Picture : Dedi Supriadi, S.H.,M.M. Founding Partner DSAP Law Firm
The architectural integrity of a nation’s domestic market is frequently challenged by the complexities of international trade, specifically the practice of dumping. In the Indonesian legal context, dumping is conceptualized as the importation of goods at an export price lower than the normal value in the country of origin, a practice that necessitates robust regulatory intervention to prevent material injury to domestic industries. The primary legal instrument governing these interventions is Government Regulation Number 34 of 2011 concerning Anti-Dumping Measures, Countervailing Measures, and Trade Safeguard Measures. This regulation establishes a sophisticated administrative and legal framework, overseen by the Indonesian Anti-Dumping Committee (Komite Anti Dumping Indonesia or KADI), designed to navigate the lifecycle of an investigation from the initial petition to the final determination.
The Normative Foundation of Trade Remedies in Indonesia
Indonesia’s trade remedy regime is deeply rooted in both domestic legislation and international commitments. Law Number 7 of 2014 concerning Trade provides the statutory basis for the government to protect domestic markets from unfair trade practices. This is further reinforced by Law Number 17 of 2006, which amends the Customs Law to allow for the imposition of additional import duties, such as Anti-Dumping Import Duties (Bea Masuk Anti-Dumping or BMAD), to offset the effects of dumping. The procedural execution of these laws is detailed in Government Regulation (PP) Number 34 of 2011, which replaced earlier regulations to achieve closer alignment with the World Trade Organization (WTO) Anti-Dumping Agreement (ADA).
The Indonesian government views these measures not as protectionist barriers but as essential tools for ensuring a level playing field. From a legal perspective, anti-dumping actions are categorized as trade remedies intended to restore competitive balance. The complexity of these regulations reflects the dual necessity of complying with WTO standards—which demand transparency, objectivity, and scientific evidence—while simultaneously addressing the specific needs of Indonesian industrial sectors like steel, textiles, and petrochemicals.
| Regulatory Instrument | Year | Primary Function | Legal Status |
| Law No. 7 | 2014 | General Trade Framework | Active |
| Law No. 17 | 2006 | Customs and Duty Imposition | Active |
| PP No. 34 | 2011 | Anti-Dumping/Safeguard Procedures | Active |
| Permendag No. 33 | 2014 | KADI Organizational Structure | Active |
| Permendag No. 8 | 2023 | Export Price Benchmarking | Active |
Institutional Architecture: The Role and Mandate of KADI
KADI serves as the central technical body responsible for conducting anti-dumping and countervailing investigations. Established under the Ministry of Trade, KADI is a non-structural organization that operates with a degree of technical independence, although it remains accountable to the Minister of Trade. The committee’s mandate, as outlined in Regulation of the Minister of Trade Number 33/M-DAG/PER/6/2014, involves collecting evidence, processing data, and recommending the imposition or termination of duties based on its findings.
The internal structure of KADI is specialized to handle the two critical components of an investigation: the calculation of the dumping margin and the assessment of industry injury. Article 12 of Permendag 33/2014 dictates that the Investigation Sub-Committee for Proving Dumping and Subsidy is responsible for testing evidence regarding the existence of dumped goods, while the Investigation Sub-Committee for Proving Losses analyzes the causal relationship between these imports and domestic industrial distress. This separation of duties is designed to ensure that the final recommendation is the result of a multifaceted, rigorous analysis rather than a singular perspective.
The authority of KADI extends to conducting on-site verifications, both domestically and internationally, to validate the information provided by interested parties. This investigatory power is critical, as the committee must often navigate confidential financial data and complex global supply chains to determine whether a foreign exporter is practicing price discrimination.
The Petition Phase: Standing and Industry Representation
The genesis of an anti-dumping investigation is typically a written application filed by domestic producers of a like product. Under PP 34/2011, the “standing” of the petitioner is a prerequisite for initiation. This requirement ensures that the investigation represents the interests of a significant portion of the domestic industry rather than a few isolated firms.
