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A Guide to Indonesia's Import & Export

We touched briefly on the economic and business situation in Indonesia and how those factors affect the logistics sector. In addition, we have compiled the necessary details that would help you understand the country’s import and export process further.



Known as the largest archipelago in the world with over 17,500 islands in the country and as the most populated nation in Southeast Asia with a population of over 268 million, Indonesia’s logistics market has seen to be significantly developing these past years with more room for growth. As of 2020, Indonesia is the 16th largest economy in the world and is one of the logistics markets with the highest prospects in the region.


The country is positioned for growth owing to a significant number of existing trade agreements, continuous improvement in transport infrastructure, development of e-commerce, and increasing purchasing power parity* in the country. To add, a number of promising agreements are being negotiated as the country is focused on seeking new trade agreements to facilitate economic growth during the COVID-19 pandemic. In the path toward strengthening and improving the country's economy, President Widodo’s introduced the Omnibus Law in 2019 and got the green light on 5 November 2020, with the aim to stimulate domestic and foreign investment to transform Indonesia’s economic sphere.


*Purchasing Power Parity: The measurement of prices in different countries that uses the prices of a specific good to compare the absolute purchasing power of the countries' currencies.


Despite being known as Southeast Asia’s largest economy, Indonesia scores below its weight in economic performance and it is known to have a complex regulatory environment. The Omnibus law leased eased restrictions. in critical areas such as labor law, capital investment, business licensing, and more which would make the country a far more attractive destination for foreign businesses and investors.


Even with the controversies surrounding the Omnibus Law, the government is confident that together with other refinements, this law will streamline regulations and simplify the licensing process to ease the process of business and logistics in Indonesia.


If you’re looking to expand your business in the Indonesian market, here’s what you need to know for both importing to and exporting from, Indonesia.


Before proceeding, here’s a general note,


  • Businesses will now require only a Business Identification Number, Nomor Induk Berusaha, (NIB), to begin their import/export activities ever since 2018 with the implementation of the OSS (Online Single Submission) system.

  • The NIB now doubles up as an API-U (General Import License); API-P (Producer Import License); and an API-T (Limited Import License) also known as API Terbatas.

  • Businesses should check with the Indonesian Harmonization System (HS) code, which is used to classify and calculate tax and customs rates on all types of items, before importing or exporting them. This classification is done because some items may require additional permits or registrations.

  • The importation and exportation of goods may only be conducted by importers and exporters that have obtained the required licenses from the Central Government, which are stated below.

  • Importers and exporters are not required to obtain the above licenses for imports that are not for business purposes (provision is provided in the trade law as amended by the Omnibus Law and is echoed in the Trade GR).


There’s no elaboration on what is meant by imports that are not for business purposes - therefore unclear whether the exemption is for the importation of goods for personal use or applies to activities for other purposes.



Import to Indonesia


It is important to note that legality as an importer is required as imports can only be carried out by companies that have registered themselves through OSS as they’ll get a NIB after the completion of registration.


Import companies or companies that engage in import activities do not have to go through the process of acquiring a General Import License (API) and Customs Identity Number (NIK) anymore, but they need to ensure to comply with technical import requirements with relevant authorities.


The Import Procedure

Import Documents Checklist
  • Invoice

  • Commercial Invoice, signed by the manufacturer or supplier as true and correct

  • Bill of Lading (BOL)

  • Packing List

  • Insurance Certificate

  • NIB (Business Identification Number)/Import Permit

  • HS Code

  • Material Safety Data Sheet

  • Customs Import Declaration


Import Tariffs and Taxes

The customs duties vary from zero to 170 percent and most imported items attract duties in the range of zero to 15 percent. The amount of duty depends on the type of goods imported, based on the product’s HS code, plus it is required to pre-pay customs duties and import taxes as well as, provide notification of the incoming freight to customs


An import sales tax is imposed on imports at the point of entry at rates within the range of five and 30 percent. Lastly, Indonesia is committed to the ASEAN Free Trade Agreement (FTA) which duties on imports from the member countries generally range from zero to five percent, except for products specified on exclusion lists.



Export from Indonesia


Some things to note, the payment process can be via the Letter of Credit (L/C) or non-L/C methods, each coming with its own risks and advantages.


Also, a legal entity is required for a company to export goods from Indonesia; it can be a limited liability company, a public company, or a cooperative. These are the requirements for any company that chooses to be an exporter from Indonesia,


  • It is necessary for the exporter company to be a Legal Entity, in the form of CV, Firm, PT (Limited Liability Company), Persero (Limited Liability Company), Perum (Public Corporation), Perjan (Departmental Company), or Cooperative

  • Have a Taxpayer Identification Number also known as NPWP

  • Holder of one of the licenses issued by the Indonesian government; Trading Business License from the Department of Commerce (SIUP), Industrial License from Department of Industry, Domestic Investment Business License (PDMN), Foreign Investment (PMA) or having an Export Identity Number (APE)

  • Exporters can be classified into Producer and Non-Producer Exporters (Find links that explain this)


The Export Procedure

Export Documents Checklist
  • Bill of Lading (BOL), Airway Bill, or other transport documents like a postal receipt, cargo receipt

  • Commercial Invoice

  • Customs Export Declaration

  • Packing List

  • Export declaration of goods (PEB)

  • Insurance Certificate

  • Export Permit

  • Certificate of Origin


Export Tariffs and Taxes

Exporters are exempted from export duties, VAT (Value-Added Tax), and tax on luxury products for materials and products used in manufacturing goods produced from export. Despite this, certain products such as untreated skin, tanned leather, and coal attract export duties of 25 percent, 15 percent, and five percent respectively.


If you need extra hands to help you with the delivery of your items to or from Indonesia, or any other country, do talk to us!


E-mail: contact@mcglobe.ltd

Phone:+65 6206 1944

Or visit our website at www.mcglobe.ltd





References:


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