In the delivery of
goods and services, global sourcing can grant businesses access to
low-cost raw materials, tax breaks and low trade tariffs.
Beyond cost, the
advantages for SMEs of global sourcing may include:
Learning how to do business in a potential
Tapping into skills or resources unavailable
Developing alternate supplier/vendor sources
to stimulate competition and increasing total supply capacity.
Conversely, some key
disadvantages of global sourcing can include:
Hidden costs associated with different
cultures and time zones;
Exposure to financial and political risks in
countries with emerging economies;
Added risk of loss of intellectual property;
Increased monitoring costs relative to
Long lead times;
Risk supply route disruption;
Difficulty of monitoring product quality.
has become a preferred market for the sourcing of many products,
starting with its own natural resources and raw materials supply. In
addition, Indonesia is becoming an industrial giant and many
international businesses have selected it as either a privileged
sourcing country or as a location to establish manufacturing hubs.
Indonesia’s manufacturing focuses include textiles, electronics,
automotive, and palm oil processing, among others.
Destination Countries for the Top 10 Indonesian Commodities
(Non-Mineral, Non Oil & Gas)
Ministry of Trade, Economic Profile, 2015
Export Service Institutions and Regulations
responsible for regulating import and export procedures is the
Ministry of Trade (MoT, Kementarian Perdagangan), through its
Directorate General of National Export Development. This institution
administers all trade activities, such as the registration of
companies and businesses, and market development. All
matters related to Customs are monitored by the Directorate General
of Customs and Excise (DGCE)1.
Requirements when Exporting from Indonesia
Indonesia requires businesses to seek local exporters that fulfill
two sets of requirements, stemming from both domestic and European
Union regulations. It is important to explain both sides for EU
companies to have a clear image of the complexity of the procedure
expected by the local counterpart, but also if in the future they
decide to manufacture in Indonesia.
Requirements – Step-by-Step Procedure
According to the
Ministry of Trade regulation (Peraturan Menteri Perdagangan)
No No.13/M-DAG/PER/3/2012, exporters should gather the following
steps to be able to export your product are the following:
Pay taxes before submitting documents to Customs Office
Submit PEB and
order to be authorized to export, local-based companies need to fill
the PEB (Pemberitahuan Ekspor Barang), otherwise known
as the Export Declaration.
of Export Procedure
Export from Indonesia
to another ASEAN Country
Under the ASEAN Free
Trade Area (AFTA) rules, EU companies producing goods in Indonesia
may find more market opportunities, especially regarding procurement
in ASEAN, while enjoying AFTA’s comprehensive tariff elimination,
which varies from country to country in ASEAN, as well as from
industry to industry.2
The establishment of
an ASEAN Economic Community (AEC) at the end of 2015 will bring new
tariff rules for intra-ASEAN trade. The main focus of ASEAN will be
placed on the full elimination of non-tariff barriers (NTB). The
elimination of tariffs on all intra-ASEAN goods in accordance with
the CEPT-AFTA Agreement and other relevant Agreements/Protocols will
also push towards the introduction of Rules of Origin (ROO)
responding to dynamic changes in global production processes so as to
facilitate trade and investment among ASEAN Member Countries.3
Union Importing Requirements
The required type of
certification depends on the company, the product category and the
business sector. The food sector, for example, normally requires many
types of certifications, while other sectors require less or none.
The following are
the highlights of the requirements established by the EU. Before
starting a sourcing operation from Indonesia, companies should
consult the dedicated website of the EU Export Helpdesk for the most
which also notes the administrative documents required.
HS Code of the
The first 6 digits
of the HS Code are the same in every country worldwide. Possible
additional digits may be used by individual countries if they require
a more detailed system to suit their national standards.
Europe has an
11-digit system based on the international 6-digit system. The
additional digits indicate European product categories (the 7th-10th
digits) and a national number used for national VAT purposes and
national restrictions (the 11th digit).
Tariff of the European Union (TARIC) is a multilingual database
covering all measures relating to EU customs tariffs, including
commercial and agricultural legislation.
By integrating and
coding these measures, the TARIC ensures their uniform application by
all Member States and gives economic operators a clear view of the
wide set of provisions which are to be undertaken when importing in
or exporting goods from the EU.5
Finding the right
tariff category for particular goods is very important, because it
will affect the duty and taxes, as well as the importation documents.
Packaging Directive (Directive 94/62/EC, revised by Directive NO.
2004/12/EC) regulates packaging requirements in Europe. There are
three main packaging types which depend on the purpose of the
packaged goods. Each main type is subject to requirements.
