Client Newsflash

Summary of New Regulation on Importer’s Licenses

This Newsflash sets out the summary of the Minister of Trade (the “MOT”) Regulation No. 27/M-DAG/PER/5/2012 regarding Provisions on Importers’ Identification Numbers (API) dated May 1, 2012 (“Regulation 27”). Regulation 27 replaces (i) the Minister of Industry and Trade (i.e., the predecessor of the MOT) Decree No. 134/MPP/Kep/6/1996 regarding Import and Domestic Trade Activities of Complementary Goods by Foreign Companies in the Manufacturing Sector and (ii) the MOT Regulation No. 45/M DAG/PER/9/2009 regarding Importers’ Identification Numbers (API) as amended lastly by the MOT Regulation No. 20/MDAG/PER/7/2011 (collectively, “Regulation 45”).

The summary of the pertinent provisions of Regulation 27 is set out below.

1. Imports by API Holders Only. Regulation 27 expressly provides that any import of  goods may be carried out only by an importer that possesses an importer’s identification number (or in Indonesian known as an Angka Pengenal Importir or an API in short).

A company may only have one API (i.e., API-U or API-P as discussed below). An API  is valid for so long as the importer carries out its business subject to re-registrations of the API every five years.

Import of certain goods can be conducted without securing an API (but requires an  import approval from the MOT—which procedures unfortunately are not set forth in Regulation 27), including temporary imported goods; promotional goods; goods for research and development of science, shipment goods, goods as grants, gifts and donation for the purpose of religious service, charity, social, culture or natural disaster relief,  goods which are medicine and medical equipment using government budgets, samples of  goods. Further, imports of the following goods require neither API nor the import approval: goods belonging to foreign missions and their officials; goods belonging to international organizations and their officials; and goods in connection with movement (of a person).

2. Types of APIs. Regulation 27 divides APIs into two types, namely (i) General APIs (API Umum – “API-U”) and (ii) Manufacturer APIs (API Produsen – “API-P”). Each type is discussed below.

3. API-U. An API-U is given to a company that imports certain goods for trading purpose only. A company that holds an API-U is only allowed to import one category of         goods stipulated in the Goods Classification System set forth in Appendix I of Regulation 27.  One category of goods will include a range of products as provided in the Harmonized Systems. The categories of goods are set out in the appendix of this Newsflash.

4. API-P. In contrast, an API-P allows a company only to import capital goods, raw M-00147 2

materials, supplementary goods and/or goods used to support its production process. Generally, the imported goods must not be traded or transferred to other parties except as
discussed below.

In certain limited circumstances and subject to certain requirements (discussed below), a holder of an API-P may be permitted to import certain industrial goods provided such goods are required for the development of its business or investments. Such imported  industrial goods may be traded and/or transferred to any other party subject to the limitations discussed below.

5. Limitations for API-P Holders in Imports for Trade Purposes. The industrial goods  imported by an API-P holder discussed in point 3 above must not be used in its production process. Further, these imported industrial goods may only be used (i) for the purpose of market tests, and/or (ii) as complementary goods.

Market tests are defined by Regulation to 27 to mean activities of selling certain imported industrial goods (which the importer is unable to manufacture) with the purpose of assessing the market reaction and to be used as its business development. A complementary goods is defined as an imported goods that originates from and is manufactured by a foreign company that has a special relationship with the importer. A special relationship is defined to mean the ability of a party to control the other party or the presence of a significant impact of a party over the other party in taking financial and operational decisions according to the prevailing accounting standards.

Regulation 27 requires the market tests to meet the following criteria (i) such API-P holder is unable to manufacture the industrial goods and (ii) the industrial goods are
consistent with the manufacturing license (or other business license) of the API-P holder. Furthermore, the time period of the market tests will be limited by the relevant
governmental authority under applicable laws and regulations. Unfortunately, other thanas set out above, Regulation 27 offers no further guidance on what ‘industrial goods’

Consistent with the above discussion, Regulation 27 requires that any import of complementary goods by an API-P holder meet the following requirements: (i) the API-P
holder has not manufactured the imported goods, (ii) the imported goods is consistent with the business license of the API-P holder, and (iii) the imported good is manufactured
by a foreign company that has a special relationship with the API-P holder.

6. Manufacturer Importers. An API-P holder must be determined as a manufacturer importer issued by the MOT or its designee before the API-P holder may importindustrial goods for purposes of trading. In order to get this determination, the API-P holder will require a recommendation from the relevant ministry.

7. Post Audit of Import by MOT. With respect to manufacturer importers, the MOT may conduct certain post audits (which procedures will be set forth in due course) to determine, among others, the veracity of any import of industrial goods for trade by an  API-P holder who is determined as a manufacturer importer.

8. Compliance Adjustment under Regulation 27. Any API-U or API-P issued before the enactment of Regulation 27 must be conformed to the provisions of Regulation 27 before December 31, 2012.

The foregoing material is the property of AKSET Law and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor should it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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