What to Do When Your Goods Are Stuck in Indonesian Customs

It’s not uncommon for foreign companies to have goods stuck in Indonesian customs.

This happens mainly because Indonesian customs rules are very complex. 

There are strict laws, specific procedures you must follow depending on your products, and sometimes unpredictable enforcement.

In this article, we will cover the most common reasons why goods get stuck in Indonesian customs, the solution, and how you can prevent this from happening in future. 

Why Goods Get Stuck in Indonesian Customs

There are several reasons why goods get stuck in customs. Some of the most common reasons include:

• Incomplete or Inaccurate Documentation: You may be missing or have incorrect paperwork for your goods. This includes documents such as invoices, packing lists, and import permits. Customs officials require precise documentation to process shipments, and any discrepancies can halt the clearance process until it is resolved. 
• No Import license: If the consignee does not have an import license, their goods cannot go through customs.
• Incorrect Valuation of Goods: Underreporting or overreporting the value of shipments can trigger additional inspections and requests for proof, leading to delays.
• Prohibited or Restricted Items: Importing goods without necessary permits or including prohibited items in shipments can result in significant delays or even denial of clearance. Some types of goods require additional import permits. For example, cosmetics, and medicine require product registration and BPOM approval. 
• Unpaid Duties and Taxes: Failure to pay import duties and taxes in advance can cause customs to hold shipments until all fees are settled. 
• Red channel inspection. Customs personnel will physically inspect each item in red channel inspection. They will also verify relevant documents. We will discuss the inspection of goods further below.

Procedures at Indonesian Customs When Importing Goods

1. Getting the Import Declaration Form (Persetujuan Impor Barang– PIB)

A PIB is a detailed report that lists the products being imported and their values. This includes information such as import duties, Value-added tax (VAT), and Income tax. The importer must declare imported goods to the customs authorities. After processing the shipment, the customs office will release the import declaration form. 

To process a PIB, you would need the following documents: 

• Commercial Invoice
• Packing List
• Waybill/Air Waybill

Once all documentation is verified and inspections are completed, the importer must pay the applicable import duties and taxes. 

2. Verification and Inspection of Goods and Documents in Indonesian Customs

Once a shipment arrives in Indonesia, it goes through one of three inspection channels. These are the green, yellow, and red channels. These channels indicate the level of inspection needed for your goods. Here is a quick comparison between green, yellow, and red channels: 

Green Channel	Yellow Channel	Red Channel
– No physical inspection needed from Customs authorities.  – Only need to verify shipment documentation.	– May have missing documents or have additional requirements at the discretion of Customs authorities.  – Must submit the needed documents to get an approval letter.	– Customs authorities need to physically inspect each item in shipments.  – If customs authorities put your shipment in the red channel, you will receive a Notice of Red Channel (Pemberitahuan Jalur Merah – PJM).

As much as possible, you would want your goods to go through green or yellow channels to avoid delays. However, if your imported products are categorized under red, it could be one of the following reasons: 

• Goods that are restricted or prohibited or “lartas” in Indonesia. These products require additional documentation such as phytosanitary certificates or special licenses. 
• Discrepancies or mismatch in declaration and the actual contents of your shipment. 
• Goods are either undervalued or overvalued compared to commercial value. 
• Recent changes in taxes or regulations affecting the goods, including changes in HS codes
• Mismatch in the consignee’s name or details.

Possible Solutions When Your Goods are Stuck with Indonesian Customs

When your products are stuck in Indonesian customs, there are several possible solutions you can consider:

1. Coordinate Clearance with a Consignee and Customs Officials: Assign a consignee who can handle your shipment and coordinate with customs on your behalf. This consignee should be able to manage any taxes, fines, and fees associated with the shipment.
2. Obtain Goods through an Auction: If the shipment remains unclaimed or lacks export information, customs may put it up for auction. You can arrange for a third party to buy the goods back for you. 
3. Export the Shipment: If customs refuse entry to your goods, you may need to export them. This allows you to retain ownership and attempt to import them again with proper documentation and licenses. 
4. Pay Due Charges: Paying the required import duties (PIB), VAT, and other taxes can help resolve issues if the goods are stuck due to incomplete payments or documentation. 

How to Prevent Goods From Getting Stuck in Customs in Indonesia

1. Preparing Accurate Import Documentation

Preparing accurate import documentation is crucial to prevent goods from getting stuck in Indonesian customs. Failure to declare the actual value of your shipment will cause problems and may end up at the Indonesian custom’s red channel. You need to make sure that you have the following documents when importing goods to Indonesia: 

1. Commercial Invoice: Details the goods, quantity, price, and total value, necessary for calculating import duties and taxes.
2. Packing List: Provides detailed information about the goods, including net weight, gross weight, packaging dimensions, and carton numbers.
3. Bill of Lading (B/L) or Airway Bill (AWB): Acts as proof of delivery and records shipping details.
4. Certificate of Origin: States the origin of the goods, affecting import duty rates.
5. Insurance Certificate: Records shipping insurance details to protect against damage or loss.
6. Import License and Importer Identification Number (API): Required for certain goods and importers.
7. Customs Declaration (PIB): A detailed report listing the products being imported and their values.
8. Import Notification Letter (SPI): An official document submitted to the Indonesian Ministry of Trade to obtain an import permit. 

2. Appointing a Consignee or Importer of Record (IOR) in Indonesia

If you want to expedite the importation process and avoid your goods from being stuck at Indonesian customs, you may want to appoint a consignee or an Importer of Record (IOR). This service is essential, especially for foreign-owned entities who want to import heavily-regulated products such as food products or medical equipment.

A consignee or an IOR is a type of service offered by a third-party entity in Indonesia. On your behalf, an IOR can do the following: 

1. Ensures all necessary documents are accurate and complete.
2. Ensures all goods comply with Indonesian regulations, such as obtaining the necessary import licenses and adhering to labeling requirements (e.g., SNI certification for certain products). 
3. Coordinate directly with customs officials to resolve any issues that may arise during the clearance process. This includes addressing discrepancies in documentation or valuation. 
4. Manage import duties and taxes on your behalf to make sure all financial obligations are met promptly. 

With local experts in Indonesia, Emerhub can facilitate importation of goods on your behalf with our IOR service. We have all the necessary import licenses and customs identification numbers including SNI licenses for regulated products. We have direct contact with customs officials to resolve issues like red channel inspections.

3. Establishing a Company and Acquiring an Import License

Another way you can import goods to Indonesia is to establish your own import company in the country. This is essential especially if you are a foreign entity who plans to import goods regularly to the country. With a properly established PT PMA, you can obtain valid import licenses and process the necessary permits to reduce the risk of goods being flagged or held at Indonesian customs. 

To set-up a company in Indonesia, you would need the following: 

• Deed of Establishment: Includes details about shareholders, directors, and the business scope, notarized and approved by authorities.
• Business Identification Number (NIB): Acts as a multi-purpose license for customs access, tax registration, and company registration.
• Taxpayer Identification Number (NPWP): Required for tax compliance.
• Domicile Letter: Proof of the company’s registered address (not required in Jakarta). 

However, establishing a legal entity in Indonesia is a complex process. You would need to reserve a company name via the Online Single Submission (OSS) system as well as set up your own local corporate bank account. 

To help you get started, Emerhub can help you with the entire company registration process from reserving a business name to obtaining industry-specific licenses and permits. Our end-to-end service also helps you set up a virtual office as well as your tax registration in Indonesia. 

Talk to our local experts about our IOR service or how to set up your own legal entity in Indonesia. Fill out the form below and tell us about your business plans!