Arrangement and enhancement of industrial business sector shall be conducted by paying attention to:

• 1. Distribution and dissemination of industrial development by utilizing natural and human resources by using industrial process and applied technology in ode to be able to grow and develop on own ability and strength;
• 2. Creation of healthy climate for industrial growth and prevention of unfair competition among companies which conduct industrial activities, in order to avoid industrial centralization and control by one group or individual in the from of monopoly that is detrimental to the community;
• 3. Reasonable protection for domestic industries against overseas industrial and trade activities which are contradictory to the national interests in general and domestic industrial development in particular;
• 4. Prevention of damages and pollutions to the living environment, and safeguarding of the balance and preservation of natural resources.

Article 10

The government conducts enhancement and development on:

• 1. inter-relation among industrial business sectors to increase added value and larger contribution to the national production growth;
• 2. inter-relation between industrial business sector and other economic field sectors which can increase added value and larger contribution to the national production growth;
• 3. industrial growth through initiative, participation, and self-sufficiency of the community.

Article 11

The government conducts enhancement of industrial companies in implementing mutually beneficial cooperation, and seeks for improvement and development of such cooperation.

Article 12

In order to encourage development of certain industrial branches and industrial types in home country, the government may provide necessary facilities and/or protections.

CHAPTER V
INDUSTRIAL BUSINESS LICENCE

Article 13

(1) Every establishment of new industrial company and every expansion shall is obliged to obtain Industrial Business Licence.

(2) The granting of Industrial Business Licence relates with arrangement, enhancement, and development of industry.

(3) Obligation to obtain Industrial Business Licence can be exempted for certain industrial types in small industrial group.

(4) Provisions on licensing as contemplated in paragraphs (1) and (3) shall be regulated further by Government Regulation.

Article 14

(1) In accordance with the Industrial Business Licence that is obtained under Article 13 paragraph (1), industrial companies are obliged to submit industrial information periodically concerning its production activities and results to the government.

(2) The obligation to submit industrial information can be exempted for certain industrial types in small industrial group.

(3) Provisions on form, contents and procedures of submitting industrial information as contemplated in paragraph (1) shall be regulated further by Government Regulation.

Article 15

(1) In accordance with the Industrial Business Licence that is obtained under Article 13 paragraph (1), industrial companies are obliged to make efforts relating to security and safety of their tools, process and production results including its transportation.

(2) The government conducts enhancement in the form of guidance and counselling, regarding with the implementation of efforts relating to security and safety of industrial tools, process and production results including its transportation.

(3)The government conducts supervision and control regarding with the security and safety of industrial tools, process and production results including its transportation.

(4)Procedures of implementation of supervision and control as contemplated in paragraph (3) shall be regulated by Government Regulation.

CHAPTER VI
INDUSTRIAL TECHNOLOGY, INDUSTRIAL PRODUCT DESIGN,
INDUSTRIAL DESIGN AND ENGINEERING,AND STANDARDISATION

Article 16

(1) In conducting and/or developing industrial business sector, industrial companies shall use and create industrial technologies that are proper to use by utilizing devices that are available and have been developed abroad.

(2) If the required industrial technology devices are unavailable or insufficiently available in home country, the government shall assist with selection of industrial technology devices from abroad that are required and shall regulate their transfer to home country.

(3) Selection and transfer of industrial technology from abroad that are strategic and necessary fro industrial development in home country, shall be regulated further by Government Regulation.

Article 17

Industrial product design obtains legal protection the provisions of which are regulated by Government Regulation.

Article 18

The government encourages development of industrial designing and engineering ability.

Article 19

The government determines standards for basic materials and industrial produced goods with a purpose to assure quality of industrial results and to achieve production efficiency.

CHAPTER VII
INDUSTRIAL AREA

Article 20

(1) The government may determine areas of industrial growth centres and location for industrial development in accordance with its objectives in order to realize Wawasan Nusantara.

(2) The provision as contemplated in paragraph (1) shall be regulated further by Government Regulation.

