Undername Import: Importing Goods to Indonesia without Licenses and Incorporating

Opening an import company in Indonesia can take four to five months or even longer. And having import license is required for even very small shipments. If you don’t want to wait for that long or cannot / don’t want to meet all the import company requirements there are  good news though – in this […]

Undername import Indonesia

Opening an import company in Indonesia can take four to five months or even longer. And having import license is required for even very small shipments.

If you don’t want to wait for that long or cannot / don’t want to meet all the import company requirements there are  good news though – in this article we will tell you about an alternative, legal, method to get your goods to Indonesia without import license or even incorporating your company.

Table of contents

    Import licenses

    According to Ministry of Trade regulation (No.45/M-DAG/PER/9/2009), every importer in Indonesia must hold General Import License (API-U) or the Producer Import License (API-P).

    API-Us are issued to companies that import goods to be traded, while API-Ps are issued to companies for importing goods not to be traded and the goods are for the importers’ own use as capital goods, raw materials or support materials, and/or to support production only.

    Notably a company is not permitted to have both licenses. Simply saying, each importer may only have one type of API, either an API-U (as a trader) or an API-P (as a producer).

    Table below shows revisions and their implications that came into force on 1 January 2016 by the Ministry of Trade/ MOT concerning the types of goods that may be imported by API-U and API-P holder.

    Import License Regulation by Ministry of Trade/ MOT

    Types of Import License (API)

    No. 84 of 2012

    (Previous Rule)

    No. 70 of 2015

    (New Rule)

    API- U
    • Holders could only import goods under one section of the HS Code
    • A special relationship must exist between the API-U holder and its overseas supplier
    • Holders can import goods under several sections of the HS Code
    • A special relationship is no longer required
    API- P
    • Holders were allowed to import industrial/ finished goods under certain criteria (e.g. test market products and complementary products) to be traded subject to obtaining a Producer Importer/ PI license from the Ministry of Trade/ MOT
    • Holders can no longer import industrial/ finished goods to be traded or transferred to other parties unless they are imported under an import duty exemption facility and have been used for own use for at least 2 years after the date of the Import Declaration Form

    As we can see from the table above, the new development is likely to be welcomed by API-U holders as it no longer regulates the specific goods to be imported and more flexible to import goods to Indonesia for trading purposes. For API-P holders, however may not be good news as they can no longer import industrial/finished goods, including those to be traded.

    Other than the major implications clarified above, some of the provisions of the new regulation are similar with those of the previous regulations. For that, we set out below a summary of the API provisions that are worth to take note :

    APIs

    Valid in the entire Indonesian territory including for branch offices conducting the same type of activities
    Valid as long as the holder continues its business activities but must be re-registered with the issuing authority every 5 years
    API-Us and API-Ps for all foreign capital investment companies are issued by the Investment Coordinating Board/ BKPM
    * Regulation 70 provides a list of circumstances in which an API will not be required, such as for importing temporarily imported goods, promotional goods, goods for research and goods for scientific development
    Issued prior to the promulgation of * Regulation 70 are still valid, but must be adjusted by 30 June 2016
    Issued prior to the promulgation of * Regulation 70 will remain valid until their expiry

    * The new regulation was enacted by the MOT on 28 September 2015 and is set out in Minister of Trade Regulation No. 70/M-DAG/PER/9/2015 on Importer Identification Number as ‘Regulation 70’.

    This new regulation, known as Regulation 70, has come into force on 1 January 2016 and revoked the previous regulations.

    Process of becoming an importer in Indonesia

    You must obtain an Importer Identification Number (API), which is distinct depending on whether imports are done for production (API-P) or distribution (API-U) purposes.

    The licensing process for becoming an importer is complex and again, depending on the type of goods that you wish to import, specific licenses might be required by the Indonesian government.

    Many investors we talk with are put off by the extensive bureaucracy involved in becoming an importer. I recently advised a European food manufacturer who wants to sell their products in Indonesia.

    Below is how the process looks like. I skip some details for the sake of simplicity, but these are the API-U holders’ requirements and standards for food imports into Indonesia. Note that importing general use products (i.e., non-children’s products) may not require you to obtain a recommendation for approval from DEPTAN, but other requirements may apply depending to your product category.

