Indonesia: Minister of Trade imposes more restrictions on the import of finished products by manufacturers - Is it time to restructure?

In brief

The Ministry of Trade (MOT) has issued Minister of Trade Regulation No. 59 of 2020 (“Regulation 59”) which is an amendment to Minister of Trade Regulation No. 118/M-DAG/PER/12/2015 on Import Provisions for Complementary Goods, Goods for the Purpose of Market Testing, and After-Sales Service (“Regulation 118”).

Regulation 59 was issued to limit the number of industries allowed to import manufactured goods in the form of complementary goods, goods for the purpose of market testing and goods for after-sales service ( “Goods”). By putting a limitation on the number of industries allowed to import Goods, Regulation 59 is expected to boost the local manufacturing sector, which has been affected by the coronavirus pandemic.

For instance, Regulation 59 categorizes companies that want to import Goods into sectors/subsectors. Under the previous regulation, there was no categorization of sectors/subsectors.

The above provision is one of the key highlights of Regulation 59. We will further elaborate on the differences between Regulation 59 and the previous regulation below.


In depth

What’s New Under Regulation 59

New List of Sectors and Subsectors for Companies

  • Companies that want to import manufactured goods as complementary goods are divided into two groups, based on the consideration of the MOI (group A) and consideration of BPOM (group B).The following are the sectors/sub-sectors that can import manufactured goods as complementary goods:

Group A (based on consideration from the Ministry of Industry):

  1. maritime, transportation equipment, and defense equipment industry
  2. machining and agricultural machine tools industry
  3. electronics and telematics industry
  4. upstream chemical industry
  5. downstream chemical and pharmaceutical industry
  6. forest and plantation products industry
  7. beverages, tobacco products, and freshener industry
  8. food, marine, and fishery products industry
  9. cement, ceramics, and non-metal quarried processing industry
  10. textile, leather, and footwear industry
  11. small and medium chemicals, clothing, and handicraft industry and miscellaneous industry
  12. medical devices industry

Group B (based on consideration from BPOM):

  1. pharmaceutical preparations industry
  • Sector/sub-sectors that can import manufactured goods for the purpose of market testing are as follows:
  1. maritime, transportation equipment, and defense equipment industry
  2. electronics and telematics industry
  3. upstream chemical industry
  4. downstream chemical and pharmaceutical industry
  5. textile, leather, and footwear industry
  6. forest and plantation products industry
  7. beverages, tobacco products, and freshener industry
  8. food, marine, and fishery products industry
  • Sectors/sub-sectors that can import manufactured goods for the purpose of after-sales service are as follows:
  1. maritime, transportation equipment, and defense equipment industry
  2. electronics and telematics industry
  3. machining and agricultural machine tools industry
  4. downstream chemical and pharmaceutical industry
  5. medical devices industry

Business Identification Number (Nomor Induk Berusaha/NIB) to Obtain Import Approval (Persetujuan Impor/PI)

Regulation 59 stipulates that a company that wants to obtain an import approval should have a business registration number that serves as a Producer Importer Identification Number (API-P) and an industrial business license. It should submit an application through the INATRADE system to the Director General. The INATRADE system is integrated with two systems, namely the SIINAS system to obtain consideration from the MOI, and E-BPOM to obtain consideration from BPOM. Furthermore, an application for complementary goods must include a scanned copy of proof of a special relationship with a company overseas. 

In addition, under Regulation 59, the Director General based on the application and on the consideration of the MOI and BPOM must issue an import approval, or reject the application, within five working days after receiving the application. The rejection will be done electronically if the application is incomplete and incorrect or the MOI or BPOM do not provide their consideration in the INATRADE system

Sanctions for Importers

Regulation 59 gives more responsibility to the importer if the importer doesn’t conduct import activities in accordance with the regulation. Goods that are imported not in accordance with the regulation must be withdrawn from distribution and must be destroyed by the importer. In addition, the costs of the withdrawal and destruction of Goods must be borne by the importer.

Examination of Import Approval

Regulation 59 adds that the Directorate General of Consumer Protection and Trade Regulation (“DGCPT”) can examine import approvals for manufactured goods. The examination will consist of inspection and supervision of the import approval  and other supporting import documents. The supervision conducted by the DGCPT will be based on accuracy of import realization reports, conformity of Goods that are imported with data specified in the import approval, and compliance with the relevant laws and regulations.

Evaluation of Regulation

Regulation 59 provides that to evaluate the implementation of Regulation 59, the Directorate General of International Trade together with the MOI and BPOM could establish a team to evaluate the import of Goods. In addition, while Regulation 118 stated that the regulation was to be evaluated once every year, Regulation 59 states that the implementation of this regulation will be evaluated at least once every year and/or any time that it is necessary.

Key Takeaways

Looking back over the last five years, it is clear that the government of the Republic of Indonesia has been restricting the import of finished products by manufacturing companies to be traded. As mentioned above, this is the government efforts to increase the capacity of the manufacturers particularly the local manufacturers or industry.

Manufacturing companies that still import industrial/finished products to be transferred or traded need to start exploring options for the supply chain of those products, and consider how the new regulation will impact them. The options can include establishing a new trading company or appointing a local representative.

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