Manufacturing Agreement for Indonesia

Manufacturing Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes the terms and conditions for manufacturing arrangements between a principal company and a manufacturer. The document addresses crucial aspects including production specifications, quality standards, intellectual property rights, regulatory compliance with Indonesian industrial laws, local content requirements, and operational procedures. It incorporates specific provisions required under Indonesian manufacturing regulations, labor laws, and investment requirements, while ensuring alignment with local industry standards and practices.

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What is a Manufacturing Agreement?

The Manufacturing Agreement serves as the primary legal framework for establishing and governing manufacturing relationships in Indonesia. This document is essential when a company wishes to engage a manufacturer to produce goods according to specific requirements and standards. The agreement comprehensively covers all aspects of the manufacturing relationship, including production specifications, quality control measures, intellectual property protection, and compliance with Indonesian industrial regulations. It is particularly important in the context of Indonesia's complex regulatory environment, which includes specific requirements for local content, industrial licensing, and foreign investment restrictions. The document ensures compliance with key legislation such as Law No. 3 of 2014 on Industry and related regulations while protecting both parties' interests in the manufacturing process.

What sections should be included in a Manufacturing Agreement?

1. Parties: Identification of the contracting parties, including their legal status and registered addresses

2. Background: Context of the agreement, including the purpose and basic premises of the manufacturing relationship

3. Definitions: Definitions of key terms used throughout the agreement

4. Scope of Manufacturing Services: Detailed description of the manufacturing services to be provided

5. Manufacturing Process and Standards: Requirements for the manufacturing process, including compliance with industry standards

6. Quality Control and Inspection: Quality assurance procedures, testing requirements, and inspection rights

7. Production Schedule and Delivery: Timeline for production, delivery terms, and logistics arrangements

8. Pricing and Payment Terms: Pricing structure, payment schedule, and related financial terms

9. Intellectual Property Rights: Protection and ownership of IP, including existing IP and new developments

10. Confidentiality: Protection of confidential information and trade secrets

11. Representations and Warranties: Standard warranties regarding capacity, quality, and compliance with laws

12. Liability and Indemnification: Allocation of risks and responsibilities between parties

13. Term and Termination: Duration of agreement and grounds for termination

14. Force Majeure: Provisions for unforeseen circumstances affecting performance

15. Governing Law and Dispute Resolution: Choice of law and dispute resolution mechanisms under Indonesian law

16. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

What sections are optional to include in a Manufacturing Agreement?

1. Environmental Compliance: Specific environmental obligations and compliance requirements, necessary when manufacturing involves environmental risks

2. Local Content Requirements: Provisions addressing Indonesian local content requirements, needed for certain industries

3. Technology Transfer: Terms for technology transfer if required by Indonesian regulations or agreed between parties

4. Training and Support: Provisions for technical training and support, relevant when knowledge transfer is part of the arrangement

5. Export Controls: Export compliance requirements, necessary when products are intended for international markets

6. Customs and Import Duties: Specific provisions for handling customs and import duties, relevant for international manufacturing relationships

7. Insurance Requirements: Detailed insurance obligations beyond standard coverage

8. Security Requirements: Special security measures for sensitive manufacturing processes or products

9. Corporate Social Responsibility: CSR commitments and community engagement requirements

10. Subcontracting Rights: Terms governing the right to subcontract certain manufacturing processes

What schedules should be included in a Manufacturing Agreement?

1. Schedule A - Product Specifications: Detailed technical specifications of products to be manufactured

2. Schedule B - Quality Control Procedures: Specific quality control processes and acceptance criteria

3. Schedule C - Pricing Schedule: Detailed pricing structure, including volume discounts and cost adjustments

4. Schedule D - Production Timeline: Detailed production schedules and milestones

5. Schedule E - Equipment and Facilities: List of equipment and facilities to be used or provided

6. Schedule F - Key Performance Indicators: Specific performance metrics and targets

7. Schedule G - Approved Subcontractors: List of pre-approved subcontractors if applicable

8. Appendix 1 - Technical Documentation: Manufacturing process documentation and technical requirements

9. Appendix 2 - Compliance Certificates: Required regulatory and quality certifications

10. Appendix 3 - Safety Procedures: Manufacturing safety protocols and emergency procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Automotive Manufacturing

Electronics Manufacturing

Textile and Garment Industry

Food and Beverage Processing

Pharmaceutical Manufacturing

Consumer Goods Production

Industrial Equipment Manufacturing

Chemical Manufacturing

Aerospace Components

Medical Device Manufacturing

Relevant Teams

Legal

Operations

Manufacturing

Quality Assurance

Supply Chain

Procurement

Regulatory Affairs

Compliance

Research & Development

Engineering

Finance

Business Development

Relevant Roles

Chief Operations Officer

Production Manager

Quality Control Manager

Supply Chain Director

Legal Counsel

Procurement Manager

Manufacturing Engineer

Compliance Officer

Contract Manager

Industrial Relations Manager

Technical Director

Business Development Manager

Regulatory Affairs Manager

Industries
Law No. 3 of 2014 on Industry: The primary legislation governing industrial activities in Indonesia, including manufacturing operations, industrial licensing, and domestic market obligations
Law No. 13 of 2003 on Manpower: Regulates labor relations, working conditions, and employment terms that must be addressed in manufacturing operations
Law No. 25 of 2007 on Investment: Governs foreign and domestic investment in manufacturing sectors, including ownership restrictions and investment requirements
Indonesian Civil Code (KUHPerdata): Provides the basic framework for contract law in Indonesia, including formation, validity, and enforcement of agreements
Law No. 40 of 2007 on Limited Liability Companies: Regulates corporate structures and governance for manufacturing entities operating as Indonesian companies
Government Regulation No. 142 of 2015: Covers industrial estates and facilities, relevant for manufacturing location and facilities requirements
Law No. 32 of 2009 on Environmental Protection: Sets environmental obligations and compliance requirements for manufacturing operations
Law No. 39 of 2009 on Special Economic Zones: Relevant for manufacturing operations in designated special economic zones with specific incentives and requirements
Law No. 20 of 2016 on Trademarks and Geographical Indications: Protects intellectual property rights in manufacturing processes and products
Ministry of Industry Regulations on Industrial Standards: Various regulations setting quality standards and technical requirements for manufacturing processes and products
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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