They can be divided into sales packaging for private consumers (B2C),sales packaging for business customers (B2B)and other
business packaging(e.g. transport packaging).
requirements depend on the imported goods. Violating labeling
regulations can cause several problems, including fines or even the
prohibition of goods from entering the European market. Usually,
there are stricter regulations for products that will be directly
distributed to the consumer (B2C). To find the specific labeling
regulations for goods, check the EU Export Helpdesk website mentioned
Wood Packaging Material
According to EU
regulations, all wood packaging material entering the EU has to carry
the ISPM 15 mark. This mark proves that the wood met the requirements
during inspection at the point of export or import. The ISPM 15 mark
can be granted by the NPPO (National Plant Protection Organization).
According to the most recent amendment to the regulations in 2009,
used wood must be free of bark, with small exceptions. This mark has
a specific IPPC (International Plant Protection Convention) logo and
three codes (the country code, the number assigned by NPPO and the
treatment measure applied). The markings should be legible, visible,
permanent and non-transferable.
Trade Tariffs and Duty Relief
A trade tariff is a
tax or duty placed on goods crossing political borders (or Customs
Unions). Import tariffs are the most common barriers, involving a tax
being levied on products entering from another country. It is
possible to check in advance the duty that applies to a given product
and the required documents for the importation process to the EU. The
EU Export Helpdesk has a broad and up-to-date library of procedures
and requirements for export that apply in Indonesia.6
The EU's Binding
Tariff Information (BTI) system can help you identify the right
tariff classification for the goods you intend to export. To obtain
the product’s tariff information, the importer must apply to the
customs authorities of the EU country he/she wishes to export to.
Common customs tariff duties are applicable to all goods imported
into the EU.
Duty Relief –
Preferential Tariff Quotas
Duty Relief may be
granted under circumstances where such taxation is not justified
(Council Regulation 1186/2009). Customs duties can be temporarily
suspended (totally or partially) for certain goods. Under tariff
quotas, specified quantities of goods can be imported at reduced or
zero duty rate, as long as they do not overlap with any anti-dumping
duties also in place.
quotas exist under trade agreements and autonomous preferential
arrangements between the EU and selected countries. This means that a
predetermined volume of goods originating in a specified country can
be imported into the EU at a more favorable duty rate. Indonesia is
part of the EU’s Generalized Scheme of Preferences (GSP).The GSP
allows country exporters to pay less or no duties on their exports to
the EU. Indonesia benefits from GSP for all products covered by the
Live animals and animal products excluded
Animal or vegetable oils, fats and waxes;
Chemicals other than organic and inorganic
chemicals (Section 6b);
Autonomous tariff quotas can be opened for some economic sectors in
order to stimulate competition inside the EU. They are normally
granted to raw materials, semi-finished goods or components not
available in the EU in sufficient quantities. No tariff quotas are
granted for finished products.
In 2015, the EU and
Indonesia are restarting negotiations towards a Comprehensive
Economic Partnership Agreement. These are developments that are
worthwhile to keep up with, as a future agreement might have an
important bearing on facilitating EU-Indonesia trade for certain
goods and services.
The agreement should
be fulfilled on the on basis of conditions described through
INCOTERMS like FCA or FOB.7
Prohibited Goods for Export
The Regulation by
Trade Ministry (Peraturan Menteri Perdagangan - PMP)
No.44/M-DAG/PER/7/2012 enshrines the provisions regarding prohibited
goods, which are generally related to:
Threats to national security or public
Protection of intellectual property rights.
Protection of human life and health.
Damage to the environment and ecosystems.
Commitments of iInternational treaties or
agreements concluded by the government.
Products/materials classified in the CITES
List (Convention of International Trade in Endangered Species).
Online Tools for Finding Suppliers in Indonesia
has its own Virtual Marketplace which is accessible via www.eibn.org.
