Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia

(433) The 2020 Mining Law retained the foreign ownership divestment requirement and specifically provided that foreign investors must divest a number of shares necessary to ensure that at least 51 % of the total shares of the company are held by Indonesian investors. This minimum divestment requirement is consistent with the current divestment requirements applied under GR 23/2010. As regards timing and procedures for such divestment, 2020 Mining Law provides that such matters will be subject to relevant Government Regulations (currently, GR 23/2010), which requires that the divestment process starts after the 5th anniversary of the mine’s production.

(434) These provisions show that the GOID seeks to increase its meaningful control over the mining companies by increasing its presence and displacing foreign-owned mining companies. In order to ensure that its overarching objective to provide nickel ore for the domestic downstream industry, these entities are obliged after a relatively short period to relinquish ownership with a first right of acquisition conferred on the GOID and other public companies. There are also specific rules on the share valuations which do not appear to be in line with normal market negotiations that would take place between operators absent these provisions. On this basis, the Commission concluded that the divestment obligations showed how the GOID keeps a meaningful control on the ownership and management of mining companies to ensure that they continue performing governmental functions in line with the GOID’s policy objectives.

Mandatory pricing mechanism

(435) The investigation showed that the pricing of nickel ore was subject to a government mechanism that prevented the normal market dynamics of supply and demand to determine the price. The evolution of the relevant legislation on pricing shows that GOID has been actively monitoring nickel ore prices with specific measures dating back to 2010. In the early days, the GOID claimed that the pricing mechanism mainly applied in the context of collecting royalties. Subsequently, the GOID’s intervention on prices has been reinforced over the years until the formal introduction into legislation of a specific mandatory pricing mechanism that codified a pricing mechanism which already de facto existed. Throughout the years, and significantly as of 2017, this mechanism was always meant to set the price at a significant discount in comparison to the prevailing international market price, in order to favour the development of the stainless steel industry as per the agreement and bilateral cooperation with the GOC.

(436) The main objective of the pricing mechanism is to ensure that nickel ore is supplied at a significant discount to the international prices for the benefit of the stainless steel industry. At the same time, the regulated price seeks to take into account also the interests of miners to ensure continuity of supply at this discounted price, and avoid bankruptcies and social unrest. Finally, it ensures a minimum level of revenue for the State, although a much lower one than if there were no discount as compared to the international price. This has been confirmed by the Acting Director General of Mineral and Coal who said, as mentioned below, that it intended to find ‘justice for smelters who want the lowest possible prices. But on the other hand, [it] must ensure that nickel mining activities provide sufficient margin for mining.’ (93)

(437) On the basis of all the evidence available, the Commission concluded that via the regulated price the GOID specifically intended to ensure that the price of nickel ore would yield a significant discount as compared to international market prices to the benefit of the stainless steel industry. Via this mechanism, the GOID exercised meaningful control over the mining companies’ ability to otherwise set prices at a different level on the basis of normal market supply and demand.

Designation of mining companies as ‘National vital objects’

(438) An additional piece of evidence showing that mining companies are vested with government authority is their formal designation as ‘National vital objects’.

(439) The investigation showed that the nickel miners PT. Antam TBK UPBN Southeast Sulawesi, PT. Ceria Nugraha Indotama, PT Vale are formally recognised as National Vital Object in the Mineral and Coal sector (94). It is recalled that Antam is a State-owned company and the State also holds shares in PT Vale, while PT Ceria Nugraha Indotama is a private company.

(440) This status is based on Decree of the MEMR Number 202.K/HK.02/MEM.S/2021 concerning the second amendment to the Decree of the Minister of Energy and Mineral Resources Number 77 K/90/MEMILIKI/2019 concerning National Vital Objects in the energy and mineral resources, of October 18, 2021 (95). 34 companies in the mineral and coal sectors are listed as national vital objects.

(441) The companies entitled to this recognition are businesses vital to the economic development of the country or sources of State income of a strategic nature. For the mineral and coal sector. The National vital objects will have the first priority from the Indonesian National Police Force in terms of security assistance when there is any disruption to operations or threat. According to Regulation 63 of 2004 about security of the national vital objects, ‘The National Vital Objects Maintainer is responsible for the safeguarding of the National Vital Objects each based on the principle of internal security’. Furthermore, ‘The State Police of the Republic of Indonesia is obliged to provide security assistance to the National Vital Object’ and ‘The State Police of the Republic of Indonesia deployed the National Vital Object protection force based on the need and estimation of the threat and/or disorder that may arise.’ The State intervention is also assured in case there are actions of trade unions (96).

(442) On the basis of the above, the Commission concluded that the fact that mining companies active in the nickel ore business – whether public or private – are entitled to be formally recognised as ‘National vital objects’, shows once more that they possess, exercise or are vested with governmental authority.

Conclusion

(443) The above overall legal environment and assessment shows that the mining companies providing nickel ore are ‘public bodies’. The legal and economic environment prevailing in Indonesia shows that mining companies perform governmental functions by providing nickel ore on behalf of the GOID. Indeed, nickel ore, like other minerals in Indonesia, are natural resources fully controlled and managed by the GOID. Despite the widespread lack of cooperation by the GOID, the investigation has shown that a number of mining companies representing a substantial domestic production of nickel ore are fully or partially State-owned, and/or that they are managed and/or controlled by the GOID.

(444) In addition to the formal indicia of control, the GOID has created a complete normative framework mining companies have to adhere to. As such, the core characteristics of the mining companies show that nickel mining companies, rather than being normal market operators, simply implement the framework set out by the GOID in the exercise of governmental functions with respect to the SSCR industry. The sustained and systemic nature of all measures enacted by the GOID cover all aspects of the production and processing, sale, restrictions to export, and market pricing of nickel ore, as well as strict control over foreign companies via divestment obligations and the formal designation of National strategic objects of domestic miners.

(445) The Commission thus concluded that the GOID provides a financial contribution in the form of provision of nickel ore to smelters related to stainless steel producers via domestic mining companies acting as public bodies within the meaning of Article 3(1)(a)(iii) of the basic Regulation.

(446) In addition to the findings of the mining companies being a ‘public body’ for the purpose of Article 3(1)(a) of the basic Regulation, the Commission also examined in the alternative whether the GOID provided a financial contribution by entrusting or directing nickel ore mining companies (as private bodies) to sell nickel ore to the stainless steel producers for less than adequate remuneration, as provided by Article 3(1)(a)(iv) of the basic Regulation.

Legal standard

(447) Article 3(1)(a)(iv), second indent, of the basic Regulation states that a financial contribution exists if a government: ‘entrusts or directs a private body to carry out one or more of the type of functions illustrated in points (i), (ii) and (iii) which would normally be vested in the government, and the practice, in no real sense, differs from practises normally followed by governments’. The type of functions described by Article 3(1)(a)(iii) of the basic Regulation occurs where ‘a government provides goods or services other than general infrastructure, or purchases goods…’. Those provisions mirror paragraphs (iii) and (iv) of Article 1.1(a)(1) of the SCM Agreement and should be interpreted and applied in the light of the relevant WTO case law.

(448) The WTO panel in US – Export Restraints ruled that the ordinary meaning of the two words ‘entrust’ and ‘direct’ in Article 1.1(a)(1)(iv) of the SCM Agreement require that the action of the government must contain a notion of delegation (in the case of entrustment) or command (in the case of direction). It rejected the US ‘cause-and-effect-argument’ and asked for an explicit and affirmative action of delegation or command. However, in a subsequent case (US – Countervailing duties on DRAMS), the Appellate Body held that the replacement of the words ‘entrusts’ and ‘directs’ by ‘delegation’ and ‘command’ is too rigid as a standard. According to the Appellate Body, ‘entrustment’ occurs where a government gives responsibility to a private body and ‘direction’ refers to situations where the government exercises its authority over a private body. In both cases, the government uses a private body as proxy to effectuate the financial contribution, and ‘in most cases, one would expect entrustment or direction of a private body to involve some form of threat or inducement’.

(449) At the same time, paragraph (iv) of Article 1.1(a)(1) of the SCM Agreement does not allow Members to impose countervailing measures to products ‘whenever the government is merely exercising its general regulatory powers’ or where government intervention ‘may or may not have a particular result simply based on the given factual circumstances and the exercise of free choice by the actors in that market’. Rather, entrustment and direction implies ‘a more active role of the government than mere acts of encouragement’. Moreover, the WTO did not consider that ‘leaving discretion to a private body is necessarily at odds with entrusting or directing that private body […]. While there may be cases where the breadth of discretion left to the private body is such that it becomes impossible to properly conclude that that private body has been entrusted or directed (to carry out a particular task), this is a factual/evidentiary matter to be addressed on a case-by-case basis.’ In line with those WTO rulings, not all government measures capable of conferring benefits equate to a financial contribution under Article 3 of the basic Regulation and Article 1.1 (a) of the SCM Agreement.

(451) In line with that case-law, the Commission examined the nature of the GOID's intervention, i.e. whether the GOID's intervention involves the entrustment or direction of nickel ore producers to provide nickel ore at less than adequate remuneration to smelters; the nature of the entrusted or directed bodies, i.e. whether the nickel ore producers are private bodies within the meaning of Article 3(1)(a)(iv) of the basic Regulation; and the action of the entrusted or directed bodies, i.e. whether the entrusted or directed nickel ore producers provide nickel ore to the Indonesian smelters for less than adequate remuneration and hence act as a proxy for the GOID. Moreover, the Commission assessed whether the function carried out would normally be vested in the government, i.e. whether the provision of nickel ore to smelters in Indonesia is a normal government activity, and whether such function does not, in real sense, differ from the practices normally followed by governments, i.e. whether the actual provision of nickel ore by producers/mining companies, in real sense, differs from what the government would have done itself.

