The Republic of Indonesia (Indonesian: Republik Indonesia), or Indonesia for short. It is a Southeast Asian country with Jakarta as its capital, bordering Papua New Guinea, East Timor, and Malaysia. As a developing country, Indonesia is an important country in the Belt and Road route. This article is about how Indonesian customers sourcing wire ropes from Chinese factories.
#1 – RCEP & Existing Situation of Indonesian Steel
The RECP is a “10+5” agreement between ten ASEAN countries (Indonesia, Malaysia, Philippines, Thailand, Singapore, Brunei, Cambodia, Laos, Myanmar, and Vietnam) and five countries: China, Japan, South Korea, Australia, and New Zealand. It covers more than ten areas such as SMEs, investment, ETCC, and trade in goods and services, and focuses on reducing or eliminating tariffs and lowering market access barriers for trade in goods and services.
– According to the distinction of color shades, you can learn the origin of steel and the proportion of imports:
In Indonesia, 90% of steel imports come from these ten countries and regions in the chart below, of which China’s steel has a 27% share.
Imports of plates, rebar, wire, profiles, bars, pipes, semi-steel, stainless steel, etc., and the number of imports ($):
The shortcomings of Indonesia’s own steel manufacturing industry have forced the market to rely on imports, but the government has put a lock on the door of imports – the Quota Permit (in Indonesian: Persetujuan Impor Umum Besi & Baja.)
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#2 – Indonesia Imports Wire Rope System
The Indonesian Ministry of Trade（Angka Pengenal Impor） is in charge of importing products into the country and is responsible for the implementation of regulations related to import licensing requirements.
In addition, importers are required to fill out import declaration forms for all imported products and declare them to Customs. The importer must also apply for a customs identification mark (NIK) from the General Customs Office to comply with the customs regulations. Also, import permits (API) must be obtained from the Ministry of Trade or the Investment Coordinating Board BKPM in order to import products. The Indonesian government uses both Quota and License in the implementation of import control:
Quota: Alcoholic beverages and direct raw materials containing alcohol. Its import quota is only issued to approved domestic enterprises.
License: industrial salt, ethylene, propylene, explosives, motor vehicles, waste scrap, and dangerous goods obtain permission to import the above products can only be used by enterprises for their own production.
Among them, CFCs, AOC, dangerous goods, alcoholic beverages and direct raw materials containing alcohol, industrial salt, ethylene and propylene, explosives and their direct raw materials, waste scrap, old clothes, and other nine categories of imported products are mainly applicable to automatic license management, clove, textiles, steel, synthetic lubricants sugar, agricultural hand tools and other six categories of products are mainly applicable to non-automatic license management.
2.1 Licensing System
Indonesia’s import permit authority is the Indonesian Ministry of Trade (Angka Pengenal Impor), which is divided into API-U for trade-type enterprises and API-P for factory-type enterprises to import raw materials and production equipment, each enterprise can only have one import permit API.
Importers need to obtain an import permit (API) to import wire rope to Indonesia.
- API-U (General Import Permit)
This is granted to general trading companies who are selling/distributing full products in Indonesia at a later date. This Indonesian license can be used for importing finished goods or trading goods with third parties. API U application takes about 1 month.
- API-P (Producer Import Permit)
Granted to manufacturing companies that import raw materials or manufacturing support goods used in the manufacturing process in Indonesia (This license does not allow import for sales/distribution, but only for the production/manufacturing use process.)
- Limited Entry License, also known as API Terbatas (API-T).
The license can be used as a limited importer identification number and is obtained through the Indonesia Investment Coordinating Board (BKPM). Goods imported under the API-T are subject to a 2.5% withholding tax, compared to the normal rate of 7.5%.
The Indonesian authorities stipulate that each company is allowed to apply for only one type of import permit, so registering as a trading company in Indonesia and obtaining a business license to trade is entitled to use the API-U (General Import License) to import finished goods/products for re-sale/distribution in Indonesia.
However, if you want to join manufacturing activities, you must amend all principles/business licenses to manufacturing ones. In addition, you will need to apply for an Industrial Permit (IUI) and an Industrial Registration Permit (TDP), which is a process that effectively converts a trading company into a manufacturing company.
According to the regulations issued by the Indonesian Ministry of Trade, the Indonesian government has stipulated since 2011 that no one company is allowed to have both API-U and API-P licenses together. You cannot manufacture and trade in the same company, so you need to set up 2 companies to be able to manufacture and trade for export at the same time.
2.2 Quota System
a) What is the steel quota system？
Owning an import permit does not mean you are free to import goods, but also to check if your goods are on the Indonesian Ministry of Trade’s list of imported quota products（Barang larangan dan/atau pembatasan (LARTAS)）. If you want to check whether the relevant product is under quota, you can use the appropriate HS code on the website of the Indonesian Ministry of Trade https://inatrade.kemendag.go.id
Wire rope import quotas are determined by the Ministry of Trade (MoT) and are based on the supply of domestic wire rope and the demand for imported wire rope in the domestic market. Importers must also meet certain standards and quality requirements set by the Ministry of Trade in order to be eligible for import quotas. Import quotas for wire rope are limited and may change without prior notice.