With this tool, European and Indonesian companies can meet buyers and
sellers spontaneously, among the EU and Indonesian users of the
of Trade Membership Supplier Forum
the Ministry of Trade of Indonesia has its own online tool for buyers
and sellers, composed mostly of verified Indonesian companies. For
more information, please check
Case Study: Exporting Wooden Furniture from Indonesia to Europe
has a well-established regional and global reputation for furniture
and handicrafts. This is strongly related to the country’s strong
historical traditions in woodwork and artistic crafts. Indonesia has
access to a variety of wood types such as teak, suar,
mahogany or tamarind. The diversity of
Indonesian wood has been the base upon which the country’s
extensive furniture and homeware industry was developed.
furniture industry in Indonesia is one of the sectors with the
highest potential for import into the EU. While bringing Indonesian
wooden furniture to Europe can be a profitable business, a good
knowledge of wood and furniture import/export procedures to the EU
can provide the prospective European importer with a picture of what
timber products, especially exotic woods, EU Regulations have
tightened in order to prevent illegal logging products from entering
the EU Forest Enforcement Law, Governance and Trade (FLEGT),
reinforced by rules and principles of the Food and Agriculture
Organization of the United Nations (FAO), a number of terms and
regulations have been signed with several countries. This series of
agreements were the result of the “EU-FAO FLEGT Programme”,
aiming to support worldwide sustainable development.
is a part of FLEGT and has signed a Voluntary Partnership Agreement
(VPA) with the EU, which certifies quality and regulated timber
products traded between the two countries.
the EU-Indonesia VPA entered into force on 1 May 2014, Indonesian
wooden furniture can be imported more easily into the EU, if its
terms are correctly applied to the imported products. The terms of
the VPA are applicable to all Indonesian wooden furniture sellers who
intend to export to EU countries.
must be in possession of valid documents proving that the wood used
for manufacturing furniture does not originate from illegal logging.
mentioned in section 2.4. “Requirements when Exporting from
Indonesia”, exporters of wood products, must:
export licence issued from the
Republic of Indonesia Government [NPE, Nota
Obtain a Timber
Product Export License (Dokument
V-Legal) which is obtainable through
the Timber Legality Verification System (SVLK, Sistem
Verifikasi dan Legalitas Kayu);
Procedures implemented by the
Indonesian Ministry of Forestry. The Timber Product Export License
can also be used for the traceability of the product’s origin if
furniture from Indonesia requires a strong understanding of trade
requirements and country standards at source and destination. One way
to facilitate process is for EU importers to work with reliable
Indonesian counterparts. However, finding a work-ready partner may
take some time, given that they need to be in possession of all the
Meanwhile, there are
some obligatory certificates that are required in order to access the
Standards COO and SVLK in relation to timber products
An exporter should
obtain the Certificate of Origin (COO - Surat Keterangan Asal - SKA)
prior to exporting the goods. For more information on Rules of
Origin, please refer to “Annex I – Export Procedure Step-by-Step”
Timber Legality Assurance System (INDO-TLAS) or Sistem Verifikasi
Legalitas Kayu (SVLK) is an Indonesian scheme to guarantee the
legality of its timber products before entering the international
timber market. This implementation will help Indonesia to meet
growing demand for legal timber. It is expected to enhance the
competitive advantage of the country’s timber products in the wider
international market and form a part of its contribution to global
INDO-TLAS has been
developed in response to increasingly rigorous timber legislation in
key markets, including the EU Timber Regulation No. 995/2010
(effective since 3 March, 2013), Australia’s Illegal Logging
Prohibition Bill, the US Lacey Act and Japan’s Goho Wood System.
The Ministry of
Trade of the Republic of Indonesia issued Regulation No.
64/M-DAG/PER/10/2012 on October 22, 2012, on Forestry Product Export
Regulation, to support INDO-TLAS/SVLK. This regulation classifies
forest products into two categories. Each category has a different
mandatory date for achieving INDO-TLAS/SVLK certification:
Group A: plywood, sawmill, chip wood,
LVL and veneer. This group category will have INDO- TLAS/SVLK
certification before 1 January, 2013.
Group B: furniture, woodworking, pulp
and paper. This group category will have INDO-TLAS/SVLK
certification before 1 January, 2014.
Relationship between INDO-TLAS/SVLK and VPA
The EU adopted the
Timber Regulation to halt the circulation of illegal timber in the
European market. The EU Timber Regulation (EUTR) became effective in
March 2013. From that date on, all imports of timber into any EU
Member State have to pass a due diligence assessment to prevent
illegal timber from entering the market. Importers do not have to
apply this due diligence assessment to timber products arriving from
exporting countries that have signed and implemented a VPA with the
EU, including Indonesia. Such timber is considered as having zero
risk of being illegal under the EUTR.
transparency the VPA outlines the forest-related information to be
placed in the public domain, the institutions responsible for making
that information available and the mechanisms by which this
information can be accessed.