Assessment

(452) In view of the WTO case-law referred to in the previous section, Commission analysed first whether the GOID’s support to the Indonesian steel industry in the form of provision of nickel ore for less than adequate remuneration is effectively an objective of the various government measures in question and not merely a ‘side effect’ of the exercise of general regulatory power. The investigation examined in particular whether the lower prices of nickel ore found were part of the government’s objectives, or whether the lower prices were rather an ‘inadvertent’ by-product of general governmental regulation. The Commission concluded that the various interventions by the GOID had as their objective to support the stainless steel industry, and that the lower nickel ore prices were an intended objective of these measures.

(453) The GOID took a number of measures throughout the years to achieve its policy goal. Section 4.4 has detailed the relevant background and context leading to the GOID’s decision to maximise the added value from the significant nickel ore reserves by developing domestically a smelting and downstream stainless steel industry. Part of this overall policy of the GOID was to incentivize smelters to build and maintain smelting capacity in Indonesia, inter alia by ensuring low prices for nickel ore for these smelters, and in particular through export restrictions in combination with additional government measures; notably domestic processing requirements and a mandatory pricing mechanism keeping prices artificially low.

(454) In particular, the 2009 Mining Law imposed the obligation on all nickel ore mining companies either to build their own nickel processing/purification facility or to sell their product to such a domestic facility. This constituted a de facto export ban of unprocessed nickel ore. One of the key stated objectives of the 2009 Mining Law in this respect is: ‘to support and grow the expansion of national capabilities so that there is greater competitive ability at the national, regional, and international levels’ (Article 3(d)). The 2009 Mining Law confirms the GOID aim to build the downstream mineral processing industries and ensure that they have competitive advantage on an international level. As the main use for nickel ore is stainless steel production, it is clear that exporting producers are the key beneficiaries of the 2009 Mining Law.

(456) In a nutshell, the mandatory processing obligation required smelters to process nickel ore domestically, showing that the GOID intended to ensure that nickel ore would be produced and processed domestically, and not exported. The subsequent de facto or de jure export restrictions and bans on the export of nickel ore effective as of 2014, after the transitional period starting in 2009, and notably the full export ban as of 1 January 2020, were specifically intended to ensure that the nickel ore, in addition to having to be processed domestically, could not be exported. Instead it had to be kept in the domestic market for the benefit of the stainless steel industry and resulted in lower domestic nickel ore prices.

(457) The low nickel ore prices resulting from the export restrictions (and domestic processing requirement) were further supported by a mandatory pricing mechanism introduced in 2020.

(458) The GOID started regulating certain aspects of nickel ore prices as early as 2010 through Article 85 of GR 23/2010. The legislation included a reference price mainly for the purposes of calculating the level of royalties due to the GOID. It did not yet regulate the transaction prices between mining companies and smelters. Also, in these early days, the reference price only applied to domestic transactions of nickel ore. The GOID wanted to ensure that, given the potentially low level of domestic prices as opposed to export prices, the government would be able to collect a fair level of royalties on domestic sales. The pricing mechanism as set out in Article 85 was subject to an important amendment in 2017 through GR 1/2017, whereby the GOID started regulating not only the nickel ore price as regards royalties but the actual transaction price. The amended version of Art. 85 as in GR 1/2017 reads as follows: ‘(1) Holders of IUP Production Operation, both mineral and coal, which sells mineral and coal must refer to the reference price (2) The price which mentioned in point (1) is stipulated by: a. Minister for metal and coal b. Governor or regent/mayor, depending on its role, for non-metal minerals and rocks. (3) The price, which mentioned in point (1), is stipulated by market mechanism and/or depending on the price which accepted in international market. (4) Details about price fixing of metal minerals and coal are arranged by Minister Regulation.’ (97)

(459) The GOID set the actual mechanism to fix the reference prices for transactions between mining companies and smelters via its specific regulations to achieve a significant discount on the price of the nickel ore in international markets. The reference price for nickel (HPM) was provided by a formula set in MEMR Decree 2946K/30/MEM/2017, as follows: HPM Nickel Ore = % Ni x CF x HMA Nickel. ‘1. HPM Nickel Ore shall be the reference price of metal mineral in form of nickel ore in USD/DMT 2. % Ni is the content of Ni in the nickel ore. 3. CF is Corrective Factor, which is the amount of percentage that accommodates discount or premium value against the quality of commodity being sold, under the provision of: a. CF for nickel ore with 1,9 % Ni = 20 %; and b. CF will fluctuate higher/lower by 1 % for each increase of Ni content by 0,1 %.’ MEMR 7/2017 defines HPM as ‘the price of metal minerals that are determined at a sale point, Free on Board for each mining commodity of Metal Minerals;’ and HMA as ‘the price obtained from the average published Mineral Metal prices in the previous month or price on the same date as the transaction according to the price quote from the published price of Metal Minerals’. The amount of HMA is determined by the Minister every month and it refers to international prices such as the London Metal Exchange (LME) price for nickel.

(460) While indeed the formula for calculating the regulated HPM for the nickel ore is linked to international price of nickel ore, this formula includes a significant correction factor that ensures that the Indonesian domestic nickel ore price is significantly below international prices.

(461) The pricing regulation also specifically shows the GOID’s intention to regulate prices for the benefit of the domestic stainless steel industry at a level below normal market conditions. The mechanism was intended to achieve a price at a significant discount to the international market price. This was confirmed by various GOID statements. This pricing mechanism was also instrumental to the GOID’s policy objectives as it ensured that the mining companies could continue to produce and supply the downstream industry, because the GOID policy bias in favour of the smelters had endangered the subsistence of several miners.

(462) The MEMR’s Press Release No. 253.Pers/04/SJI/2020 on New Regulation on Mineral Ore Reference Price (98) confirms the fact that via the regulated price mechanism the GOID intends to keep the low level of the nickel ore price to the benefit of the domestic smelting industry as its main objective, while ensuring that the price allows the continuation of nickel ore production. The Acting Director General of Mineral and Coal openly explains that ‘the government set the HPM below international price to increase the economies of scale of smelters,’ and that ‘the lower the HPM is, the more economical the smelters are. We always set the HPM below international market price.’ The Director of Mineral Fostering and Enterprise, Yunus Saefulhak, gave an illustration of the HPM setting below international price. ‘For example, if international price is USD 60 (per Wet Metric Tonne), our (Indonesia) price is USD 30 (per WMT)’ (99).

(463) Other commentators also report that the GOID kept a vigilant eye on smelters’ interest when setting the nickel ore price. The Acting Director General of Mineral and Coal confirmed that it intended to find ‘justice for smelters who want the lowest possible prices. But on the other hand, [it] must ensure that nickel mining activities provide sufficient margin for mining’ (100) and added ‘Of course, please note that after calculating the average mineral price is still below the international price of 30 percent. This aims to encourage the investment climate of smelters to build processing and refining facilities in Indonesia.’ (101) The regulated price for nickel ore, disconnected from market conditions, can only work with the parallel implementation of the export ban preventing miners from other selling opportunities and the possibility to circumvent the price limitations by selling their products abroad at a higher price.

(464) By subjecting mining companies to export restrictions for nickel ore, in combination with other government measures including in particular (i) a price regulation that kept nickel ore prices artificially low, and (ii) domestic processing requirements resulting in oversupply and depressed prices, the GOID put the nickel miners into an economically irrational situation, forcing them to sell the nickel ore domestically for artificially depressed prices as compared to the substantially higher prices they could have obtained otherwise from many more potential customers in the absence of the licencing obligations and of the pricing mechanism. The nickel ore miners are therefore deprived of a rational commercial choice, and are induced to comply with the GOID’s policy objective to favour the stainless steel industry.

(465) Based on the data provided by the GOID regarding the production and consumption of nickel ore in Indonesia, presuming that this data is accurate as the GOID claims (see recitals (348) and (351)), the production of nickel ore is significantly higher than the consumption of nickel ore.

(466) In other words, these measures taken together constitute an explicit and affirmative action by the GOID of delegation or command over nickel ore mining companies to the effect of providing nickel ore to smelters for less than adequate remuneration. The role of the GOID went well beyond an ordinary intervention as a market regulator in the mining sector. The relevant measures not only regulated general aspects of the market, but imposed a specific behaviour on mining companies by obliging them to process the ore domestically, by closing the export markets, and by regulating a price at a significant discount to the international market. All these measures were undertaken in order for mining companies to provide nickel ore for less than adequate remuneration for the benefit of the downstream industry. That intention was made clear through numerous policy statements and actions.

(467) By obliging mining companies to comply with these measures (including through penalties and revocation of the licenses, see recitals (337) - (375)), the GOID deprived them of the ability to freely choose their production and selling strategies according to market considerations. In other words, these measures clearly constitute a ‘demonstrable link’ between the government act and the conduct of the private mining companies. The GOID used the mining companies as a proxy to support the smelters and stainless steel producers. Moreover, the Commission already noted that the GOID manages and controls the mining of natural resources, including nickel ore, as part of its governmental functions (see recital (374)). The provision of nickel ore may therefore be treated as a function normally vested in the government pursuant to the exercise of its regulatory powers.

