Indonesia Respond on 4G DCL Regulation to WTO

Ilustrasi (dok)

JAKARTA (IndoTelko) - Indonesian Minister of Communication and Informatics Technology Rudiantara finally respond to the United States (US) action who will take the domestic local content regulation for 4G devices to the World Trade Organization (WTO).

"I've had a discussion with Apple officials yesterday. The domestic content level (DCL) regulation should not be an issue anymore," said the minister.

Rudiantara said that he had clarified on the local content regulation with delegates from the Ministry of Commerce of the United States.

"I said, every year there are about US $ 5 billion trade deficit due to the large imports of mobile phones. What will you do if you are me?, possibly would do the same thing. Because the greater the deficit, making a country's currency is volatile," he said.

In the Pre-Washington Dialogue within the US official visit, there is no discussion about the domestic content level issue.

"I was confused too if it still submitted into the WTO. Maybe when they submitted the issue, they were not understood," said Rudiantara.

Further, the domestic content level regulation cannot stand alone because actually the Indonesian Ministry of Commerce also has regulations on registered importers are required to build a factory in Indonesia.

"This is a work of many parties, such as the Ministry of Trade, Ministry of Communication, and the Ministry of Industry. Now the Ministry of Industry is making regulation that encourage the global brands to establish a design house in Indonesia and measured by the domestic content level," he concluded.

Earlier, in an official statement of the Permanent Mission of the Republic of Indonesia in its portal revealed that in the meeting of the Committee for Trade-Related Investment Measures (TRIMS) WTO some time ago mentioned that a number of WTO members expressed their attention to Indonesian investment-related trade policies in five of the twelve agenda discussed.

Most of the concerned regulations are Indonesian local content policy in various sectors. One of them, the Indonesian policy that brought members at the meeting is the policy of local content requirements for 4G / LTE Mobile Devices by US and local content requirements in the Telecommunications Sector (Universal Service Obligation) in undeveloped and underdeveloped areas by the Japanese.

As is known, in Article 2.1 of the TRIMs Agreement WTO Members are prohibited from applying local content requirement obligations under the investment rules. This is also confirmed in the illustrative list referred to Annex Agreement.
On the 4G/LTE related agenda to local content requirements of 4G / LTE, the US praised the plan of deregulation and streamlining of rules related to the economy which echoed the Government of Indonesia in early September.

However, the US was surprised by the adoption of Regulation No. MENKOMINFO 27, 2015, signed on July 8, 2015. The US claimed that the local content requirements set forth in these rules will force mobile phone manufacturers and mobile device-based 4G / LTE to relocate investments to Indonesia.

This would be detrimental to developing countries around Indonesia, which also bases its economic growth on foreign investment.

It is estimated that in 2017, 400 million mobile phones will be used by the Indonesian people. Given these regulation, the contribution of 4G / LTE mobile devices trade-based in tax revenue from the giant mobile manufacturers in the world and technology transfer will be guaranteed.

When this is considered to violate the TRIMS regulation, then this is the perfect example where developing countries need greater flexibility in the TRIMS for the development of their domestic industries, as proposed by the G-90 proposals in the Special Session meeting of the Committee on Trade and Development last week.(es)