    1.   Incorporating limited liability company in Indonesia – 6 weeks
    2.   Permanent business license (IUT) – 1 to 2 weeks
    3.   General import license (API-U) –  1 week
    4.   Customs identification number (NIK/SRP) – 1 week
    5.   Recommendation by Ministry of Agriculture (DEPTAN) – ± 4 weeks
    6.   Approval by National Agency of Drug And Food Control – ± 3 weeks
    7.   Ministry Of Trade Approval – 2 weeks

    The rules which are detailed above are the API-U holders’ requirements and standards for food imports into Indonesia. Importing general use products (i.e., non-children’s products) may not required you to obtain a recommendation for approval from DEPTAN, but other requirements may apply depending to your product category.

    Also note that IUT is only required by companies with API-U, which means you won’t need to have IUT prior to proceed API-P.

    Referring to the procedure for the estimation time above, we can see that it takes at least 4 to 5 months to become an importer in Indonesia. If you are lucky, you might need couple of weeks less. But more often than not things in Indonesia take more time than expected.

    If you don’t mind waiting for that long, then we can provide the full import company setup service for you. However, there are several scenarios to why we think setting up your own import company is not suitable.

    • You want to import your goods faster than in 4 months
    • Your Indonesian legal entity does not have or cannot apply for import license
    • You only need to import goods a few times and thus do not want to apply for another license
    • You do not want to spend time learning how to work with the Indonesian customs to make sure your goods do not get delayed at the border

    If you want to start selling right now and not wait for months to get your papers done, we strongly advise you to use our undername importer service as a solution.

    Undername importer as a solution

    Undername importer is a company that already has the import licenses for the product you want to bring to Indonesia.

    By using our company’s service of an undername importer, there is no need of you to obtain any import license or permission to import your products to Indonesia.

    To help you minimize delays and additional costs, our company is ready in administering the aforementioned steps for you.

    Our undername importer service involves being a total transporter, supply chain management, handling freight forwarding and arrange customs clearance to get your goods passed the customs and to Indonesia safely.

    How it works

    It is very simple actually – you have a product you want to sell in Indonesia and Emerhub has the license to do it. Just recently we signed a contract with a huge electronics manufacturer for bringing their electronic products to Indonesia using our undername service.

    This is how the process looked like :

    • The client consulted with us what kind of electronic products he wanted to send to Indonesia, and we helped him finding an undername importer since we did not have a license to that particular product
    • We agreed on the price (incl. undername license fee and a certain percentage of the transaction value as commission). Exact commission rates depend on the company and industry, but they should not be higher than few percentages.
    • Client prepared necessary documents for us to import his goods into Indonesia
    • Client completed necessary detail as a shipper, such as Bill of Lading, Packing List, Commercial Invoice, Certificate of Origin, Import Declaration Form (Pengetahuan Impor Barang/ PIB)
    • Client sent us the goods he wanted to sell and we paid the freight forwarder and provided them with supporting documents
    • Upon arrival, the goods were processed into 3 channels :

    o   Green – The goods are cleared to go

    o   Yellow – Cargo exit requires additional document. After the approval, goods can be acquired through Cargo exit order (Surat Persetujuan Pengeluaran Barang/ SPPB)

    o   Red –  The goods need physic check by Customs of imported commodity

    • After the goods were successfully processed, we would receive the documents which client gave us from the freight forwarder and client will keep the copies

    There are many companies offering undername importer service in Indonesia, and if we already have the license in your industry, we can start the importing immediately. If not, we will immediately use our network to get the license – and the process will not take more than 1-2 days.

    The benefits of using Emerhub as your undername importer

    The biggest benefit is that Emerhub guarantees your products will arrive in Indonesia and get through customs safely since we have created an efficient trade network with our partners who have massive expertise and experience of international import freight.

    Other main benefits include the following :

    • You do not need to wait and get to start your importing immediately
    • You do not need to worry about how your products could arrive in Indonesia without incorporating or having an import license

    So, if you are thinking to sell your products in Indonesia, now is the perfect time- and there is no better time to start then today. Moreover, importing your products can provide an enormous financial boost and it can come with no cost to you.

    We work with companies in all industries to provide you with client references and we know exactly which types of licenses you need. Just keep in mind that for different industries the import licenses and approvals required can be quite different.

    Let us help you sell your products in Indonesia today. We understand that the excitement of shipping your product to Indonesia can be dampened by the licenses, regulatory, logistical, and financial hurdles. But that is where we can help.  

    You provide the product and we provide the undername importer service.

    That’s it, we hope this article helps you to get your trading business started faster. If you still wish to become an importer yourself, we suggest you to first use our undername importer service while in the same time let us start the process of helping you becoming an importer yourself.

     

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