Indonesia – Prohibited and Restricted Imports
Indonesian importers must comply with numerous and overlapping import licensing requirements that impede access to Indonesia’s market. MOT Regulation 70/2015 came into effect in January 2016, replacing MOT Regulation 27/2012 as amended by Regulation 59/2012. The new regulation requires all importers to obtain an import license as either importers of goods for further distribution (API-U) or as importers for their own manufacturing (API-P), but they cannot obtain license for both activities.
In response to stakeholder concerns, in December 2015, MOT issued Regulation 118/2015 on complementary goods, which allows companies that operate under an API-P import license to import finished products for complementary goods, market testing, or for after sales service purposes, as long as the goods are new, consistent with the company’s business license and meet import requirements. In October 2015, MOT issued Regulation 87/2015 on the Import of Certain Products (replacing Decree 56/2009, which had been extended through MOT Regulation 83/2012). Like its predecessors, Regulation 87/2015 requires pre-shipment verification by designated companies (known in Indonesia as “surveyors”) at the importer’s expense and limits the entry of imports to designated ports and airports. In addition, Regulation 87/2015 maintains non-automatic import licensing requirements on a broad range of products, including electronics, household appliances, textiles and footwear, toys, food and beverage products, and cosmetics. However, for holders of an API-U license, Regulation 87/2015 appears to eliminate the additional requirement to apply or register as an importer of certain products.
MOT Regulation 82/2012, as amended by Regulations 38/2013, 68/2015, 41/2016, and MOI Regulation 108/2012, in effect since January 2013, imposes burdensome import licensing requirements for cell phones, handheld computers, and tablets. Under Regulation 82/2012, importers of cell phones, handheld computers, and tablets are not permitted to sell directly to retailers or consumers, and they must use at least three distributors to qualify for a MOT importer license. MOT Regulation 41/2016 requires 4G device importers to provide evidence of contributions to the development of the domestic device industry or cooperation with domestic manufacturing, design, or research firms.
Import Licensing for Agricultural Products
Import licensing requirements also apply to certain horticultural products. In order to import horticultural products into Indonesia, Ministry of Agriculture (MOA) and MOT regulations require Indonesian importers to obtain: (1) an Import Recommendation of Horticultural Products (RIPH) from MOA; and (2) an Import Approval (SPI) from MOT. Import approvals are issued on a biannual basis and are valid for one six-month period. RIPHs specify, inter alia, the product name, HS code, country of origin, manufacturing location (for industrial materials), and entry point for all horticultural products the applicant wishes to import. After securing an RIPH, an importer must obtain an SPI from MOT before importing horticultural products. An SPI specifies the total quantity of a horticultural product (by tariff classification) that an importer may import during the period for which the SPI is valid. Importers cannot amend existing SPIs or apply for additional ones outside the application window.
Indonesia has updated its import rules on horticultural products through MOT’s Regulation 71/2015 (superseding MOT Regulations 16/2013, 47/2013, and 40/2015), but the new regulation makes few substantial changes. Import licenses still are required and quantities will be allocated subject to the importer’s cold storage capacity. MOT eliminated the 80-percent rule for horticultural products, which imposed punitive measures on importers that used less than 80 percent of the quota allotted under their import permits. However, importers state that they must file import-realization reports and that the 80 percent rule is still being implemented informally. This regulation also specifies that the total import allocation will be set annually and that importers are no longer required to register as horticultural product importers. MOA also maintains seasonal import restrictions on certain horticultural products. For example, oranges can only imported in months outside of Indonesia harvest periods.
