The authority in charge of regulating import/export procedures in Indonesia is the Ministry of Trade (MoT) through its Directorate General of Foreign Trade, and the Ministry of Finance (MoF) through its Directorate General of Customs and Excise (DGCE) by which they act as Trade Facilitator. Another important player is the Investment Coordinating Board (Badan Koordinasi Penanaman Modal - BKPM), which is the coordinating body with consulting functions in the area of trade and investment.
In practice, Customs areas are under the supervision of the Directorate General of Customs and Excise (DGCE – Direktorat Jenderal Bea Cukai). This body’s main task is to formulate and implement policies; prepare norms, standards, procedures, and criteria; provide technical guidance and supervision; and implement the functions of monitoring, evaluation, and reporting. The objective of the above-mentioned task is for law enforcement, service and supervision, plus optimization of state revenues through Customs and Excise.
To import to Indonesia, the most relevant regulations to be taken into account are, among others:
- Indonesian Customs Law No. 17 of 2006 (ICL)
- Ministry of Trade Regulation No. 73/2014
- Ministry of Trade Regulation No. 51/2020
- Ministry of Trade Regulation No. 28/2020
- Ministry of Trade Regulation No. 121/2018
- National Drug and Food Control Agency (BPOM) Regulation No. 80 of 2017
Requirements for Importers
Every importer, whether a business entity or an individual, requires the following administrative elements (depending on the goods and the purpose of the import):
Importer Identification Number (Angka Pengenal Impor or API). The API, as regulated by Ministry of Trade Regulation No. 75/2018, is the importers’ mandatory proof of identification. It is valid as long as their business activities continue to operate in Indonesia. However, the importers must submit an import realization report every three months to the Ministry of Trade, even if no imports have taken place. Reporting can also be carried out on the website http://api.kemendag.go.id.
There are two types of API:
- API-U (General Importer Identification Number – Angka Pengenal Impor Umum), granted to companies importing goods only for trading purposes. It is issued by the Ministry of Trade (or the related Head of Provincial Service).
- API-P (Producer Importer Identification Number – Angka Pengenal Impor Produsen), granted to companies importing goods for their own use, such as raw materials and/or others that are only intended to support their production process. It is prohibited to trade such goods or transfer them to another party.
Please note that importation without an API can only be performed one time. Should a company decide to import products without an API the next time, they will need to submit a formal request to obtain approval from the Ministry of Trade, which will only be granted for infrequent import of self-consumed goods that are not for trading purposes. Certain goods do not require an API.
Business Identification Number (Nomor Identitas Berusaha - NIB). The NIB or Business Identification Number is a company identity number and is the first step towards obtaining the following licenses:
- Certificate of Company Registration (Tanda Daftar Perusahaan or TDP);
- Importer Identification Number (Angka Pengenal Impor or API) if your business intends to import goods;
- Customs Access (Akses Kepabeanan) if your business intends to export and/or import goods.
According to Government Regulation No. 24/2021, since July 2018, application for the NIB can be made online at the Online Single Submission (OSS) website at https://www.oss.go.id/.
Import Approval for Used Capital Goods (Persetujuan Impor Barang Modal Non Baru). This is issued by the Ministry of Trade and is necessary for imports of used capital goods conducted by direct users, reconditioning and remanufacturing companies and/or hospital equipment suppliers.
Calculation of Import Duty and Taxes
When importing goods, it is required to provide notification of the incoming freight through the Customs Declaration Form (PIB) and to pre-pay customs duties and import taxes. There is a 10% penalty (of the total custom duty payable amount) if the deadline is not met.
Customs duty is referenced to the HS Code of the goods as classified in the Indonesian Customs Tariff Book (Buku Tarif Bea Masuk Indonesia – BTBMI). Knowing the correct classification is essential, as the HS Code is one of the factors that determine the rate of customs duties and taxes, as well as the import/export requirements for the product. There is a possibility that the applicable HS Code for products from overseas may differ from the applicable ones in Indonesia, however, the initial 6 digits of HS Code can be utilized to identify the possible HS Code in Indonesia. Indonesian tariff classifications are governed under Minister of Finance Regulation No. 17/PMK.010/2020 and No.17/PMK.010/2018
Service Facilities, Fiscal Facilities, Bonded Storage
Service Facilities are considered a special case in the process for customs formalities, providing an effective, efficient, and cost-effective service to clear customs procedures. There are several forms of Service Facility, for example:
- Discharging or Storing outside Customs Area: When certain conditions apply, such as those relating to the condition of the imported goods or the adequacy of the customs area, the Head of Customs Office is allowed to take proper measures in allowing the goods to be discharged or stored outside the Customs Area.
- Vooruitslag Facility: Special treatment allows the imported goods to go through Customs, although they are still liable for Import Tariff and Tax on Import (Pajak Dalam Rangka Impor - PDRI), by entrusting their guarantees. The guarantees can take the form of a cash guarantee, bank guarantee, Customs bond, among others.
- Rush Handling Facility: This facility is provided on certain imported goods because of specific characteristics that require immediate removal of the goods from the customs area.
- Deferred Payment: Credit facility for payment of import duty granted to producer with good reputation.
Meanwhile, forms of Fiscal Customs Facility include:
- Exemption from Customs Duty that may be applied for the import of certain categories of goods such as goods of diplomatic representative offices; goods for the needs of international organizations; consigned goods in the form of donation; goods for scientific research and development; and goods and materials for state defence and security purposes.
- Exemption or relief of customs duties that may be given to goods if they are: imported for the purpose of developing and advancing an industry (capital investment), preventing environmental pollution, or advancing the agriculture and animal husbandry sectors.
- Payment suspension of import tariff against bonded zone: incentives received by the party storing the goods in a Bonded Zone (Tempat Penimbunan Berikat - TPB) in the form of a suspension of the customs duties and taxes not levied.
- Goods or materials that are introduced into a bonded warehouse that may be granted postponement of customs duty, exemption from excise of a non-collection of Value Added Tax (VAT), luxury tax on sales and income tax on import. These facilities are provided to goods or materials introduced solely for the purpose of supporting the local industry or for re-exporting.
Government regulations in Indonesia is often considered unrefined but the country’s market potential is too vast to be ignored. Even if some obstacles still remain, the Indonesian market is becoming more accessible and profitable than ever before. Many environmental-friendly, innovative and high-quality products and services by the private sector provide solutions to the ecological, industrial and social challenges and opportunities that Indonesia is facing. In combining Indonesia’s potential and the solutions provided by private sector, an established and trusted local partner is needed.