12 Key Points about Import License in Indonesia

Foreign entrepreneurs who want to start a business in Indonesia and import goods into the country need an import license. Regardless of the size of your shipment, you must apply for this license before importing goods to Indonesia. With the proper authorization, your products can get through customs clearance.

As a business owner, taking one step ahead is advisable, especially knowing the import license requirements. Plus, you have to know in advance what sort of license suits your business and how you should go about getting one.

This article will walk you through applying for an import business license in Indonesia.

An Overview of Import License in Indonesia

As of 2017, Indonesia is the 8th largest economy in the world based on purchasing power parity. Annually, for the last decade, it has growing at an average of 5%. With the help of this consistent economic growth and natural resources such as natural gas, crude oil, fuels, and foodstuffs, Indonesia has pulled itself into the upper-middle-income status.

Trading plays a crucial role in economic growth in Indonesia, with the combined value of exports and imports equal to 37% of GDP. Indonesia is also known for its large amounts of goods imported and then have them re-exported to the neighboring countries.

Read also: Opening a Trading Company in Indonesia

Therefore, if you want to start a business in Indonesia, trading from importing can be an excellent option. Foreign companies can do this by appointing an agent, distributor, or importer.

Also, the Indonesian government has launched a series of reforms to remove unnecessary requirements for several policies to spur economic growth in Indonesia further.

More than 31% of licensing and irrelevant examination procedures were canceled at the Ministry of Trade (MOT). This applies to more than 15 government entities and licensing ministries. This is good news for most ex-pats, including importers.

What is an Import License?

In general, an import license is used to keep control of import allowance, and also the imported items, to Indonesia. This particular license is a non-tariff barrier for Indonesia to protect the local economy and producers by restricting the number of goods imported.

Many importers in Indonesia represent multiple foreign manufacturers and product companies. Often, overseas companies will form close relations with Indonesian importers that allow two entities to operate as one through the import business license.

Related article: Export Import License that Your Company Should Have

What are the Types of Import Permit in Indonesia?

Indonesia, an archipelago of over 17,000 islands, is renowned for its stunning landscapes and its dynamic and diverse market. If you’re looking to import goods into this Southeast Asian nation, understanding the intricacies of import permits is crucial to ensure a smooth and lawful process.

Indonesia has a range of import permits, each tailored to specific goods and purposes. Here are some of the most common types:

1. General Importer Identification Number (API-U)

Any business intending to import goods into Indonesia must obtain an API-U. This serves as a company’s identification number for importing activities.

2. Specific Importer Identification Number (API-P)

Certain products, such as hazardous materials and used capital goods, require a specific importer identification number. Obtaining an API-P is a prerequisite for importing such items.

3. Customs Registration Number (NIK)

This number is essential for customs clearance and is granted upon approval of the API-U or API-P.

4. Importer’s Registered Number (API-PER)

Companies involved in processing imported raw materials for export are obligated to obtain an API-PER.

5. Quota and Non-Quota Import Permits

Some goods, like agricultural products and textiles, require quota permits that limit the quantity imported annually. Non-quota permits are issued for goods not subject to such limitations.

Read more: Export-Import Indonesia: A Guide to Becoming A Reputable Exporter and Importer

What are the Application Process of Import License in Indonesia?

Securing an import permit in Indonesia involves a series of steps and paperwork. It’s advisable to seek guidance from a local consultant or legal expert to navigate this process effectively. Generally, the steps include:

1. Company Registration

Establish a legal entity in Indonesia, such as a Limited Liability Company (PT) or a Foreign Investment Company (PMA).

2. Obtain a Taxpayer Identification Number (NPWP)

This is a prerequisite for most business activities in Indonesia, including importation.

3. Apply for an API-U or API-P

Apply to the Ministry of Trade or its local counterparts, depending on the type of permit you need.

4. Wait for Approval

The approval process may take several weeks, during which your application will be reviewed and evaluated.

5. Customs Registration

Once you receive your API-U or API-P, you can apply for a Customs Registration Number (NIK) from the Directorate General of Customs and Excise.

6. Comply with Regulations

Always adhere to Indonesia’s import regulations and stay informed about trade policy and procedure changes.

Importing into Indonesia can be complex due to ever-changing regulations, language barriers, and bureaucratic procedures. It’s essential to conduct thorough research, partner with reliable local agents or consultants, and stay updated with trade-related news and policies.

What are the Import Regulations in Indonesia?

With its thriving economy and vast consumer base, Indonesia is an attractive destination for businesses looking to import goods. However, to ensure a smooth and compliant entry into this Southeast Asian nation, understanding the import regulations is paramount. Here’s a brief overview of crucial import regulations in Indonesia:

1. Import Licensing

Importing into Indonesia often requires obtaining specific licenses or permits, depending on the nature of the goods. The primary import license is the General Importer Identification Number (API-U), which every importing entity must possess. Certain products may necessitate additional licenses or permits, such as the Specific Importer Identification Number (API-P) or quota permits for restricted goods.

2. Tariffs and Customs Duties

Indonesia imposes customs duties and tariffs on imported goods. The rates can vary widely, depending on the type of product, its origin, and any applicable trade agreements. Importers must know these costs and ensure they are calculated accurately to avoid unexpected expenses.