(468) Indeed, rather than providing nickel ore at less than adequate remuneration directly to the stainless steel industry in order to achieve the GOID's public policy objectives of attracting smelting capacity through low nickel ore prices, the GOID induced the mining companies, through a set of carefully targeted laws and regulations, to do so on its behalf.

(469) In the comments on final disclosure, the GOID objected firstly to the reference to the 1945 Constitution in recital (374) as completely irrelevant in the context of the establishment of the financial contribution. In this respect, the GOID recalled the principle of state sovereignty, which includes the principle of sovereignty over national resources, as recognised by the WTO Panel in China – Raw Materials (102).

(470) The Commission noted at the outset that the reference to the 1945 Constitution is without prejudice to the principle of state sovereignty, including the principle of sovereignty over natural resources. Indeed, the Commission did not question the possibility or the ability of the GOID to take policy and regulatory choices. The only finding that in recital (374) the Commission drew from the 1945 Constitution, together with the 2009 Mining Law, is that all minerals in Indonesia are public natural resources, which are controlled and utilized by the State. The Commission did not establish, based on the citation of the 1945 Constitution limited to Article 33, para. 2 alone, that the GOID provided a financial contribution in the context of the provision of nickel ore from LTAR. The relevance of the 1945 Constitution is justified by the fact that Article 33 is mentioned twice in the preamble of the 2009 Mining Law, which actually regulates the mining sector and provides an implementation to the principle enshrined in the 1945 Constitution. Furthermore, the Commission noted that the principle of state sovereignty does not exclude that certain policy and regulatory choices, freely adopted by the GOID, could be qualified, together with all the other evidence available, as providing a financial contribution for the purpose of the GOID’s obligations under the WTO. Indeed, in China – Raw Materials, the Panel, while acknowledging that ‘the ability to enter into international agreements – such as the WTO Agreement – is a quintessential example of the exercise of sovereignty’ (103), recalled that ‘Members must exercise their sovereignty over natural resources consistently with their WTO obligations’ (104). Consequently, on the substance of the case, in China – Raw Materials the Panel recommended (105) – and the Appellate Body upheld (106) – that China had to bring its export duty and export quota on some raw materials in line with its WTO obligations. Therefore, the Commissions considered the reference to the Constitution relevant to understand the legal context and rejected this objection.

(471) The GOID also claimed that the mining laws, regulations and policies quoted by the Commission are irrelevant in the context of the establishment of the financial contribution because they do not intervene in the commercial transactions between business operators. The GOID argued that the Commission misinterpreted the meaning of the word ‘control’, included in a number of provisions, which would actually refer to the activity of managing and supervising mining businesses or activities to combat illegal mining, to prevent environmental damage caused by mining activities and to ensure that the mining exploration is fully in line with good mining practices. In this respect, the GOID made reference to the definitions of direction, supervision, public protection and implementing guidance included in Chapter XIX of the 2009 Mining Law and in Article 3 of GR 55/2010, urging the Commission to take into account the whole legislation, including implementing measures, notably GR 55/2010. The GOID was of the opinion that these provisions did not prove that it intervened in private business transactions and instructed miners to provide nickel ore for LTAR.

(472) More specifically, the GOID contested the role in the nickel ore market attributed to it by the Commission in recital (327) by referring to the preamble of MEMR 26/2018 concerning the implementation of good mining rules and the supervision of mineral and coal mining, which implements GR 55/2010 and states that the GOID’s task is only to supervise and provide guidelines for the implementation of good mining principles and practices.

(473) Also, the GOID reacted to the finding in recital (374) that all natural resources are controlled by it with the assertion that it needs to control the mining sector to prevent the negative impact of mining activities, such as environmental degradation and pollution in connection with mining areas.

(474) The Commission considered, in the first place, that it had to take into account each relevant piece of legislation or regulation concerning the mining sector, including the implementing regulation, to reach a conclusion concerning the financial contribution in the context of the provision of nickel ore for LTAR. A legal assessment based only on partial information and evidence on file which neglected potentially relevant information and evidence would undermine the accuracy and adequacy of the Commission’s findings. It was therefore the Commission’s legal obligation to analyse all relevant evidence, contrary to the GOID’s assertion. This argument was therefore rejected.

(475) As for the other claims, the allegations that the Commission misunderstood the meaning of the word ‘control’ and partial, limited quotations of certain pieces of legislation are not as such capable of reversing the Commission’s findings.

(476) Indeed, the Commission does not dispute the fact that the GOID’s control through management and supervision is exercised also in order to fight illegal mining, prevent environmental damage and ensure good mining practices. However, the GOID’s control is not limited to these activities only. As the investigation and evidence have amply shown, the control of GOID was implemented also for the overarching objective of developing the domestic processing industry inter alia by controlling the production and sale prices of nickel ore. The fact that the control may have other concurrent and/or ancillary objectives does not detract from this reality. This would already be sufficient to dismiss this claim.

(477) For the sake of completeness, the Commission also analysed the definitions of direction, supervision and public protection in Chapter XIX of the 2009 Mining Law. The Commission noted that they refer to the activity of direction and supervision that the central GOID exercises over the provincial and district/city levels within their competences in the management of the mining sector. This is clear from the paragraphs introducing the definitions reported by the GOID, namely Article 139: ‘The Minister shall give direction on management of mining business conducted by the provincial governments and district/city governments within his/her authority’, and Article 140, para. 1: ‘The Minister shall make supervision of management of mining business conducted by the provincial governments and district/city governments within their authority.’ This is further confirmed by the attributions to the central GOID in Article 6, para. 1 of the 2009 Mining Law, where point (n) includes ‘to direct and supervise the management of mineral and coal mining that are conducted by the regional governments’. Therefore, the activity of direction and supervision, and its definitions, concern the direction and supervision of the central GOID in respect of the local governmental levels. However, this merely constitutes one of the attributions to the central GOID. The Commission notes, for example, that the GOID did not make reference in its arguments to Chapter III of the 2009 Mining Law, expressly entitled ‘Control of minerals and coals’. This control is exercised at all levels of the GOID (Article 4, para. 2: ‘shall be conducted by the Government and/or the regional governments’), as opposed to the direction and supervision in Chapter XIX exercised specifically by the Minister of Energy and Mineral Resources. Moreover, Article 5 of the 2009 Mining Law further elaborates on the notion of control, stating that ‘in the national interest … the Government … may adopt a policy on preference for domestic mineral and/or coal needs’ (para. 1), that ‘National interests … may be realized by making supervision of production and export’ (para. 2) and that ‘In the making of supervision … the Government shall have the authority to set the annual production quantity of any commodity for any province’ (para. 3). The supervision referred to in Article 5 is very different from the supervision referred to in Chapter XIX. Indeed, no reference to production and export can be found in the definition of supervision reported by the GOID, included in Article 141 in Chapter XIX of the 2009 Mining Law. The GOID did not provide any evidence that the notion of control is defined as supervision in Article 141, nor that the supervision referred to in Article 5 is defined by Article 141. Indeed, the definition of supervision in Article 141 clearly refers to ‘Supervision as intended by Article 140’, i.e., to the supervision of the central GOID over the local governmental levels in the management of the mining sector.

(478) Again, also with reference to Article 3 of GR 55/2010, the GOID makes a partial reading of the legislation. Indeed, while the Commission does not dispute the definition of guidance provided in Article 3, it notes that this is not relevant for the assessment of control. What is relevant, for example, is instead the fact that ‘The minister, governor, or regent/mayor in accordance with their authority shall supervise the implementation of the management of mining businesses …’ (Article 13, para. 2), that ‘The supervision as referred to in Article 13 paragraph (2) shall be implemented on the following: … b. marketing’ (Article 16, point (b)) and finally that ‘The supervision on marketing as referred to in Article 16 letter b should at least encompass the following: a. the realization of production and sales including the quality and quantity and the price of mineral and coal’ (Article 22). The GOID did not address any of these clear legal bases for the GOID’s control and its intervention in the price setting of nickel ore.

(479) In addition, with reference to MEMR 26/2018, the Commission did not contest that, according to its preamble the GOID’s task is only to supervise and provide guidelines for the implementation of good mining principles and practices. The Commission considers that this statement alone is not sufficient to describe the role of the GOID. On the contrary, it has to be noted that the definition of good mining practices ‘shall include … b. governance of mining business’ (Article 3, para. 2, point (b)), which in turn ‘shall include the implementation of: a. marketing’ (Article 3, para. 4, point (a)). These provisions on marketing are implemented by holders of IUP and IUPK for production operation and ‘shall at least consist of: … c. the selling price of Mineral and Coal guided by the reference price of Mineral, the reference price of Coal, or the selling price as stipulated by the Minister; d. pricing on the relevant sales contracts guided by the reference price of Mineral or the reference price of Coal’ (Article 30, para. 1, points (c) and (d)). Also in this instance, the GOID relied on selective quotations and deliberately failed to address the most relevant provisions of the pieces of legislation it quoted in its submission. Therefore, these claims were rejected.

(480) The GOID further maintained that nickel ore miners and smelters were fully free and independent from the GOID to negotiate their business transactions, including the price of nickel ore. According to the GOID, HPM was meant to ensure (i) royalty payments, and (ii) business fairness, whereby the HPM served also as the mandatory floor price for nickel ore.

