Permendag 27/2012 and Permendag 59/2012 : New Rules, New Start?

With the intention to protect domestic manufacturing industry, as well as to create stricter control over importers, the Minister of Trade regulated new regime of Importer Identification Number under its Regulation Number 27/M-DAG/PER/5/2012 (“Permendag 27/2012”). The Regulation that was amended in the same year when it was issued limits importer in importing goods, either for trading purpose or to be further manufactured.

Similar with its predecessor, the Permendag 27/2012 only allows importation to be performed by holders of Importer Identification Number (also known as ‘API’ or Angka Pengenal Importir) and also classify API into two categories : 1) API for Trader / API-Trader (known as API-Umum) and 2) API for Producer / API-Producer (known as API-Produsen). The unique limitation stipulated under this Permendag 27/2012 is that the holder of API-Trader can only import various goods which are classified in one Section of the ‘Harmonized Commodity Description and Coding System’ (HS Code). By saying ‘one Section’ of the HS Code, does not mean that the Permendag 27/2012 only allowed Importer to import one particular good, instead Permendag 29/2012 allowed holders of API-Trader to import any type of product, as long as those product classified in ‘one Section’ of HS Code, e.g. Section XV (Metals and Metal Products) of the HS Code consists Iron & Steels products, Copper & its Articles etc.

Dissimilar treatment was regulated in the Permendag 27/2012 for holders of API-Producer. The AP-Producer which previously can only be hold by manufacturer who wishes to import capital goods, raw materials and auxiliary materials to be used for them self for further production process, now can be used in importing products to be sold directly to the customer without further being manufactured. The products that the API-Producer holder may import to be sold directly are products to be used for market test (in order to identify market-acceptance to such product prior to production) and complementary products.

On the same year where the Permendag 27/2012 was issued, the Ministry of Trade issued its amendment named Permendag 59/M-DAG/PER/9/2012 (“Permendag 59/2012”) which mainly regulating on the exception of the Permendag 27/2012. While Permendag 27/2012 limits the import of goods of the same Section in HS Code, the Permendag 59/2012 allows importation of goods classified in more than one Section in HS Code by state-owned enterprise and API-Trader holder having special relationship with overseas company supplying the imported goods.

The Permendag 59/2012 defines ‘special relationship’ as a relationship that “one shall have control over or having significant influence to the other in accordance with the applicable standard accountancy”. The ‘special relationship’ meant by Permendag 59/2012 is not only concerning shareholding issues, but also the including the distributorship and supplier agreement between the parties. Based on this, importer who wishes to obtain API-Trader and be exempted from the limitation of Permendag 27/2012, is required to declare (in their API-Trader Application) their special relationship with the overseas company supplying the imported goods and is required to prove such special relationship by providing 1) Statement Letter declaring special relationship and 2) Statement from Indonesian Diplomatic Representative in the country where the supplying company is domiciled at.

Thousands of Importers struggled for its existence by complying these new regulations. However, as per March 18th, 2013, only 19,246 or equivalent to 71.65 % of the API holders have successfully updated their API. Should 28.35% of the rest importer fails in updating their API by April 2013, there is no sanction will be imposed. However, failure in updating API in compliance with the new API Regulation shall prohibit them in importing goods from the overseas. Knowing this severe consequence, let’s hope there will be no other changes over API regulation will be made in the near future, requiring investors to make significant change to its licenses. Fingers crossed.


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