Bordered by countries such as Singapore, Thailand, Malaysia, the Philippines, Vietnam, Australia, etc., Indonesia is a critical trading hub in Southeast Asia for both export and import.
Trading has a pivotal role in Indonesia’s economic growth with exports and imports contributing to 37% of GDP. In 2016, Indonesia imported US$ 132 billion worth of goods, mainly from China (US$32 billion), Singapore (US$26 billion), Japan (US$11 billion), Malaysia (US$6.7 billion), and South Korea (US$6.6 billion).
Before the implementation of OSS (Online Single Submission), according to the Trade Ministry in Indonesia, any individuals or any companies who wanted to import goods to Indonesia legally were required to obtain a special license – the General Import License (API-U) or a Producer Import License (API-P), depending on what products you were dealing with.
Regardless of how large or how small your import shipment was, you would need one of these licenses under the Indonesian Law.
The processing time of these licenses could be daunting and used to take up to five months. However, the implementation of the OSS licensing system and the cancellation of unnecessary procedures by Ministry of Trade have allowed more convenient and shorter processing time.
This has also encouraged more and more investors to start a trading business in Indonesia. In this article, we will detail the updates on securing an import license with OSS, and requirements on how to start a trading company in Indonesia.
Difference between API-U and API-P before OSS
The two special licenses, as mentioned, are API-U and API-P. The difference between these two licenses became clear after the significant changes from January 1, 2016, under the Regulation 70/2015 by Ministry of Trade.
Companies in Indonesia are prohibited from holding two types of licenses at the same time.
API-U General Import License (Angka Pengenal Impor Umum)
An API-U import license allows a trading company to import goods for general trade and commerce in Indonesia. Please note that under the updated Reg 70/2015, API-U license holder can now import products under more than one group with the HS code. Previously, only one particular group of items is allowed for import by the API-U holder.
API-P Producer Import License (Angka Pengenal Impor Produsen)
Different from API-U, an API-P is a license used to import items for personal use or internal use in a company. These imported goods under API-P include raw materials, capitals goods or supporting items that can be further processed to produce other goods, or merely for the support of operational and production activities.
Importers with API-P needs to be aware that items imported with this type of license are not permitted to be transferred or sold directly to any third parties.
Process Requirement for Import License before OSS
Previously, apart from the import regulators such as the Investment Coordinating Board (BKPM), Directorate General of Customs and Excise, and Ministry of Agriculture, investors or importers also needed to go through a lengthy process of up to 5 months.
Furthermore, the type of goods imported could also further complicate the import license application process. Let us walk you through how the previous process looks like:
- PT PMA or PT incorporation in Indonesia (1.5 months)
- For API-U applicant, you will need to obtain an IUT permanent business license (2 weeks)
- Getting the import license (1 week)
- Obtaining custom identification number NIK/SRP (1 month)
- If you import items from the food or children’s items categories, you need to get a recommendation from KEMENTAN Ministry of Agriculture (1 month)
- Depending on your item group or category, you will need approval from other relevant authorities. For example, for food products, you will need approval from the National Agency of Drug and Food Control. (3 weeks)
- Approval from the Ministry of Trade in Indonesia
Process Requirement for Import License with OSS
The OSS system in Indonesia has been effective since July 2018. The system has been gradually improved, and eventually, all permit and licensing processes will be streamlined under the OSS.
Licensing processes covered under the OSS include the import licenses as well – good news for investors and importers is that with the OSS, there is no need for them to obtain an API and a NIK (Customs Registration) as basic import licenses anymore.
NIB is the Basic Import License
With this new system, all business entities will need to register themselves through it. After completion of registration at the OSS, each business will get a Business Identity Number NIB (Nomor Induk Berusaha).
The NIB will not expire as long as the company is in operation. This NIB number makes all processes much easier as it replaces the Company Registration Certificate, Importer Identification Number (for import license), and Customs Registration NIK (Nomor Induk Kepabeanan).
With that being said, import companies or companies engage in import activities do not have to go through the process of acquiring API and NIK anymore. However, importers need to make sure that they still comply with technical import requirements with relevant authorities.
Difference between NIB and API/NIK
Validity and Data Change
One of the pros of a NIB is that it does not have a validity period, compared to API and NIK.
Previously, API had to be renewed every five years. Besides, the NIB offers benefits such as the elimination of technical challenges when a company changes its data or other information. With API and NIK, once a company’s data or information is altered, the company will have to proceed with a course of license and permit updates caused by the data changed.
This might not seem like a big issue, but the series of licenses updates were often detrimental to the import capability of a company. Businesses were not allowed to go ahead with any import activities until all licenses had been updated. Now, thanks to the OSS, all you need to do is to change the data with your NIB in the system.
Integration of Customs and Excise System in the OSS in Indonesia
According to the government of Indonesia, NIB as an import license has now been successfully implemented. Also, the OSS has been integrated with the Indonesian customs and excise system.
Anyone to be an authorised person for Import Document Signatories has become invalid under the OSS. It means that only directors are now permitted to be registered under the OSS for the signing of import documents.
Previously in API, anyone who is stated as an authorised person can do the signing. In practice, by giving powers of attorney, directors of import companies can still authorise other individuals to sign the import documents.
Did you know that you can also export to Indonesia without having your own import license? Learn about undername import in Indonesia
Start a Trading Company in Indonesia
Starting a trading company in Indonesia can be an excellent way to offer new products or services, open new domestic markets or reduce manufacturing costs.
The most common form of trading company in Indonesia by foreigners is a foreign-owned company (PT PMA). Here are some of the general requirements you need to pay attention to:
- Contact Cekindo to get familiar with the Indonesian Law. You need to make sure the sector and location you are going to set up your trading company are in compliance with local law such as the NIL (Negative Investment List) as well.
- Through AHU Online, complete the incorporation process at the Ministry of Law and Human Rights (MOLHR)
- Proceed with registration at OSS.
For all foreigners, especially for first-time investors, it will be more beneficial to start a trading company in port areas in Indonesia, i.e. Medan, Semarang, and Surabaya. The reason is to take advantage of its direct access to important sea routes, to improve the shipping capacity with growing demand, as well as to lower the transportation costs.
Apply with a Local Agent
Contact Cekindo in Jakarta, Semarang and Bali to get to know the latest updates on the application for an import license via OSS. Our advisors have been going through every updated regulation to ensure smooth process of our clients. We will apply for an import licence on your behalf, and thus minimise the potential risk of rejection of your application.