How to Make Sure Goods Don’t Get Stuck in In­done­sian Cus­toms

Indonesia Expat - - Books - BY ANGGA WAHYUDI

In­done­sian im­port reg­u­la­tions are of­ten chang­ing, so it is not un­com­mon for­eign com­pa­nies find prod­ucts stuck in In­done­sian cus­toms. In this ar­ti­cle, we shed light on what you need to do when your prod­ucts get stuck in cus­toms and how to pre­vent it in the first place. Main rea­sons why goods are kept in cus­toms One of the main rea­sons why goods get stuck in the cus­toms is be­cause your con­signee in In­done­sia does not have an im­port li­cense or the nec­es­sary sup­port­ing doc­u­ments. Some prod­ucts re­quire fur­ther pa­pers in ad­di­tion to li­censes as well. Some for­warders do not in­form their client and so once the goods have ar­rived in In­done­sia they get stuck. An­other rea­son is a red chan­nel in­spec­tion, or pe­merik­saan

jalur merah (PJM), which is per­formed se­lec­tively. This means that in ad­di­tion to doc­u­ment ver­i­fi­ca­tion, your ship­ment will be in­spected phys­i­cally as well. In In­done­sia, it is com­mon prac­tice that end-to-end im­port/ ex­port providers use door to door ser­vices to avoid pay­ing duty and taxes to the cus­toms of­fice. How­ever, the gov­ern­ment is­sued a new reg­u­la­tion in July

2017 that prac­ti­cally shuts down the ser­vice in In­done­sia. As a re­sult many ship­ments that used that method have been stuck in cus­toms be­cause of in­com­plete doc­u­men­ta­tion or taxes. What you need to pre­pare be­fore ship­ping Be­fore ship­ping your prod­ucts to In­done­sia you need to de­cide whether you want to do it through your own im­port com­pany or by us­ing a third party im­porter of record ser­vice. If you de­cide to set up an im­port com­pany you must ac­quire an Im­porter Iden­ti­fi­ca­tion Num­ber (API) from the In­done­sian Min­istry of Trade. This is a li­cense that will al­low you to start im­port­ing. How­ever, prior to ap­ply­ing for an API, you need to de­cide whether you are go­ing to be­come a gen­eral im­porter (API-U) or you want to im­port ma­chin­ery and raw ma­te­ri­als for your own pro­duc­tion (API-P). The to­tal time of in­cor­po­rat­ing a for­eign-owned com­pany is at least six weeks, mean­ing that you can­not start im­port­ing to In­done­sia right away. Im­porter of record You can also im­port to In­done­sia with­out set­ting up a le­gal en­tity. An im­porter of record ser­vice, also known as un­der­name im­port, en­ables you to im­port to In­done­sia im­me­di­ately with­out ac­quir­ing any im­port li­censes or be­ing li­able for any im­port taxes. The idea of an im­porter of record ser­vice is quite sim­ple – you out­source the ser­vice to a third party ser­vice provider and use the im­port li­censes and ex­per­tise of an al­ready ex­ist­ing com­pany. Be­sides be­ing faster, an im­porter of record ser­vice has many other ben­e­fits as well – from smooth and seam­less cus­toms clear­ance to full ser­vice in which every­thing re­gard­ing your im­port will be taken care of by the ser­vice provider. What other doc­u­ments do I have to pre­pare? A pack­ing list is a doc­u­ment pre­pared by the seller that in­di­cates the prod­uct de­tails, the vol­ume of the ship­ment ei­ther in Kg or CBM, and al­lows to check whether the ship­ment has been packed cor­rectly or not. A pro­forma in­voice or a com­mer­cial in­voice are doc­u­ments that pro­vide the to­tal value of the ship­ment usu­ally in US dol­lar hence would have a suf­fi­cient in­for­ma­tion in de­ter­min­ing the im­port du­ties and taxes, and the el­i­gi­bil­ity of the ship­ment. Bill of lad­ing or air way­bill are doc­u­ments ac­knowl­edg­ing the trans­port of the ship­ment. Bill of Lad­ing (BL) if the ship­ment ar­rived via sea freight. Air­way Bill (AWB) if the ship­ment ar­rived via air freight. Pro­ce­dures are con­ducted at the cus­toms The PIB ( Pem­ber­i­tahuan Im­por Barang) -

Im­port Dec­la­ra­tion Form Im­ported goods must be de­clared to the cus­toms au­thor­ity. When the ship­ment has been pro­cessed, an Im­port Dec­la­ra­tion Form (PIB) will be re­leased. The PIB in­cludes im­port du­ties (which varies based on the HS Code of the goods be­ing im­ported), value-added tax (fixed at 10 per­cent), and in­come tax ar­ti­cle 22 (fixed at 2.5 per­cent). This form is is­sued to de­clare the goods, with or with­out the im­port li­censes. Thus, even if you pay the PIB, it does not au­to­mat­i­cally mean that your ship­ment will be re­leased. The PJM ( Pe­merik­saan Jalur Merah) -

Red Chan­nel In­spec­tion Upon ar­rival, im­ported goods are pro­cessed in three chan­nels:

Green chan­nel - only doc­u­ment ver­i­fi­ca­tion, the goods are cleared

Yel­low chan­nel - additional doc­u­men­ta­tion is re­quired be­fore the re­lease of goods Red chan­nel - phys­i­cal in­spec­tion of goods, ev­ery ship­ment needs to be in­spected one by one Gods can get stuck in the red chan­nel when there are changes in taxes, reg­u­la­tions, HS codes and so on. In that case, a No­tice of the Red Chan­nel will be re­leased. What to do when prod­ucts are stuck in cus­toms The cus­toms of­fice will give three pos­si­ble so­lu­tions to get­ting goods out of cus­toms.

One of the op­tions is to pay the due amount of PIB (Im­port Duty, VAT, and In­come Tax or ar­ti­cle 22) and a read­dress

con­signee charges. By do­ing this you de­clare to read­dress the ship­ment con­signee from the previous to the cur­rent one who has the proper im­port li­censes/per­mits for the im­ported goods. You will get your ship­ment out of cus­toms, but it can be quite ex­pen­sive. Al­ter­na­tively, the cus­toms of­fice may put your goods up for

auc­tion. Your items will be put up for a bid and sold to the high­est bid­der. The third op­tion is that the cus­toms of­fice may re­quire you to re-im­port your ship­ment. If you can’t im­port the goods that are stuck in the cus­toms, you need to ex­port them out of In­done­sia and ac­quire the rel­e­vant doc­u­ments/li­censes be­fore im­port­ing them to In­done­sia again. This is the case, of course, if your prod­ucts do not fall un­der for­bid­den goods that are pro­hib­ited of im­port to In­done­sia. These prod­ucts in­clude, for ex­am­ple, po­lit­i­cally sen­si­tive ma­te­ri­als, guns and firearms (which need a spe­cial per­mit), nar­cotics and drugs. Ac­cord­ing to In­done­sian cus­toms, the at­tempt to im­port these prod­ucts can re­sult in heavy penal­ties and even im­pris­on­ment. In gen­eral, it takes ap­prox­i­mately be­tween four to six work­ing days to get goods out of In­done­sian cus­toms. Angga Wahyudi is the re­gional Head of Im­port at Emer­hub where he over­sees all of the im­port projects and lo­cal lo­gis­tics teams in South­East Asia. Be­fore the cur­rent role he was in charge of the for­eign di­rect in­vest­ment projects for Emer­hub in Jakarta. He also has a long list of ex­pe­ri­ences in event man­age­ment and in­vest­ment banking.

Angga can be reached at im­port@emer­hub.com

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