Countertrade and Offset Mechanism for Procuring Military Equipment

The Government has issued Government Regulation No. 76 of 2014 on Countertrade Mechanisms for Procuring Security and Defense Equipment from Overseas (“Regulation”), as the implementation of Article 43 (9) of Law No. 16 of 2012 on Defense Industry (“Defense Industry Law”).[1]

Article 43 (9) of the Defense Industry Law mandates the government to establish further provision on countertrade, mandatory local component content, and/or offset mechanisms, as part of mandatory arrangements for procuring security and defense equipment (“Military Equipment”) from overseas.