INDONESIA

SUBSIDY PROGRAMS AIMED AT INDUSTRIAL SECTORS
Last Changes Made February 2008

Effective February 15, 2000, Import Administration began publishing "Decision Memos" to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a decision memo was published, you will find a link to the memo listed below.

In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.

COUNTERVAILABLE SUBSIDY PROGRAMS

The subsidy programs listed below have been investigated by the Department and have been found to be "countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in those cases.

GOI Provision of Logs at Less Than Adequate Remuneration

Lined Paper (2004) 71 FR 7524 (2/13/06-prelim);   71 FR 47174 (8/16-06-final);   Final Memo

CFS Paper (2005) 72 FR 17498 (4/09/07-prelim);   72 FR 60642 (10/25/07-final);   Final Memo

[Lined Paper]: Timber can be harvested from the GOI land under two main types of licenses: licenses to harvest timber in the natural forest and licenses to establish and harvest from plantations ("HTI licenses"). We preliminarily find that the GOI's provision of a good, pulp logs, to the input suppliers of the pulp and paper producers confers a countervailable subsidy on TK, as it provides a financial contribution, the good was probided for for less than adequate remuneratio, and there is a de facto limitation of stumpage benefit to a group of industries.

[CFS Paper (cites omitted)]: According to the GOI, virtually all harvestable forest land in Indonesia is owned by the National Government. The GOI allows timber to be harvested from the government-owned land under two main types of licenses: “HPH” licenses to harvest timber in the natural forest; and “HTI” licenses to establish and harvest timber from plantations. HTI license holders pay “cash stumpage fees” known as PSDH royalty fees which are paid per unit of timber harvested. In addition to paying PSDH fees, HPH license holders pay a per-unit Rehabilitation Fee (“dana reboisasi” or “DR”) for timber harvested from the natural forest. n1 License holders in Jambi province also pay a PSDA fee for harvest from plantations. ... Information provided by the GOI indicated that standing timber was provided by the GOI to five industries during the POI. These five industries compare to the 23 industries identified by the GOI that existed in Indonesia at the same level of industrial classification (large and medium manufacturing activities) at which the GOI classified the industries that harvest or consume timber. As such, we found that these five industries constitute a limited group of industries within the universe of 23 industries identified by the GOI. Therefore, we determined that the provision of standing timber by the GOI was de facto specific in accordance with section 771(5A)(D)(iii) of the Act.

Subsidized Funding for Reforestation (HTI Program)

Lined Paper (2004) 71 FR 7524 (2/13/06-prelim);   71 FR 47174 (8/16-06-final);   Final Memo
CFS Paper (2005) 72 FR 17498 (4/09/07-prelim);   72 FR 60642 (10/25/07-final);   Final Memo

[Lined Paper]: According to the GOI, in the 1990s the government decided to use money collected as reforestation charges to create public-private joint ventures with HTI holders. In addition to the government's equity contribution, the joint venture could also apply for interest-free loans from the Reforestation Fund to establish the plantation. We preliminarily determine that this loans confers a countervailable subsidy on TK. The loan is a financial contribution as described in section 771(5)(D)(i) of the Act, which gives rise to a benefit in the amount of the difference between what the borrower paid and what the borrower would have paid on a comparable commercial loan (section 771(5)(E)(ii)). The loan program is specific because within the meaning of section 771(5A)(D)(i) because it is limited to public/ private joint venture tree plantations.

[CFS Paper (cites omitted)]: The GOI has reported that there are three types of plantations in Indonesia: (1) privately owned, (2) voluntary HTI joint ventures, and (3) compelled HTI joint ventures which implement transmigration policy. Of these three types of plantations, only HTI joint ventures could apply for zero-interest rate loans. The GOI reported that the loaned amounts came from the DR Fund. The HTI joint venture could apply for zero-interest loans from the DR Fund for the establishment phase of the plantation. According to the GOI, loan amounts were payable to the joint venture in increments based on the amount of harvesting done each year and the total amount of the loan could not exceed 32.5 percent of the calculated plantation costs. The GOI required that the private party guarantee the loan repayment in full. In 2000, the GOI discontinued funding joint ventures through the DR Fund loan programs, although existing joint ventures which had previously obtained loans through the DR Fund would receive loan disbursements and would be required to make loan payments as required by loan agreements finalized before 2000. ... The loan program is de jure specific within the meaning of section 771(5A)(D)(i) of the Act, because participation in the program is limited to HTI joint venture plantations.

