Introduction
If you plan to move to Indonesia and establish an import business here, it is important to be informed about Indonesia’s recent economic condition. You need to understand the latest import regulations to ensure your day-to-day business operations are uninterrupted.
This article will provide several insights about Indonesia’s economic overview, including top ten commodities which currently dominate Indonesia import markets and some regulation about importing commodities business.
Indonesia Import: The Economy Overview of The Country
Indonesia imported an estimated US$141.57 billion worth of goods from around the world in 2020, drastically down by -17.34% compared to US$171.38 billion in 2019. This major decline occured in every sector, namely consumer goods by -10.93%, capital goods by -16.73%, and raw materials goods by -18.32%.
The major decline in imported goods indicates that consumer demand in Indonesia is decreasing. This mainly happens due to global pandemic COVID-19 that disrupts the world economic market, including Indonesia. However, this economic situation may change due to mass vaccination conducted in every country around the globe in late 2020 to mid 2021.
Indonesia Import: Top 10 Commodities
The following product groups portray the highest dollar value in Indonesia’s import purchases throughout 2020. Also displayed is the percentage share each product category represents in terms of overall imports into Indonesia.
| No | Commodity | Import Purchases in US$ billion | Compared to Overall Import |
|---|---|---|---|
| 1 | Machinery Equipment | 21.80 | 15.40% |
| 2 | Electrical Machinery, Equipment | 19.02 | 13.40% |
| 3 | Plastic, Plastic Articles | 7.15 | 5.05% |
| 4 | Iron, Steel | 6.85 | 4.80% |
| 5 | Organic Chemicals | 5.02 | 3.50% |
| 6 | Vehicles, Parts | 4.43 | 3.10% |
| 7 | Cereals | 3.02 | 2.10% |
| 8 | Other Chemical Goods | 2.97 | 2.09% |
| 9 | Industrial Food Waste | 2.91 | 2.05% |
| 10 | Optical, Technical, Medical Apparatus | 2.90 | 2.04% |
The product commodities to appreciate were machinery equipment, plastics, organic chemicals, cereals, other chemical goods, industrial food waste, and optical medical apparatus. They rose to the top ten imported goods, replacing the other seven former goods in 2019. While electrical machinery, vehicles, and iron and steel manage to hold their position in top imported commodities.
Electrical machinery and its equipment represent the slightest decline among Indonesia’s top 10 imported commodities, down by US$0.05 billion compared to 2019. The vehicles and its parts category decreased by US$2.73, followed by iron and steel which fell by US$3.54 billion in comparison to 2019.
Indonesia Import: The Regulation
Importing goods into Indonesia can be a very challenging task due to strict rules and regulations. There are some commodities that need special permission while the others do not. The appropriate government institutions we need to receive approval from will differ depending on the type of commodities you are importing.
If you plan to import commodities like food, cosmetics, medicine, or supplement you need a specific permit called the Distribution License from BPOM (Badan Pengawas Obat dan Makanan or the Indonesian Food and Drugs Agency). They supervise the distribution of food and drugs in Indonesia. If your products are unregistered, you can face up to two years of imprisonment and a fine of IDR 1 billion penalties.
Commodities like remanufacturing capital goods or some machinery equipment also require the Import License (Persetujuan Impor) from the Ministry of Trade. While a few commodities need specific recommendations from related ministries before you can acquire the Import License from the Ministry of Trade.
For example, to import iron and steel, you need a recommendation from the Ministry of Industry to get the Import License from the Ministry of Trade. There are 108 lists of commodities in Indonesia that also need to register for the Import License from the Ministry of Trade.
Considering the growing level of government inspection over businesses in Indonesia, it is important that your companies comply with these regulations in order to prevent any interruption to your day-to-day operations.
Closing Thoughts
Establishing an import business in Indonesia can be time-consuming work. Depending on the type of commodities you are importing, Permitindo can help advise you throughout the whole procedure and help you gain the required permits and documents, e.g. the import license in order to operate legally in Indonesia. If you have any further questions, please drop us an email at anita@permitindo.com or contact us by filling out this form. We would love to hear from you.
References
[I] Head of BPOM Regulation No 27, Year 2017
[II] Health Minister Regulation No 1175/MENKES/PER/VIII/2010
[III] Head of BPOM Regulation No 16, Year 2019
[IV] Government Regulation No 28, Year 2004
[V] Trade Minister Regulation No 110, Year 2018
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