Indonesia’s Trade Performance
Well positioned for economic recovery despite the pandemic, Indonesia managed a significant increase in GDP in the year 2021 and is set for an even higher one this 2022. With the Covid-19 pandemic improving, the economy slowly returns to the pre-pandemic era.
Since the pandemic, private sector investment – especially import and export businesses – saw a steady decrease due to the global restrictions and lockdowns. However, with the continued proper management of the pandemic, Indonesia is recently experiencing increased consumption activity.
Up until the end of 2021, Indonesia still recorded a high number of exports and imports compared to 2020. The double-digit growth combined with the increased trade balance surplus contributed to the 3.5% annual GDP growth. According to the World Bank and the Asian Development Bank (ADB), economic recovery will continue in 2022 with a GDP growth rate of up to 5%.
With a target of 23% for 2025, the difference between this year’s 11% renewable energy usage is quite significant. This growth has resulted in a surge in the exports of Indonesia, mainly coal and petroleum gas. While beneficial in the short run, the long-term prospect is sure to slow down Indonesia’s attempt to transition to green energy. Indonesia’s futile effort to transition to green energy is backed up by challenges such as inadequate financial & technical resources and a lack of clarity on policies due to the contradicting ministries working on the green transition. This is a clear opportunity for foreign investors to start a company with the capacity to help in the transition.
How Foreign Investors Can Tap into Export-Import Businesses in Indonesia
The Omnibus Law has implemented regulations on the activities of foreign investment companies concerning issues of trade, particularly exports and imports. By acquiring an import and export license that doubles up as a business identification number, exporters and importers can conduct business efficiently within the country. The Omnibus Law has also given the Ministry of Trade power to grant ease of business licensing to what they refer to as ‘reputable’ exporters and importers. This comes with benefits for companies like getting instant export and import approvals and eliminating surveyor report requirements for obligatory commodities.
Reputable Exporters and Importers in Indonesia
What are Reputable Exporters and Importers in Indonesia
The Indonesian government has already set several laws and regulations for businesses to follow to be considered reputable. Until now, the government has identified over 700 companies that can be regarded as reputable.
There are specific criteria for a business to qualify as a reputable exporter or importer under MOT Reg 17 of 2021. They are as follows:
- Must be a valid taxpayer for the last two years, which the Ministry of Finance will confirm;
- Carry out the export of goods in the previous two years per the line of business;
- Fulfill the obligation to report on the realization of all exports that have been undertaken for every commodity; and
- Have never been subject to administrative or criminal sanctions.
How to Become Reputable Exporters and Importers in Indonesia
One way to classify as a reputable exporter and importer in Indonesia is to be awarded as an Authorized Economic Operator or as a Main Customs Partner. The Director-General of Foreign Trade gives this award on behalf of the Ministry of Trade.
However, the primary method is shown below.
For exporters
- Fulfill the obligation to report on the realization of all exports that have been undertaken for every commodity;
- Must be a valid taxpayer for the last two years, which the Ministry of Finance will confirm;
- Have carried out the export of goods in the last two years per the line of business;
- The business has never been the subject of administrative sanctions due to violating the regulations for exporters;
- The business has never been subject to criminal sanctions; and
- The business is currently not under administrative sanctions.
For importers
- Fulfill the obligation to report on the realization of all imports that have been undertaken for every commodity;
- Must be a valid taxpayer for the last two years, which the Ministry of Finance will confirm;
- Have carried out the import of goods in the previous two years per the line of business;
- The business has never been the subject of administrative sanctions due to violating the regulations for exporters;
- The business has never been subject to criminal sanctions; and
- The business is currently not under administrative sanctions.
Businesses can easily have their licenses revoked if they fail to comply with the criteria mentioned or break the law, which results in the business being under investigation. Check out our complete guide on bringing goods to Indonesia and how you can obtain an Indonesian import license.
