Understanding the New Licensing Regime for Trading Companies Exporting From Indonesia

Indonesia’s trade value recorded a surplus of USD 4.74 billion, according to statistics from the Central Statistics Agency, maintaining a trend of surpluses that began in May of 2020. Growth in Indonesia’s exports intensified in August 2021, hitting USD 21.42 billion, a double-digit gain of 20.95% (month-to-month) or 64.10% (year-on-year), bolstering the remarkable surplus performance.

This growth is a testament to Indonesia’s economic recovery in lockstep with global demand recovery. The increase in Indonesia’s exports also backed up the improvement in the Purchasing Managers’ Index (PMI) in August 2021, which rose to 43.7 from 40.1 in July 2021. Animal/vegetable fats and oils, mineral fuels, and metal ores contributed the highest to Indonesia’s exports in this period.

With such a promising future, Indonesia offers competitive advantages to international investors in all industries looking for new export opportunities or establishing a trading business in the country. This article will address the new licensing process for trade companies exporting from Indonesia.

Understanding The New Licensing Regime

Two regulations were issued by the Indonesian Ministry of Trade on April 1, 2021, and went into effect on November 19, 2021:

(i) Regulation No. 18 concerning Goods Prohibited from Exporting and Importing, which regulates the production of goods prohibited for export and import; and

(ii) Regulation No. 19 of 2021 concerning Export Policy, which introduces significant changes to export licensing for exporters in Indonesia, which will then be integrated with an online-based licensing system.

Who Can Become an Exporter in Indonesia?

An exporter is a person, organization, or commercial entity that exports goods or services, whether it is a legal entity or not. The action of transporting products outside of the customs area is known as export.

A customs area is defined by Law No. 10 of 1995 concerning Customs (“Law No.10/1995”) as the Republic of Indonesia’s territory, which encompasses land, water, and air space above it, as well as specific areas of the exclusive economic zone and continental shelf.

Risk-Based Business Licensing for Export Businesses in Indonesia

A new Risk-Based Business Licensing system for exporters has come into effect with MoT Reg 19/2021, allowing exporters to carry out business activities by implementing and boosting the convenience of licensing directly through the INATRADE system.

Exporters must get a Business Identification Number (“NIB”) by registration on the Online Single Submission before applying for an export authorization. Since Indonesian business license documents are only supplied to exporters whose tax status is already legitimate, MoT Reg 19/2021 also requires exporters to prove their taxpayer status.

How to Obtain an Export Business License in Indonesia

Exporters must submit applications electronically via the Indonesia National Single Window System (SINSW). It is an electronic system that integrates systems or information related to the process of handling customs documents, quarantine documents, licensing documents, port/airport documents, and others.

Exporters must have access rights to apply through SINSW, which they can receive by registering with SINSW and submitting original scanned papers in the form of at least the following:

• Taxpayer Identification Number (“NPWP”) or Population Identification Number (“NIK”), for particular exporters;
• NPWP, for exporters of State-Owned Enterprises and Foundations; or
• NIB and NPWP, for exporters in cooperatives and business entities.

Following the receipt of Access Rights, the exporter must apply by uploading scanned copies of the appropriate documentation according to the commodities to be exported, as specified in Appendix I of MoT Reg 19/2021, as well as a declaration of responsibility.

Furthermore, if the application for an export business license is declared complete and meets the requirements, the Director-General of Foreign Trade, on behalf of the MoT, provides an export business license through the INATRADE system, which is delivered to SINSW with an electronic signature and QR code.

Exportable and Prohibited Goods

Exportable Goods in Indonesia

Following is a list of numerous items that can be exported after acquiring a business license in Indonesia, as provided by MoT Reg 19/2021:

• Edible swallow’s nest;
• Rice;
• Animals and animal products;
• Natural plants, wildlife, and fish;
• Industrial Forest Products;
• Rough diamonds;
• Masks and mask raw materials;
• Tin;
• Metal scraps; and others

Prohibited Goods to Export Out of Indonesia

The prohibition of products to be exported and imported was previously governed by the MoT Regulation No. 45 of 2019 concerning goods banned from export, and MoT Regulation No. 12 of 2020 addressing Prohibited Imports.

In its present state, MoT Reg 18/2021 unifies the commodities forbidden for export and import. Additional areas, such as subsidized fertilizers and some types of metal scrap, are barred from exporting under MoT Reg 18/2021. Contact our legal consultants for more details.

Start Your Export Business in Indonesia with Cekindo

Starting an export company in Indonesia consists of multiple procedures that are time-consuming and overly official.

Having company registration professionals, like Cekindo, by your side can save you a great deal of time and provide you with a hassle-free experience.

Cekindo delivers a broad spectrum of ancillary services related to company registration, like legal consultancy, business license and other, documents acquisition, tax and accounting, and HR services.

Let’s start by filling out the form below and talking to one of our professional counselors.