(481) The Commission noted at the outset that it is in itself contradictory for the GOID to claim on the one hand that nickel ore miners and smelters are fully free to negotiate the nickel ore price and, on the other hand, to maintain that HPM worked as a mandatory floor price. The very existence of the HPM and its role shows that nickel ore miners and smelters are not fully free to negotiate nickel ore prices. Moreover, the claim that the HPM is a floor price is contradicted by the overwhelming evidence in the file, which shows that nickel ore prices in practice corresponded to the HPM for the transactions between related and unrelated parties alike throughout the period (see recital (518)). This shows that the HPM was a regulated and mandatory price mechanism followed by all parties, and that its mechanics via the arbitrary correction factor were designed and implemented to ensure a significant discount compared to international nickel ore prices. Therefore, this claim was rejected.

(482) In response to the finding that the Indonesian domestic price is kept significantly below international prices, the GOID asserted that no regulation intervenes in such a manner. The GOID claimed that, on the contrary, according to MEMR 7/2017, HPM was determined based on the prevailing market price and that its compulsory introduction pursuant to MEMR 11/2020 shows how the GOID upholds the international price, as the HPM includes the HMA, which embeds an international price element. In spite of this, the GOID maintained that commercial decisions in the transactions were fully dependent on the parties, without any intervention by the GOID.

(483) The Commission firmly rejected the claim of the GOID as unfounded. Indeed, while it is true that the HPM refers to the HMA, which reflects the international price of nickel according to the LME, the HMA is then adjusted by an arbitrary corrective factor, as explained in recital (460). This corrective factor introduces a significant ‘discount or premium value against the quality of commodity being sold’ (Annex to the MEMR Decree No. 2946 K/30/MEM/2017), which ensures that the domestic prices of nickel ore are always kept below international levels. This argument was therefore rejected.

(484) Concerning the role of miners acting as public body, the GOID claimed, with reference to recital (373), that it never authorised miners to carry out government functions and there is no evidence for this in the file.

(485) The GOID also specified, in reaction to recital (375), that it never determined to whom the miners should have sold nickel ore for further processing. In particular, the GOID referred to Article 104, para. 1 of the 2009 Mining Law, where the wording ‘may cooperate with’ implies that the miners are free to cooperate with other business operators.

(486) The Commission observed that the finding that nickel ore miners act as public bodies results from the overwhelming body of evidence and the consequent findings developed in recitals (371)-(445). Concerning the instructions regarding who the miners should sell nickel ore to, the Commission acknowledged that the GOID does not force directly the miners to cooperate with other mining permit or special mining permit holders. However, the miners are under an obligation to increase the added value of their output according to Article 102 of the 2009 Mining Law. Then, if they cannot do this by themselves, they have to cooperate with other mining permit or special mining permit holders. Once they decide to cooperate, the 2009 Mining Law significantly restricts the number of potential cooperating parties, stating in Article 103 that the output must be processed domestically in Indonesia, and limiting the participation to the processing of the output to mining permit or special mining permit holders. Furthermore, mining permits or special mining permits are issued by the GOID. Therefore, this claim was rejected.

(487) The GOID further claimed that it never determined which companies and areas were allowed to extract nickel ore. It stated that the mining permits have a control and regulatory function with a view to ensure that activities do not conflict with each other and there is no misuse of permits granted. To support this, the GOID referred to MEMR 7/2020, which states that the purpose of mining permits is to guarantee legal certainty, ensure effectiveness and efficiency in mining activities and encourage business development. Again, the GOID requested the Commission to look also at implementing regulations, such as MEMR 25/2018 concerning mineral and coal mining businesses, which explains the planning and the administrative steps for the extraction of nickel ore. In particular, concerning the RKABs, the GOID recalled that the amount of nickel ore to extract depends on the findings of exploration and feasibility study prepared by the companies. The GOID approves RKAB as long as it is in line with the feasibility study and only requires the miners to further process the mineral into a certain level of purification. The GOID argued that this requirement is normal and it does not derive from the stainless steel industry.

(488) The Commission noted that the various objectives of the issuance of the mining permit did not affect the finding that the GOID, through the mining permits, determines which companies are allowed to extract nickel ore. Moreover, the Commission observes that the GOID did not challenge the finding that the GOID, through planning decision at national and local level, determines which areas are allowed to extract nickel ore. In addition, the Commission confirmed that it did take MEMR 25/2018 into account in its analysis and that this did not lead to findings different from those in this regulation. Finally, regarding RKABs, the Commission noted that the GOID failed to provide full feasibility studies and avoided engaging in discussions concerning how the production targets are set for each company, and then how it monitors and acts afterwards with regard to production actually achieved for the period covered by the feasibility study. Due to the lack of cooperation on this important aspect, the Commission had to rely on inferences on the basis of Article 28 of the basic Regulation. Therefore, these claims, not further substantiated as such, were rejected.

(489) In response to the conclusion in recital (393) that large part of the nickel ore miners are owned by the GOID, the GOID recalled that, according to Article 2 of Law No. 19 of 2003, SOEs are established with the objective of maximising profits in their business operations.

(490) In this regard, the GOID asserted that the establishment of entrustment and direction of the miners would require written legislation, which is absent in this case. The GOID pointed to the example of the coal sector, where MEMR Decree No. 261 of 2019 introduced a ceiling price for the coal devoted to public electricity production. On the contrary, the GOID claimed that such a ceiling does not exist for the nickel ore or the stainless steel industry. The GOID reiterated that the only requirement is the extra processing of nickel ore to reach certain minimum purification, in accordance with MEMR 25/2018.

(491) The GOID maintained that none of the three elements for the existence of entrustment and direction, as spelled out by the Panel in US - Export Restraints (107), can be found in the present case. It added that entrustment and direction cannot even be found based on the economic effects of a government measure, referring to the Panel in US - Countervailing Measures on Softwood Lumber from Canada (108).

(492) The Commission observed that the fact that SOEs are established with the objective of maximising profits according to the legislation does not call into question the State ownership and all the other elements underpinning the conclusion that nickel ore miners acted as public body. The existence of the measures on mandatory domestic processing obligations, the export restrictions, and the mandatory price mechanism all indicate that these SOEs and other miners, far from aiming for profit maximisation, were forced to follow irrational economic behaviour by being obliged to process the ore domestically, being barred from exporting and thereby achieving a higher price in international markets. Even domestically they could only sell at the low government-mandated price (i.e. the HPM). Therefore, the legal environment created by the GOID is objectively incompatible with the purported legislative aim of these companies to maximise their profit.

(493) With regard to entrustment and direction, the Commission noted at the outset that its main findings concluded that nickel ore miners acted as public bodies. Therefore, even if this claim by the GOID were founded, quod non, it would not have any impact on the conclusion concerning financial contribution by a government or a public body. In substance the Commission demonstrated the existence on entrustment and direction on the part of the GOID towards the miners in recitals (446) to (499). The evidence found was deemed to fulfil the conditions and requirements as elaborated in the relevant WTO case-law. As recalled by the Commission in recital (448), the findings in US – Export Restraints must be read together with the findings of the Appellate Body, as was also recognised by the Panel in US – Countervailing Measures on Softwood Lumber from Canada. The combination of measures taken by the GOID, including the domestic processing obligations, the export restrictions, and the mandatory pricing mechanism, as well as the statements made in relation thereto, showed that the GOID deliberately implemented these measures to entrust or direct suppliers of nickel ore to supply nickel ore at LTAR. Therefore, the effects achieved by these measures were not inadvertent or a mere by-product of the economic effects of these policies. Therefore, these claims were rejected.

(494) With reference to the export ban referred to in recitals (405) to (413), the GOID claimed that it was not designed to distort nickel ore price in Indonesia. Instead, it was meant to preserve mineral reserves and the environment. The GOID also reiterated that nickel ore transactions were made independently, without the GOID’s intervention and with the HPM as a floor price, determined by the prevailing international market price and practices.

(495) In this respect, the GOID recalled the Panel in US - Export Restraints, which held that the treatment of export restraints as a financial contribution based on the mere reaction to a measure was inconsistent with the SCM Agreement (109). The Panel stated that the existence of a financial contribution should be proven by reference to the action of a government. In the case at hand, the GOID claimed that it is simply exercising its functions and that its nickel ore policy is not an action meant to provide subsidies. The GOID affirmed that the Commission’s findings concern the reaction or the effect of the nickel ore policy.

(496) The Commission referred to its arguments in recital (493) and noted that its findings on the existence of a financial contribution are not based only on the export ban introduced by Indonesia, but on a set of measures and mechanisms undertaken by the GOID, including notably the domestic processing obligation, the RKABs, the divestment obligation, the nickel ore price setting mechanism, and the designation of mining companies as ‘National vital objects’. The concerted application of all these measures speaks to the deliberate action of the GOID to achieve its policy objective to benefit the nickel processing industry, mainly SSCR producers. Therefore, the claim was considered unfounded and rejected.

(497) In response to the finding in recital (330) concerning the relationship between the GOID’s nickel ore policy and the cooperation between the GOID and the GOC, the GOID claimed that the Agreement between the GOID and the GOC on Expanding and Deepening Bilateral Economic and Trade Cooperation does not have any connection with the provision of nickel ore for LTAR. Indeed, according to the GOID, the cooperation with the GOC was not limited to the stainless steel industry. In any case, the GOID recalled that the implementation of any international agreement is subject to Indonesian law, which is applicable to all market operators in Indonesia.

