1. GENERAL PRESENTATION:
1.1 General characteristics:
||Republic of Indonesia.
||1,904,569 square kilometers.
||196.5 millions inhabitants (1996).
||103 inhabitants per square kilometer.
||Indonesia has a tropical monsoon-like climate. Apart from the mountainous areas, temperatures
vary between 20 and 32° C. There are two kinds of monsoons. Eastern monsoon or the dry season from May to October
influenced by continental winds blowing from Australia and Western monsoon or Winter from November to April which
is influenced by winds blowing from continental Asia and Pacific through the oceans. Rainfalls may reach 2,286
mm along the equatorial rain belt.
||January 1st, March 8th, May 1st, June 2nd, August 17th
(independence), December 25th, Good Friday Ascension of the Prophet Mohamed* Ascension of the Christ
Eid-ul-Fitr*, Eid-ul-Adha*, Muharram 1st*, Mouloud*, and Hindu holidays*.
|Weekly day off
(*) Variable Dates
1.2 General Information
||Bahasa Indonesia is the official language. English, Dutch and Chinese are spoken in
business circles and the other languages are Javanese, Sundanese and Arabic are also spoken.
||Rupiah. 1 US$ = 2,383 Rp (End of 1996).
GMT +7 in Western Indonesia
GMT+8 in Central Indonesia
GMT+9 in Eastern Indonesia
- Business: Monday - Friday: From 8H to 17H / Saturday: From 9H to 13H
- Government offices: Monday - Thursday: From 8H to 15H. / Friday: From 8H to 13H
/ Saturday: From 8H30 to 13H
- Banks: Monday - Friday: From 8H to 16H. / Saturday: From 8H to 12H30.
1.3 Legal framework of trade relations:
Indonesia is member of the following international organizations:
|World Trade Organization (W.T.O);
|United Nations Organization (UN) and its main specialized institutions (IMF, World
|Organization of the Islamic Conference (O.I.C);
|The Association of Southeast Asian Nations (ASEAN);
|Asian Development Bank;
Indonesia signed commercial and economic co-operation agreements with ASEAN and
APEC countries and bilateral co-operation agreements with Malaysia, Singapore, Hong Kong, Thailand, Philippines
Investment agreements were signed between Indonesia and Egypt (19/1/1994), Malaysia
(22/11994), Netherlands (6/4/1994), Turkmenistan (2/6/1994), Slovakia (12/7/1994), Laos (18/10/1994), China (18/11/1994),
Ukraine (11/4/1995), Spain (30/5/1995) and Finland (13/3/1996).
2. TRADE STRUCTURE (1996):
2.1. Main imported
and exported products
Main imported products
|Foodstuffs and beverages
|Raw materials for industrial use
||Textiles and shoes
||Wood and wood products
||Prawns, Tuna and other fisheries
||Copper, charcoal and nickel
2.2 Trading partners:
United States of America
United States of America
3. FOREIGN TRADE REGULATIONS:
Indonesian customs tariff is based on the harmonized commodity description and coding
3.1 Imports regulations:
Imports are classified into four main groups such as group A, group B, group C and
includes rice, flour, iron and steel products, chemicals, organic and pharmaceutical
products, cotton, medicine, fertilizers and insecticides, agricultural and industrial machinery and some raw materials.
includes materials and spare parts for industry
is made up of locally produced goods that require import protection.
is made of luxury products, some consumer goods and some goods produced locally.
Importers must have API, temporary API, limited API. Importers must have an import
license delivered by the Ministry of Industry and trade.
At import level the following documents are required:
Three copies are required bearing the name and address of the shipper, place and
date of the shipment, name and address of the consignee, number and kind of packages, content and weight of each
package, tariff number, marks and numbers.
Prices, quantities, and qualities on the invoices should be the same as those originally
quoted. Invoices covering shipments under letter of credit should show the date and number of the letter of credit
and the import control number. On air cargo shipments, two copies of the invoice are required.
a certificate of origin is required for narcotics and drugs imports. The certificate
of origin must be certified by a recognized chamber of commerce, which usually requires one additional notarized
copy for its files.
