LAW NO. 36/2000 DATED DECEMBER 21, 2000 THE STIPULATION OF GOVERNMENT REGULATION IN LIEU OF LAW NO. 1/2000 ON FREE TRADE AREAS AND FREE PORTS TO BECOME A LAW WITH THE BLESSING OF THE GOD ALMIGHTY THE PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering : a. that in order to face domestic and international developments, it is necessary to respond to challenges of global competition, with the spirit of regional autonomy which provides broad, real and responsible authority to regions proportionally; b. that the regional autonomy, which is materialized by regulations, distribution and exploitation of national resources, as well as the financial equilibrium between the central government and regional administrations, in accordance with democratic principles, public participation, equal distribution and justice as well as regional potentials and diversification, is implemented in the framework of the Unitary State of the Republic of Indonesia; c. that the free trade areas and ports can boost international trading activities which produce foreign exchange to the country and can give great influence and benefits to Indonesia, so as to provide job opportunities maximally, promote tourism industry and domestic and foreign investments; d. that in the framework of speeding up regional development in line with the manifestation of the regional autonomy, it is necessary to stipulate several areas as free trade areas and free ports; e. that since provisions of Law No. 3/1970 concerning the main provisions on Free Trade Areas and Free Ports are no longer relevant with the spirit of the regional autonomy as regulated in Law No. 22/1999 on Regional Administrations, it is necessary to improve the law; f. that in order to ensure the prompt realization of Free Trade Areas and Ports in Indonesia which are in accordance with the spirit of the regional autonomy, the government has stipulated Government Regulation In Lieu of Law No. 1/2000 on Free Trade Areas and Ports; g. that based on the above mentioned considerations, it is necessary to stipulate Government Regulation In Lieu of Law No. 1/2000 on Free Trade Areas and Ports to become a law. In view of : 1. Article 5, sub article (1), article 20, sub article (1) and (2) of the 1945 Constitution as already amended by the Second Amendment to the 1945 Constitution; 2. Law No. 22/1999 on Regional Administration (Statute Book of 1999 No. 60, Supplement Statute Book No. 3839); 3. Law No. 25/1999 on the Financial Equilibrium between the Central Government and Regional Administration (Statute Book of 1999 No. 70, Supplement Statute Book No. 3848); WITH THE APPROVAL OF THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA D E C I D E S : To stipulate : LAW ON THE STIPULATION OF GOVERNMENT REGULATION IN LIEU OF LAW NO. I/2000 ON FREE TRADE AREAS AND FREE PORTS TO BECOME A LAW
Article 1 Government Regulation in Lieu of Law No. 1/2000 on Free Trade Areas and Ports (Statute Book of 2000 No. 147, Supplement Statute Book No. 3996) is stipulated to become a law and encloses it as inseparable part of this law. Article 2 This law starts to be effective as from the date of promulgation. For public cognizance, this Law shall be promulgated and placing it in the Statute Book of the Republic of Indonesia. Stipulated in Jakarta on December 21, 2000 THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd. ABDURRAHMAN WAHID Promulgated in Jakarta on December 21, 2000 STATE SECRETARY OF THE REPUBLIC OF INDONESIA sgd DJOHAN EFFENDI STATUTE BOOK OF THE REPUBLIC OF INDONESIA OF 2000 NO. 251
ELUCIDATION ON LAW OF THE REPUBLIC OF INDONESIA NO. 36/2000 ON THE STIPULATION OF GOVERNMENT REGULATION IN LIEU OF LAW NO. 1/2000 ON FREE TRADE AREAS AND PORTS TO BECOME A LAW GENERAL In the framework of facing domestic and international developments, it is necessary to respond to challenges of global competition, with the spirit of regional autonomy which provides broad, real and responsible authority to regions proportionally, Regional autonomy, which is implemented by regulations, equal distribution and exploitation of national resources, as well as the financial equilibrium between the central government and regional administrations, in accordance with democratic principles, public participation, equal distribution and justice as well as potentials and diversification of regions in the framework of the Unitary State of the Republic of Indonesia. Free trade areas and ports can boost international trading activities resulting in foreign exchange to the country and can provide great influence and benefits for the welfare of Indonesian people. Since provisions on Free Trade Areas and Ports as regulated