(498) The Commission noted that the cooperation between the GOC and the GOID as found in this investigation showed that access to Indonesian nickel ore was one of the main objectives behind the cooperation of China in the Morowali project. The Agreement between the GOID and the GOC on Expanding and Deepening Bilateral Economic and Trade Cooperation dates back to 2011, at a time in which exports of nickel ore to China were high, as Table 2 shows, and the 2014 export ban was not yet in force. Nonetheless, the Agreement already included a reference to the ‘steel industry’ (Article III) as one of the fields of cooperation, since the 2009 Mining Law already provided for a domestic processing obligation subject to a 5-year grace period. In any event, the objective of the Chinese cooperation does not have any bearing on the findings of the countervailability of the provision of nickel ore for less than adequate remuneration, as it merely concerned the context in which that programme was implemented. What was relevant for the finding concerning this programme are the measures taken by the GOID. Therefore, this claim was rejected.

Conclusion

(499) The Commission therefore concluded that there was ample evidence that the measures taken by the GOID were specifically intended to entrust or direct nickel mining companies to comply with the policy objectives to benefit the stainless steel industry in a manner amounting to a countervailable subsidy as specified under Article 3(1)(a)(iv) and (iii) of the basic Regulation, as interpreted and applied in line with the relevant WTO standard under Article 1.1(a)(iv) and (iii) of the SCM Agreement.

(500) The Commission concluded that nickel ore mining companies constituted a public body and/or were entrusted or directed by the GOID to provide nickel ore to the stainless steel industry.

(501) In the next step, the Commission assessed whether the mining companies, acting as public bodies or as being entrusted or directed by the GOID, actually provided nickel ore for less than adequate remuneration. That necessitated a detailed analysis of the market developments in Indonesia against an appropriate benchmark.

(502) In accordance with Articles 3(2), 5 and 6(d) of the basic Regulation, the Commission assessed the amount of countervailable subsidies in terms of the benefit conferred on the recipient, which was found to exist during the investigation period.

(503) The Commission therefore first assessed whether prices set by mining companies in Indonesia could amount to an appropriate benchmark.

(504) As noted in recitals (435) - (437), the investigation showed that the pricing of nickel ore was subject to a pricing mechanism by the government and other government interventions that prevented the normal market dynamics of supply and demand to determine the price.

(505) As recalled in recitals (458), the GOID started regulating certain aspects of nickel ore prices as early as 2010.

(506) With the progressive introduction of export restrictions and the other measures as of 2014 to achieve its goal to establish the downstream stainless steel industry domestically and to support this establishment inter alia through low nickel ore prices, the GOID progressively changed the way the price was set. These GOID policies successfully achieved their objective to create an oversupply of nickel ore in the Indonesian market to the benefit of the stainless steel industry. As a result, this industry gained considerable pricing power vis-a-vis the mining companies, and so significantly depressed nickel ore prices in Indonesia.

(507) In this context, as explained above, the pricing mechanism as set out in Article 85 was amended in 2017 when the GOID started regulating not only the nickel ore price as regards royalties, but the actual transaction price.

(508) It is recalled that the GOID set the actual mechanism to fix the reference prices for transactions between mining companies and smelters via its specific regulations to achieve a significant discount on the price of the nickel ore in international markets. The reference price for nickel (HPM) was provided by a formula set in MEMR Decree 2946K/30/MEM/2017 (‘MEMR 7/2017’), as follows: HPM Nickel Ore = % Ni x CF x HMA Nickel. ‘1. HPM Nickel Ore shall be the price of metal mineral in form of nickel ore in USD/DMT 2. % Ni is the content of Ni in the nickel ore. 3. CF is Corrective Factor, which is the amount of percentage that accommodates discount or premium value against the quality of commodity being sold, under the provision of: a. CF for nickel ore with 1,9% Ni = 20 %; and b. CF will fluctuate higher/lower by 1 % for each increase of Ni content by 0,1 %.’ MEMR 7/2017 defines HPM as ‘the price of metal minerals that are determined at a sale point, Free on Board for each mining commodity of Metal Minerals;’ and HMA as ‘the price obtained from the average published Mineral Metal prices in the previous month or price on the same date as the transaction according to the price quote from the published price of Metal Minerals’. The amount of HMA is determined by the Minister every month and it refers to international prices such as the LME price for nickel.

(509) Furthermore, Article 2 of MEMR 7/2017 reads as follows: ‘(1) Holders of Metal Minerals Production Operation IUP, Coal Production Operations IUP, Production Operations Metal Minerals IUPK, and Coal Production Operation IUPK in selling Metal Minerals or Coal products must be guided by Metal HPM or HPB.’

(510) The GOID claimed that HPM was linked to international prices and should be taken as the floor price for the real transaction between nickel ore producers and nickel ore buyers. The Commission notes that while indeed the formula for calculating the regulated HPM for the nickel ore is linked to the international price of nickel ore, this formula includes a significant correction factor that ensures that the Indonesian domestic nickel ore price is significantly below international prices. By its very mechanics, the actual price of transactions must ensure a significant discount in relation to international prices.

(511) Although the HPM was not a compulsory price at that time, it was important to protect the mining and smelter business actors in buying and selling minerals. The Director General of MEMR stated that the government would implement the price in October 2017, and that it would be announced monthly. Furthermore, it was stated that the ‘HPM will become a reference so that mining companies do not sell at a higher price, otherwise smelter entrepreneurs do not buy nickel at a price that is far below the market price. In this case the government does not want one party to be superior to the other in determining commodity prices’ (110). This was confirmed by a publication by the Indonesian Processing and Refining Industry Companies Association (AP3I) from September 2017, which mentioned that the HPM was intended to protect smelter companies and miners in sale and purchase transactions of minerals (111). In other words, the HPM – set at a level far below the international price – became the reference price for nickel ore in Indonesia.

(512) As the GOID policy to develop the stainless steel industry had been effectively implemented and successful, the resulting depressed nickel ore prices coupled with the government-fuelled purchasing power of the stainless steel industry had exacerbated the difficult financial situation of the mining companies, most of which would risk going out of business. The miners also organised protests and social unrest due to this bias in favour of the stainless steel industry. Therefore, the GOID had to resort to the HPM as a way to favour the stainless steel industry, but at the same time to avoid that the mining companies would either go bankrupt or would further mount their social discontent against the government. This would have caused disruption in supplies and possible price increases at the expense of the stainless steel industry, jeopardising the GOID’s overarching policy objective. The HPM also had as side effect to ensure a minimum level of state revenue from the royalties, which had also been substantially affected by the nickel ore oversupply and the corresponding depressed prices due to the successful policy bias in favour of the stainless steel industry.

(513) In January 2020, the GOID re-implemented the full export ban on nickel ore for all purity grades. This increased the already existing imbalance on the Indonesian nickel ore market to the benefit of smelters, and as a result the GOID decided to regulate through specific legislation the price of nickel ore and by using the HPM. Therefore, in April 2020, MEMR revised MEMR 7/2017 and issued MEMR 11/2020. This Regulation amends Article 2 concerning guidelines on selling metallic minerals and coal. Pursuant to the new Article 2: ‘(1) Holders of Metal Mineral Production Operation IUP, Coal Production Operation IUP, Metal Mineral Production Operation IUPK, and Coal Production Operation IUPK, in selling Metal Mineral or Coal produced, must refer to HPM or HPB.’ Thus, pursuant to MEMR 7/2017 the miners had to be guided by the HPM in their sales transactions, pursuant to MEMR 11/2020 they had to use the HPM as a transaction price. As stated in recital (508) above, HPM shall mean ‘the price of metal minerals that are determined at a sale point.’ In other words, mining companies were obliged to set the price in line with the HPM and did so in practice.

(514) Furthermore, MEMR 11/2020 added Article 2A concerning procedures and obligations for selling nickel ore, which reads as follows: ‘(1) Holders of Metal Mineral Production Operation IUP and Metal Mineral Production Operation IUPK that produce nickel ore, must refer to HPM in selling the nickel ore produced. (2) The obligation to refer to HPM as referred to in paragraph (1) also applies to holders of Metal Mineral Production Operation IUP and Metal Mineral Production Operation IUPK in selling nickel ore produced to their Affiliates. (3) Other parties that refine nickel ore originating from holders of Metal Mineral Production Operation IUP and Metal Mineral Production Operation IUPK are required to purchase nickel ore with reference to HPM.’

(515) Article 3 reads ‘(1) HPM Metal as referred to in Article 2 is: a. the lower limit price in calculating the obligation to pay production fees by the holders of Metal Mineral Production Operation IUP and Metal Mineral Production Operation IUPK’. The same article also states that ‘(3) In the terms that there is a difference in the reference period for the Reference Metal Mineral Price in the HPM Metal calculation with the transaction quotation period, penalties for impurities, or bonuses for certain minerals, for the sale of nickel ore shall be made with the provisions: a. if the transaction price is lower than HPM Metal in the quotation period according to the Reference Metal Mineral Price or there is a penalty for impurities, the sale can be made under HPM Metal with a maximum difference of 3 % (three percent); or b. if the transaction price is higher than HPM Metal in the quotation period according to the Reference Metal Mineral Price or there is a bonus for certain minerals, the sale must follow the transaction price above the Metal HPM’.

(516) As a continuation of the pricing mechanism enacted at the end of 2017, the regulated price for nickel ore as transposed into legislation mirrors the same approach and logic. It is a price set by the government whose main objective is to ensure that nickel ore is supplied at a significant discount to the international LME for the benefit of the stainless steel industry. At the same time, the price seeks to also take into account the interests of miners to ensure continuity of supply at this discounted price, and avoid bankruptcies and social unrest. Finally, it ensures a minimum level of revenue for the State, although a much lower one than if there was no discount as compared to the international price. This has been confirmed by the Acting Director General of Mineral and Coal who said, as mentioned, that it intended to find ‘justice for smelters who want the lowest possible prices. But on the other hand, [it] must ensure that nickel mining activities provide sufficient margin for mining.’ (112) In other words, the price of nickel ore in Indonesia is not freely determined according to market conditions but is fixed within a narrow price corridor by the GOID in order to achieve its respective policy objectives.