The Quantified Threshold of Support
To satisfy the standing requirement, the petition must meet two specific quantitative benchmarks defined by Article 5.4 of the WTO ADA and reflected in Article 1 paragraph 17 of PP 34/2011. First, the producers supporting the application must account for more than 50% of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. Second, in no instance should the producers supporting the application account for less than 25% of the total domestic production.
| Standing Requirement | Percentage Threshold | Legal Reference |
| Minimum Industry Support | > 50% of active respondents | PP 34/2011 Art. 1(17) |
| Minimum Total Production | > 25% of domestic output | WTO ADA Art. 5.4 |
| Petitioner Identity | Producers of “Like Product” | PP 34/2011 Art. 4 |
Prima Facie Evidence and Data Confidentiality
The application must contain prima facie evidence of dumping, injury, and a causal link. This evidence must be supported by proper documentation, which KADI categorizes into confidential and non-confidential versions. Confidentiality is paramount in these proceedings; Article 4 of PP 34/2011 allows parties to withhold sensitive business information, provided they provide a non-confidential summary that allows other parties to understand the essence of the data. If KADI finds the evidence sufficient, it initiates the investigation; if not, it may request additional information or reject the petition entirely.
The Investigative Framework: Timelines and Extensions
Once a petition is accepted, KADI publishes a notice of initiation, which marks the “starting date of investigation”. The standard duration for an anti-dumping investigation is 12 months, a limit intended to provide legal certainty to all stakeholders. However, the complexity of modern trade often necessitates extensions.
Managing Extended Deadlines
Under Article 9 paragraph 2 of PP 34/2011 and Article 5.10 of the WTO ADA, KADI may extend the investigation period for up to an additional six months, bringing the total duration to 18 months. These extensions are often triggered by the high volume of responses from interested parties, especially in cases involving multiple countries. For instance, the ongoing investigation into Polypropylene Homopolymer (Homo-PP) initiated in late 2024 involves eight countries—Saudi Arabia, the Philippines, South Korea, Malaysia, China, Thailand, Singapore, and Vietnam—leading to a massive influx of data that KADI must meticulously verify.
The Role of Questionnaires and Cooperation
The primary tool for data collection is the questionnaire, sent to domestic producers, foreign exporters, and importers. The questionnaire for exporters is particularly detailed, seeking information on domestic sales, costs of production, and export prices to Indonesia. Article 15 of PP 34/2011 notes that “blocking the investigation”—refusing to provide data or access for verification—is a significant obstacle. In such cases, KADI is authorized to use “Facts Available,” which often relies on the information provided in the petition, potentially leading to less favorable outcomes for non-cooperative exporters.
Proving the Dumping Margin: Prices and Costs
At the core of the KADI technical analysis is the determination of the dumping margin, which is the difference between the normal value and the export price.
Normal Value and Market Economy Status
The “Normal Value” is generally the price paid for a like product in the ordinary course of trade in the domestic market of the exporting country. However, calculations become complex if sales in the home market are distorted or non-existent. In such scenarios, KADI may use a “Constructed Value”—calculating the cost of production plus a reasonable amount for administrative, selling, and general costs, and profit.
The BOPP (Biaxially Oriented Polypropylene) case provides an illustrative example where KADI faced challenges in calculating the constructed value for producers in Malaysia, with parties disputing the inclusion of direct selling expenses and profit percentages. Furthermore, for non-market economies, KADI may resort to using prices from a “Surrogate Country” to establish a fair normal value, a method that is often a point of contention in WTO disputes.
Export Price and Adjustments
The “Export Price” is the price actually paid or payable for the product exported to Indonesia. To ensure a “fair comparison,” both the normal value and the export price must be adjusted to the same level of trade, typically the ex-factory level. KADI accounts for differences in:
- Physical characteristics of the goods.
- Import charges and indirect taxes.
- Discounts, rebates, and quantities.
- Levels of trade and terms of sale.
The resulting dumping margin is expressed as a percentage of the export price. If the margin is de minimis (less than 2%), the investigation for that specific exporter is terminated.