3. Documentation and Declaration

A detailed set of documents is required for customs clearance in Indonesia. These typically include a commercial invoice, packing list, bill of lading or airway bill, certificate of origin, import licenses, and customs value declaration. Accurate and complete documentation is essential to prevent delays or issues at the border.

4. Customs Valuation

Customs authorities in Indonesia use various methods for valuing imported goods, including transaction value, transaction value of identical goods, and deductive value. Importers must understand and comply with these valuation methods to determine the correct customs value of their products.

5. Prohibited and Restricted Goods

Indonesia lists prohibited and restricted goods that cannot be imported without special permission or may require compliance with specific conditions. These include firearms, narcotics, certain chemicals, and more. Importers should check the list and ensure their goods comply with regulations.

6. Labelling and Packaging Requirements

Imported goods must meet labeling and packaging standards as stipulated by Indonesian authorities. This includes product name, manufacturer details, ingredients (if applicable), and safety instructions. Non-compliance can result in fines or delays.

7. Intellectual Property Rights (IPR)

Indonesia has stringent IPR regulations to protect intellectual property, including trademarks, copyrights, and patents. Importers must respect these rights and avoid infringing on them when importing and distributing goods.

8. Inspection and Testing

Certain products, especially those related to health and safety, may be subject to inspections and testing by relevant authorities. Compliance with these requirements is essential to avoid import disruptions.

9. Environmental Regulations

Importers of products with environmental implications, such as hazardous materials or endangered species, must adhere to Indonesia’s environmental regulations, which may involve permits or certifications.

Read more: Newest Import Duties in Indonesia: 2023 Update

What are the Documentations You Need for Import License in Indonesia?

With its growing economy and vast consumer market, Indonesia is a prime destination for businesses looking to import goods. However, the journey to successful imports begins with understanding the intricate web of import documentation required to navigate this Southeast Asian nation’s regulations.

1. Commercial Invoice

A comprehensive commercial invoice is a fundamental import document. It should include details like the seller and buyer’s information, a description of the goods, quantity, unit price, total value, payment terms, and currency. Accuracy is paramount, as this document forms the basis for calculating customs duties and taxes.

2. Packing List

A packing list provides an itemized breakdown of the contents of each package or container. It should include information such as each item’s weight, dimensions, and packaging type. This document aids customs officials in verifying the shipment’s contents.

3. Bill of Lading (BOL) or Airway Bill (AWB)

The BOL or AWB is a crucial transport document. It confirms the shipment’s acceptance by the carrier and serves as evidence of the contract of carriage. It also contains information about the port of departure, destination, and the goods being transported.

4. Certificate of Origin

Depending on trade agreements and the nature of the goods, a certificate of origin may be required. This document confirms the country of origin for the imported goods and can influence customs duties and tariffs.

5. Import License (API-U/API-P)

Importers in Indonesia must possess the appropriate Importer Identification Number (API-U/API-P), depending on the nature of the imported goods. This license is a prerequisite for customs clearance and must be included in the import documents.

6. Customs Value Declaration

This document states the declared value of the goods, which is used for calculating customs duties and taxes. Accurate valuation is crucial to avoid potential issues with customs.

7. Bill of Entry (BOE)

The Bill of Entry is submitted to customs authorities for clearance. It includes details about the shipment, import duties, and taxes paid or payable.

8. Permits and Certifications

Additional permits and certifications may be required depending on the nature of the goods. These can include environmental clearances, health certificates, or licenses for specific product categories.

9. Import Duty and Tax Calculations

Understanding the complex tariff and tax system in Indonesia is essential. Importers must accurately calculate the applicable customs duties, value-added tax (VAT), and any other relevant taxes to ensure compliance.

10. Importer’s Registered Number (NIK)

A Customs Registration Number (NIK) is essential for customs clearance and is granted upon approval of the Importer Identification Number (API-U/API-P).

Read more: 5 Most Important Things to Know before Importing from Bali to Australia

How to Obtain an Import License in Indonesia?

If you’re considering importing goods into Indonesia, one critical step is obtaining an import license. Indonesia’s regulatory framework requires businesses to hold the appropriate permissions to engage in international trade. Here’s a step-by-step guide on how to obtain an import license in Indonesia:

1. Business Entity Registration

Before applying for an import license, you must establish a legal entity in Indonesia. Businesses commonly register as a Limited Liability Company (PT) or a Foreign Investment Company (PMA). This step is essential as your company’s legal status will be closely linked to your import activities.

2. Obtain a Taxpayer Identification Number (NPWP)

Next, you must obtain your company’s Taxpayer Identification Number (NPWP). The NPWP is a mandatory requirement for all businesses operating in Indonesia, including importers.

3. Prepare Required Documents

Gather the necessary documentation for your import license application, which may include:

• Company registration documents (copy of Deed of Establishment, Business License, etc.).
• A copy of the company’s Articles of Association.
• Company’s organizational structure.
• Describe the business activities, including details about the goods you intend to import.
• A copy of your NPWP.
• A recommendation letter from the Chamber of Commerce and Industry (KADIN) for certain types of businesses.

