ProdukHukum Perdagangan
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
DECIDES:
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);
DECIDES:
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-artic le (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
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
DECIDES:
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);
DECIDES:
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-artic le (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