A bill of lading usually shows the name of the shipper, name and address of the
consignee, port of destination, description of goods, listing of freight and other charges, numbers of bills of
lading in full set, and date and signature of the carrierís official acknowledging receipt on board of goods for
shipment. The information should correspond with that appearing on the invoices and packages. Freight charges must
be stated separately. The airway bill replaces the bill of lading on air cargo shipments.
3.2 Exports regulations:
In compliance with the decree of the Ministry of Industry and Trade (n° 124/MPP/Kep/5/1996,
goods or commodities that can be exported are classified into four categories and they are as follows: goods subject
to Export regulations (textiles, timber and wooden products, sandalwood products and handicrafts, manioc and rattan
products), goods subject to inspection, goods that are forbidden for Export, goods that are free for Export.
The specific following documents are required for exports:
Sanitary certificate: special sanitation, fumigation, and other
similar certificates are required only for the import of goods generally prohibited or restricted.
Goods originating in places infected with pests and cholera must be disinfected
before their import. The entry and Export of some plants and seedlings require a permit from the Ministry of Agriculture
or from a designated official.
The import license must be accompanies by a plant health certificate from the country
of origin. Plants propagating materials and plant products must be imported through authorized ports and are subject
to inspection in Indonesia at the expense of the importer.
All food products require a health certificate issued by the authorized body in
the country of origin. Some animals require an inspection certificate from the Indonesian Veterinary Service.
Shipping restrictions: All Indonesian government imports and exports
must be carried out on Indonesian vessels.
3.3 Other formalities and documents:
Standard and special requirements:
Processed foods and other foodstuffs produced locally must be registered with the
Ministry of Health, which requires a sample of the product and the product label, an explanatory brochure, a letter
of certification delivered by the authorized body of the country of origin.
Cosmetics regulations are in effect for the registration, packaging, marking, and
advertisement of imported or produced locally cosmetics and hygiene articles.
Alcoholic beverage regulations are in effect for the import, production, distribution
and labeling of these articles.
A special permit from the Director General of medicines and food control of the
Ministry of Health is required for the import of medicines. All imported or locally produced medicines must be
specially registered and licensed.
The importation of hypodermic needles, acetic anhydride and opium pipes are subject
to a special license delivered by the Director General of medicine and food control. Importation of printed material
using Chinese characters or written in Chinese is prohibited.
Import of food products must be labeled in English or Indonesian with the name of
the food and /or brand name; composition, net contents or net weight, name and address of the producer, distributor
or importer and the registration number assigned by the Ministry of Health.
All perishable foodstuffs must be labeled with an expiration date determined by
the Ministry of Health. Expiration dates are also required for dry milk, baby food, bread and bread products and
nutritional supplements. Storage and preparation instructions must be provided when applicable. Certain food must
be labeled with a code of production or lot identification.
Indonesian regulations do not require special markings. As a matter of fact, the
marking requirements of the country of origin are acceptable. Yet the import reference number assigned by the importerís
bank should be part of the marking on the outer container to facilitate identification. In order to ensure the
safety of goods shipped to foreign destination, the supplier may insert the country of origin and other marks.
The possibility of long storage at dock warehouses in the tropical climate, rough
treatment by Dockers and pilferage at ports should be taken into consideration in packing goods intended for this
market. Packing may be made with oil-lined paper to withstand heat and humidity and prevent deterioration.
4. FINANCIAL REGULATIONS OF FOREIGN TRADE OPERATIONS:
4.1 Banking system:
The Bank Indonesia has recently introduced flexibility at the level of the exchange
rate of the Rupiah along with trade incentives. This bank issues currency, supervises and regulates financial institutions
including banks. It also grants loans to commercial banks and refinances the loans of these banks.
At the end of 1995, the banking system of Indonesia included the following banks:
240 commercial banks, 7 of which are state banks, 166 private national foreign exchange
banks, 30 joint banks, 10 foreign branches and 27 local government owned banks (for the 27 provinces).
