Indonesia Customs and Trade Facilitations

You may have found term of ‘trade facilitation’ and  ‘customs facilitation’ sometime used interchangeably. This could raise a question of whether they are actually the same or referring to different areas.

When you look at the international trade process there are some areas that you have to deal with customs authority, such as on import and export clearance process in the border or on extended areas beyond the border (i.e. your warehouse or factory) where customs still have controls over your imported or exported goods. From there you can get an understanding that trade process is spanning over beyond the customs process then we can say that customs facilitation is one of the form of trade facilitation.

The goals of customs facilitation are to speed up flows of goods cross border, attract investment, increase exports, reduce logistics cost and finally boost the national economic growth. In Indonesia, there are 2 major types of customs facilitation, Procedural Eases and Fiscal Incentives

Procedural Ease

This facilitation provides procedural simplification to accelerate flows of goods cross border for importers and exporters. Some of customs facilitation within this category are:

• Authorized Economic Operator (AEO)
  As defined by the World Customs Organization (WCO), AEO is a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards. The parties can be manufacturers, importers, exporters, brokers, carriers, consolidators etc. Business (party) recognized as AEO by national customs authority will receive special treatment and priority services on their customs process.

• Customs Prime Partner (MITA)
  Importer and exporter with MITA facilitation will also get special treatment and priority service on customs process such as export and import clearance, minimum check on document and physical, truck loosing and stripping (part off container) with no prior approval and etc. For financial related, MITA can also use a corporate guarantee and periodic payment for customs bills.

• Rush Handling
  This facilitation allows immediate clearance of imported goods with certain characteristics, such as organs or human body, living animal or plants, time sensitive newspaper and radioactive to release out from the port storage.

• Vooruitslag
  Some goods imported for special purpose may get exemption or relief of duties and allowed to be released out from the port storage before submitting the import declaration. Goods imported for natural disaster aid is one of example use of this facilitation.

• Pre-Notification
  Import declaration procedure normally requires inward manifest number information before submitting it electronically. But in some circumtances, the manifest information is not yet available from carrier and waiting for it could delay the clearance process. In this situattion, importer is allowed to proceed and submit the import declaration and update the manifest number information in later time.

• Returnable Package
  Some types of goods are imported using certain package that can be used repeatedly for shipment. The package can be re-exported to use on subsequent import shipments and will not be regarded as part of the imported goods. So, duties and taxes on this packaging used on the import shipments is exempted.

Fiscal Incentives

This customs facilitation is related to exemption, relief, postponement or uncollected of duties and taxes on imported goods under certain conditions, such as:

• Uncollected import duties for transshipped and transited goods.
• Exemption of import duties on temporary admission, using either normal import declaration or ATA Carnet
• Preferential tariff scheme under the Free Trade Agreement (FTA).
• Exemption of import duties on certain goods, such as for diplomatic, international organization and other various noncommercial goods.
• Conditional exemption or relief of duties on imported goods for certain industry and trade sector.
• Refund of import duties for excessive payment or on previously imported raw materials contained in exported finished goods.
• Postponement of import duties (and related taxes) under Bonded Storage Facilitation, such as Bonded Zone (factory), Bonded Warehouse and Bonded Logistics Center.

Each of those facilitation has their specific regulations, outlining the provisions and requirements. We will write other articles to elaborate each of them individually.

I hope this short article could give you some knowledge and general understanding of Indonesia customs and trade facilitation. If you need more information or advices on customs or international trade compliance, especially in relation to Indonesia, please send your query through this E-consulting link or simply email us at [email protected]

You may also request us to arrange a training on a particular topic of customs and international trade through this Request link or email us at [email protected]