Foreign investors must have an Indonesia import license when entering the Indonesian trade industry. Foreign trade has been paramount in boosting Indonesia’s economic growth by contributing 37.3% towards the GDP in 2019. The International Monetary Fund projected export of goods and services to bounce back by 18.4% and imports to ascend by 23.5% in 2021.
Among ASEAN countries, Singapore’s contribution in Indonesia’s exports was 7.7% whereas imports from Singapore stood at 10.1%.
Singapore investments in Indonesia amounted to US$9.8 billion, making it the highest foreign investor in the country in 2020. The annual Leader’s Retreat, where leaders from both countries discuss key bilateral issues and prospective joint ventures demonstrates potent bilateral ties. Such events attest to the strong bilateral relations and ensure confidence in Singaporean firms to invest in the Indonesian market.
Aside from its geographical accessibility, growing opportunities, as well as government support through Positive Investment List (PIL), Singapore Investors can further profit from the existing trade agreements between Indonesia and Singapore. Following are some trade agreements between them :
The ASEAN member countries have lowered the import tariff range down to 0-5% through an effective agreement named the Common Effective Preferential Tariff (CEPT) Scheme.
The Indonesia-Singapore BIT administers additional protection of Singapore Investments in Indonesia and vice versa. The treaty establishes a multi-tiered dispute settlement mechanism involving mediation, consultations and international arbitration through the International Centre for Settlement of Investment Disputes (ICSID).
Signed between Indonesia and Singapore, the DTAA reduces the tax rates on branch profits and royalties on copyrighted works from 15-10%. Moreover, DTAA administers taxation on capital gains and prevents tax evasion.
|Type (License)||Size (Company)||Net Worth (in US$)|
|Micro SIUP||Micro-sized, Sole Proprietorship||< US$3,560|
|Small SIUP||Small-sized||> US$3,560;
|Medium SIUP||Medium-sized||> US$35,60;
|Large SIUP||Large-sized||> US$712,125|
Since Branch Offices and Representative Offices are considered as a unit of the parent company or acting on behalf of their corporate headquarters, it is not mandatory for these business entities to obtain an SIUP.
A company must have an API or Import Identification Number in order to import goods to Indonesia under the laws of the Indonesian Ministry of Trade (MoT). Primarily, there are two types of Import Identification Number: General Import License (API – U) – goods imported are for trading purpose; and Producer Import License (API – P) – import of industrial raw materials for further processing.
As the process for the business set-up proceeds, obtaining an import license for a foreign investor becomes comparatively complex. The following table demonstrates the timeline to set up an import business in Indonesia:
|Business Process/ License Obtaining||Tentative Time|
|Incorporation of PT PMDN or PT PMA in Indonesia||6 weeks|
|Obtaining Permanent Business License (IUT), mandatory for all foreign investment companies.||1 – 2 weeks|
|Obtaining Import License API-U or API-P||1 week|
|Getting NIK (Customs Identification Number) and SRP (Customs Registration Certificate)||4 weeks|
|Acquiring a recommendation from DEPTAN Ministry of Agriculture (only for a particular category such as food or children’s items)||4 weeks|
|Approval by other authorities depending on your product category (e.g. National Agency of Drug and Food Control for food products)||3 weeks|
|Approved by the Ministry of Trade (MoT).|
Setting up a business overseas can be a tedious and daunting process. Cekindo’s comprehensive business solutions can help you in all facets of setting up your business in Indonesia. Our consultants have thorough knowledge of the Indonesian Market and can help you create a viable roadmap for your business. Our experienced legal advisors will assist in all statutory and regulatory aspects of your investment.
Cekindo can also act as your Importer of Records provider in Indonesia handling all aspects of importing, including documentation, payments of duties and delivery of your product.