CHAPTER VIII
INDUSTRY IN RELATION TO NATURAL RESOURCES AND LIVING ENVIRONMENT

Article 21

(1) Industrial company is obliged to make efforts of balancing and preserving natural resources and prevention of damages and pollutions to the living environment from occurring as a result of industrial activities it conducts.

(2) The government conducts arrangement and enhancement in the form of guidance and counselling on implementation of damage prevention and pollution control to the living environment resulting from industrial activities.

(3) The obligation to make efforts as contemplated in paragraph (1) shall be exempted for certain industrial types in small industrial group.

CHAPTER IX
DELEGATION OF AUTHORITY AND AFFAIRS ON INDUSTRY

Article 22

Delegation of authority on arrangement, enhancement, and development of industry, shall be regulated further by Government Regulation.

Article 23

Assignment of affairs and revocation thereof regarding with certain industrial business sectors from the Central Government to the Regional Government in the framework of implementation of regional development that is real, dynamic, and accountable, shall conducted with Government Regulation.

CHAPTER X
CRIMINAL PROVISIONS

Article 24

(1) Anyone who purposely commits in actions contradictory to provisions as contemplated in Article 13 paragraph (1) and Article 14 paragraph (1) shall be subjected to imprisonment of maximum 5 (five) years or and fine of maximum Rp 25.000.000,- (twenty five million rupiah) with additional punishment of its Industrial Business Licence revoked.

(2) Anyone who due to his/her negligence commits in actions contradictory to provisions as contemplated in Article 13 paragraph (1) and Article 14 paragraph (1) shall be subjected to imprisonment of maximum 1 (one) years or and fine of maximum Rp 1.000.000,- (one million rupiah) with additional punishment of its Industrial Business Licence revoked.

Article 25

Anyone who purposely without authority commits in imitation of industrial product design as contemplated in Article 17, shall be subjected to imprisonment of maximum 2 (two) years or and fine of maximum Rp 10.000.000,- (ten million rupiah).

Article 26

Anyone who purposely commits in actions contradictory to provisions as contemplated in Article 19, shall be subjected to imprisonment of maximum 5 (five) years or and fine of maximum Rp 25.000.000,- (twenty five million rupiah) with additional punishment of its Industrial Business Licence revoked.

Article 27

(1) Anyone who purposely commits in actions contradictory to provisions as contemplated in Article 21 paragraph (1) shall be subjected to imprisonment of maximum 10 (ten) years and/or and fine of maximum Rp 100.000.000,- (one hundred million rupiah).

(2) Anyone who due to his/her negligence commits in actions contradictory to provisions as contemplated in Article 21 paragraph (1) shall be subjected to imprisonment of maximum 1 (one) years and/or and fine of maximum Rp 1.000.000,- (one million rupiah).

Article 28

(1) Offences as contemplated in Article 24 paragraph (1), Article 25, Article 26, and Article 27 paragraph (1) are crimes.

(2) Offences as contemplated in Article 24 paragraph (2), and Article 27 paragraph (2) are violations.

CHAPTER XI
TRANSITIONAL REGULATIONS

Article 29

Upon coming into force of this Law, all statutory regulations relating to industrial affairs that do not contradict to this Law shall remain be effective as long as their replacement are not stipulated yet under this Law.

CHAPTER XII
CLOSING PROVISION

Article 30

Upon coming into force of this Law, the Bedrijfsreglementerings-ordonnantie 1934 (Staatsblad 1938 Number 86) shall be declared as inapplicable to industry.

Article 31

Matters that are not or insufficiently regulated in this Law shall be regulated by Government Regulations.

Article 32

This Law regulation shall comes into force as of the date of promulgation.

For public cognizance, this Law shall be announced by placing it in the Statute Book of the Republic of Indonesia.

Ratified in Jakarta
On June 29, 1984

PRESIDENT OF THE REPUBLIC OF INDONESIA,
Sgd
SOEHARTO

Promulgated in Jakarta
on June 29, 1984

MINISTER/SECRETARY FOR THE STATE OF THE REPUBLIC OF INDONESIA,
Sgd
SUDHARMONO, S.H.