(517) The fact that the HPM as transposed into legislation in April 2020 was a continuation of the 2017 mechanism has also been corroborated in the investigation. The main difference was that before MEMR 11/2020 entered into force, in the sale-purchase agreements for nickel ore the price of the nickel ore was stipulated as an absolute value. After the MEMR 11/2020 entered into force, the price of nickel ore in the sale-purchase agreements was set up as the government HPM. The empirical evidence collected in the investigation (i.e. purchases of nickel ore of the IRNC Group) confirmed that the prices during the IP before and after the entry into force of MEMR 11/2020 are substantially the same, that is in line with the HPM mechanism in its version pre- and post-April 2020.

(518) The investigation also revealed that the price formula as from April 2020 was adjusted with ‘1-moisture content%’. IRNC stated that the government formula was for dry nickel ore, and as the nickel ore was sold in a wet form, this formula had to be adjusted accordingly. If this is the case, then that contradicted the GOID’s claim that the HPM was used in the past only for the calculation of royalties. Indeed, the investigation revealed that the purchase price of IRNC and its related companies during the investigation period was very close to the government price. Moreover, there was no price difference between purchases of nickel ore from related suppliers as compared to from unrelated suppliers. Finally, the sales transactions during the investigation period of the sole nickel miner that submitted such information in the framework of the investigation showed that a very similar price was charged to all clients for the same nickel ore type. This shows that the government-determined price for nickel ore was followed in practice.

(519) On the basis of all the above evidence, the Commission concluded that the GOID intervenes in the nickel ore market by specifically regulating the transaction price for nickel ore between mining companies and smelters. This price is therefore not a market price but a price set by the government with its specific policy objectives in mind. For that reason alone, the Commission considers that the nickel ore prices in Indonesia are distorted and cannot be used as benchmark for the purpose of determining benefit.

(520) However, in addition to the government regulation of nickel ore prices, there are other market distortions by the GOID that specifically affect nickel ore prices in Indonesia which confirms that these prices cannot serve as benchmark. In particular, the government's obligation on smelters to process nickel ore domestically coupled with specific production targets results in oversupply in the domestic market and hence depresses domestic prices. The export restrictions also contributed to the oversupply of nickel ore on the domestic market and hence to a depression of prices. No single transaction for nickel ore in Indonesia escapes the fact that the various market distortions directly or indirectly affecting prices result in all nickel ore prices in Indonesia being distorted.

(521) As a result, the Commission concluded that the whole domestic nickel ore market is affected by these measures and it was impossible to establish an undistorted price of nickel ore in the Indonesian market according to the prevailing domestic conditions. Accordingly, there were no domestic prices which could be used as an appropriate benchmark.

(522) Therefore, the Commission had to look for an appropriate out-of-country benchmark (113). In that regard, the Commission noted that since Indonesian exports of nickel ore stopped in 2014, exports of nickel ore from the Philippines have developed considerably, in particular to the main consumption market, that is the PRC. The Philippines' laterite nickel ore has the same properties as the Indonesian laterite nickel ore. It is extracted according to the same open mine process as in Indonesia and has similar nickel content as Indonesian ore. Both Philippine and Indonesian ores are extracted in a similarly wet climate, so they have a relatively high and similar water content. Consequently, as the Philippine nickel ore is unaffected by the government measures distorting the Indonesian market and as the prevailing market conditions in the two countries, including quality, availability, marketability, transportation and other conditions of purchase or sale, are similar, the Commission considered Philippine and Indonesian nickel ore to be comparable. There is also geographical proximity, which also contributes to making the situation of the Philippine nickel ore comparable to the one that would prevail in Indonesia in the absence of the GOID’s distortive measures.

(523) Therefore, the Commission considered that, in line with Article 6(d), second subparagraph, (ii) of the basic Regulation, the export price from the Philippines constitutes an appropriate benchmark to assess whether or not the Indonesian nickel ore prices were made for less than adequate remuneration. The price considered as a reference for Philippines' nickel ore is the Philippines FOB price as reported by the FerroAlloyNet with a nickel content of 1,8 %. This information was submitted by the complainant on a quarterly basis. In addition, the complainant supplied benchmarks (also on a quarterly basis) for products with a nickel content of 1,5 %, 1,6 %, 1,9 % and 2,0 %. These benchmarks were used to establish benchmarks for other grades purchased by the IRNC Group based on the nickel content (1,3 %, 1,4 %, 1,7 %, 2,1 %, 2,2 %, 2,3 % and 2,4 %).

(524) These benchmarks were compared to the reported purchase prices of the companies within the IRNC Group (IRNC, GCNS, ITSS, SMI and TSI) in the IP according to both the nickel content and the appropriate quarter. Differences obtained from this comparison were calculated for each Group company in IDR. It follows from the above recitals that the Indonesian domestic nickel ore prices were consistently lower than the benchmark proxy price (Philippine FOB prices). Hence, the Commission concluded that the measures of the GOID oblige nickel ore mining companies acting as public bodies and/or as entrusted or directed by the GOID to provide nickel for less than adequate remuneration to the Indonesian stainless steel industry.

(525) Therefore, the Commission compared the actual domestic purchase price of nickel ore to the cooperating producers with the undistorted benchmark price in the Philippines.

(526) In their comments on the final disclosure, the GOID and IRNC Group disagreed over the benchmark for nickel ore based on the nickel ore from the Philippines, because: (i) the Philippines laterite has the properties of nickel ore of Ni <1,5 % (limonite), while the Indonesian laterite nickel ore has the properties of nickel ore of Ni >1,5 %, (ii) the quantity of laterite nickel ore produced in Indonesia is more than double the production of the Philippines, and (iii) the cost/ton production of nickel in Indonesian is lower than that of the Philippines, since the average thickness of nickel laterite is 30 m in Indonesia, while in the Philippines is only 20 m, and the deposit of nickel in Indonesia is at the level of 1,8 % nickel content, whilst in the Philippines is of 1,6 % nickel content. Moreover, both the GOID and IRNC claimed that the Indonesian export ban, while depressing domestic price, pushed up prices of nickel ore from the Philippines. The right benchmark should be, according to the GOID, the actual production cost of nickel ore of IRNC, as established in the anti-dumping investigation on imports of certain hot rolled stainless steel sheets and coils (114), or, according to the IRNC Group, the actual production costs, actual SG&A and an appropriate profit of the Indonesian nickel ore producers investigated.

(527) The complainant responded that in their view the Philippines nickel ore remained the most appropriate benchmark for Indonesian nickel ore. The complainant added that, should the Commission consider that the Philippines nickel ore would not constitute an appropriate benchmark, it supported the reference to the LME nickel international price as the sole existing alternative benchmark. The complainant recalled that the published Indonesian HMA price for nickel, used to define the domestic sales price of nickel ore (HPM), is itself based on LME. Since the LME refers to dry metric tonnes, according to the complainant it should be adjusted by the moisture content. The complainant clarified that this would be a conservative approach, because it does not take into account the iron content of nickel ore.

(528) IRNC provided a rejoinder to EUROFER’s response concerning the use of LME as alternative benchmark. IRNC Group highlighted first that nickel, to which the LME refers, and nickel ore are different products. According to IRNC Group, the different trends in price data for the nickel based on the LME, which was decreasing, and for the Philippines nickel ore, which was increasing, would cast doubt on its use because the demand and supply of nickel and nickel ore would be different. Second, IRNC Group argued that the formula proposed by EUROFER overstates the nickel ore price because: (i) not all nickel content contained in the nickel ore can be extracted from the nickel ore and further processed into pure nickel, but a yield ratio from nickel ore to nickel should be considered; (ii) the price of pure nickel reflects all costs and expenses necessary to bring pure nickel to the market (e.g., nickel ore cost, energy cost, depreciation expense of machinery, labour cost, transportation expense, SGA, and profits of producers and traders etc. The IRNC Group concluded that, in its view, the formula based on the LME overstated the benchmark, and that a proper benchmark would be based on the actual production costs, the actual SG&A and a proper profit of investigated Indonesian nickel ore producers.

(529) The Commission considered carefully all arguments raised by the parties. Starting with the request by GOID and IRNC Group to use an in-country benchmark based on the cost of production, SG&A and an appropriate profit margin of Indonesian producers of nickel ore, the Commission concluded that this would not be feasible and in any event would not be in line with the relevant legislation. Due to the non-cooperation of nickel ore producers, the Commission did not have available on file in-country data on cost of production and SG&A of Indonesian nickel ore producers, nor did it have information on an appropriate profit margin in Indonesia. Therefore, it would not be feasible to construct the benchmark as requested by these parties. In any event, the Commission noted that in view of the pervasive domestic distortions in the Indonesian nickel ore market as detailed in Section 4.4.3.2.2, the Commission concluded at recital (521) that it could not find any suitable in-country benchmark and thus it had to resort to an out of country benchmark. Therefore this in-country alternative benchmark was rejected.