The year-on-year increase in steel consumption in Indonesia:
Indonesia Steel Industry “Technology Roadmap”:
- PT. A and PT.B in Indonesia are applying for steel quotas from the Ministry of Trade at the same time. While PT. A is an import self-use company with API-P qualification, and PT.B is a trading company with API-U qualification. In this case, the Ministry of Trade will give priority to approving A’s quota application. At the same time, if company A operates in an industry supported by the Indonesian government, such as automotive/industrial/electronic/industrial ship / or belongs to a preferential priority project engineering, etc., then the high timeliness of quota approval, the large number of quotas and the variety of steel categories will be fully satisfied. If PT.A’s business scope does not belong to Indonesian government-supported projects/industries, but only to general contractors, subcontractors, or general manufacturers, then the quota approval period is about 3-6 months, and the quota quantity is small.
- PT.B is a trading company and the steel is imported and can be sold.
- The documents that need to be submitted to the Ministry of Trade to apply for the steel quota are NPWP, TDP, Izin Prinsip Penanman Modal, and NIB.
- Shipment information to be submitted: steel name, steel type specification, quantity/weight, and the correct HS code.
For example:
b) How to get a wire rope quota?
In Indonesia, the steel manufacturing industry is its shortcomings, so the market has to rely on imports of steel from other countries to complete the construction of factories, infrastructure, roads and airports, and other municipal projects. However, the government also needs to protect its own goods at the same time and implement the quota permit system for foreign steel. Full name in Indonesian: Persetujuan Impor Umum Besi & Baja.
STEP 1 – Recommendation letter application from the Ministry of Industry
STEP 2 – Online submission of a recommendation letter to the Ministry of Trade
STEP 3 – After getting the quota official document 《Persetujuan Impor Umum Besi & Baja》, the importer needs to find a professional freight forwarder to assist in putting together the steel list, into a draft, packing list, and invoice. Based on the contents of the draft, packing list, invoice, and finally the Indonesian inspection unit will send the verification Oder to the exporting country by E-mail. It contains details of the content: exporter, importer, supplier, port of shipment, goods name/weight/specifications/volume/customs code/value of goods CIF.CFR / FCL LCL / break-bulk and so on.
STEP 4 – CCIC contact the exporter/supplier by the content of VO, arranges the supervision and inspection, and seals the box after completion.
STEP 5 – Documents: Bill of Loading, Insurance, Packing List & Commercial Invoice, Form E originals need to be submitted to customs, freight forwarders ppjk to complete the tax drafting, operation of customs clearing, shipping company for a single, port terminal payment, etc.
Note: After paying the tax and the customer can be released on the same day (green light SPPB), about two days (yellow light SPJM), or about five days (red light SPJK).
STEP 6 – Once the goods are released, the quota of this B/L will be exhausted.
STEP 7 – LS fee is collected by KSO Indonesia.
#3 – Other Regulations of Indonesia Sourcing Wire Ropes
3.1 Tariff
Indonesia’s tariffs on imported goods are divided into four categories, while Category A goods are essential imports for Indonesia, including rice, flour, certain steel products, certain chemical fiber products, cotton, medicinal materials, agricultural machinery & equipment. The import tariff rate for most of these commodities is between 5 and 40%. Importers can request their Chinese suppliers to apply for Form E, which can reduce the tariff by presenting it to Indonesian customers during customs clearing.
3.2 Commercial Invoice
The invoice must state the name and address of the exporter and consignee, the location and time of dispatch, the mark, serial number, quantity and type of shipping pieces, the weight and content of each piece of goods, and be accompanied by a detailed trade name and customs tariff code number.
3.3 Certificate of Origin
There is no uniform requirement, only that the Indonesian official agency reserves the right to request a certificate of origin in individual cases. The Certificate of Origin requires 3 originals and 2 duplicates.
3.4 Other Documents
Inspection Report (LKP) requires all goods to be inspected for quality, quantity, and price before shipment.
3.5 Handling of Demurrage by Customs
Goods arriving in Indonesia must be dutiable within 30 days. At the port of Jakarta, goods that exceed the deadline are sent to a simple depot of the relevant supervisory agency, which is part of the National Port Strip Company. The goods can be stored there for 13 months, and if they are overdue, they are auctioned off in the warehouse of the port authority, and the proceeds are used to pay the storage fees. The balance after deducting the auction fees is kept for 3 years and after 3 years, if it remains unclaimed, it is paid to the Indonesian State Treasury, and the goods are not allowed to be returned until the customs duty is paid.
3.6 Logistics & Shipping
There are normally 3 logistics methods for Chinese goods to Indonesia:
- Sea freight double clearance: This is the more common logistics method at present, with a lead time of about 21 – 60 days.
- Sea freight formal customs clearance: Chinese enterprises declare customs clearance independently through the import permit issued by the Indonesian government, the lead time is about 14 – 30 days.
- Double Clearance by Air: the lead time is about 8 – 15 days.
Final Conclusions
Overall, these guidelines provide a great overview of the process of sourcing wire ropes from Chinese factories for Indonesian customers. It is important to remember that the process can be complex and time-consuming, so it is important to research potential suppliers thoroughly and understand the legal and regulatory requirements in both countries. Additionally, it is important to consider the quality of the product, the cost, and the delivery time. By taking all of these factors into consideration and conducting thorough due diligence, Indonesian customers can ensure that they are sourcing wire ropes from the right Chinese suppliers.
As a China Certified Manufacturer, Sichwirerope mainly produces Wire Ropes, Wire rope Slings & Lifting Chain Slings & Rigging Hardware. We are always ready to welcome Indonesian customers to consult and purchase. Welcome, to consult & purchase:
Email: info@sichwirerope.com
Call / WhatsApp: +86 13140901139⠀
