Indonesia Allows the Import of Certain Manufactured Goods Hoping to Kick-Start Local Production
- Indonesia’s Ministry of Trade issued Reg 59/2020 in June 2020 that limits the number of industries allowed to import manufactured goods.
- The type of goods, however, must fall into one of three categories – complementary goods, goods used for market testing, and goods used for after-sales service purposes.
- Through this regulation, the government hopes to stimulate the local manufacturing sector, which has contracted in the first half of 2020 due to the coronavirus pandemic.
In late June 2020, Indonesia’s Ministry of Trade (MoT) issued Regulation 59 of 2020 (Reg 59/2020), which permits the import of certain manufactured goods from selected industries.
Reg 59/2020 is an amendment of Minister of Trade No. 118/M-DAG/PER/12/2015 (Reg 118/2015) on the importation of manufactured goods that fulfil three criteria – complementary goods, goods used for market testing, and goods for after-sales service purposes.Through (Reg 118/2015), the MoT permitted all industries that fell under the aforementioned criteria to import manufactured goods. However, under (Reg 59/2020), the government has limited the number of these industries, hoping that this will stimulate the local manufacturing sector that has contracted for two quarters due to the COVID-19 pandemic.
According to Bank Indonesia (the central bank), the country’s Prompt Manufacturing Index (PMI), was recorded at 28.5 percent in Q2 2020, down from 45.6 percent in Q1. The PMI is a composite index that provides an indication of the health of the country’s manufacturing sector, taking into account five indices, namely, production volumes, employment, supplier delivery times, inventory, and new order volumes.
Which industry sectors can import manufactured goods?
Under (Reg 59/2020), 13 industries are allowed to import complementary goods.
Eight industry sectors are allowed to import goods for market testing.
Four industries have been permitted to import goods that will be used for after-sales services.
How can businesses obtain import approval?
To obtain import approval, businesses should first ensure that they adhere to the aforementioned industries and sub-sectors.
Companies will also need to have a business identification number (NIB) and apply through the Ministry of trade’s INATRADE online portal. The portal is now integrated with SIINas (the national database, which contains information on the country’s industries) and E-BPOM (for applications to the National Food and Drugs Agency).
The applicants will receive notification of their application within five working days, and if approved, companies will need to submit an electronic report through INATRADE after the products have been imported.
Businesses should seek advice from reliable local advisors who can ensure their application is accurate.