(530) The Commission then carefully assessed the arguments concerning the formula based on the LME price of nickel. At the outset, the Commission considered that the LME is among the world’s largest financial markets covering base metals. With regard to the price of nickel, the Commission noted that the LME price is based on actual transactions and that its conditions are well aligned with the Indonesian market conditions. More importantly the Commission considered convincing the argument that the LME nickel price is the starting point of the methodology used by the GOID itself to set the domestic reference price of nickel ore, as this would constitute a closer link to the Indonesian market and situation. Therefore, the LME nickel prices do constitute an appropriate basis for the calculation of nickel ore in Indonesia. At the same time, the Commission noted that the formula proposed by the complainant with regard to nickel prices would need to be adapted to reflect some of elements mentioned by the IRNC Group in its rebuttal submission. Due to the absence of sufficient evidence on file at the extremely late stage of the investigation, it was however impracticable for the Commission to perform the aforementioned adaptation and thus use LME prices as the benchmark in the investigation.

(531) In view of the forgoing, the Commission then considered the arguments raised by the parties on the benchmark based on the Philippines actual prices of nickel ore on an FOB basis used for the benefit calculation. The Commission noted that the GOID and the IRNC Group did not substantiate how the elements they referred to on different technical characteristics and output quantities between the Indonesian and the Philippines nickel ore impacted those Philippine prices, nor did they submit any evidence attempting to quantify any possible adjustments resulting from these differences to the Philippines prices used as benchmark. The argument that the Indonesian export ban artificially depressed domestic Indonesian prices and also resulted in higher Philippines prices did not affect the fact that the Philippines prices represented an appropriate benchmark, because they reflected actual market prices of nickel ore resulting from all concurring market circumstances and regulatory choices of the various countries (including Indonesia) and thus did not undermine the actual market representativeness of these prices. With regard to the claim of a different nickel content in nickel ore in the Philippines, the benchmark used by the Commission accounts for such difference (the Commission constructed a benchmark for each type of nickel ore purchased by IRNC Group). As for the claim that the cost of production of nickel ore in Indonesia is lower than in the Philippines, as stated in recital (528) the Indonesian nickel ore miners have not cooperated in the investigation and therefore the Commission was not able to assess such costs. The Commission therefore confirmed its choice to use the Philippines benchmark as the most appropriate in these circumstances, also considering the substantial quantities exported from the Philippines and the fact that the main buyers of the Philippines nickel ore were Chinese stainless steel producers using the same technology as IRNC Group to produce the product concerned. The arguments by the GOID and IRNC Group in this respect were therefore dismissed.

(532) The GOID also claimed that nickel ore was not a direct raw material for SSCR. On the contrary, nickel ore was a raw material for NPI and hot-rolled stainless products, which are in turn upstream inputs for SSCR. According to the GOID, this fact should be taken into consideration in the calculation of the benefit.

(533) IRNC Group claimed that the entity IRNC was selling the purchased nickel ore within IRNC Group and therefore no benefit deriving from its purchased nickel ore should be included in the calculation of the benefit. This argument was reiterated by IRNC Group after additional final disclosure.

(534) The Commission confirmed that it took into account both of these aspects in the calculation of the amount of subsidisation for IRNC Group. First, for the related suppliers on inputs, the benefit found in those companies was allocated using the proportion of their turnover which related to the exporting producer. This allocated benefit was then added to the benefit of the exporting producer and included in the subsidy calculations of this producer. At the level of the exporting producer, the denominator of the benefit was the total turnover of the company. The detailed calculation methodology was disclosed to IRNC Group in its individual disclosure as it contained confidential information.

(535) The Commission noted that the end-use of the nickel ore purchased, whether for the product concerned or for sales to related companies for further processing, is irrelevant as, in the calculation of the subsidy rate, the denominator is the total turnover of IRNC Group. Therefore, the claim was rejected.

(536) The benefit amount so calculated amounted to 9,64 % for the IRNC Group.

(537) The GOID's set of measures were directed to benefit certain industries, in particular the domestic stainless steel industry. Indeed, even though the distortions on nickel ore also benefit downstream products other than stainless steel (namely the producers of electric batteries used in new energy vehicles), the benefit is available only to certain industries in Indonesia, namely those active in the nickel value chain. The GOID’s measures are therefore specific under Article 4(2)(a) of the basic Regulation. The inherent characteristics of nickel ore limit the possible use of the subsidy to a certain industry, but this does not mean that, in order to be specific, the subsidy must be further limited to a subset of this industry (115).

(538) In their comments on final disclosure the GOID claimed that there was no specificity in the nickel ore policies, because they did not apply only to the stainless steel sector, but to a various range of products.

(539) The Commission rejected this claim. Indeed, the GOID’s nickel ore policies focused always on nickel ore as a raw material for the stainless steel sector. As a matter of fact, documents in the investigation file showed that nickel ore employed for the production of stainless steel must have a nickel content > 1,7 %. On the contrary nickel ore with < 1,7 % finds different applications, for example in batteries for electric vehicles. Evidence of that is the fact that, as of GR 1/2017 and until MEMR Regulation 11/2019, the export ban concerned only nickel ore with nickel content > 1,7 %, i.e., only nickel ore employed in the stainless steel sector. Therefore, the claim was rejected.

(540) By a specific set of measures the GOID, through the mining companies acting as public bodies or entrusted/directed by the GOID, provide nickel ore to the stainless steel industry for less than adequate remuneration. This provision of goods constitutes a financial benefit for the recipient and is specific, and thus countervailable.

(541) There was not sufficient evidence to establish the extent to which Jindal Stainless Indonesia may benefit from this scheme, as Jindal Stainless Indonesia is not vertically integrated and starts its production process at the level of hot-rolled coils.

(543) The complaint alleged that as part of its plan to develop the stainless steel industry, the GOID relied on financial support provided by the GOC. This support was specifically linked to the development of the Morowali Park that is essentially run by Chinese companies, notably Shanghai Decent Investment (Group), the holding company of Tsingshan Group. According to the complaint, the GOID not only actively sought, acknowledged and adopted as its own the Chinese financing, but it also allegedly exercised pressure on the GOC to support Chinese companies that were previously smelting the nickel ore imported from Indonesia into NPI in China to move their smelting activities to Indonesia.

(544) The historical and factual background to the very close cooperation between Indonesia and China to develop a completely integrated downstream stainless steel industry relying on the nickel ore reserves available on Indonesia, and on the finances and the know-how brought in by China is introduced at Section 4.3. As explained, Indonesia has significant nickel ore reserves and is one of the largest players in that market worldwide. As from 2005 the extraction of nickel ore increased substantially, and so did exports (see Tables 1 and 2). The tables also show that China progressively became the overwhelmingly largest destination of nickel ore exports, given that the Indonesian ore was the most suitable for stainless steel production. The GOID was concerned that its nickel ore reserves would be depleted by exports as it did not have sufficient domestic capacity to further process the ore, and thus the country would not gain sufficient benefits from them.

(545) Through the new Mining Law of 2009 the GOID decided to increase the domestic added value by promoting the domestic processing of minerals including nickel ore, mainly via a domestic processing obligation (see recitals (401) to (404)). It also decided to introduce export restrictions after a grace period of 5 years to ensure that the sufficient domestic capacity would be built to absorb the nickel ore production and to ensure that miners would provide it for less than adequate remuneration (see previous section).

(546) In this context, the GOID started talks with potentially interested third countries with a domestic stainless steel industry. For instance, the GOID sought to convince Japan and its nickel ore processing industry to invest in Indonesia. However, the Japanese government was opposed to the planned Indonesian export restrictions as it considered them incompatible with WTO rules and threatened to launch a case against Indonesia at the WTO (116).

(547) The GOID was successful when it approached the Chinese government. As a result of the bilateral cooperation sanctioned in the agreements in 2011 and 2013, and then further stepped up, the Chinese started building and developing smelters in Indonesia. The exports to China peaked in 2013 to 58 million tonnes, whereas the domestic capacity in Indonesia increased progressively from 7,81 million tonnes in 2014, when the domestic processing obligation and the export restrictions entered into force, up to 61 million tonnes in 2019 (see Table 3).

(550) The Commission requested the GOID to provide certain information concerning the bilateral cooperation framework set out by the GOID and the GOC and, in particular, the conditions under which Morowali Park was originally established and whether and to what extent the Morowali Park and the financial assistance provided by the GOC was part of the bilateral cooperation between the respective governments of Indonesia and China.

(551) The Commission specifically requested the GOID to provide a document, signed on 3 October 2013 by Xiang Guanda of Shanghai Decent Investment and Halim Mina from Bintang Delapan Group in the presence of the Chinese and Indonesian presidents. The GOID failed to provide this document, which according to the information available to the Commission, sets out the agreement to jointly establish IMIP and the subsequent development of the Morowali Industrial Park (117). Furthermore, during the RCC of the GOID, the GOID confirmed the existence of this agreement; however, the GOID claimed that it did not have it.

(552) As explained in recital (573), the Commission requested the GOID to provide the list of priority projects that have been selected for implementation as per the provisions of the Indonesia-China Program. The GOID instead provided a different list of projects, i.e. the list of Indonesia and China cooperation projects under the high-level economic dialogue (HLED).

(553) Furthermore, as explained in recitals (639) et seq., the Commission requested the GOID to submit documentation relating to the implementation of the agreements provided, and the consultation mechanisms put into place by the GOC and the GOID in this respect. However, the GOID replied that the KIT Indonesia team created in this regard had not generated meaningful policies and refused to provide any documentation in this regard.

(554) Therefore, the Commission informed the GOID that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation when examining the existence and the extent of the alleged subsidisation for companies located in the Morowali Industrial Park.