Indonesia changed its requirements for importation of beef in 2016. Under Regulation 34/2016, all kinds of bovine meat cuts, including variety meats and offal, are allowed for import. Additional changes include the extension of import license validity to six months, and the elimination of a rule requiring importers to use at least 80 percent of their allotted import licenses. Despite these changes, the import licensing procedures continue to hinder Indonesia’s beef imports. For example, import licenses are issued for specific countries of origin, and importers cannot change sourcing to respond to evolving market conditions. Also, Indonesia only issues import licenses for meat originating in approved facilities. Approvals for new facility require on-site inspection by MOA, but MOA lacks the resources to inspect all interested U.S. facilities. Indonesia also limits trade through practices not covered by its written regulations. For example, certain importers have reported that the Indonesian Ministry would only approve approximately 10 percent of quantity of beef offal that they have requested in their import licensing application. Additionally, importers are required to sell beef at prescribed reference prices in traditional wet markets as a condition for the issuance of import licenses. Finally, although Indonesia has stated that it will issue import licenses to any importer at any quantity, importers report that the Indonesian Ministry will refuse licenses to importers who request quantities above a certain threshold determined by the Indonesian government. Similar to the prior import regulations, the new import regulations restrict the import of poultry and poultry products. The regulations governing animals and animal products maintain a positive list of products that may be imported with a permit. The regulations provide for the import of whole fresh or frozen poultry carcasses (chicken, turkey, or duck) but not for the import of poultry parts, effectively resulting in a ban on the import of poultry parts. Additionally, although the regulations provide for the import of whole chicken carcasses, Indonesia in practice does not issue import permits covering these products. This practice was expanded to whole duck and turkey carcasses as Indonesia has not issued import permits for these products since December 2013.
MOT regulation 63/2016 “Farmer Level Purchase and Consumer Level Selling Reference Prices” sets reference prices to ensure availability and price stability for agricultural products. The regulation covers seven commodities: rice, corn, soybeans, sugar, shallots, chilies, and beef. According to MOT 63/2016, the Indonesian government (through Indonesia’s state procurement body, the Bureau of Logistics (BULOG), and other state-owned enterprises) is required to carry out market operations in the event that market prices fall below buying reference prices or rise above selling reference prices. In its initial implementation of this new regulation, the Ministry of Agriculture has assigned PD. Pasar Jaya (a provincial government-owned company) to distribute sugar to consumers at a maximum price of Rp. 12,500/kg. The Indonesian government also is currently requiring beef importers to sell beef at set prices in Jakarta’s traditional markets as a condition for the issuance of import licenses. Sales to modern retail outlets, as well as hotel, restaurant and institutional buyers are not bound by government-set prices.
The licensing regimes for horticultural products and animals and animal products have significant trade restrictive effects on imports, and the United States has repeatedly raised its concerns with Indonesia bilaterally and at the WTO. Indonesia has failed to address these concerns. As a result, in January 2013, the United States requested consultations with Indonesia under the WTO’s dispute settlement procedures. After the consultations failed to resolve the concerns, the United States requested establishment of a WTO dispute settlement panel, and a panel was established in April 2013. In August 2013, New Zealand joined the dispute by filing its own request for consultations to address Indonesia’s measures. At the same time, the United States filed a revised consultations request to address recent modifications to Indonesia’s measures and to facilitate coordination with co-complainant New Zealand. A panel was established in May 2015.
Indonesia imposes restrictions on feed corn imports, limiting imports to BULOG only. (Some corn imports intended for starch manufacturing are allowed.) As Indonesia’s sole importer of feed corn, BULOG prioritizes corn distribution to small-holder poultry farmers. The import volume is set based on the level of domestic feed production. Other feed millers are obligated to use locally produced feed corn, but have expressed concern that they are unable to obtain quantity sufficient to maintain the poultry industry’s growth. Indonesia maintains a seasonal ban on imports of sugar, in addition to limiting the annual quantity of sugar imports based on domestic production and consumption forecasts. Indonesia bans exports of raw and semi-processed rattan.
Indonesia applies quantitative limits on the importation of wines and distilled spirits. Companies seeking to import these products must apply to be designated as registered importers authorized to import alcoholic beverages, with an annual company-specific quota set by MOT.