Overview

With the issuance of Minister of Trade Regulation 8 of 2024 (MoT Reg 8/2024), which took effect on 17 May 2024, the Ministry of Trade amended and replaced the Indonesian importation regulations amidst public outcry concerning various controversial provisions in Minister of Trade Regulation 36 of 2023 on Import Policies and Provisions (MoT Reg 36/2023) that had only recently come into force on 6 March 2024.

MoT Reg 8/2024 is now the third amendment/replacement of MoT Reg 36/2023 in less than two months, having already been amended/replaced by Minister of Trade Regulation 3 of 2024 (MoT Reg 3/2024) and Minister of Trade Regulation 7 of 2024 (MoT Reg 7/2024).

The main impact of MoT Reg 8/2024 is to make it easier for certain goods and commodities to be imported into Indonesia with the aim of boosting various industries (including electronics manufacturing, textiles and food) and improving the Indonesian economy. Another impact of MoT Reg 8/2024 is to restore the pre-MoT Reg 36/2023 position on the importation of certain goods into Indonesia by migrant workers which was and now remains under the jurisdiction of the Ministry of Finance (specifically the Directorate General of Customs) rather than the Ministry of Trade.

New provisions in MoT Reg 36/2023 and the subsequent amendments.

According to the regulations, nearly all imported products are classified under the “Harmonized System Codes” (HS Codes), which are currently classified under the Indonesian Customs Tariff Book 2022 (Buku Tariff Kepabeanan Indonesia). The requirements and restrictions for various HS Codes were set out in the extensive attachments to MoT Reg 36/2023. MoT Reg 8/2024 has mostly eliminated the requirements and restrictions imposed on the importation of certain goods that had been difficult to satisfy.

MoT Reg 8/2024 further amends the permit requirements and the maximum quantity/amount of goods that may be imported into Indonesia for various industries. Importers must therefore ensure they comply with the permit requirements and maximum quantities/amounts to ensure they are not charged additional customs duties or penalties.

• Release of imported goods

At the time when MoT Reg 36/2023 came into force in March 2024, many imported goods were being held up in the Indonesian ports due to the lengthy and complicated importation requirements (as set out under MoT Reg 36/2023). The resulting delays in the processing of imported goods caused massive container buildup at the ports. ¹ One of the purposes of the new amendments to MoT Reg 36/2023 (including MoT Reg 8/2024) was to address the backlog of imported goods by allowing importers to satisfy simpler importation requirements.

However, the simplified importation process under MoT Reg 8/2023 is not applicable for certain goods, including steel, alloy steels and their derivative products, as well as textiles and textile products. For these goods, a Verification and a Technical Search from the Ministry of Trade are required. ²

• Expanded opportunities for importing non-hazardous used goods

MoT Reg 36/2023 expanded the scope of the usage of used goods to also include the importation of leftover scraps and waste that are not categorised as hazardous or toxic waste. Under the earlier regulations, the importation of used goods was restricted to used capital goods, but only if the particular capital goods could not be obtained domestically and were needed for the purposes of increasing Indonesia’s exports, competitiveness, or reconstruction after natural disasters . ³ The ability of businesses to import scraps and waste may be a good opportunity for some businesses to be able to cut down on costs.

• The simplified importation requirements are intended to benefit key industries

The simplified importation requirements under MoT Reg 8/2024 are designed to facilitate the importation of certain goods in industries perceived by the Indonesian government to be important to the Indonesian economy. Examples include the importation of manufactured products as complementary goods (for market testing and after-sales support), prototype products, horticultural products, and used aircraft spare parts.

Changes in the controversial provisions

• Relaxed importation regulations for Indonesian migrant workers

MoT Reg 8/2024 has removed restrictions on goods that may be brought into Indonesia by migrant workers (except for dangerous and prohibited goods). MoT Reg 36/2023 had imposed restrictions on the quantity of specific goods that migrant workers could import, ⁴ including clothing, accessories, electronics, household items, food and beverages. This restriction led to many items being held at the Indonesian ports.

Following criticism by the Head of the Protection of Migrant Workers Agency, and migrant workers themselves, the Ministry of Trade decided to revoke Appendix III of MoT Reg 36/2023 which sets out the extensive restrictions on goods imported by migrant workers. This revocation indicates that Ministry of Trade will no longer have authority over the importation of goods by migrant workers, and the authority has been restored to the Ministry of Finance.

• Lifted restrictions on passenger imports under MoT Reg 7/2024 and MoT Reg 8/2024

Other controversial provisions in MoT Reg 36/2023 restricted the quantity of certain goods not intended for business purposes imported into Indonesia by people arriving from overseas. Under MoT 7/2024 and MoT 8/2024, most of these restrictions have been lifted. Arrivals from overseas can now bring most goods into Indonesia without quantity limitations, provided they pay the required taxes or customs duties. An exception applies to specific electronic items, such as cellphones and tablets brought from outside customs into free trade and free port areas, where people arriving from overseas are limited to a maximum of two items per person, per arrival, per year. Despite the relaxation of most restrictions, some goods still require import permits due to security concerns, including nitrocellulose, goods with cooling systems and used lithium batteries.

Key Takeaways

The flurry of significant legislative changes to Indonesia’s importation regulations, policies and procedures following the coming into force of the controversial MoT Reg 36/2023 in March 2024 appears to have been important to help develop Indonesian businesses, either directly or indirectly (including for research and development). One of the main goals of the latest changes is to significantly reduce the time required for many goods to satisfy the statutory importation procedures. In addition, certain procedural changes have also been necessary to appease certain sectors of society, particularly the families of the Indonesian migrant workers that depend on the importation of various goods.