4. Choose the Appropriate Import License Type

In Indonesia, there are different types of import licenses, mainly the General Importer Identification Number (API-U) and the Specific Importer Identification Number (API-P). The API-U is for general import activities, while the API-P is for specific goods or purposes. Identify the one that suits your import needs.

5. Submit the Application

Submit your import license application to the Ministry of Trade or its local office, depending on your business location. You may need to use an authorized customs clearance agent to assist with the application process.

6. Wait for Approval

The approval process for an import license can take several weeks. During this time, the relevant authorities will review your application and ensure that you meet all the necessary requirements and regulations.

7. Customs Registration

Once you receive your import license, you can apply for a Customs Registration Number (NIK) from the Directorate General of Customs and Excise. The NIK is essential for customs clearance.

8. Compliance and Ongoing Responsibilities

After obtaining your import license, it’s crucial to stay compliant with Indonesian import regulations. This includes staying up-to-date with changes in trade policies, paying the applicable customs duties and taxes, and adhering to any other regulatory requirements specific to your imported goods.

Read more: Obtaining an Import License Indonesia

Import Quotas in Indonesia: Managing Trade Restrictions

Import quotas are a critical aspect of Indonesia’s trade policy, designed to regulate the influx of certain goods into the country and protect domestic industries. 

Understanding how import quotas work is crucial for businesses looking to import into this dynamic Southeast Asian nation. Indonesia implements two main types of import quotas

Absolute Quotas

These quotas specify a maximum quantity of a particular product that can be imported within a defined period, typically a year. Absolute quotas are often used for goods that are considered sensitive to domestic industries or have limited availability. Importers must secure quota permits from relevant government agencies to bring in these products.

Tariff Rate Quotas (TRQs)

TRQs combine a two-tier system involving both quotas and tariffs. Within the quota limit, a lower tariff rate applies, while quantities exceeding the quota face a higher tariff. This mechanism aims to balance the interests of domestic producers and consumers while allowing some access to imported goods.

Products Subject to Import Quotas

Indonesia’s import quotas cover a wide range of products, including agricultural goods, textiles, and certain industrial items. These quotas are regularly reviewed and adjusted based on factors like domestic production capacity and market demand.

Obtaining Quota Permits

To import goods subject to quotas into Indonesia, businesses must obtain the necessary quota permits from relevant government agencies, such as the Ministry of Trade. The application process can be complex and requires careful documentation, including information about the product, its origin, and the intended use.

Read more: How to Import Raw Materials of Food & Beverages into Indonesia

What are the Challenges in Navigating Import Quotas in Indonesia?

Navigating import quotas in Indonesia can be challenging for several reasons

Limited Access

Quotas often result in limited access to certain goods, which can impact businesses dependent on those imports.

Competition

The competition for quota permits can be fierce, leading to increased costs and complexities for importers.

Regulatory Changes 

Import quotas can change frequently based on market conditions, making it crucial for businesses to stay updated with the latest regulations.

Update for an Import License Application

This innovation enables businesses to obtain an API (General Importer Identification Number) and a NIK (Customs Registration Number) more efficiently. The Business Identity Number (NIB) serves as the foundational import license under this system. 

It simplifies processes by replacing the Company Registration Certificate, Importer Identification Number (for import licenses), and Customs Registration NIK (Customs Registration Number). In essence, companies involved in import activities no longer need to acquire an API and NIK.

However, it is imperative for importers to remain compliant with technical import requirements imposed by relevant authorities.

What are the Import Restrictions in Indonesia?

Certain goods in Indonesia necessitate a Special Importer Identification Number (NPIK – Nomor Pengenal Importir Khusus). Without NPIK, the import of items like rice, corn, soybean, sugar, textiles and textile products, electronics and their components, and toys is prohibited.

Beyond the API and NPIK, businesses must ascertain which ministries are responsible for processing pertinent certificates. Additionally, Indonesia completely prohibits the import of the following goods, and severe penalties apply to any violations:

Prohibited Goods

The following goods are completely banned in Indonesia for import. Heavy sanctions apply to whoever breaks the law.

1. Pornographic materials
2. Drugs and narcotics
3. Any politically sensitive materials
4. Weapons, including sport and hunting guns (special permit required)
5. Explosives, firearms, and ammunition (special permit required)

Import Tax and Duties in Indonesia

Import tariffs in Indonesia range from 0 to 40%, contingent on the product category defined by the HS code. The Declaration of Imported Goods (PIB) comprises a 11% value-added tax (VAT) and a 2.5% income tax.

Read also: Income Taxation System in Indonesia

Under-name Import

Navigating the import license process in Indonesia can be daunting. However, under-name importers are prevalent in Indonesia, offering a comprehensive solution for importers. Under-name importers possess all the requisite import licenses and are ready to facilitate importing goods into Indonesia.

Obtain Your Import License Easily with InCorp Indonesia

InCorp Indonesia (formerly Cekindo) is an under-name importer, simplifying the process and reducing costs and waiting times. We ensure the seamless customs clearance of your products, enabling them to reach Indonesia securely.