250 financial institutions operating in the leasing sector, financing, credit cards
and all sorts of credits.
150 insurance companies for the industrial sector.
18 pension funds for industrial growth.
4.2 Exchange system:
Bank Indonesia, the Ministry of Trade and Industry, and the Ministry of Finance,
Foreign Exchange Banks and the customs authorities administer Exchange control. The best currency for exchange
control is the American dollar.
Exchange regulations in Indonesia are liberal. Capital transactions including profits,
dividends and interests are not subject to exchange control. Authorized banks only may carry out foreign trade
related exchange operations.
4 3 Methods and means for international settlement:
Import payment may be made by any method acceptable in international trade.
5. CUSTOMS TAXATION:
Within the framework of the ASEAN-AFTA, a progressive import liberalization is emerging
between Member States. The decrease in customs duties is due to the efforts made by the Indonesian government to
fight inflation and to the WTO agreements.
5.1 Applicable duties and taxes:
Manufactured goods, machinery and finished goods that lessen the need for manpower
are subject to higher rate of duties.
Tariffs on most imports range from 5% to 30% based on the CIF value.
Starting from June 1996, under the deregulation package unweighted tariff rate was
reduced to 12.2 and it has been planned to reduce those of up to 20% to 5% by the year 2000 and all tariffs higher
than 20% to 10% by 2003.
Within the framework of a tariff incentive program for motor vehicle manufacturers,
duties are lowered to on imported vehicle parts in proportion to the amount of local content the assembled product
Good imported to be used in the manufacture of exported products are exempt from
import duties, value-added taxes and sales taxes as are goods imported to be used in projects financed by foreign
Applicable duties and taxes are the following:.
specific duties on foodstuffs, textiles and other consumer goods.
ad valorem duties are paid in Rupiah when the goods are cleared through customs.
The Association of Southeast Asian Nations (ASEAN) was formed to promote economic,
social, cultural and scientific ties as well as trade and monetary policies. Towards this end, its member states
of which Indonesia called for the formation of an ASEAN Free Trade Area within 15 years which began with a round
of tariff reductions under the common effective preferential tariff scheme on January 1st, 1994. Under
the CEPT plan, tariffs on all goods that are made up of at least 40 % of ASEAN content will drop to 5% or less
by the year 2008. The products concerned are as follows: vegetable oils, chemicals, fertilizers, rubber products,
pulp and paper, wooden and rattan furniture, gems and jewelry products, cement, pharmaceuticals, plastics, leather
goods, textiles, ceramics and glass products, copper cathodes and electronics.
Tariffs above 20% will be reduced between 0 to 5% within 10 years and tariffs below
20% will be reduced between 5% or less within 7 years.
|Customs surcharges and indirect taxes:
Import surcharges were eliminated in 1996 and most of imported products are subject
to a 10 percent value-added tax. Luxury goods are subject to a luxury tax ranging from 20% to 35%.
Alcoholic beverages and many luxury goods are subject to excise duties. Any violation
of Indonesian trade regulations may lead to the payment of fines or other penalties.
Countervailing and anti-dumping duties are provided for under a customs law enacted
in April 1997.
5.2 Special provisions:
Importers must be registered and have a valid importerís license and a tax identification
Importers of foods and drugs must be registered with the Ministry of Health and
those of oil and gas products must register themselves with the appropriate department.
Video tapes and laser discs must be to approved by the censorship board. Imports
of printed material in Bahasa Indonesia, Chinese languages, or other Indonesian dialects are prohibited.
Imports of any origin of second-hand goods and of some specific products are prohibited.
Second-hand engines and parts and other capital goods may be imported by industrial firms for their own use or
in order to conform with the guidelines relating to the industrial field set by the Ministry of Trade and Industry.
6. FOREIGN TRADE LOGISTIC:
6.1 International transports:
There are more than 300 ports in Indonesia, 133 of which are devoted to foreign
trade activities. The main ports are: Tanjunk, Priok near Jakarta, Tanung Perak near Surabaya, Begawen near Mena
and Ujunpandung in the south of Sulawesi. Daily sailings are available between Belawan and Penang int Malaysia.
