DRAFT OF REGULATION OF THE MINISTER OF COMMUNICATION AND INFORMATION OF THE REPUBLIC OF INDONESIA NUMBER OF 2014 REGARDING
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1 DRAFT OF REGULATION OF THE MINISTER OF COMMUNICATION AND INFORMATION OF THE REPUBLIC OF INDONESIA NUMBER OF 2014 REGARDING PROCEDURE FOR CALCULATION OF LOCAL CONTENT IN TELECOMMUNICATION DEVICES BY THE MERCY OF ONE SUPREME GOD THE MINISTER OF COMMUNICATION AND INFORMATION OF THE REPUBLIC OF INDONESIA, Considering : a. that to support the industry development and to support the policy on use of local content in the telecommunication provision, it is necessary to calculate Local Content in telecommunication devices; b. that in this respect, it is necessary to stipulate the Regulation of the Minister of Communication and Information regarding Procedure for calculation of Local Content in telecommunication devices; Recalling: 1. Law of the Republic of Indonesia Number: 36 of 1999 regarding Telecommunication (Official Gazette of the Republic of Indonesia of 1999 Number 154, Supplement to the Official Gazette Number 3881);
2 2. Law Number 19 of 2002 regarding Copy Right (Official Gazette of the Republic of Indonesia of 2002 Number 85, Supplement to the Official Gazette Number 4220); 3. Government Regulation of the Republic of Indonesia Number: 52 of 2000 regarding Telecommunication Provision (Official Gazette of the Republic of Indonesia of 2000 Number 107, Supplement to the Official Gazette Number 3980); 4. Regulation of President Number: 47 of 2009 regarding Establishment and Organization of the State Ministry as already amended several times, recently by the Regulation of President Number 91 of 2011 regarding Fourth Amendment to Regulation of President Number 47 of 2009 regarding Establishment and Organization of the State Ministry; 5. Regulation of President Number: 24 of 2010 regarding Position, Task, and Function of the State Ministry as well as Organizational Composition, Task and Function of Echelon I of State Ministry as already amended several times, recently by the Regulation of President Number 92 of 2011 regarding Second Amendment to Regulation of President Number 24 of 2010 regarding Position, Task, and Function of the State Ministry and the Organizational Composition, Task and Function of Echelon I of State Ministry;
3 6. Decree of Minister of Transportation Number: KM. 21 of 2001 regarding Implementation of Telecommunication Service as already amended recently by the Regulation of Minister of Communication and Information Number 31/PER/M.KOMINFO/09/2008 regarding Decree of Minister of Transportation Number KM. 21 of 2001 regarding Implementation of Telecommunication Service; 7. Regulation of Minister of Communication and Information Number 07/PER/M.KOMINFO/01/2009 regarding Arrangement of Radio Frequency Band for Wireless Broadband; 8. Regulation of Minister of Communication and Information Number 41/PER/M.KOMINFO/10/2009 regarding Procedure for Assessment of Attainment of Local Content in Telecommunication Provision; 9. Regulation of Minister of Communication and Information Number: 01/PER/M.KOMINFO/3/2010 regarding Telecommunication Network Provision; 10. Regulation of Minister of Communication and Information Number 17/PER/M.KOMINFO/10/2010 regarding Organization and Work System of Ministry of Communication and Information; 11. Regulation of Minister of Industry Number 16/M.IND/PER/2/2011 regarding Provisions on and Procedure for Calculation of Local Content; 12. Regulation of Minister of Communication and Information Number 21 of 2013 regarding Implementation of
4 Content Provision Service in Cellular Mobile Network and Wireless Fixed Network with Limited Mobility; 13. Regulation of Minister of Communication and Information Number 32 of 2013 regarding Implementation of Digital Television Broadcasting and Multiplexing Broadcasting through Terrestrial System; HAS DECIDED: To Stipulate: REGULATION OF MINISTER OF COMMUNICATION AND INFORMATION REGARDING PROCEDURE FOR CALCULATION OF LOCAL CONTENT IN TELECOMMUNICATION DEVICES CHAPTER I GENERAL PROVISIONS Article 1 In this Regulation of the Minister of Communication and Information, by: 1. Domestic product shall mean goods and/or service including design and engineering produced or manufactured by the company made investment and production in Indonesia, of which the production or manufacturing process may use the imported raw material or component; 2. Goods shall mean every touchable object (hardware) and or non-touchable object (software) in intact or decompose form, covering tradable, usable, exploitable or utilizable raw material, semi-finished, or finished goods/equipment.
