In 2020, it was estimated that Indonesia’s total imports amounted to US$ 141.6 billion and Indonesia’s total exports amounted to US$ 163.3 billion. Indonesia’s growing economy is undoubtedly an appealing factor for foreign investments, particularly the import-export industry. In this article, we will discuss the requirements and processes needed to set up an import or export company in Indonesia and the regulations concerning the import-export activities.
Governing law and regulation
- Law No. 7/2014 on Trade as amended by Law No.11/2020 on Job Creation
- Government Regulation (PP) No. 24/2018 on Electronically Integrated Business Licensing Services
- The Minister of Trade Regulation (Permendag) No. 48/M-DAG/PER/7/2015 of 2015 General Provisions in Import Sector
- The Minister of Trade Regulation (Permendag) No. 12 of 2020 on Import Prohibited Goods
- The Minister of Trade Regulation (Permendag) No. 45 of 2019 on Export Prohibited Goods
- Investment Coordinating Board (BKPM) Regulation No. 4/2021 on Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities
IMPORT
Definition
Based on Law No. 7/2014, import is an activity of shipping in goods into the territory of the Republic of Indonesia. The subject that can import goods (importer) can be an individual, institution, or business entity, either a legal entity or a non-legal entity.
Procedure to set up an import company
- Preparations
The first preparation that must be made is to establish a foreign-owned company in Indonesia “Perseroan Terbatas Penanaman Modal Asing” (PT PMA). To understand the details to establish a PT PMA, please refer to our article here. One of the most critical aspects of establishing PT PMA is to know the list of the business fields of PT PMA that are open to investment activities or Daftar Positif Investasi.
- Business Identification Number “Nomor Induk Berusaha” (NIB) and Other Licenses
After the establishment of PT PMA, the next step would be to obtain Business Identification Number “Nomor Induk Berusaha” (NIB). NIB also serves as an Importer Identification Number “Angka Pengenal Impor” (API) and a custom registration “Nomor Induk Kepabeanan” (NIK), which are essential for importers. Therefore, there is no need for an importer to specifically apply for API and NIK at the relevant ministry as used to be the procedure before the existence of the Online Single Submission Risk-Based Approach (OSS-RBA System).
Registration for NIB is done by filling in necessary data through oss.go.id on the Perizinan Berusaha menu. A NIB will be issued after filling in the required data.
- Business Licensing
Other than NIB, an importer is also required to obtain Business License, Commercial License (if required), and register their product (for certain products). A list of the necessary licenses and the procedure can be seen here.
Please note that some licenses are not able to be obtained electronically through the OSS system. The following types of licensing in the import industry are excluded from the OSS system and therefore shall still be applied directly to Investment Coordinating Board (BKPM):
- Machinery, capital goods and materials import facilities for investments in the industry sector and industries that produce services;
- Machinery, capital goods import facilities for investment in the electricity sector;
- Machinery, capital goods import facilities for contract of work (CoW) and Coal Mining Business Work Agreement “Perjanjian Karya Pengusahaan Pertambangan Batubara” (PKP2B).
EXPORT
Definition
Based on Law No. 7/2014, export is an activity of sending out goods out of the territory of the Republic of Indonesia. Subjects that are eligible to export goods (exporter) can be an individual or institution or business entity, either a legal entity or non-legal entity.
Export goods are grouped in:
- Free Export Goods;
- Export Restricted Goods, and
- Exports Prohibited Goods.
Goods, as intended in point b and c, will be defined through a Ministerial Regulation. All Free Export Goods can be exported except goods that are mentioned as Export Restricted Goods, Export Prohibited Goods, or otherwise stipulated by the law.
Procedure to set up an export company
- Early stage preparations
For foreign business, the early stages of preparations would be the same as mentioned before in the import section, which is to establish a PT PMA. To understand the details to establish a PT PMA, please refer to our article here.
- Business Identification Number or Nomor Induk Berusaha (NIB)
After establishing PT PMA, exporters are required to have NIB and business licenses in the export sector from the Minister. The registration of NIB can be done through oss.go.id on the Perizinan Berusaha menu.
- Business Licensing
Business licensing in the export sector consists of Registered Exporter and Export Approval.
To obtain a Business License in the Export sector, an Exporter must submit an application electronically to the Minister through Sistem Indonesia National Single Window or INSW (insw.go.id). To have access rights to INSW, exporters must first register and upload scanned original documents through INSW at least in the form of:
- Taxpayer Identification Number or Population Identification Number, for Exporters who are individuals;
- Taxpayer Identification Number for Exporters who are State-Owned Enterprises and Foundations; or
- NIB and Taxpayer Identification Number, for Exporters who are cooperatives and business entities.
After that, the submission of an application for a Business Licensing in the Export sector is carried out by uploading the scanned original documents of the requirements for a Business Licensing in the Export sector as contained in Annex I of Permendag No. 19/2021.
If the application for a Business Licensing in the export sector is declared complete, the Director General on behalf of the Minister will issue a Business Licensing in the export sector through the INATRADE System (inatrade.kemendag.go.id) which is forwarded to INSW using an Electronic Signature, and includes QR code. It will issue within a maximum period of 5 (five) working days from the application date is declared complete.
Business Licensing in the form of a Registered Exporter contains data or information at least regarding:
- NIB and identity of the Exporter
- company’s address
- validity period
Meanwhile, Business Licensing in the form of Export Approval contains data or information at least regarding
- NIB and identity of the Exporter
- tariff post/HS
- type/description of Goods
- quantity and unit of Goods
- loading port
- effective date
- end date.
The Exporter may apply for an extension of the Registered Exporter and Export Approval no later than 7 (seven) working days before the validity period of the Registered Exporter expires in accordance with the requirements as contained in Annex I Permendag No. 19/2021.
Exporters who already have Business Licensing in the Export sector must submit a report on the realization of Exports, both realized and unrealized, electronically to the Minister of Trade. The realization report shall be submitted through INSW which is forwarded to the INATRADE System.
Export of goods could only be commenced by businesses that have been registered and confirmed as an exporter.
Business entities can only export Free Export Goods and Exports Restricted Goods.
Government prohibition and restrictions on certain goods
The government of Indonesia has the authority to prohibit or restrict the export or import of certain goods through the enactment of regulations.
Through Permendag No. 45/2019, it is regulated export-prohibited goods while import-prohibited goods are regulated under Permendag No. 12/2020.
The government shall prohibit import or export of goods in the national interest for the following reasons:
- to protect national security or the public interest, including social affairs, culture, and public morals;
- to protect the intellectual property rights; and/or
- to protect the health and safety of people, animals, fish, plants and the environment.
The government may restrict export and import of goods for the national interest for the following reasons:
- to protect the national security or public interest: and/or
- to protect the health and safety of people, animals, fish, plants and the environment.