(555) In the absence of the requested information the Commission considered that it did not receive crucial and necessary information relevant to this aspect of the investigation. Therefore, the Commission applied Article 28 of the basic Regulation and relied on facts available with respect to those matters.

(556) As recalled above in recital (15), the Commission in the Notice of initiation invited the GOC to become an interested party and, on the same day of its publication, sent the Notice of initiation to the GOC, expressly drawing its attention to the invitation. By email of 19 February 2021, the GOC confirmed that it had registered as an interested party.

(557) The Commission sent a request for information to the GOC in order to collect information regarding an overview of the financial sector in China, information related to China Banking and Regulatory Commission, and information about financial support, export guarantees and insurance in the context of the Morowali Park and Overseas Trade and Cooperation Zones. However, the GOC refused to submit this information.

(558) Therefore, the Commission informed the GOC that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation with regard to the subsidy scheme in question. No comments were received from the GOC.

(559) In the absence of the requested information, the Commission considered that it did not receive crucial and necessary information relevant to this aspect of the investigation. Therefore, the Commission applied Article 28 of the basic Regulation and relied on facts available with respect to those matters.

(560) The cooperation instigated by the GOID with the GOC on the preferential treatment to set up and favour the creation and development of the Indonesian stainless steel industry can be traced back to the early 2000s. It consists of a number of bilateral documents setting up the legal and policy framework leading to the adoption of several specific support policies and preferential programmes constituting countervailable subsidies covered by this investigation.

(561) These documents show that over the years the two countries set up a cooperation framework on the basis of a number of bilateral legal and policy documents to increase progressively their cooperation. They contain all the terms of the cooperation and the primary objective to set up and develop a domestic stainless steel industry in Indonesia via a number of different preferential measures and policies applicable to Sino-Indonesian entities encouraged and supported by the respective governments to implement this cooperation.

(562) The cooperation between the GOID and the GOC in the mining and the metallurgical sector started in 2005 by the signing of a Joint Declaration between Indonesia and China on strategic partnership, stating that both parties will ‘enhance investment cooperation by increasing mutual understanding and networking among investment authorities, including the private sectors, and by creating more conducive eco-socio-political and legal climates for the flow of investments’. Already at that time, the GOC had requested assurance from the GOID to guarantee the interests of foreign investors to gain profits (118). It was further stated at that time that in the last ten years of economic development, the Chinese government had always guaranteed that every investment in China was profitable. This cooperation was in line with China’s ‘going out’ policy that started in 1999 and favoured the establishment abroad and export and internationalisation of Chinese companies.

(563) In January 2010, as an implementation of the 2005 Joint Declaration, Indonesia and China signed the Indonesia-China Plan of Action (‘Plan of Action 2010’) document to further their strategic partnership. This document contains a plan to encourage Chinese investment in resource-based industries in Indonesia, including mining (119). In Section 3.2 on ‘Trade Cooperation’, Article 3.2.14 referred to ‘formulate and implement the five-year plan for the China-Indonesia economic and trade cooperation’, which was indeed signed shortly thereafter (see below). The chapter on ‘Investment Cooperation’ provides for the encouragement of the participation of private actors (Article 3.4.3) and encouragement of ‘Chinese investment in resource-based industries in Indonesia, such as (…) mining and energy (…)’ (Article 3.4.8). The document also refers to a Memorandum of Understanding between GOID and the GOC on Infrastructure and Natural Resources Cooperation signed on 25 April 2005.

(564) The investigation found that three memoranda of understanding and one technical regulation signed by the representatives of the Chinese and of the Indonesian governments during a visit of the then China’s Prime Minister, Mr Wen Jiabao, in Jakarta at the end of April 2011. The Commission requested the GOID to provide these three memoranda of understanding and the technical regulation.

(565) The GOID submitted three documents. The first document was a Protocol amending the memorandum of understanding between the Ministry of marine affairs and fisheries of Indonesia and the State oceanic administration of the PRC on marine cooperation signed on 29 April 2011.

(566) The second document was an Agreement between the GOID and GOC on expanding and deepening the bilateral economic and trade cooperation signed on 29 April 2011. Pursuant to this agreement, the ‘two governments agreed to encourage enterprises’ to carry out economic cooperation of various forms in several fields such as the steel industry, industrial park and export processing zone.

(567) The third document was a Joint Communiqué between the GOID and GOC on further strengthening China – Indonesia strategic partnership signed on 29 April 2011. Pursuant to this Communiqué, ‘The two sides expressed satisfaction over the Plan of Action for the Implementation of the Joint Declaration on Strategic Partnership between the GOC and GOID signed on 21 January 2010, and agreed to take concrete measures to implement the Plan of Action and promote pragmatic cooperation in various fields between the two countries’. Furthermore ‘The Chinese side also hopes to strengthen the cooperation with the Indonesian side on the development of the Economic and Trade Cooperation Zone’.

(568) On 25 March 2012, the GOID and the GOC agreed, in a joint statement delivered in Beijing at the end of an official visit of Indonesian President Yudhoyono, to develop a bilateral Indonesia-China economic and trade cooperation agreement in accordance with the specific preferential policies in the 12th Five-year plan of the GOC and the MP3EI of the GOID (120). Moreover, the GOID encouraged Chinese enterprises to participate in enhancing Indonesia’s industrial capacity and promised to ‘continue creating conducive investment atmosphere for foreign investors, including those of China’. More specifically, the GOID expected Chinese enterprises to ‘invest more in Indonesia’s mining industry’ and ‘briefed China on its efforts to improve the management of its mining resources’. Finally, both parties agreed to ‘gear up efforts to further solidify and expand cooperation in […] mining’. This statement shows that the two sides sought to implement their respective domestic preferential policies, notably in order to strengthen Indonesia’s downstream industrial capacity by involving and keeping updated China on the development of the policy on raw materials.

(569) With regard to Indonesia, the MP3EI acknowledges that the industry needs to be further developed in Indonesia and brands Sulawesi as a development area for the industry. To support the development of the steel industry the GOID envisaged, among other actions, regulatory changes to facilitate the provision of raw materials, build national upstream and downstream business partnerships, the cluster development of downstream steel industry and prioritization of integration of steel smelting and stainless steel production (121). In addition, the natural resources, and specifically mining and nickel, are also targeted with the objective of increasing Indonesia’s industrial processing to capture higher added value. On nickel, the focus is strengthening downstream nickel industries with the facilitation of strong partnerships between upstream and downstream industries (122).

(570) With regard to the PRC, the 12th Five-Year Plan for National Economic and Social Development, in force at the time of the establishment of IMIP, highlights the strategic vision of the GOC for improvement and promotion of key industries. It indicates that the GOC formulates policies to support the technical improvement of enterprises in order to improve market competitiveness. Past investigations showed that the steel industry figured prominently among these key industries (123). Moreover, the GOC issued a specific plan for the steel industry, i.e. the 12th Five Year Plan for the Steel Industry (‘the 12th Five-Year Steel Plan’), in force at the time of the establishment of IMIP as well. The 12th Five-Year Steel Plan highlights that the steel industry is an important basic industry of the national economy and emphasizes the importance of ‘strengthen[ing] the connection of fiscal, financial, trade, land, energy saving, environmental protection, safety and other policies with the steel industrial policy’. Past investigations showed that these plans are legally binding (124) and revealed the predominant role of the GOC via SOEs in the steel sector (125). The predominant role of the GOC in the steel sector and ensuing significant market distortions are further confirmed by the Commission Staff Working Document on significant distortions in the economy of the PRC for the purpose of trade defence investigation, which stated that ‘[w]ith the high level of government intervention in the steel industry and a high share of SOEs in the sector, even privately owned steel producers are prevented from operating under market conditions’ and recognised the ‘substantial ownership, control and/or government intervention with respect to the allegedly privately-owned steel companies’ (126).

(571) On 2 October 2013, the Minister for Economic affairs of Indonesia and the Minister of Commerce of China signed in Jakarta ‘The Indonesia-China Five-Year Development Program for Economic and Trade Cooperation’ (‘the Indonesia-China Program’). The Indonesia-China Program envisaged ‘to boost trade investment between the two countries and push forward the implementation of common priority projects’ (127), which were expected to be the concrete expression of the program.

(572) Chapter III of the Indonesia-China Program, the GOID and GOC clarified that the programme is materialised through the priority projects whose ‘selection principle should meet strategic interest and socioeconomic development needs of the two countries, be consistent with mid and long term planning for economic development of both countries, and fit the development plans of the enterprises involved’.

(573) The Commission requested the GOID to provide the list of priority projects that have been selected for implementation as per the provisions of the Indonesia-China Program. However, the GOID instead provided a different list of projects i.e. the list of Indonesia and China cooperation projects under the high-level economic dialogue (HLED). Based on the application of Article 28(1) due to this refusal to cooperate, the Commission inferred that the Morowali Project was also included in this list of priority projects under the bilateral cooperation. Indeed, this is an important project where the presence of Chinese companies is significant.

(574) The Indonesia-China Program also confirmed the statement of 2012 that one of the main objectives of the cooperation was to implement preferential policies for the steel sector at Chapter I, point 1.2.3, stating that one of the overarching objectives of the bilateral cooperation was ‘to encourage competitive and reputable Chinese enterprises and financial institutions to participate in the development of six economic corridors in Indonesia and the project listed in the GOI’s MP3EI and to encourage competitive and reputable Indonesian enterprises in the development of the GOC’s 12th five-year plan’ (128).