COVID-19: Indonesia Issues Regulations for Faster and Easier Import Licensing

Many businesses in Indonesia have been forced to temporarily cease their activities because of COVID-19. Some factories are still operating to ensure the continuation of production, while implementing certain restrictions to try and prevent the spread of COVID-19, but production volume is down and price inflation is a possibility.

In response, Indonesia has taken measures to ensure the stock availability of basic commodities and the continuity of manufacturing for industries. These measures include simplifying the import licensing process and maintaining the accessibility of essential goods and principal commodities.

It has done this through the issuance of Presidential Regulation Number 58 of 2020 regarding the Arrangement and Simplification of Import Licensing ("PR 58/2020"), on April 8, 2020, and Presidential Regulation Number 59 of 2020 regarding the Amendment of Presidential Regulation Number 71 of 2015 on the Stipulation and Storage of Essential Goods and Basic Commodities ("PR 59/2020").

PR 58/2020 simplifies import licensing for certain goods, depending on availability, production, price and national interest. These goods are (i) essential goods and food commodities; (ii) foodstuffs for government food reserves; (iii) raw materials or supporting materials; (iv) goods and raw materials for disaster prevention and mitigation; and/or (v) other goods as stipulated by the government (together, "Prioritized Goods").

Separately, PR 59/2020 stipulates the types of goods deemed essential goods and/or basic commodities.

Types of Import Licenses and its Pre-requisite Requirements

PR 58/2020 acknowledges four types of import licenses. These can be in the form of (i) approval, (ii) registration, (iii) stipulation, and/or (iv) acknowledgement (together, "Import Licenses").

To obtain the Import Licenses, an importer must provide certain documents issued by the minister with oversight of the sector relevant to the imported goods. Those documents can be in the form of a (i) permit, (ii) letter of approval, (iii) statement letter, (iv) recommendation, (v) technical consideration, (vi) stipulation of the sufficiency of demand, production of basic commodities or government food reserves, and/or (vii) any other import requirements depending on the regulations in the relevant sector (together, "Import Prerequisite Documents").

The Import Licenses are granted by the Minister of Trade ("MOT") once it receives the necessary Import Prerequisite Documents, as stipulated by the relevant regulations in each sector.

New Mechanism to Simplify the Granting of Import Licenses

PR 58/2020 introduces a new mechanism to issue the Import Prerequisite Documents without having to fulfill the technical requirements stipulated in the relevant regulations in each sector. This new mechanism is a coordination meeting organized by the Coordinating Ministry for Economic Affairs and attended by the minister/head of the related sector/head of the non-ministerial government department, or their authorized representatives ("Coordination Meeting"). This meeting can be held by videoconference or teleconference.

The Coordination Meeting is valid if attended by at least one minister/head of related sector/head of non-ministerial government department. The decision of the Coordination Meeting will be rendered in a minutes of the Coordination Meeting.

The Coordination Meeting can decide to suspend or waive technical requirements for the Import Prerequisite Documents by considering the urgent need for the goods or the current unreasonably high price of the goods in the domestic market, the lack of domestic or international supplies, and/or obstacles to import traffic and/or disruptions to distribution.

Other Items on the Coordination Meeting Agenda 

PR 58/2020 and PR 59/2020 stipulate that the Coordination Meeting may also decide on the following matters:

1. Assignment of state-owned enterprises to import Prioritized Goods.
2. Determination of the types and amounts of Prioritized Goods that can receive certain taxation, customs and excise facilities.
3. Determination of the types of essential goods and/or basic commodities.
4. Creation of policy to control access to essential goods and/or basic commodities, including the opening hours for hypermarkets and supermarkets.

Implementation of the Coordination Meeting 

It is still unclear under PR 58/2020 what the formal outcome of the Coordination Meeting might look like. Currently, several MOT regulations still require the fulfilment of  Import Prerequisite Documents to obtain the Import Licenses for certain products, such as sugar and animal products. It is unclear whether these requirements can be waived by the result of the Coordination Meeting.

As of this writing, we are not aware of any Coordination Meeting decisions granting Import Prerequisite Documents using the mechanism under PR 58/2020. However, certain MOT regulations were issued prior to the enactment of this regulation to simplify the licensing process for certain goods including medical devices to respond to COVID-19.

PR 58/2020 also stipulates that upon the enactment of this regulation, any regulations on the granting of Import Prerequisite Documents remain valid as long as they are not contrary to or are not specifically regulated under PR 58/2020.

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