GOI's Log Export Ban

CFS Paper (2005) 72 FR 60642 (10/25/07-final);   Final Memo

[CFS Paper (cites omitted)]: The GOI's complete ban on the export of logs was in place from 1985 through the POI, with the exception of a short period of time from 1998 to 2001. As a result, for 17 of the 20 years prior to the POI, the GOI's log export ban completely foreclosed log suppliers' access to any possible alternative to the domestic market. This fact pattern can be contrasted to other types of export restraints, such as: quantitative export restrictions that curtail but still allow for some amount of exports, export duties, or various types of administrative or bureaucratic requirements (e.g., certification requirements). Depending on the type, severity and other characteristics of the restraint, these “partial restraints” may allow for alternative sales outlets that are not available under an export ban which eliminates all such alternative sales outlets and would likely have a significant impact on the market dynamics of the product in question. A total export ban, especially one that has remained in effect for as long as the Indonesian log ban, therefore, stands out in terms of the scope and extent of its likely impact on the market for the product and players involved. We find that this log export ban is not a mere policy pronouncement or exhortation; log suppliers are required to comply with the ban under threat of law, including criminal sanctions. The GOI therefore exercises direction over these suppliers by imposing its legal authority to criminally prosecute any supplier who exports logs from Indonesia. The result is that log suppliers are limited to selling in the domestic market as directed by the government. This ... resulted in an abundant supply of logs at suppressed prices that benefitted the downstream industries that use these logs, particularly the pulp and paper industry.

Debt Forgiveness through GOI Acceptance of Instruments with No Market Value

CFS Paper (2005) 72 FR 60642 (10/25/07-final);   Final Memo

[CFS Paper (cites omitted)]: Petitioner alleged that the GOI, through IBRA, accepted SMG/APP's shares in its affiliated bank, Bank Internasional Indonesia (BII), for debt repayment at a time when BII was in financial collapse and its shares were essentially worthless. ... Respondents provided information about the transfer of BII shares, which they explained occurred as part of a transaction that also involved a $ 90 million cash payment and the transfer of “Certificates of Entitlement” (COEs). ... The COEs were financial instruments that represented a bank's former shareholder's right to repurchase bank shares. COEs were issued to the Widjaja family when the GOI, through IBRA, assumed the SMG/APP loan assets from BII's balance sheet in an effort to strengthen the bank's financial condition and restore it to a healthy operating condition. ... At verification, the Department learned for the first time that some of companies whose debt was paid with COEs are holding companies with ownership interests in companies in the SMG/APP CFS group. Therefore, based on adverse facts available, we continue to find that IBRA's acceptance of COEs as payment to be a company-specific action of the GOI, in accordance with section 771(5A)(D)(iii) of the Act. ... Record information shows that these COEs were non-transferable, non-negotiable, and had no market or commercial value. COEs only had value to the extent they were used to repurchase previously-owned bank shares back from IBRA. In other words, this was not an equal value-for-value transaction; SMG/APP was allowed by the GOI to use an instrument with no commercial monetary value in the market to repay its debt obligations to the government. Thus, we conclude that these COEs had no value, and we determine that the GOI's decision to allow SMG/APP to repay its debt with COEs constitutes a financial contribution within the meaning of section 771(5)(D)(i) of the Act in the form of debt forgiveness. Moreover, IBRA's acceptance of the COEs from SMG/APP as partial repayment of its debt conferred a benefit to TK and PD in accordance with section 771(5)(E)(ii) of the Act in the amount of the debt repaid with the valueless COEs.

Debt Forgiveness through Company Buyback of Own Debt from the GOI

CFS Paper (2005) 72 FR 60642 (10/25/07-final);   Final Memo

[CFS Paper (cites omitted)]: Petitioner alleged that the GOI provided debt forgiveness when IBRA sold $880 million of SMG/APP debt for $214 million to Orleans Offshore Investment Ltd. (Orleans), which Petitioner alleged is affiliated with SMG/APP. ... The GOI was unable to provide most of the requested information to the Department. ... As such, the Department relied upon facts available for its analysis of this program. In addition, the Department preliminarily determined that the GOI significantly impeded the Department's investigation of this allegation by not cooperating to the best of its ability, and applied adverse inferences to its analysis of record information, as provided by section 776(b) of the Act. ... During the period when IBRA made the decision to sell the SMG/APP debt to Orleans, IBRA was under increasing public scrutiny amid claims that it was providing special deals to large corporate groups, and was allowing a number of these groups to buy back their own debt. ... At verification, we also learned that the sale of SMG/APP debt to Orleans was one of only five sales conducted under the Strategic Asset Sales Program, which was a special program established by the GOI to manage the sale of the assets of companies which the GOI had identified as having particular social or economic significance. ... Because we find Orleans to be affiliated with SMG/APP, we also find that SMG/APP bought back its own debt from the GOI, at a steep discount. The sale by the GOI of SMG/APP's debt back to SMG/APP constitutes a financial contribution and benefit in the form of debt forgiveness - that is, SMG/APP's overall debt obligation was reduced by the difference between the amount of the SMG/APP debt held by IBRA and the amount SMG/APP paid for this debt. Through this debt sale, SMG/APP was effectively relieved of the liability of repaying its debt to an outside party. ... Finding that a company repurchased its own debt from GOI at a steep discount when such a transaction was prohibited, means that this financial contribution and benefit are specific to a company, SMG/APP, in accordance with section 771(5A)(D)(iii) of the Act. Furthermore, because a special program was created, with special rules and obligations, to handle the debt sales of five large and significant obligors, including SMG/APP, we also find that this sale was limited to a group of enterprises in accordance with section 771(5A)(D)(iii)(I) of the Act.

