21
Oct2021

The Organization of Industrial Sector (Government Regulation Number 28 of 2021)

As a form of implementation of Law Number 11 of 2020 on Job Creation which changes a number of regulations, one of which is in the industrial sector, Indonesian Government has issued Government Regulation Number 28 of 2021 on The Organization of The Industrial Sector (GR 28/2021). Several provisions in PP 28/2021 related to the implementation of the industrial sector are as follows:

 

Raw Materials and/or Auxiliary Materials

Industrial Companies must use Raw Materials and/or Auxiliary Materials in the production process in an efficient, environmentally friendly, and sustainable manner. The raw materials and/or auxiliary materials shall at least include:[1]

  1. Raw Materials and/or Auxiliary Materials from nature;
  2. Raw Materials and/or Auxiliary Materials from production results;
  3. Raw Materials and/or Auxiliary Materials from byproducts results; and
  4. Raw Materials and/or Auxiliary Materials from recycled products.

In using Raw Materials and/or Auxiliary Materials, Industrial Companies hall prioritize the use of domestically-originated.[2] Guarantee on the availability of Raw Materials and/or Auxiliary Materials from within the country shall be conducted through:[3]

  1. mapping and stipulation of areas for the provision of Raw Materials and/or Auxiliary Materials;
  2. introduction of the use of alternative Raw Materials and/or Auxiliary Materials; and
  3. establishment of upstream Industry and natural resource-based Industry.

In order to guarantee the availability of Raw Materials and/or Auxiliary Materials, the Central Government may conduct:[4]

  1. prohibition or restriction on Export of Raw Materials and/or Auxiliary Materials; and
  2. granting the ease of Import of Raw Materials and/or Auxiliary Materials, with the following conditions:
    1. there is no supply availability of domestic Raw Materials and/or Auxiliary Materials; and/or
    2. the supply availability of domestic Raw Materials and/or Auxiliary Materials is not sufficient in terms of quantity/volume and/or quality standards.
    3. Import of Raw Materials and/or Auxiliary Materials shall only be conducted by Industrial Companies that have a business identification number which is valid as Manufacturer Importer Identification Number (Angka Pengenal Importir Produsen/API-P).
    4. Industrial Companies are prohibited from selling or transferring imported Raw Materials and/or Auxiliary Materials, except in accordance with Regulation of the Minister.

 

Conformity Assessment Institutions (Art. 38 GR 28/2021)

Conformity assessment of mandatory SNI, Technical Specification, and/or Code of Conduct as referred to in Article 10 paragraph (1) of Regulation Government Number 2 of 2017 on the Construction of Industrial Facilities and Infrastructures shall be carried out by accredited conformity assessment institutions in accordance with its scope and is appointed by the Minister. The conformity assessment institutions shall consist of:

  1. product certification agencies;
  2. test laboratories; and
  3. inspection agencies.
  4. All of them shall shave an effective business licensing in the certification services industry sector (for letter a), Business Licensing in the laboratory testing services Industry sector (for letter b), and Business Licensing in the periodic inspection services Industry sector (for letter c). In addition, all of them shall have test laboratories domiciled or located in the jurisdiction of the Republic of Indonesia.

 

Strategic Industry

Strategic Industry shall be controlled by the state and consist of industries which:[5]

  1. fulfill important needs to people’s welfare or affect the lives of many people;
  2. increase or generate added value to strategic natural resources; and/or
  3. have links to state defense and security interests.

The state controls strategic industries through:

  1. Ownership Arrangement[6]

The ownership arrangement of Strategic Industry shall be carried out by the Central Government through:

  1. total equity participation by the Central Government;
  2. establishment of joint ventures between the Central Government and private sectors; or
  3. restriction of ownership by foreign investors in accordance with provisions of laws and regulations.

 

  1. Establishment of Policies[7]

The state grants facilities in the form of fiscal and non-fiscal facilities which conducts:

  1. structure deepening;
  2. technology research and development;
  3. testing and certification; or
  4. restructuring of machinery and equipment;

 

  1. Business Licensing Arrangement[8]

Business Licensing for Strategic Industries shall be granted by the Central Government and shall be granted in accordance with provisions of laws and regulations on the implementation of risk-based business licensing.

 

  1. Production, Distribution, and Price Arrangements [9]

The production, distribution and price arrangements shall at least stipulate the amount of production and distribution and product prices. Such action shall be conducted to maintain the stability of the national economy and national security.

 

  1. Supervision[10]

The supervision shall be conducted by the Minister at least for:

  1. the stipulation of Strategic Industry as national vital objects; and
  2. production, distribution, and product prices.

 

The supervision shall be carried out on the ownership status, policy implementation, legality of Business Licensing, production activities, distribution, and application of product prices from the Strategic Industry.

 

Community Participation in Industrial Development

Through GR 28/2021, the community may participate in the planning, implementation, and supervision of Industrial development. The community consists of individuals, and/or group of people who are incorporated insofar that they have an interest in the national Industrial development progress.[11]

Community participation in Industrial development shall be realized in the form of:[12]

  1. provision of suggestions, opinions, and proposals; and/or
  2. submission of information and/or reports.

which may be submitted to the Central Government and/or Regional Governments through the SIINas.

 

 

DISCLAIMER:

Any information contained in this Article is provided for informational purposes only and should not be construed as legal advice on any subject matter.  You should not act or refrain from acting on the basis of any content included in this Legal Update without seeking legal or other professional advice.  This document is copyright protected. No part of this document may be disclosed, distributed, reproduced or transmitted in any form or by any means, including photocopying and recording or stored in a retrieval system of any nature without the prior written consent of SIP Law Firm.

 

 

 

[1] Art. 3 GR 28/2021

[2] Art. 5 GR 28/2021

[3] Art. 8 GR 28/2021

[4] Art. 7, Art. 10 ayat (1), Art. 19 ayat (1), Art. 20 GR 28/2021

[5] Art. 60 (1-2) GR 28/2021

[6] Art. 61 GR 28/2021

[7] Art. 62 GR 28/2021

[8] Art. 63 GR 28/2021

[9] Art. 64-65 GR 28/2021

[10] Art. 66 GR 28/2021

[11] Art. 67 GR 28/2021

[12] Art. 69 GR 28/2021

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