REGULATION OF THE MINISTER OF FINANCE
No. 177/PMK.11/2007

CONCERNING
THE EXEMPTION OF THE IMPORT DUTY OF GOODS FOR THE NEED OF USTREAM PETROLEUM AND NATURAL GAS AS WELL AS GEOTHERMAL BUSINESS ACTIVITIES

THE MINISTER OF FINANCE,

Considering:

• a. that in the framework of increasing national oil and natural gas as well as geothermal production, it is necessary to provide fiscal incentives for upstream petroleum and natural gas as well as geothermal business activities;
• b. that based on the provision of Article 26 paragraph (1) a., b., and/or c. of Law No. 10/1995 concerning Customs that is amended by Law No. 17/2006, the activities as described in a. can be exempt from import duty;
• c. that based on the considerations as described in a. and b., as well as in the framework of implementing the provision of Article 26 paragraph (3) of Law No. 10/1995 concerning Customs that is amended by Law No. 17/2006, it is necessary to stipulate a regulation of the Minister of Finance concerning the Exemption of the Import Duty of Goods for the Need of Upstream Petroleum and Natural Gas as well as Geothermal Business Activities from Import Duty;

In view of:

• 1. Law No. 10/1995 concerning Customs (Statute Book of 1995 No. 75, Supplement to Statute Book No. 3612) that is amended by Law No. 17/2006 (Statute Book of 2006 No. 93, Supplement to Statute Book No. 4661);
• 2. Presidential Decision No. 20/P/2005;

HAS DECIDED:

To stipulate:

REGULATION OF THE MINISTER OF FINANCE ON THE EXEMPTION OF THE IMPORT DUTY OF GOODS FOR THE NEED OF USTREAM PETROLEUM AND NATURAL GAS AS WELL AS GEOTHERMAL BUSINESS ACTIVITIES

Article 1

In this regulation:

1. "Business entities" refers to companies in the form of statutory body, which undertake businesses regularly, continuously and are established in accordance with legislation in force as well as operate and are domiciled in the territory of the Republic of Indonesia.

2. "Permanent Establishments" refers to business entities established and having statutory body outside the territory of the Unitary State of the Republic of Indonesia, which undertake activities in the territory of the Unitary State of the Republic of Indonesian and are obliged to abide by legislation in force in the Republic of Indonesia.

3. "Cooperation Contracts" refers to production sharing contracts or other forms of cooperation contracts in exploration and exploitation activities, which rather benefit the state and have proceeds utilized maximally for the people's welfare.

Article 2

(1) The import duty of goods used for upstream petroleum and natural gas as well as geothermal business activities shall be exempt from import duty.

(2) The exemption of the goods as described in paragraph (1) from import duty shall be granted to goods decidedly used for upstream petroleum and natural gas as well as geothermal business activities with the provision as follows:

• a. the goods have not been able to produce in the country;
• b. the goods have been produced in the country but have not met the required specifications; or
• c. the goods have been produced in the country but the production has not been sufficient to the need of industries.

Article 3

The exemption from import duty as described in Article 2 shall be granted to:

• a. in the case of upstream petroleum and natural gas activities:
• 1) Business entities or permanent establishments binding cooperation contracts with the Executive Board of Upstream Petroleum and Natural Gas Business Activities; and
• 2) PI Pertamina (persero).
• b. in the case of geothermal business activities:
• 1) Business entities securing Mining Concession (WKP) or assignment to undertake preliminary surveyor geothermal mining business license;
• 2) PI. Pertamina (persero); and
• 3) PI. Geo Dipa Energi.

Article 4

(l) The application for the exemption from import duty as described in Article 3 a. shall be submitted to the Director General of Customs and Excise, enclosed by Import Plan of Goods (RIB) for the need in 12 (twelve) months, which has been approved and validated by the Director General of Petroleum and Natural Gas, Ministry of Energy and Mineral Resources, by observing the provision as described in Article 2 paragraph (2).

(2) The application for the exemption from import duty as described in Article 3 letter b shall be submitted to the Director General of Customs and Excise, enclosed by Import Plan of Goods (RIB) for the need in 12 (twelve) months, which has been approved and validated by the Director General of Mineral, Coal and Geothermal, Ministry of Energy and Mineral Resources, by observing the provision as described in Article 2 paragraph (2).

(3) RIB as described in paragraphs (1) and (2) shall contain at least elements of the following data:

• a. Number and date of RIB;
• b. Name of contractor;
• c. Taxpayer Code Number (NPWP);
• d. Address;
• e. Contract basis;
• f. Contract area;
• g. Customs and Excise Service Office overseeing the importing place of goods;
• h. Tariff Post;
• i. Description of Goods;
• j. Quantity/Unit of Goods;
• k. Estimated Price/Import Value;
• I. Kind of activity (exploration or exploitation);
• m. Chief of contractor company.

(4)The application as described in paragraphs (1) and (2) shall be accompanied by:

• a. Copy of NPWP;
• b. Customs Identity Number (NIK);
• c. Copy of cooperation contract for the petroleum and natural gas sector, in the case of the first time submission; and
• d. Copy of business license or assignment to undertake survey, for geothermal, in the case of the first time submission.

Article 5

The Director General of Customs and Excise on behalf of the Minister of Finance shall issue decision on the exemption from import duty to applications already fulfilling the requirements as set forth in this regulation.

Article 6

The implementation of this regulation shall be evaluated in not later than 2 (two) years as from the date of stipulation of this regulation.

Article 7

Following the enforcement of this regulation, the import of goods for the need of upstream petroleum and natural gas as well as geothermal business activities, which is realized as from July 16, 2007 to December 31, 2007 can be exempt from the import duty in accordance with the provisions regulated in this regulation, so that:

• 1. the import, which remains in the course of vooruitslag facility can be settled by using definitive Import Declaration (PIB).
• 2. in the case of the import using vooruitslag facility and in the course of collection, the collection is discontinued.

Article 8

This regulation shall come into force as from the date of stipulation and be retroactive to July 16, 2007.

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

Stipulated Jakarta
On December 28,2007
THE MINISTER OF FINANCE,
signed,
SRI MULYANI INDRAWATI