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Part 8: Another Changes To The Import Policy And Regulation

By : Riza Buditomo; Rinaldi Raymond; Muhammad Ramzi; Devi Mutia Alisa

06-May-2024

 Download: Another Changes To The Import Policy And Regulation

I. In Brief

Following up on the inputs from business actors and importers who have faced challenges in obtaining import licenses after the issuance of the Minister of Trade (“MOT”) Regulation No. 36 of 2023 on Import Policy and Regulation (“MOT Regulation 36”), MOT has issued the MOT Regulation No. 7 of 2024 on the Second Amendment to the MOT Regulation 36 (“MOT Regulation 7”) which will take effect as of 6 May 2024. 

Essentially, the issuance of MOT Regulation 7 is expected to facilitate the import of industrial raw materials, import of consignment goods of Indonesian Migrant Workers (Pekerja Migran Indonesia – “PMI”), as well as resolve issues related to the import of personal passenger goods. Thus, several import provisions are amended in the MOT Regulation 7 (i.e., provision regarding consignment goods of Indonesian migrant workers, personal goods of passengers, and the issuance of import approval of certain commodities).

II. Key Issue

We set out below the key takeaways of MOT Regulation 7.

1. Removal of Provision on PMI Consignment Goods 

In essence, PMI consignment goods are goods sent by PMI working abroad and not intended for commercial purposes. MOT Regulation 7 removes Appendix III of MOT Regulation 36 which pertains to the import provisions for PMI consignment goods (e.g., the type of goods and quantity limitations for PMI consignment goods).

With the removal of Appendix III of MOT Regulation 36, the import provision of PMI consignment goods will be referred to the provisions of Minister of Finance Regulation No. 141 of 2023 on the Import Provisions for PMI Goods (“MOF Regulation 141”) as outlined below.

 PMI may send their goods to Indonesia for non-commercial purposes.

• There are restrictions on the goods value eligible for exemption on import duty, Value Added Tax (VAT), Sales Tax on Luxury Goods, and Income Tax Article 22 (“Exemptions”), if they meet the following conditions:
• for PMI registered with the Indonesian Migrant Workers Protection Center (Badan Nasional Penempatan dan Perlindungan Tenaga Kerja Indonesia – "BP2MI"), the Exemptions will be granted if the goods are imported up to a maximum of 3 shipments per year, with a customs value of FOB USD 500 per shipment (i.e., USD 1500 in total), and
• for non-registered PMI with the BP2MI, the exemption will be granted if the goods are imported up to a maximum of 1 shipment per year, with a maximum customs value of FOB USD 500.

If the goods’ value exceeds the limits (i.e., more than USD 500 or more than USD 1,500 for registered PMI), they will be treated as regular shipments; thus, will be subject to a 7.5% import duty, VAT, Sales Tax on Luxury Goods, and Income Tax Article 22.

As a background, the removal of Appendix III from MOT Regulation 36 is carried out to resolve the issue of PMI consignment goods that are still detained at Tanjung Perak Port, Surabaya, and Tanjung Emas Port, Semarang, as some of these goods exceed the specified quantity limit set in Appendix III of MOT Regulation 36. Further, this provision retroactively applied from 11 December 2023.

 

2. Removal of the Provision regarding Quantity Limitation of Personal Goods of Passengers Import

Previously, MOT Regulation 36 limits the quantity and/or value of personal goods passenger’s import. However, such provisions have been removed under MOT Regulation 7; thus, passengers and/or carrier crew may now bring goods without specific quantity and or value limitations. However, provision on import of personal goods of passenger and/or carrier crew should still refer to Minister of Finance Regulation Number 203/PMK.04/2017 on the Provisions on Export and Import of Goods Carried by Passengers and Carrier Crew as outlined below:

• Import of passengers' goods intended for personal use is granted exemption from import duty for up to FOB USD 500 per person for each arrival. If the amount exceeds this limit, then 10% import duty, VAT, and Income Tax Article 22 will be levied on the excess.
• Import of passengers' goods intended for non-personal use is subject to imposition of import duty, VAT, and Income Tax Article 22 for the entire value of the goods.
• Import of carrier crew's goods intended for personal use is granted exemption from import duty for up to FOB USD 50 per person for each arrival. If the amount exceeds this limit, then 10% import duty, VAT, and Income Tax Article 22 will be levied on the excess.
• Import of carrier crew's goods intended for non-personal use is subject to imposition of import duty, VAT, and Income Tax Article 22 for the entire value of the goods.

3. Changes in Import Licenses for Raw Materials for the Flour Industry

MOT Regulation 7 changes the provision on import licenses and supervision of raw material for the flour industry (i.e., fortificant premixes with HS Code 2106.90.73) as set out in the comparison below.

 

Regulation	Import License	API Holder	Supervision
MOT Regulation 36	· Import Approval (PI) and · Surveyor Report (LS)	API-U	Border
MOT Regulation 7	LS	API-U and API-P	Post Border

 

This change is made due to many complaints from local wheat flour manufacturers who are experiencing difficulties in importing flour raw materials (i.e., fortificant premixes) since it requires PI and LS. The chairman of the Indonesian Wheat Flour Producers Association (Asosiasi Produsen Terigu Indonesia) conveyed that such condition may lead to a reduction of more than 50% in the national wheat flour supply, as well as potentially causing a shortage of flour in the market, leading to an increase in wheat flour prices.[1]

4. Changes to the Requirements for Lubricant Raw Materials PI Obtainment

MOT Regulation 7 amends the provisions regarding PI obtainment for lubricant raw materials (i.e., lubricant oil feedstock with HS Code 2710.19.41). Previously, under MOT Regulation 36, verification, recommendation and/or technical consideration from the Minister of Industry were required to obtain Lubricant Raw Materials PI. Currently, the requirements for Lubricant Raw Materials PI only consist of (i) declaration letter containing information regarding production capacity and (ii) industrial business license.