1989 Equity Infusion to CRMI

Cut-to-Length Carbon Steel Plate (1998) 64 FR 40457 (7/26/99-prelim);   64 FR 73155 (12/29/99-final)

The Government of Indonesia (GOI) provided CRMI with an equity infusion in 1989. The equity infusions were not on terms consistent with commercial considerations. We therefore determined that these equity infusions were countervailable.

1995 Equity Infusion into Krakatau

Cut-to-Length Carbon Steel Plate (1998) 64 FR 40457 (7/26/99-prelim);   64 FR 73155 (12/29/99-final)
Hot-Rolled Carbon Steel Products (SR) (Expedited review - no prelim);   71 FR 70960 (12/7/06-final);   Final Memo
Hot-Rolled Carbon Steel Products (1999) 66 FR 20236 (4/20/01-prelim);   66 FR 49637 (9/28/01-final);   Final Memo;   Amended

The Government of Indonesia (GOI) provided Krakatau with equity in the form of debt-to-equity conversions in 1995. In 1995, the GOI converted subordinated loans into equity, as authorized by the Minister of Finance through Decree S-44/MKO16/1995. Through the Decree, the conversion was approved at a slightly lower amount than originally authorized. We determined that the equity conversion was not consistent with the usual investment practice of a private investor and confers a benefit in the amount of each infusion. The equity conversion is specific because it was limited to Krakatau. Accordingly, the 1995 debt-to-equity conversion is a countervailable subsidy within the meaning of section 771(5) of the Act.

Pre-1993 Equity Infusions into Krakatau

Cut-to-Length Carbon Steel Plate (SR) (Expedited review - no prelim) 70 FR 45692 (8/8/05-final);   Final Memo
Cut-to-Length Carbon Steel Plate (1998) 64 FR 40457 (7/26/99-prelim);   64 FR 73155 (12/29/99-final)
Hot-Rolled Carbon Steel Products (1999) 66 FR 20236 (4/20/01-prelim);   66 FR 49637 (9/28/01-final);   Final Memo;   Amended

The Government of Indonesia made equity infusions into Krakatau prior to 1993. Because we determined that Krakatau was unequityworthy during this period, we determined that the equity infusions into Krakatau were not consistent with the usual investment practice of a private investor and confer a benefit in the amount of each infusion. Accordingly, we determined that the equity granted to Krakatau provides a countervailable subsidy.

Three-Step Equity Infusion to CRMI

Cut-to-Length Carbon Steel Plate (1998) 64 FR 40457 (7/26/99-prelim);   64 FR 73155 (12/29/99-final)
Hot-Rolled Carbon Steel Products (1999) 66 FR 20236 (4/20/01-prelim);   66 FR 49637 (9/28/01-final);   Final Memo;   Amended

In 1989, an equity infusion was provided to CRMI in three installments. We determined that the equity infusions were made on terms inconsistent with commercial considerations and were therefore countervailable.

Two-Step Loan Programs

Cut-to-Length Carbon Steel Plate (SR) (Expedited review - no prelim) 70 FR 45692 (8/8/05-final);   Final Memo
Cut-to-Length Carbon Steel Plate (1998) 64 FR 40457 (7/26/99-prelim);   64 FR 73155 (12/29/99-final)
Hot-Rolled Carbon Steel Products (SR) (Expedited review - no prelim);   71 FR 70960 (12/7/06-final);   Final Memo
Hot-Rolled Carbon Steel Products (1999) 66 FR 20236 (4/20/01-prelim);   66 FR 49637 (9/28/01-final);   Final Memo;   Amended

Pursuant to Government Regulation number 12/1969, the Ministry of Finance through Bank Indonesia, can borrow money denominated in foreign currencies to lend to Indonesian companies. The Government of Indonesia (GOI) provided Krakatau with 'two-step' loans for the construction of certain fixed assets. These 'two-step' loans were drawn by Krakatau from "credit facilities" in the billing currencies of its equipment suppliers, who, in turn received payments from banks appointed by lenders. In the year in which the credit facilities were extended, the interest rate charged was inconsistent with comparable commercial loans. Therefore, these loans were countervailable.

SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further details of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

Government of Indonesia Loan Guarantee to Sinar Mas/APP

Lined Paper (2004) 71 FR 7524 (2/13/06-prelim);   71 FR 47174 (8/16-06-final);   Final Memo not used

In 1999, SMG/APP's affiliated bank, Bank Internasional Indonesia (BII), qualified for a GOI recapitalization program run by the Indonesian Bank Restructuring Agency (IBRA). As part of the agreement, IBRA took a majority ownership of BII and all SMG/APP debt owed to BII was restructured. A subsequent debt restructuring agreement was signed by SMG/APP, BII and IBRA the following year. In February 2001, SMG/APP negotiated a new restructuring agreement on its debt to BII. The terms of the agreement stated that BII would retain SMG/APP's debt on its books, but the GOI extended a loan guarantee on the debt. The guarantee was not outstanding during the POI and conferred no benefit during the POI. Therefore, this program was not countervailable.

Subsidized Funding for Reforestation (HTI Program): Government Capital Infusions into Joint Venture Forest Plantation

CFS Paper (2005) 72 FR 60642 (10/25/07-final);   Final Memo

[CFS Paper (cites omitted)]: Under this program, the GOI provided equity funding to establish forestry companies as joint ventures between the GOI and a private forestry company. Both RAL and FI are joint ventures between the GOI and an SMG/APP CFS company. ... We found that the capital infusions provided by the GOI to RAL and FI under this program had been provided in the 1990s, and thus pre-dated the alleged unequityworthyiness we were investigating. As such, we did not examine whether the GOI provision of capital to joint venture forest plantations provides a countervailable subsidy, and we preliminarily determined that this program was not used. ... For purposes of the final determination, we have also examined these capital infusions in light of 19 CFR 351.507(a)(2), to determine if the prices paid by the government for its shares were greater than the prices paid by the private investors. ... Based on verification, we find that the GOI's capital infusions were provided at the same time and on comparable terms as the private capital infusions. As such, we determine that the investment is not inconsistent with the usual private investment practice of private investors and that these equity infusions are not countervailable.

Export Countertrade (Counterpurchase) Program

Certain Textiles and Apparel (1983) 49 FR 49672 (12/21/84-prelim);   Investigation Terminated 50 FR 15208 (4/17/85)

The counterpurchase program is administered by the Ministry of Trade and requires certain foreign suppliers with which the GOI has entered into procurement contracts exceeding 500 million rupiah in value to purchase for export commodities other than oil and gas in an amount equal to that of the procurement contract. No government financial assistance is provided in support of purchases made under the countertrade program, and the GOI plays no part in setting the prices or establishing the terms of any purchases made under the program.

Government Investment in Fiber Mills

Certain Textiles and Apparel (1983) 49 FR 49672 (12/21/84-prelim);   Investigation Terminated 50 FR 15208 (4/17/85)

No program description available.

Textile Export Incentive Program

Certain Textiles and Apparel (1983) 49 FR 49672 (12/21/84-prelim);   Investigation Terminated 50 FR 15208 (4/17/85)

The Government of Indonesia (GOI) established a "Serifikat Ekspor" (Export Certificate or SE) program in 1978 as a mechanism for the rebate of import duties and taxes (import sales tax and import withholding tax). Under the Act under which it was established, the non-excessive rebate of import duties and import taxes borne by inputs that are physically incorporated into the final product is not considered a subsidy. The SE program refunds import duties and import taxes that "bear directly or indirectly on exported products" and is therefore not countervailable.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

No programs listed.

SUBSIDY PROGRAMS THAT HAVE NOT BEEN USED

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

Government Ban on Log Exports

Lined Paper (2004) 71 FR 7524 (2/13/06-prelim);   71 FR 47174 (8/16-06-final);   Final Memo not used

No program description available.

Subsidized Funding for Reforestation (Hutan Tanaman Industria or HTI Program): Commercial Rate Loans

CFS Paper (2005) 72 FR 17498 (4/09/07-prelim);;   72 FR 60642 (10/25/07-final);   Final Memo

Investment Credit for the Expansion of the Rubber Industry

Extruded Rubber Thread (1997) 63 FR 48191 (9/9/98-prelim);   64 FR 14695 (3/26/99-final) not used

No program description available.

Incentives for Companies with Publicly Held Stock

Certain Textiles and Apparel (1983) 49 FR 49672 (12/21/84-prelim);   Investigation Terminated<50 FR 15208 (4/17/85) not used

No program description available.

SUBSIDY PROGRAMS DETERMINED NOT TO EXIST

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that, while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.

No programs listed.