Indonesiaís national airline is Garuda (GA). The international airport Soekarno-Hatta
is 20 km northwest of the city (travel time-45 minutes). A bus goes every 30 minutes to the city from 6.30 a.m.
to 900 p.m. Other buses link Jakarta to Halim Perdanakusuma airport (HLP) 13 km south east of the city. There are
also Polonia Airport in Medan, Ngurah Rai airport 13 Km south of Denspar, Juanda airport near Surabaya, Ratunkangi
airport in Manado and Hasanuddin airport near Ujung Pandang.
There are other airports for internal services, these are Kemayoran, Bouraq Indonesia,
Merpati Nusantara and Sempati.
Trains connect every day Belawan and Penang through the National Railroad of Indonesia.
The railroad is 6,362 km long and is situated between Sumatra, Madura and Java.
There are three railroads:
North railroad: Sumatra-Belawan-Medam and Tanjoung Balai/Rantu Prapet (2 to 3 trains
South railroad: Palembang-Panjang (3trains/day).
Railroad leading to Java.
Birma express links Jakarta to Surabaya.
There are roads between Kalimantan and Sarawak and Sabah Malaysian States in Borneo
Island and Irian Jaya and Papua New Guinea. The road network extends over more than 245,000 km of which 200 km
are on the motorway. There are good road links between Java, Bali and Sumatra.
With a view to increasing foreign investments, West Irian has been provided with
a highly developed communication infrastructure between Jayapura and foreign countries.
P.T. Telekom (Domestic and telegraph services) provides telecommunications services,
P.T. Indosat (International telecommunications) and P.T. Pos Indonesia (Postal services).
Thanks to Indonesiaís satellite programme (Palapa) telecommunications in Indonesia
are of good quality. There are telephone links with 27 provinces and other centers. There are 159 telephone lines
per 1000 inhabitants. Apart the usual telephone system, cellular phone (GMS, AMPS and NMT), are more and more widely
used, in 1996 subscribers were more than 300,000 and pager subscribers 400, 000. Postal services will be installed
in 40% of villages.
6.3 Distribution system:
In compliance with regulations established by the Indonesian Government, Indonesian
companies only may carry out the import, Export, wholesale and retail distribution of imported or locally produced
goods. Foreign investors are not allowed to undertake the distribution of products in the local market.
Foreign companies may open a local representative office with the authorization
of the Indonesian Ministry of trade and Industry. But only one representative office per firm is allowed.
The largest markets are located in Java, Jakarta, Sumatra, Sulawesi, and Kalimantan.
7. USEFUL ADDRESSES:
ORGANIZATIONS AND PUBLIC ESTABLISHMENTS
|Ministry of Trade. Department of Trade
||7th Floor Centre for International Trade Relations 5, JI. M. I. Ridwan Rais
||Tel: (6221) 3841961
Fax: (6221) 3522749
|National Agency for Export Development
||8, JI. Gajah Mada P.O.Box 443 /JKT Jakarta 10130
||Tel: (6221) 3841072
Fax: (6221) 3848380
|Indonesia Exporters Federation Sudirman Tower
||8th Floor , 60, Jalan Senderal Sudirman Jakarta 12190
Tel: (6221) 5226522
Telex: 60966 ia
Fax: (6221) 5226528
|Indonesia chamber of commerce and industry
||Chandra building , Jalan M.H. Thamrin 20 Jakarta 10350.
Tel: (6221) 324000
Fax: (6221) 3150241
|Director General of Customs and Excise. Department of Finance
||JI Jend. A. Yani P.O.Box. 108 Jakarta 13230
||Tel: (6221) 4890308
Fax: (6221) 4890871
|Bank of Indonesia
||JI. M. H. Thamrin 2 Jakarta 10010.
||Tel : (6221) 2311180
Fax : (6221) 2311550