This change is implemented to provide relaxation in the import of raw materials for the lubricant industry, considering that the majority of lubricant raw materials in Indonesia are still dominated by imported products. With no need for verification, recommendation, and/or technical consideration from the Minister of Industry to obtain PI, the import process will be faster; thus, the lubricant raw material needs in Indonesia will be easily fulfilled.

 

Other changes

Apart from the above, we set out below other changes of import provision under MOT Regulation 7 compared to MOT Regulation 36.

No	Commodity/Provision	MOT Regulation 36	MOT Regulation 7
1.	Alcoholic Beverages (Appendix I)	-	Addition of explanation for alcoholic beverages as consumer goods.
2.	Traditional Medicine and Health Supplements (Appendix I)	HS 2106.90.73 Fortificant Premix Prohobition and Restriction (Larangan dan Pembatasan – “Lartas”): PI and LS Entities that may import: API-U Supervision: Border	HS 2106.90.73 Fortificant Premix Lartas: LS Entities that may import: API-U and API-P Supervision: Post Border
3.	Cosmetics and Household Health Supplies (Appendix I)	HS 3304.10.00 Lip makeup preparations HS 3304.20.00 Eye makeup preparations HS 3304.91.00 Powder, solidified or not Lartas: PI and LS Entities that may import: API-U Supervision: Border	HS 3304.10.00 Lip makeup preparations HS 3304.20.00 Eye makeup preparations HS 3304.91.00 Powder, compacted or not Lartas: Pl and LS Entities that may import: API-U and API-P Supervision: Border
4.	Electronics (Appendix I)	HS 8471.30.90 in electronics goods group Description: -- Miscellaneous	HS ex. 8471.30.90 in electronics goods group Description:- Miscellaneous. Other than Tablet Computers and Handheld Computers
5.	BPO (Appendix I)	HS ex 3827.32.00 CAS Number: 5-45-6:2837-89-0/63938-10-3;75-28-5;75	HS ex 3827.32.00 CAS Number: 75-45-6;2837-89-0/63938-10-3;75-28-5;75-68-3
6.	HFC (Appendix I)	HS 3827.64.00 CAS Number: 354-33-6/811-97-2/106-97-8/109	HS 3827.64.00 CAS Number: 354-33-6/811-97-2/106-97-8/109-66-0
7.	Group of Goods: a. Rough Diamond; b. Non pharmaceutical precursors; c. Nitrocellulose (NC); d. Explosives (Handak) for commercial industry; e. Ozone Layer Depleting Substances (BPO); f. Cooling System Based Goods; g. Hazardous Materials (B2); h. Hydrofluorocarbon (HFC). (Appendix I)	-	Addition: The provisions of import policies and regulations still apply to imports of [Group of goods]: PMI consignments goods, Personal goods of passengers, Personal goods of the carrier’s crew, goods crossing borders, goods belonging to Indonesian citizens and foreigners, and goods sent by Hajj pilgrims through postal operators.   K3L category goods group.
8.	Traditional Medicine and Health Supplements (Appendix I)	KGM and/or LTR units	Unit of KGM, LTR, and/or PCE
9.	Cosmetics and Household Health Supplies (Appendix I)	KGM and/or LTR units	Unit of KGM, LTR, and/or PCE
10.	Group of Goods: a. Non-New Lithium Batteries; b. Non hazardous waste as industrial raw material (Appendix II)	-	Addition: The provisions of import policies and regulations still apply to imports of [Group of goods]: PMI consignments goods, Personal goods of passengers, Personal goods of the carrier’s crew, goods crossing borders, goods belonging to Indonesian citizens and foreigners, and goods sent by Hajj pilgrims through postal operators.   K3L category goods group.
11.	Cellular Phone, Handheld Computer, Computer Tablet (Appendix IV)	Regulated regarding limitations on the value and/or amount against: a. Moved goods of Indonesian citizen/ foreigner b. Personal goods of passengers, carrier’s crew, or border crosser c. Re-imported goods	Removed
12.	Exemption of the Lartas of Consignment Goods (Appendix IV and V)	Goods sent through postal operators by using airplane.	Goods sent through postal operators   This means that the provision of consignment goods is not limited only by using airplanes.

 

III. Note to Importers 

In general, importers should take into account the new import provisions provided by the MOT Regulation 7, especially for fortificant premixes and lubricant oil feedstock importers. 

It should be noted that, less than two months after the implementation of MOT Regulation 36, this regulation has been amended two times. This shows that import-related regulations are complex and greatly impact the macroeconomy. Considering the recent issues in the implementation of MOT Regulation 36 (e.g., lack of guidance and certainty on the process of import approval and quota acquisition for certain commodities), in the near future, this MOT Regulation 36 may experience changes again to accommodate any issues that are currently and will occur. 

Rest assured, we are committed to keeping you well-informed about the developments regarding the amendment to the import policy and regulation. We will provide you with timely insights and analysis to help you navigate this ever-changing business environment with confidence.

  

For more information: 

RIZA BUDITOMO – PARTNER

riza.buditomo@aymp.law

+62815-911-0720

 

RINALDI RAYMOND – SENIOR ASSOCIATE

rinaldi.raymond@aymp.law

+62818-0874-9666

 

MUHAMMAD RAMZI – SENIOR ASSOCIATE

ramzi@aymp.law

+62856-3212-629

 

DEVI MUTIA ALISSA – ASSOCIATE

devi@aymp.law

+62857-7045-5782

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