Updated: Jun 1, 2020
Have you ever thought about importing goods to Indonesia as foreigners? If you plan to import goods into Indonesia there are two options with a certain type of licenses. In the following sections, you can choose which option suits you and do provide yourself with the most up-to-date information before importing goods.
What are the options?
The first option is you need to establish a company in the form of a foreign investment limited liability company (PT PMA) which takes up to three months.
The second option is by carrying out the activities using undername importer, a company that already has the import licenses for the product you want to bring to Indonesia. By using an undername importer, there is no need for you to obtain an import license or permission to import your products to Indonesia. This company can help you minimize delays, additional costs and will be ready in administering the following steps for you.
What are the licenses needed?
There are two general import licenses which need to be arranged after the establishment of the import company, the general Import Identification Number (API-U) and the Customs Identification Number (NIK). Without these licenses trading companies are basically unable to perform import activities and thus unable to import goods into the Indonesian territory.
The trading company should first apply for a general Import Identification Number (API-U), which is issued by the Minister of Trade. As a standard, the API-U is only applicable to one category of goods. If companies wish to import goods in multiple categories, they must comply with certain requirements. In most cases, companies are required to hold an API-U in order to import goods. There are however exceptions to this rule. Some examples of activities which are exempted from the API-U requirement are the import of temporarily imported products, promotional products, products which are required for research and scientific development and shipments of household goods and personal effects.
After the trading company has obtained the API-U license from the Minister of Trade, it can apply for the NIK license, which is issued by the Director of Directorate General of Customs and Excise.
More about import licenses
According to the Ministry of Trade regulation (No.45/M-DAG/PER/9/2009), every importer in Indonesia must hold a General Import License (API-U) or the Producer Import License (API-P). API-Us are issued to companies that import goods to be traded, while API-Ps are issued to companies for importing goods not to be traded and the goods are for the importers’ own use as capital goods, raw materials or support materials, and/or to support production only. Notably, a company is not permitted to have both licenses.
Simply saying, each importer may only have one type of API, either an API-U (as a trader) or an API-P (as a producer).
The following points show the implications that came into force on 1 January 2016 by the Ministry of Trade/MoT concerning the types of goods that may be imported by API-U and API-P holder.
Holders of API-U can import goods under several sections of the HS Code
A special relationship between the API-U holder and its overseas supplier is no longer required
Holders of API-P can no longer import industrial/ finished goods to be traded or transferred to other parties unless they are imported under an import duty exemption facility and have been used for own use for at least 2 years after the date of the Import Declaration Form
The new development is likely to be welcomed by API-U holders as it no longer regulates the specific goods to be imported and more flexible to import goods to Indonesia for trading purposes. For API-P holders, however may not be good news as they can no longer import industrial/finished goods, including those to be traded.
Below a summary of the API provisions that are worth to take note :
Valid in the entire Indonesian territory including for branch offices conducting the same type of activities
Valid as long as the holder continues its business activities but must be re-registered with the issuing authority every 5 years
API-Us and API-Ps for all foreign capital investment companies are issued by the Investment Coordinating Board/BKPM
What about the Import Tax Duties and the HS Code?
The import tariff differs in Indonesia, ranging from 0 to 40%, depending on the product category with HS code that you import into the country. The declaration of imported goods (PIB), includes 10% of value-added tax (VAT) and 2.5% of income tax.
International transactions are now much easier to use the Harmony System Code, or another name is the HS Code. HS Code applies globally and it facilitates the suppliers if they want to have international cooperation. HS Code is a list of goods classification list made systematically for the purpose of facilitating tariff, trading transaction, transport and statistic which has been improved from the previous classification system. Currently, the classification of goods in Indonesia is based on the Harmonized System and is applied in a list of tariff called Indonesia Customs Tariff Book - Buku Tarif Bea Masuk Indonesia/BTBMI.
If you want to the import tariff for your imported product, you can access the online database for HS Code in Indonesia National Single Window (here). You can drop down the parameter button and opt for BTBMI description in English and type in what sort of product you want to import.
What is the process?
You must obtain an Importer Identification Number (API), which is distinct depending on whether imports are done for production (API-P) or distribution (API-U) purposes. The licensing process for becoming an importer is complex and again, depending on the type of goods that you wish to import, specific licenses might be required by the Indonesian government.
Below is how the process looks like and these are the example of API-U holders’ requirements and standards for food imports into Indonesia. Note that importing general use products (i.e., non-children’s products) may not require you to obtain a recommendation for approval from the Ministry of Agriculture, but other requirements may apply depending to your product category.
Incorporating limited liability company in Indonesia – 6 weeks
Business license – 1 to 2 weeks
General import license (API-U) – 1 week
Customs identification number (NIK/SRP) – 1 week
Recommendation by Ministry of Agriculture – ± 4 weeks
Approval by National Agency of Drug And Food Control – ± 3 weeks
Ministry Of Trade Approval – 2 weeks
Also note that business license is only required by companies with API-U, which means you won’t need to have this license prior to proceeding API-P. Referring to the procedure for the estimation time above, it can be seen that it takes at least 4 to 5 months to become an importer in Indonesia. If you are lucky, you might need a couple of weeks less. But more often than not things in Indonesia take more time than expected.
What if you want to choose the second option?
The undername importer service involves being a total transporter, supply chain management, handling freight forwarding and arrange customs clearance to get your goods passed the customs and to Indonesia safely. The process with undername importer are further explained as follows:
Your company consult with undername importer what kind of products you want to send to Indonesia, and the company will help you to find an undername importer if they do not have a license to that particular product.
Your company and the undername importer need to agree on the price (incl. undername license fee and a certain percentage of the transaction value as commission). Exact commission rates depend on the company and industry.
You need to prepare necessary documents to import goods into Indonesia
You need to complete necessary detail as a shipper, such as Bill of Lading, Packing List, Commercial Invoice, Certificate of Origin, Import Declaration Form (Pengetahuan Impor Barang/PIB)
You inform the undername importer about the goods you want to sell and the importer pays the freight forwarder and provided them with supporting documents
Upon arrival, the goods were processed into 3 channels: Green (The goods are cleared to go) or Yellow (Cargo exit requires additional document). After the approval, goods can be acquired through cargo exit order (Surat Persetujuan Pengeluaran Barang/SPPB). If the goods need to be physically checked by customs, then it will be given a red flag.
After the goods were successfully processed, the importer would receive the documents which your company give from the freight forwarder and you will keep the copies. There are many companies offering undername importer service in Indonesia, and if they already have the license in the industry that relates to your sector, they can start the importing immediately.
Things to be considered
Before starting the company, you need to double-check the regulation as not all trade companies are allowed to be owned by foreign investors. For example, distributor companies are restricted by the Negative Investment List and cannot sell directly to Indonesian customers. You must be aware of the restrictions in Indonesia, such as the restrictions set by the Negative Investment List and by Regulations of the Minister of Trade. Besides the general investment restrictions, there are specific requirements based on the type of goods.
For further information or any inquiries, please contact us here.
Indonesia National Single Window, https://intr.insw.go.id/
Ministry of Trade, http://djpen.kemendag.go.id/app_frontend/links/61-hs-code