in Law No. 3/1970 are no longer relevant with the spirit of regional autonomy based on Law No. 22/1999 on Regional Administration, it is necessary to re-regulate Free Trade Areas and Ports. Because the need for the regulation of Free Trade Areas and Ports has been very urgent in a bid to expedite the growth of regional economies, the Government has stipulated Government Regulation In Lieu of Law No. 1/2000 on Free Trade Areas and Ports. In accordance with Article 22, sub-article (2) of the 1945 Constitution, it is necessary to stipulate Government Regulation in Lieu of Law No. 1/2000 on Free Trade Areas and Ports to become a law. ARTICLE BY ARTICLE Article 1 Sufficiently clear Article 2 Sufficiently clear SUPPLEMENT STATUTE BOOK OF THE REPUBLIC OF INDONESIA NO. 4053
ATTACHMENT GOVERNMENT REGULATION IN LIEU OF LAW NO. 1/2000 ON FREE TRADE AREAS AND PORTS PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering : a. that in order to face domestic and international developments, it is necessary to respond to challenges of global competition, with the spirit of regional autonomy which provides broad, real and responsible authority to regions proportionally; b. that the regional autonomy, which is materialized by regulations, distribution and exploitation of national resources, as well as the financial equilibrium between the central government and regional administrations, in accordance with democratic principles, public participation, equal distribution and justice as well as regional potentials and diversification, is implemented in the framework of the Unitary State of the Republic of Indonesia. c. that free trade areas and ports can boost international trading activities which produce foreign exchange to the country and can give great influence and benefits to Indonesia, so as to provide job opportunities maximally, promote tourism industry and domestic and foreign investments. d. that in the framework of speeding up regional development in line with the manifestation of the regional autonomy, it is necessary to stipulate several areas as free trade areas and free ports. e. that since provisions of Law No. 3/1970 concerning the main provisions on Free Trade Areas and Ports are no longer relevant with the spirit of the regional autonomy as regulated in Law No. 22/1999 on Regional Administration, it is necessary to improve the law. f. that based on the above mentioned considerations, it is necessary to stipulate Government Regulation in Lieu of Law No. 1/2000 on Free Trade Areas and Ports to become a law. In view of : 1. Article 5, sub article (1), article 20, sub article (1) and (2) of the 1945 Constitution as already amended by the Second Amendment to the 1945 Constitution; 2. Law No. 22/1999 on Regional Administration (Statute Book of 1999 No. 60, Supplement Statute Book No. 3839); 3. Law No. 25/1999 on the Financial Equilibrium between the Central Government and Regional Administration (Statute Book of 1999 No. 70, Supplement Statute Book No. 3848); D E C I D E S : To stipulate : GOVERNMENT REGULATION IN LIEU OF LAW ON FREE TRADE AREAS AND PORTS
CHAPTER I GENERAL PROVISION Article 1 In this Government Regulation in Lieu of Law, what is meant by : 1. Free Trade Areas and Ports are areas located in the jurisdiction of the Unitary State of the Republic of Indonesia which are separated from the customs area so that they are exempted from import duty, valueadded tax, sales tax on luxury goods and excise. 2. Ports are seaports and airports. Article 2 The land and sea boundaries of Free Trade Areas and Ports are stipulated in Law in the Establishment of Free Trade Areas and Ports. Article 3 In Free Trade Areas and Ports activities, activities in the economic sectors such as trade, maritime, industry, transportation, banking, tourism and other sectors stipulated in Law on the establishment of Free Trade Areas and Ports are executed. CHAPTER II LEGAL STATUS Article 4 Free Trade Areas and Ports are the jurisdiction of the Unitary State of the Republic of Indonesia whose establishment is stipulated by a law. Article 5 The validity period of a Free Trade Areas and Ports is 70 (seventy) years, starting as from the date of establishment of the said free trade areas and ports. CHAPTER III INSTITUTIONAL AFFAIRS Article 6 (1) The President stipulates Free Trade Area and Port Councils in regions, which are hereafter called Area Councils. (2) The chairman and members of the Area Councils are stipulated by the President on the basis of recommendations from governors and regional legislative councils. (3) The term of office of Area Councils is 5 (five) years and can be extended to another term of office of one year.
