Prohibited and Restricted Imports

In December 2010, Minister of Trade issued Decree No. 57/2010, concerning the provisions on certain product imports. The decree regulates seven categories of products including food and beverages, ready-to-wear clothes, footwear, electronics, toys, traditional and herbal medicine, and cosmetics. The measure includes a requirement for pre-shipment verification by designated surveyors at importers’ expense and a restriction on imports to seven designated seaports, but to any international airport.

In May 2008, Indonesia introduced new import restrictions for plantation white sugar. The United States has raised concerns with Indonesia that the new regulation will further limit sugar imports, which already are highly restricted as a result of existing regulations. The United States will continue to press Indonesia to withdraw this new regulation.

The Indonesian government requires an import permit from the Directorate General of Livestock Services for imports of animal-based food products. In approving requests for such letters, the Indonesian government arbitrarily may alter the quantity it allows to enter. U.S. industry estimates the annual trade impact of this restriction to be between $10 million and $25 million.

Indonesia bans salt imports during the harvest season. It requires salt importers to be registered and to source products locally.

As a result of new mining legislation, mining firms operating in Indonesia will face new restrictions in exporting unprocessed ore. The legislation will require them to process the ore in Indonesia before shipping it abroad. The United States will closely monitor implementation of the law to ensure that it does not constitute an export ban on raw materials.

Customs Regulations and Contact Information

Since April 1997, the Customs Directorate of the Ministry of Finance has operated a post-entry audit system, which relies primarily on verification and auditing rather than inspection to monitor compliance. A paperless electronic data interchange system that links importers, banks, and Customs was also introduced and is slowly being adopted. Indonesia is in nominal compliance with the WTO Customs Valuation Agreement, but U.S. companies operating in Indonesia have reported problems with Customs procedures and valuations. Many complain of a host of irregular and non-transparent fees to get shipments released. The USG continues to monitor the situation, and assist as needed.

To curb corruption and expedite customs clearance, the GOI requires that Indonesian importers pay import duties and taxes at one of the 45 appointed state-owned and private-owned banks. The system enables an importer to make an online payment, and the corresponding bank automatically confirms the payment with the customs office. This payment system is a part of Indonesia’s reform program for the customs office to increase its performance as a trade facilitator and revenue collector.

The House of Representatives approved an amended Customs Law on October 18, 2006 that intended to cut red tape for importers and exporters and imposes stiffer sanctions on smugglers. The revision is part of the GOI’s effort to improve Indonesia’s business and investment climate by overhauling taxation, investment, and customs and excise statutes. Article 5 of the new law makes a potentially important change for importers and exporters by allowing them to submit customs clearance documents electronically. Article 102 increases the penalties for individuals convicted of smuggling up to a maximum of 20 years in prison and a fine of up to Rp.100 billion ($10.8 million). The law also increased by a third penalties for customs officials involved in smuggling.

Rapid growth of international trade has resulted in the development of product and service standardization in all industrial sectors. Products and services exported to a foreign market must meet standard requirements in order to be successful. Standards could also be used as a non-tariff barrier to protect a country’s domestic economy from the flow of foreign products and services.

At present, standards are commonly used in most Indonesian industries. The GOI and related industrial players have been very active in formulating standards for products and services, which are either locally manufactured or imported and exported.

Conformity Assessment

In line with the economic globalization and the WTO’s “Standard Code” on Technical Barriers to Trade (TBT), the role of standards and conformity assessment has become very crucial. In order to successfully compete in the global market, the GOI formulates its national standards with reference to regional and/or international standards.

In order to ensure that certain standards have been complied with a conformity assessment mechanism is required. Moreover, the available scheme of Mutual Recognition Arrangements (MRAs) in the area of standard and conformity assessment should be used as the basis of recognition on product certificates and/or test reports when trade transaction cross inter-country territories.

Product Certification

At present, product certification is required. According to the Government Regulation on National Standardization, the only national standards are Indonesian National Standards (SNIs). Institutionally, BSN is responsible for the formulation of the SNIs, whereas the task on accreditation is given to the National Accreditation Committee (KAN). SNIs are formulated in accordance with the nationally agreed mechanism of standard formulation and normally aligned with similar regional or international standards whenever possible.

Accreditation

The National Accreditation Committee (KAN) is the formal accreditation body. The main function of KAN is to establish an accreditation system in Indonesia and to grant accreditation in certain fields including testing and calibration laboratories, certification bodies and inspection bodies.

Currently, KAN has been operating an accreditation system for testing and calibration laboratories, certification bodies that consist of ISO 9000 quality system certification bodies, ISO 14000 series environmental quality system certification bodies, personnel certification bodies, product certification bodies, HACCP certification bodies, and inspection bodies.

Publication of Technical Regulations

There are two publications issued by BSN on technical regulations, namely “Sistem Standarisasi Nasional” (National Standard System) and “Info Standarisasi” (Standardization Information).

Labeling and Marking

All imported consumer goods must identify the importing agents, typically accomplished by affixing a label after goods have cleared customs. The GOI requires that information on product labels be distinctly and clearly written or printed or shown so that it can be seen easily and understood. The information on product labels should be written or printed in the Indonesian language, Arabic numbers, and Latin letters. The use of language, numbers, and letters other than the Indonesian language will only be permitted when there are no matching terms, or in the event of trading abroad.

Labeling should not contain the following: claims on the effect of the product on health, whether preventative and/or curative; incorrect or misleading information; comparisons to other products; promotion of certain similar products; and any additional information that has not yet been approved.

Trade Agreements

Indonesia is a member of the World Trade Organization (WTO) and the Association of Southeast Asian Nations Free Trade Agreement (AFTA). As a member of AFTA, Indonesia committed to reduce tariff and non-tariff barriers and investment restrictions. Under AFTA, the six original ASEAN members (Indonesia, Malaysia, Singapore, Thailand, the Philippines and Brunei) agreed to reduce import duties to five percent or less by 2010, and by 2015 for the four newer members (Vietnam, Laos, Burma and Cambodia).

The United States and Indonesia signed a Trade and Investment Framework Agreement (TIFA) in 1996, which was designed to build stronger economic ties. Indonesia signed an Economic Partnership Agreement (EPA) with Japan in July 2008. Under EPA, Indonesia will be exempted from 90 percent of Japan’s 9,275 import duties, and Japan will be exempted from 93 percent of Indonesia’s 11,163 import duties.

As a member of ASEAN, Indonesia signed a trade agreement with China and South Korea. ASEAN is negotiating FTAs with the European Union, India, Australia and New Zealand. Indonesia is also exploring the feasibility of having a trade agreement with the European Free Trade Association (EFTA) which consists of Switzerland, Liechtenstein, Norway and Iceland.

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