LEGAL OPINION RELATED KCIC’s CAPITAL GOODS IN THE MASTER LIST IMPOSED BY IMPORT

DUTY

I. Background

Jakarta-Bandung Haig Speed Railway Project (JKT-BDG HSR) connects Jakarta and Bandung.
Passing 9 cities and counties, including Jakarta province, Bekasi city, Bekasi regency, Karawang
regency, Purwakarta regency, West Bandung regency, Cimahi city, Bandung city and Bandung
regency, the total length of the trase is around 142.3 km, of which around 4.7km are in in the
Jabodetabek area and around 137.6 km are in the province of West Java, and include four stations
from Halim, Karawang, Walini and Tegal Luar. and EMU depots and integrated maintenance bases in
Tegal Luar, and there are several constructions works in the form of tunnels, bridges, subgrade.

II. Problems:

How to apply the Masterlist to KCIC's capital goods on Jakarta-Bandung high-speed railway Project?

III. Legal Basis:

1. Law Number 25 of 2007 concerning Investment

2. Regulation of the Head of the Investment Coordinating Board Number 14 of 2015 concerning
Guidelines and Procedures for the Principle License for Investment
3. Regulation of the Minister of Finance Number 176 / PMK.011 / 2009 concerning Exemption from
Import Duty on the Import of Machinery and Goods and Materials for Development or Industrial
Development in the Context of Investment
4. Regulation of the Director General of Customs and Excise Number: Per-51 / BC / 2012
concerning Guidelines for Implementing Temporary Imports

IV. Legal Review

1. Law Number 25 of 2007 concerning Investment

Article 1 number (1):

Investment is all forms of investment activities, both by domestic investors and foreign
investors to do business in the territory of the Republic of Indonesia.

Article 1 number (3):

Foreign investment is an investment activity to do business in the territory of the Republic of

Indonesia which is carried out by foreign investors, both those who use full foreign capital
and those who are affiliated with domestic investors.

In relation to the Investment Facility regulated in Article 18 paragraph (4) letter (b):

b. exemption or relief of import duty on the import of capital goods, machinery, or equipment
for production purposes that cannot be produced domestically;
 Article 21 stated that:

In addition to the facilities as referred to in Article 18, the Government provides facilities for
services and / or licensing to investment companies to obtain:

a. land rights;

b. immigration service facilities; and

c. import licensing facilities.

2. Regulation of the Head of the Investment Coordinating Board Number 14 of 2015 concerning
Guidelines and Procedures for the Principle License for Investment

Article 13 paragraph (1):

PMA companies must implement the terms and conditions of investment and capital values
in order to obtain Principle License.

3. Regulation of the Minister of Finance Number 176 / PMK.011 / 2009 concerning Exemption from
Import Duty on the Import of Machinery and Goods and Materials for Development or Industrial
Development in the Context of Investment

Article 2 paragraph (3):

Exemption from import duty as referred to in paragraph (1), is given as long as the machine,
goods and materials are:

a. not yet produced domestically;

b. has been produced domestically but has not met the required specifications; or

c. already produced domestically but the amount has not met the needs of the industry,

based on the list of machines, goods and materials determined by the minister responsible
for the industrial sector or the appointed official, after coordinating with the relevant technical
agency.

4. Regulation of the Director General of Customs and Excise Number: Per-51 / BC / 2012 concerning
Guidelines for Implementing Temporary Imports, mentioned in Article 3 paragraph (2) letter (d)
number (3):

Goods for the needs of experts, namely Imported Goods While those brought together or not
by experts who come to Indonesia to carry out certain work according to their expertise to
meet the criteria:

1. supported by documents showing as experts;

2. the goods are used by experts or their use is under the supervision of experts; and

3. does not include equipment to be used in the manufacturing industry, packaging of

goods, exploration of natural resources, construction needs, building repairs or
maintenance, land leveling projects or the like, except in the form of hand tools.
Based on the explanation of the above regulations, related to the granting of duty-free facilities to the
KCIC capital goods masterlist are as follows:

i. KCIC is a foreign investment company, thus subject to regulations concerning capital

management and Regulation of the Head of the Investment Coordinating Board Number 14 of
2015 concerning Guidelines and Procedures for Principle Licensing for Investment, in this
case the mandatory license is to start or continue the business.

ii. Based on the Minister of Finance Regulation Number 176 / PMK.011 / 2009 concerning
Exemption from Import Duty on the Import of Machinery and Goods and Materials for Industrial
Development or Development in the Context of Investment it is clearly regulated that the
exemption from import duty is provided as long as the machine, goods and materials have not
been produced domestically; has been produced domestically but has not met the
required specifications; or has been produced domestically but the amount has not met
the needs of the industry.

Thus, in the case of submitting exemption from import duty on machinery, goods and materials
in carrying out project work, KCIC can explain to the relevant parties the need to procure
machinery, goods and materials for project purposes and in accordance with the principle
permits owned by KCIC in project implementation and adjusted to KCIC's principle permits for
the implementation of this project.

iii. In connection with the Regulation of the Director General of Customs and Excise Number:
Per-51 / BC / 2012 concerning Guidelines for Implementing Temporary Imports, mentioned in
Article 3 paragraph (2) letter (d) number (3) which explains about import exceptions while one
of them is for construction needs,

As such, KCIC and HSRCC as the executor of the work provide explanations regarding the
procurement of imported goods for construction purposes.

V. Conclusion

Whereas for the Master list submission for KCIC capital goods must be adjusted with the principle
permit given to KCIC and provide a detailed explanation of the use of construction materials in the
implementation of this project.