Article 7 (1) Area Councils establish Free Trade Area and Port Management Board, which are hereafter called Management Boards. (2) The chairman and members of the Management Boards are stipulated by the Area Councils. (3) The term of office of the chairman and members of Board of Management is 5 (five) years and can be extended to another term of office for one year. (4) The Management Boards are responsible to the Area Councils (5) The provision in the organizational structure, tasks and authority of the chairman, vice chairman and members of the Management Boards is further regulated in a decision of the Chairman of the Area Councils. CHAPTER IV TASKS AND AUTHORITY Article 8 (1) The Area Councils as meant in Article 6, sub-article (1) have tasks and authority to stipulate general policies, develop, supervise and coordinate activities of Management Boards. (2) The chairman of the Management Board has tasks and authority to execute the management, expansion and development of Free Trade Areas and Ports in accordance with functions of the Free Trade Areas and Ports (3) In executing the management of Free Trade Areas and Ports, the Board of Management has tasks and authority to make provisions as long as they do not contravene this government regulation in lieu of law and other existing regulations. CHAPTER V FUNCTIONS OF AREAS Article 9 (1) Free Trade Areas and Ports function as places for the development of businesses in the field of trade, service, industry, mining and energy, transportation, maritime and fishery, post and telecommunication, banking, insurance, tourism and other fields. (2) The function as meant in sub-article (1) covers : a. manufacturing, designing and engineering, sorting, sorting out, initial inspection, final inspection, packing and re-packing of goods and raw materials including those imported from other countries, repairing services or reconditioning of machinery and improving of quality; b. provision and development of water infrastructures and facilities and water intakes, communications infrastructures and facilities, including seaports and airports, buildings and electricity networks, post and telecommunications, and other infrastructures and facilities. CHAPTER VI LICENSING Article 10 In order to ensure the smooth activities in Free Trade Areas and Ports, the Board of management is authorized to issue business licenses and other licenses required by businessmen in establishing and running businesses in Free Trade Areas and Ports through the delegation of authority in accordance with the existing regulations.
CHAPTER VII TRAFFIC OF GOODS, QUARANTINE, FOREIGN EXCHANGE, IMMIGRATION, SHIPPING AND AVIATION Article 11 (1) Goods subjected to the banning provisions are prohibited from being imported to Free Trade Areas and Ports (2) The import and export of goods to and from Free Trade Areas and Ports only can be done by businessmen already securing business licenses from the Board of Management. (3) The businessmen as meant in sub-article (2) only can import goods to Free Trade Areas and Ports, which are related to their businesses. (4) The import and export of goods to and from Free Trade Areas and Ports and Duty Areas through seaports and airports which are appointed and under the customs supervision are exempted from import duty, valueadded tax, sales tax on luxury goods and excises. (5) The import and export of goods to and from Free Trade Areas and Ports to/from the customs areas are subjected to customs procedures for the import and export and provisions on excise. (6) The import of consumers goods from outside the customs areas to meet the need of residents in Free Trade Areas and Ports are exempted from import duty, value-added tax, sales tax on luxury goods and excises. (7) The quantity and type of goods securing the facilities as meant in sub-article (6) are stipulated by the Board of Management. Article 12 (1) Regulations on human, animal, fish and plant quarantine in Indonesian territories remain effective in Free Trade Areas and Ports (2) The Board of Management can cooperate with officials of authorized institutions to encourage inspection and other kinds of cooperation. Article 13 (1) The Rupiah is the legal instrument of payment in all over Free Trade Areas and Ports (2) The transfer of the Rupiah from/to the customs areas to and from Free Trade Areas and Ports follow regulations issued by the government and the transfer of the Rupiah from and to Free Trade Areas and Ports and abroad follow regulations in force in the customs areas. (3) Foreign currencies can be traded in Free Trade Areas and Ports through banks or foreign exchange dealers securing licenses in accordance with the existing regulations. (4) In Free Trade Areas and Ports, all international trade transactions are done in foreign currencies by banks securing licenses in accordance with the existing regulations. Article 14 (1) Regulations on immigration affairs in Indonesia remain enforced in Free Trade Areas and Ports (2) The granting of immigration facilities to foreigners executing free trade businesses in Free Trade Areas and Ports is regulated in a decree of the Ministry of Justice and Human Rights. Article 15 The Board of Management, with the approval by the Area Council can make out regulations in the field of shipping and aviation, traffic of goods in ports and the provision of port facilities and so on as well as the stipulation of tariffs of all kinds of services in accordance with the existing regulations.