5 3. Industry shall mean the economic activity processing raw material, raw substance, semi-finished, or finished goods/equipment to become the goods with the higher value of its utilization, including industrial design and engineering activities. 4. Production Goods Level 1 (one) shall mean the goods constituting the end product. 5. Production Goods Level 2 (two) shall mean the goods constituting the component of end product. 6. Local Content, hereinafter abbreviated to TKDN, shall mean the amount of local content in the goods and /or service. 7. Verification shall mean the activity to carry out the verification of attainment of TKDN calculated by the goods supplier by using the data taken or collected from the goods supplier business activity. 8. List of Inventory Taking of Local Content shall mean the list of domestic product, containing the name and address of producer, type of product, specification, standard, capacity, and TKDN value. 9. Clarification shall mean the activity to request for further explanation from Ministry of Communication and Information to the goods supplier on the attainment of TKDN in the certificate issued by the Ministry of industry.
6 10. Patent shall mean exclusive right provided by the State to the Inventor for his invention in technology sector, whose for certain term carries out his own invention or issues approval to the other party to carry out the same. 11. Intellectual Property Right hereinafter referred to as HKI shall mean the right to obtain legal protection on intellectual property according to the legislation. 12. Intellectual Property shall mean assets arising or generating from the intellectual capability of the human being through his creativity, sense and intention that may be in terms of work in technology, science, arts and literature. 13. Industrial Design shall mean a creation on form, configuration, or composition of line or color, or line and color, or combination thereof in from of three dimension or two dimension providing esthetical impression and can be materialized in three dimensions or two dimensions pattern as well as can be used to produce a product, goods, industrial commodity, or handicraft. 14. Integrated Circuit shall mean an electronic product in finished or semi-finished form, containing various element and at least one of such elements is the active element, that partly or entirely correlates to each other as well as formed on integrated basis in a semiconductor material intended to produce the electronic function.
7 15. Integrated Circuit Layout Design shall mean the creation in form of design of three dimension placement of various elements, at least one of such elements shall be the active element, as well as part of or all interconnection in an Integrated Circuit and such there dimension placement is intended for preparation of Integrated Circuit. 16. Copy Right shall mean the exclusive right for the right creator or receiver to announce or duplicate its creation or issue permit for such purpose without prejudice to the restrictions according to the legislation shall mean the sign in form of picture, name, word, letters, numerals, composition of color, or combination of such elements having the distinguishing power and used in the goods trade activity. 18. Goods supplier shall mean business entity or individual whose business activity provides goods. 19. Minister shall mean Minister of communication and information.
8 CHAPTER II TKDN CALCULATION Part One General Article 2 (1) Telecommunication devices shall fulfill TKDN commitment according to the legislation. (2) The implementation of TKDN calculation for telecommunication devices as referred to in paragraph (1) shall fulfill the provisions herein. Article 3 TKDN for telecommunication devices as referred to in Article 2 shall cover: a. TKDN for Manufacturer; and/or b. TKDN for Development. Part Two TKDN for Manufacturer Article 4 (1) Calculation of TKDN for Manufacturer shall be made to the type of goods constituting the result of the same production process and using the same raw material.
9 (2) The calculation of TKDN for Manufacturer as referred to in Article 3 item a shall be calculated by using the formula as follows: % TKDN = cost for domestic component x 100% production cost of finished goods Article 5 (1) The cost for domestic component by using the formula as referred to in Article 4(1) shall constitute the production cost of finished goods less the cost for foreign component. (2) The determination of cost for domestic component referred to in Article 4(1) shall be based on the criteria as follows: a. for the material, it is directly calculated based on the country of origin; b. for manpower, it is calculated based on the nationality; c. for the work equipment/work facility, it is calculated based on ownership and country of origin. (3) The production cost of finished goods as referred to in Article 4(1) shall cover: a. direct material cost; b. direct manpower cost; and c. factory overhead cost.
10 Article 6 (1) The direct material cost as referred to in Article 5(3) item a and (4) item a shall be calculated until the workshop location for the relevant goods. (2) The domestic component for the work equipment/work facility as referred to in Article 5(3) item c shall be determined with the provisions as follows: a. for work equipment produced in the home country and owned by domestic goods/service supplier, it is assessed 100% (one hundred percent) of its domestic component; b. for work equipment produced in the home country and owned by foreign goods/service supplier, it is assessed 75% (seventy five percent) of its domestic component; c. for work equipment produced in the home country and owned by the goods/service supplier in cooperation between the domestic goods/service supplier and foreign goods/service supplier, its domestic component is assessed 75% (seventy five percent) plus 25% (twenty five percent) proportional to the shares composition of the domestic goods and/or service supplier; d. for work equipment produced overseas and owned by the domestic goods and/or service supplier, it is assessed 75% (seventy five percent) of its domestic component;
11 e. for work equipment produced overseas and owned by the foreign goods and/or service supplier, it is assessed 0% (zero percent) of its domestic component; and f. for work equipment produced overseas and owned by the goods and/or service supplier in cooperation between the domestic goods and/or service supplier and foreign goods/service supplier, its domestic component is assessed proportional to the shares composition of the domestic goods supplier. (3) The determination of the domestic component for work equipment/work facility as referred to in paragraph (2) shall be as per Appendix I forming integral part hereof. Article 7 (1) The calculation of TKDN for Manufacturer as referred to in Article 6(1) shall be made to every type of goods and/or component of telecommunication devices. (2) Every type of goods and/or component of telecommunication devices as referred to in paragraph (1) shall constitute the goods produced based on the same production process and raw material.
