The Common Challenges in Importing Goods to Indonesia

The Common Challenges in Importing Goods to Indonesia

The Common Challenges in Importing Goods – Indonesia, the world’s fourth most populous country, offers vast opportunities for businesses. However, importing goods into Indonesia can be a complex process due to several challenges.

Trade Restrictions and Local Content Requirements

One of the significant challenges is trade restrictions, such as local content mandates. Local Content Requirements (LCRs) or TKDN in Indonesian are identified as one of the most significant challenges faced by businesses. These requirements were initially focused on the oil and gas sector but have been applied to a broad range of economic sectors. Goods and services supplied by companies without a majority Indonesian shareholding cannot qualify as local content, disadvantaging foreign energy service companies.

Intellectual Property Protections

Protection of intellectual property is another key concern. Indonesia remains on the Priority Watch List in the 2021 Special 301 Report. Widespread copyright piracy and trademark counterfeiting, both online and in physical markets, are prevalent. Indonesia’s 2016 Patent Law continues to raise concerns, including patentability criteria for incremental innovations, local manufacturing and use requirements, and the grounds and procedures for issuing compulsory licenses.

Divergent Standards and Certification for Importing Goods

Businesses should be mindful of additional requirements for testing and certification imposed on a wide range of products. In many cases, the U.S. exporter will need to pay for an Indonesian laboratory or certification body to conduct testing for individual shipments, adding to the overall cost of bringing goods to market.

Read More: How to Choose Goods Import Services in Indonesia

Pricing Sensitivities

Exporters targeting public tenders will find an opaque pricing environment, and local content requirements. For example, medical device manufacturers have expressed the need for greater clarity in how pricing and reimbursement are set within the Indonesian National Formulary.

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Regulatory Requirements and Customs Procedures Importing Goods

Understanding the regulatory requirements and customs procedures specific to Indonesia is also a challenge. Prior to the Omnibus Law, businesses had to apply for one of three types of import licenses: API-U (General Import License), API-P (Producer Import License), API-T (Limited Import License). However, under Government Regulation No. 29 of 2021 (GR 29/2021), businesses now only require a Business Identification Number (NIB) to commence their import or export activities.

Despite the common challenges, the Indonesian government has taken significant steps to streamline the process of importing to Indonesia. The Omnibus Regulation of 2020 has been touted for reducing bureaucratic red tape and facilitating investment. However, businesses should check with the Indonesian Harmonization System (HS) code, which is used to classify and calculate tax and customs rates on all types of items, before importing or exporting them.

In conclusion, while there are challenges in importing goods to Indonesia, understanding these challenges and navigating through them can lead to successful business ventures in this dynamic market.

Indonesia Customs website here.
Collection of Indonesia customs consultations here.

Topic: Indonesia, Import, Challenges, Trade Restrictions, Intellectual Property, Standards and Certification, Pricing, Regulatory Requirements, Customs Procedures

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