What is Export ? – Export is the activity of selling products from the domestic market to foreign countries to compete and gain profit. Exports apply to companies that trade products, both on a small and large scale. Based on the latest data from BPS (Central Statistics Agency) in September 2020, exports from Indonesia reached US$14.01 billion. This figure increased by 6.97% from August 2020 but decreased by 0.51% compared to September 2019.
Exports can be a good option to increase company revenue. Although competition in the international market is broader than in the local or regional market, the opportunities offered are substantial.
Benefits of Export
1. Broader Market
By exporting, companies can reach a much wider market than just selling products in Indonesia. This market expansion can also increase revenue and scale up the company.
2. National Revenue
Exports can increase the country’s foreign exchange. Exporters need to pay certain fees to the country, so the more that is exported, the higher the country’s revenue.
3. Growing Various Domestic Industries
With a broader market and potential increased revenue, exports can grow industries within the country and strengthen Indonesia’s economic power.
4. Controlling Domestic Product Prices
By exporting abundant goods, producers can optimize profits and keep domestic product prices stable.
5. Enhancing Indonesia’s Reputation
Products circulating abroad can enhance Indonesia’s reputation in the eyes of the world as a productive nation with high-quality export goods.
Differences Between Export and Import
1. Sellers and Buyers
The sellers in exports are exporters who sell products abroad, while in imports, the buyers are importers who purchase products from abroad.
2. Procedures and Documentation
Export procedures are generally easier than import procedures. The necessary documents include packing lists, shipping instructions, delivery orders, airway bills, and customs documents.
3. Costs
Export and import costs differ, mainly in terms of duties. Imports incur import duties, while exports incur export duties.
4. Goods Inspection
Both imports and exports require goods inspection. Imported goods are categorized into different channels, including red, yellow, green, and MITA priority and non-priority channels.
Export Procedures
1. Sales of Contract
The sales contract is made between the exporter from Indonesia and the importer from abroad.
2. Letter of Credit
The issuing bank will provide a guarantee to the exporter according to the importer’s instructions. The letter of credit functions as a fund guarantee to ensure the importer’s funds are safe in case of fraud.
3. Shipping the Goods
After all documents are processed, the exporter ships the goods to the destination country according to the contract.
4. Fund Disbursement
Once the goods are received, the importer confirms, and the exporter can disburse the funds.
Export Cost Components
1. Export Cost Components for Goods Abroad
In general, there are 13 export cost components for goods abroad:
- Cost of Goods Sold (COGS)
- Product packaging costs
- Bank payment fees
- Transportation costs from the building to the port
- Forwarder fees
- Passport document handling fees
- Terminal handling charges (THC)
- Export duties
- Sales agent commission fees
- Freight charges
- Insurance costs
- Warehousing fees
- Other operational costs
2. Export Tax
Export tax is divided into two based on percentage and specification:
- Ad Valorem Principle (Percentage) Formula: Export Tax Rate x Number of Units x Export Benchmark Price x Exchange Rate
- Ad Naturam Principle (Specific) Formula: Export Tax Rate x Number of Units x Exchange Rate
3. How to Calculate Export Costs
Export prices are calculated based on the unit of goods. For example, if the price of timber is 65 USD per ton and you ship 20 tons, the total cost is 20 x 65 USD = 1300 USD.
Conclusion
Exports are an essential element in international trade that offers numerous benefits for the economy. By understanding the processes and challenges involved, companies can maximize their export potential and contribute to sustainable economic growth.
Indonesia Customs website here.
Collection of Indonesia customs consultations here.
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