12 CHAPTER III PRODUCTION GOODS LEVEL Article 8 (1) The calculation of TKDN for Manufacturer shall be traced until the Production Goods level 2 (two) produced by the domestic producer. (2) The calculation of TKDN for Manufacturer level 2 (two) as referred to in paragraph (1) shall be declared 100% (one hundred percent), if: a. The Production Goods level 2 (two) is produced in the home country; b. the cost for Production Goods level 2 (two) is below 3% (three percent) of the cost for production goods level 1 (one); and c. the accumulated cost of all Production Goods level 2 (two) as referred to in item b is maximum 10% (ten percent) of total cost for goods level 1 (one). Article 9 The form of calculation of TKDN for Manufacturer shall be as per Appendix II, Appendix III, and Appendix IV forming integral part hereof. CHAPTER IV
13 CALCULATION of TKDN for DEVELOPMENT Article 10 (1) The calculation of TKDN for development shall be made to the type of goods constituting the result of research and development. (2) The calculation of TKDN for development can be made through: a. weighting process to Intellectual Property Right (HKI); or b. project base. (3) TKDN for development made through the weighting process to Intellectual Property Right (HKI) as referred to in paragraph (2) item a shall cover: No. Criteria Weight a. HKI Relevant Patent - Registered (5%) - Applied (20%) 2 Design - Industry (10%)
14 - Integrated Circuit Layout (10%) 20% 3 Copy Right 4 Mark b. Material Cost TOTAL 100% (4) TKDN for development made through the project base as referred to in paragraph (2) item b shall cover the costs for: a. material; b. work equipment; c. manpower; and d. supporting service. Article 11 (1) The form of calculation of TKDN for development for industry shall be as per Appendix V and Appendix VI forming integral part hereof.
15 CHAPTER V CALCULATION OF TKDN FOR MANUFACTURER AND TKDN FOR DEVELOPMENT Article 12 (1) The calculation of Goods TKDN for telecommunication devices shall constitute the calculation obtained from the Calculation of TKDN for Manufacturer and TKDN for development already subjected to weighting. (2) The calculation of TKDN for Manufacturer shall be weighted by 80% and calculation of TKDN for development shall be weighted 20%. Article 13 Form of calculation of goods TKDN for telecommunication devices shall be as follows: DESCRIPTION Weight KDN TKDN I. TKDN for Manufacturer Goods II. TKDN for development TKDN for Telecommunication devices
16 a. Weight shall constitute the percentage value provided for TKDN; b. The Percentage of Domestic component (KDN) shall constitute the TKDN value of Manufacturer goods and TKDN value for development; c. The percentage of TKDN shall constitute the calculation of Goods TKDN for telecommunication devices obtained from the calculation of TKDN of Manufacturer s Goods multiplied by the Weight and Calculation of TKDN for Telecommunication devices multiplied by Weight; and d. Calculation Formula: % TKDN (3B) = Weight (80%) x TKDN for Manufacturer Goods (1A) + Weight (20%) x TKDN for development (2A) CHAPTER VI SUPPORTING DOCUMENT Article 14 (1) The Goods supplier shall provide the true information related to the verification process carried out by the goods user, Government or Independent Survey Institution designated by the Government. (2) The calculation of Goods TKDN for telecommunication devices shall be made based on the accountable document.
17 (3) In case the document of goods TKDN assessment as referred to in paragraph (2) cannot be accounted for, TKDN value for the relevant component shall be assessed nil. (4) The ownership evidence documents may be in terms of: a. deed of Notary Public; b. Motor Vehicle Ownership Book (BPKB); c. PIB (Notification on Goods Import); or d. invoice of purchase of work equipment. CHAPTER VII TECHNOLOGY AUDIT Article 15 (1) For verification of TKDN for development related to software, a Government institution shall be appointed to carry out technology audit. (2) Technology audit as referred to in paragraph (1) shall involve the National Information and Communication Technology Board. CHAPTER VIII CLOSING Article 16
18 This Regulation of Minister shall become effective as of the promulgation date. For public cognizance, it is instructed to promulgate this Regulation of Minister by inserting the same in the State Gazette of the Republic of Indonesia. Stipulated in Jakarta on MINISTER OF COMMUNICATION AND INFORMATION OF THE REPUBLIC OF INDONESIA, Tifatul Sembiring Promulgated in Jakarta on MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA, AMIR SYAMSUDIN STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2014 NUMBER...
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