Indonesia removes local manufacturing requirement from its patent law

11.12.2020 | Law and policy

The dialogue between Switzerland, most notably the IPI, and the relevant Indonesian authorities has borne fruit with the adoption of the Omnibus Law, in autumn 2020.

At the beginning of October 2020, the Indonesian Parliament passed the Omnibus Law. This legislative amendment concerns the revision of a total of 76 laws covering areas such as labour, taxation and intellectual property.

On 2 November 2020, President Joko Widodo enacted the Omnibus Law (Job Creation Law, No. 11 of 2020).

Under Chapter VI on Ease of Doing Business, Article 107 amends certain provisions of Patent Law No. 13 of 2016, particularly Article 20. Contrary to the WTO/TRIPS Agreement, Article 20 obliged patent owners to manufacture their patented products in Indonesia (‘local manufacturing requirement’). Otherwise, patent protection was not guaranteed. Article 20 has been revised by the Omnibus Law and as a result, the use of a patent (‘working the patent’) no longer requires the patented product to be manufactured in Indonesia. Instead, the importation of a patented product is now also considered as working the patent. In addition to the law, various ordinances and regulations will now have to be amended accordingly.

Since the end of 2016, the IPI, in close cooperation with the Swiss Embassy in Jakarta (FDFA) and the State Secretariat for Economic Affairs (SECO/EAER), has maintained close contact with the relevant Indonesian authorities, with a view to render the Indonesian law WTO-compatible. Such efforts had also been undertaken within the framework of the EFTA-Indonesia free trade agreement negotiations. With the adoption of the Omnibus Law by the Indonesian Parliament, this goal has now been achieved and problematic legal uncertainties have been removed. This will improve the bilateral trade and investment climate between Switzerland and Indonesia.