The Anatomy of Industry Injury
Dumping alone is insufficient to trigger duties; the domestic industry must suffer “Material Injury” or the threat thereof. PP 34/2011 defines injury broadly, encompassing actual material loss, the threat of such loss, or the significant retardation of a new industry’s development.
Evaluating the 15 Economic Indicators
In accordance with Article 3.4 of the WTO ADA, KADI conducts an objective examination of all relevant economic factors that have a bearing on the state of the industry. These are often summarized into 15 specific indicators that provide a holistic view of industrial health.
| Indicator Category | Specific Factors Analyzed |
| Sales and Market | Actual and potential decline in sales, market share, and production. |
| Financial Performance | Profits, return on investment, and cash flow. |
| Operational Efficiency | Productivity, capacity utilization, and inventories. |
| Labor and Wages | Effects on employment, wages, and growth. |
| Investment and Growth | Ability to raise capital or investment. |
Price Effects and Undercutting
A critical part of the injury analysis is the impact of dumped imports on domestic prices. KADI looks for evidence of “Price Undercutting” (imported goods sold at prices significantly lower than domestic prices) and “Price Suppression” or “Price Depression” (domestic producers unable to increase prices to cover costs or forced to lower prices to compete). In the investigation into imports from Turkey, KADI noted that even if the domestic industry’s prices were increasing, injury could still exist if those prices were being undercut by dumped imports, preventing the industry from achieving a sustainable profit margin.
Establishing the Causal Link
The final technical hurdle is the “Causal Link”—proving that the dumped imports are the cause of the injury. This requires KADI to demonstrate that the volume and price effects of the dumped imports correlate with the decline in the domestic industry’s performance.
The Non-Attribution Principle
KADI must also ensure that injury caused by other factors is not attributed to dumping. Under PP 34/2011 and the WTO Agreement, the committee must examine external factors such as:
- Changes in the patterns of consumption or demand.
- Developments in technology that make domestic production less competitive.
- The export performance and productivity of the domestic industry itself.
- Contractions in the domestic market unrelated to imports.
For instance, in the case of PT Indofood, KADI had to consider the impact of raw material price fluctuations in international markets and the depreciation of the Rupiah, as these factors also influenced the company’s financial condition.
From Preliminary Findings to Final Determination
The investigation process moves through several formal reporting stages. Before a final decision is reached, KADI may issue a Preliminary Determination, often accompanied by the recommendation for Provisional Measures.
Provisional Anti-Dumping Duties
Provisional measures are temporary duties imposed during the investigation to prevent further injury while the committee completes its work. These can only be applied at least 60 days after the initiation of the investigation and are typically limited to a duration of four to six months. Any provisional duty collected is refundable if the final determination is negative.
The Final Report and Public Disclosure
The Final Determination is based on a “Final Report” that synthesizes all the evidence gathered through questionnaires, on-site verifications, and public hearings. KADI is required to disclose the “essential facts” to all interested parties, allowing them to provide comments before the recommendation is sent to the Minister of Trade. The conclusion of an investigation can take several forms:
- Affirmative Final Determination: Leading to a recommendation for BMAD.
- Negative Final Determination: Leading to the termination of the investigation without duties.
- Termination based on National Interest: Even if dumping and injury are proven, the government may decide not to impose duties.
The National Interest Clause: A Strategic Filter
Article 18 of PP 34/2011 introduces a “National Interest” consideration that acts as a final policy filter. Once KADI provides its recommendation, the Minister of Trade evaluates the broader impact of the proposed anti-dumping duties on the national economy.
Balancing Upstream and Downstream Interests
The national interest test considers the impact of duties on domestic industrial users, national food security, price stability, and employment. Anti-dumping duties protect upstream producers but may increase costs for downstream industries that use the product as a raw material.