Indonesia and the EU
have been negotiating a VPA for the past four years to ensure that
key forestry-related information is made available to the public
under the FLEGT-VPA in a timely and appropriate manner. Indonesia is
the first Asian country to have a VPA with the EU, although
negotiations between Malaysia and Vietnam and the EU are showing
By signing the VPA,
timber products exported from Indonesia to the EU may be considered
as having a negligible risk of illegality under the EUTR, saving
European operators and their supply chains time and money. In
addition, this may increase confidence for Indonesian timber
suppliers and make Indonesian timber products more attractive than
those originating from non-VPA countries.
Customs Office: Kantor Pusat Direktorat Jenderal Bea dan
Cukai Jl. Jenderal Ahmad Yani (By Pass) Rawamangun, Jakarta
Timur, Jakarta Phone: (+62-21)4890308 ext. 821/822 E-mail:
firstname.lastname@example.org Website: www.beacukai.go.id/
Ministry of Industry Republic Indonesia Jl. Gatot
Subroto Kav. 52-53 Jakarta Selatan Phone: (+62-21) 5255 509
ext 2666 Website: www.kemenperin.go.id/
National Agency for Food and Drug Control Badan Pengawasan
Obat dan Makanan (BPOM) Jl. Percetakan Negara No.23 Jakarta
10560 Indonesia Phone: (+62-21) 4244691/ 42883309/ 42883462, Fax:
(+62-21) 4263333 E-mail: Informasi@pom.go.id Website:
National Standardization Agency BSN - Badan Standardisasi
National Gedung Manggala Wanabakti, Blok IV, Lantai 3-4 Jl.
Gatot Subroto, Senayan, Jakarta 10270 Indonesia Phone : (+62-
21)574 70 43 Fax : (62 21) 574 70 45 E-mail: email@example.com Website: www.bsn.go.id
Information Center & Standardization Documentation
(division of National Standardization Agency) Pusat Informasi dan
Dokumentasi Standardisasi Gedung Manggala Wanabakti, Blok IV
lantai 3, Jl. Gatot Subroto, Senayan Jakarta 10270 Phone :
(+62-21) 5747043 with ext .148 (information) and ext. 144
(library) Fax : (+62-21) 5747045 E-mail : firstname.lastname@example.org
National Standard Board Gedung Manggla Wanabakti, Blok IV
Lt. 3-4 Phone: (62-21) 5747043 Fax: (62-21) 5747045 E-mail
Directorate General of Intellectual Property Rights Jalan
Daan Mogot KM 24 Tangerang 15119 – Banten Phone: (62-21)
5525388, 5524839 Website: www.dgip.go.id
EU Delegation in Indonesia
Intiland Tower, 16th floor, Jl Jend Sudirman 32, Jakarta 10220
Legality Verification System (Sistem Verifikasi dan Legalitas
Intégré de la Communauté (The Integrated Tariff of the Community)
Registration Certificate (Tanda Daftar Perusahaan)
TPB Bonded Zone
(Tempat Penimbunan Berikat)
VAT Value Added
Committee for Franchises and Licenses
EIBN is a partnership project between five European bilateral
chambers of commerce in Indonesia (BritCham, EKONID, EuroCham, IFCCI,
INA) and two counterparts in Europe (EUROCHAMBRES, CCI Barcelona).
The EIBN’s aim is to promote Indonesia and ASEAN as high potential
trade and investment destinations towards companies from all EU28
member states – particularly SMEs – and support them in their
endeavor to explore the full market potential in Indonesia. The
project was initiated and is co-funded by the EU.
Business Guide series is the product of a joint research and
editorial effort of the EU-Indonesia Business Network team throughout
2014 and 2015. EIBN hereby acknowledges with gratitude the
contributions of members of the EIBN team during the said period:
Agrika Puspita, Antaressa Pritadevi, Armyta Rahardhani, Chloe
Martinez, Giandomenico Zappia, Giovanny Tutupoly, Ferdi Ferdian,
Firrisky Nurtomo, Johannes Kotschenreuther, Joaquim Torrinha, Laura
Aramo, Triesti Prabawati, Ruzha Likja, Sri Kumala Chandra, Martin
Krummeck, Michael Gramlich and Yacinta Esti.
Writing and Editing
publication has been produced with the financial assistance of the
European Union. The contents of this document are the sole
responsibility of the EIBN and can under no circumstances be regarded
as reflecting the position of the European Union.
figures in this report correspond to EIBN’s best estimate of value
of the corresponding variables. Although due care was taken in the
preparation of this publication, EIBN makes no warranty as to its
accuracy or completeness and is not to be deemed responsible for any
errors or loss resulting from its use. Other organizations quoted
herein are in no way responsible for the content of the report or the
consequences of its use.