CHAPTER VIII INCOME AND FINANCIAL SOURCES Article 16 (1) The Board of Management looks for its own income sources for financing its internal affairs (2) The Board of Management can also get income sources from the State Budget, Regional Budgets and other resources which are not against the existing regulations (3) The Board of Management is obliged to manage its finance in accordance with the existing regulations. (4) Financial reports of the Board of Management are audited by financial auditing institutions every year with the existing regulations Article 17 Free Trade Areas and Ports can receive domestic and foreign loans with the approval by the Area Council, Provincial Legislative Council, through the Central Government. CHAPTER IX CLOSING PROVISIONS Article 18 With the enforcement of this Government Regulation In Lieu of Law effective, Law No. 3/1970 on the principle provisions on Free Trade Areas and Ports is declared null and void. Article 19 This Government Regulation In Lieu of Law starts to be effective as from the date of promulgation. For public cognizance, this Government Regulation In Lieu of Law shall be promulgated by placing it in the Statute Book of the Republic of Indonesia. Stipulated in Jakarta On September 1, 2000 THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd. ABDURRAHMAN WAHID Promulgated in Jakarta On September 1, 2000 ACTING STATE SECRETARY OF THE REPUBLIC OF INDONESIA sgd. MARSILAM SIMANJUNTAK STATUTE BOOK OF THE REPUBLIC OF INDONESIA 2000 NO. 147
ELUCIDATION ON GOVERNMENT REGULATION IN LIEU OF LAW NO. 1/2000 CONCERNING FREE TRADE AREAS AND PORTS GENERAL In the framework of facing domestic and international developments, it is necessary to respond to challenges of global competition with the spirit of regional autonomy which gives broad, real and responsible authority to regions proportionally. Regional Autonomy, which is materialized in the regulation, distribution, exploitation of national resources and the financial equilibrium between the central government and regional administrations in accordance with the principles of democracy, public participation, even distribution, justice and regional potentials and diversity, is implemented in the framework of the Unitary State of the Republic of Indonesia Free Trade Areas and Ports can boost international trade activities resulting in foreign exchange to the country and can give great influence and benefits for the welfare of Indonesian people. Provisions on Free Trade Areas and Ports as regulated in Law No. 3/1970 are no longer relevant with the spirit of regional autonomy based on Law No. 22/1999 on Regional Administration, so it is necessary to reregulate Free Trade Areas and Ports. Since the need for the stipulation of Free Trade Areas and Ports has been very urgent in a bid to speed up the growth of economies in regions, it is necessary to stipulate Government Regulation In Lieu of Law on Free Trade Areas and Ports. ARTICLE BY ARTICLE Article 1 and 2 Sufficiently clear Article 3 The opening of other fields which will be stipulated in Government Regulation in Lieu of Law on the Establishment of Free Trade Areas and Ports provide flexibility for regions to diversify activities in other fields other than the economic sector. Article 4 Since Free Trade Areas and Ports are integrated parts of the Unitary State of the Republic of Indonesia, they are not separated from the national law. Article 5 The granting of the period of 70 (seventy) years is meant to provide incentives for domestic and foreign investors to do economic and trade activities in Free Trade Areas and Ports, and to improve fair competition in the framework of increasing national revenues through the increasing of revenues in foreign exchange and domestic and foreign investment. Article 6 Sub article (1) Sufficiently clear Sub article (2)
The involvement of Regional Legislative Councils in the stipulation of the Chairman and Members of the Area Councils constitutes the implementation of Law No. 22/1999 on Regional Administrations. Sub article (3) With the term of office of Chairman and Members being limited, the Board of Management can avoid the abuse of power. Article 7 up to Article 19 Sufficiently clear SUPPLEMENT TO STATUTE BOOK NO. 3996 THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd. ABDURRAHMAN WAHID