We will provide an overview of the import quota policy and an analysis of its impact in the section below.

Import quota policy

What is an import "quota" policy?

The import quota policy is implicitly regulated under MOT Regulation 36, as it does not specifically define an import quota. However, a quota can be defined as a form of non-tariff trade barrier or restriction set by the government to limit the quantity or numbers of units of certain goods that can be imported into a country within a certain period.

What MOT Regulation 36 actually says on the quota

MOT Regulation 36 stipulates that certain goods can be imported into Indonesia if the importers obtain Business Licensing in the import sector, namely an Import Approval (Persetujuan Impor (PI)). In general,¹ PI contains various elements of data and descriptions of the following:

1. Import Approval number and date of issuance
2. Business Identity Number (Nomor Induk Berusaha (NIB)) and importer identity
3. Classification/HS codes of goods
4. Serial number of goods
5. Type/description of goods
6. Quantity and units of goods
7. Country of origin
8. Port of destination
9. Validity period in the form of starting date and end date

Based on the above, essentially, the PI will lay out the quota of products that can be imported by a company within a certain period. The products' scope is also limited based on the HS Codes, description and serial numbers.

To determine those elements of data, the MOT will consider Commodity Balance (Neraca Komoditas). If the Commodity Balance is not yet available for the category of products, then the MOT will refer to a Technical Consideration (Pertimbangan Teknis ("Pertek")) issued by the relevant ministries.

To date, Commodity Balance is available for the following categories of products:

For products outside of the list above, the import quota will be decided by the relevant ministries. For instance, the Ministry of Industry (MOI) will decide the Pertek for certain products, such as the following:

Further guidance related to the application of import quota

First of all, a company needs to determine the category of its imported products and HS Codes to look into (i) the availability of Commodity Balance for the products; and (ii) the relevant technical ministries that govern the products. The relevant ministry issues guidance on the procedures to obtain a Pertek for the imported products to implement the provisions under MOT Regulation 36.

Below we summarize the technical ministry's regulations related to import quotas that are issued as guidance or implementing regulations of MOT Regulation 36:

The detailed procedure and requirements to obtain the import quota are varied and are specifically regulated in the relevant MOI regulations as indicated above.

Implications on importers

1. Importers faced a black-out period (unable to process the import license until the system was ready) before the regulation became effective. There was also operational instability that caused distrust from the importers.
2. Additional requirements to obtain Pertek, such as the LHVKI or LHVIU requirement for importers of textile, bags and footwear, create additional compliance costs for importers that hinder them from acquiring an import license on time.
3. A government’s determined limitation on companies' import quota will reduce the availability of imported products needed by the public in the domestic market.
4. For textile, bags and footwear products, the MOI requires API-U holder companies (i.e., trading companies) to have a SIINas account to apply for an import quota. This causes more compliance obligations for the trading companies doing business in Indonesia.
5. The change in supervision from post-border to border for certain products may lead to longer lead times for customs clearance, as Customs authorities must check the readiness of import permits before the product can be removed from the customs area.

Relaxation to overcome policy challenges

Import quota policy challenges

As explained earlier, since its implementation on 10 March 2024, MOT Regulation 36 and its revisions have caused a backlog of containers at Indonesian major ports. These containers have been held up due to slow issuance of PI and Pertek. There have been comments that the Ministry of Industry takes a long time to process these Pertek.

Regulation amendment

To overcome this, the government revised MOT Regulation 36 by issuing Ministry of Trade Regulation No 8 of 2024. This regulation provides relaxation on import licensing for certain commodities as follows:

• Traditional medicine and health supplements, cosmetics and household supplies, bags, and valves commodities, which in MOT Regulation 36 were tightened by adding PI and Surveyor Report, are returned to the rules of MOT Regulation 20 of 2021 amended by MOT Regulation 25 of 2022 ("MOT Regulation 20") to only require Surveyor Report.
• Electronics, footwear, apparel and accessories commodities, which in MOT Regulation 36 were tightened by adding Pertek requirements, are returned to MOT Regulation 20 rules to not require a Pertek.

With the regulation coming into effect on 17 May 2024, goods that have arrived at the port since 10 March 2024 refer to the provisions of MOT Regulation 8.

To accelerate the settlement of import licensing issues, the president also directed related parties, such as the Ministry of Trade, to accelerate the issuance of PI, and the Ministry of Industry to accelerate the completion of Pertek.

Staying alert

The relaxation of import licensing is good news for business actors. However, given the dynamic nature of the Ministry of Trade's regulations, they must remain alert to the longevity of this relaxation and potential future changes.

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