The 2025 Synthetic Filament Yarn case involving China is a landmark example of this balancing act. Despite KADI’s affirmative finding of dumping and injury, the Indonesian government decided to terminate the investigation without duties. The reasoning was that the domestic supply of yarn was insufficient to meet the needs of the Indonesian textile industry. Imposing duties would have starved downstream garment manufacturers of essential materials, thereby hurting a sector that is a major employer and exporter.
Case Study Analysis: Petrochemicals and Steel
The petrochemical and steel sectors are the most frequent subjects of KADI investigations, reflecting their strategic importance to Indonesia’s industrialization.
The Polypropylene Homopolymer (Homo-PP) Investigation
Initiated in late 2024 following a petition by PT Chandra Asri Pacific Tbk, this case targets imports from eight major trading partners. The alleged dumping margin for Vietnam was noted at 13.6%, highlighting the significant price gap KADI must investigate. This case is particularly complex because Indonesia still relies on imports for roughly 60% of its homo-PP demand. The government must therefore carefully determine whether protecting domestic production capacity outweighs the risk of supply shortages for plastic manufacturers.
Hot Rolled Plate (HRP) and Steel Trade Remedies
Steel investigations are a perennial feature of KADI’s workload. In October 2024, KADI concluded a sunset review for Hot Rolled Plate (HRP) imports from China, uncovering that the steel was sold at prices 10% lower than the Chinese domestic market. KADI recommended extending the anti-dumping duties by up to 50% to prevent the recurrence of injury to the domestic steel industry, which faces intense competition from state-supported foreign producers.
Challenges and Juridical Hurdles
Despite a clear regulatory framework, anti-dumping investigations in Indonesia face persistent challenges. Critics point to issues regarding transparency, the length of investigations, and the difficulty of accurately proving injury.
Procedural Constraints and WTO Compliance
International law, through the WTO regime, sets strict limits on how investigations are conducted. Indonesia has previously been challenged at the WTO, as seen in the case brought by Indonesia against South Korea regarding paper imports (DS312). This case taught Indonesian authorities that failing to provide proper disclosure of verification results or using “facts available” without special circumspection can lead to the invalidation of measures by the WTO Dispute Settlement Body.
Sharia Economic Perspectives on Dumping
An emerging area of discourse in Indonesia is the alignment of trade remedies with Sharia economic principles. From this perspective, dumping is often equated with ighraq—a predatory pricing strategy intended to dominate the market and eliminate competition. Sharia law emphasizes the principle of justice (‘adl) and the prohibition of causing harm (la darar wa la dirar), providing an ethical justification for state intervention to prevent the destruction of domestic businesses through unfair trade.
Future Outlook: Digitalization and Regional Integration
The future of anti-dumping in Indonesia will be shaped by the increasing digitalization of trade and the expansion of regional agreements like the RCEP.
Adapting to Modern Trade Realities
As trade shifts toward digital platforms and e-commerce, KADI may need to adapt its methodologies for calculating normal value and tracking import surges. The use of “big data” and more sophisticated economic modeling will likely become standard in injury assessments to ensure that determinations are both scientifically sound and resistant to international legal challenges.
Strategic Use of Trade Remedies
Indonesia is increasingly viewing anti-dumping not just as a defensive tool but as part of a proactive industrial strategy. This is evident in the government’s willingness to use the “National Interest” clause to protect downstream industries when necessary. As the global trade environment remains volatile, the anatomy of the anti-dumping investigation will continue to evolve, balancing the rigors of international law with the pragmatic needs of the Indonesian economy.
Conclusion: The Integrated Lifecycle of Trade Protection
The anatomy of an anti-dumping investigation in Indonesia, from the initial standing of the petitioner to the final determination by the Minister of Trade, is a testament to the country’s sophisticated legal and administrative capacity. Through PP 34/2011 and the technical expertise of KADI, Indonesia has built a system that largely mirrors international best practices while maintaining the flexibility to serve the national interest. For domestic producers, the process offers a vital pathway to relief from unfair competition, while for foreign exporters and importers, it demands a high degree of transparency and compliance. As the nation continues to navigate the complexities of global trade, this investigative framework remains a cornerstone of its economic security and industrial development strategy.