International trade and commercial transactions in Indonesia: overview

A Q&A guide to the regulation of international trade and commercial transactions in Indonesia.

The Q&A covers key matters relating to sale of goods contracts, including rules on formation, price and payment, delivery, passing of title and risk, variation and assignment, enforcement and remedies, exclusion of liability, choice of law and jurisdiction, and arbitration. It also provides an overview of the rules governing storage of goods, imports, trade remedies, exports and international trade restrictions.

To compare answers across multiple jurisdictions, visit the international trade and commercial transactions Country Q&A tool.

This Q&A is part of the International Trade and Commercial Transactions Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/internationaltrade-guide.

Harry T Prabawa, Indria Prasastia and Hapsari Arumdati, Hanafiah Ponggawa & Partners (HPRP Lawyers)
Contents

Recent trends

1. What are the recent trends affecting the regulation of international trade in your jurisdiction? Is your jurisdiction a member of the World Trade Organization (WTO)?

Indonesia is a member of the World Trade Organization (WTO).

Recent trends

There are a number of factors that affect the regulation of international trade, including:

  • Politics. The political conditions are not conducive to trade.

  • The economic situation. The Indonesian rupiah has weakened against the value of the US dollar and there is greater inclination towards export in general.

  • Agreements. Indonesia has recently negotiated international trade agreements with Turkey and the European Union (EU).

Indonesia is also involved in a number of trade disputes before the WTO, including against:

  • Australia: certain measures concerning trade marks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging (panel composed).

  • Brazil (complainant): measures concerning importation of chicken meat and chicken products (in consultations).

  • Chinese Taipei (complainant): safeguards on certain iron or steel products (in consultations).

  • New Zealand (complainant): importation of horticultural products, animals and animal products (panel established, not yet composed).

  • Pakistan: anti-dumping and countervailing duty investigations on certain paper products from Indonesia (panel established, not yet composed).

  • The EU: anti-dumping measures on biodiesel from Indonesia (in consultations).

  • The US: anti-dumping and countervailing measures on certain coated papers from Indonesia (in consultations).

  • The US (complainant): importation of horticultural products, animals and animal products (panel established, not yet composed).

  • Vietnam (complainant): safeguards on certain iron or steel products (consultations requested).

Trade agreements

Indonesia is a party to the following trade agreements:

  • ASEAN–China.

  • ASEAN Free Trade Area (AFTA).

  • ASEAN–India.

  • ASEAN–Korea.

  • Association of Southeast Asian Nations (ASEAN) –New Zealand.

  • ASEAN Trade in Goods Agreement (ATIGA).

  • Indonesia–Japan.

  • Indonesia–Pakistan.

Reforms

There are no impending developments or proposals to reform national legislation on international trade and commercial transactions. However, there are proposals to enact implementing regulations to Law No. 7 of 2014 on Trade, which as at September 2015, consists of nine government regulations, 14 presidential decrees and 20 ministerial regulations.

 

Contracts for the sale of goods

General

2. What is the legal system in your jurisdiction based on (for example, civil law (codified), common law or sharia law)?

Indonesia operates under a codified civil law system, which includes a duty to negotiate contracts in good faith (Article 1338 paragraph 3, Indonesian Civil Code).

There is also an overriding duty of fairness or avoidance of unconscionability. No consent is valid if it is granted based on mistake or obtained by duress or fraud (Article 1321, Indonesian Civil Code).

 

Formation

3. What domestic legislation and international rules apply to a sale of goods contract in your jurisdiction? Are standard international contractual terms commonly used?

Domestic legislation

The main relevant legislation is the Indonesian Civil Code.

International rules

Indonesia is a party to the:

  • United Nations Convention on Contracts for the International Sale of Goods (CISG).

  • Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention).

  • Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention).

Standard contractual terms

The following are commonly used:

  • International Chamber of Commerce (ICC) international commercial terms (Incoterms) 2010.

  • UNIDROIT Principles of International Commercial Contracts (PICC).

  • Uniform Customs and Practice for Documentary Credit (UCP).

  • Uniform Rules for Demand Guarantees (URDG).

 
4. What are the authority/capacity rules for entering contracts, for different commercial entities?

Firms

Each partner in a firm has the authority to act, disburse and receive money on behalf of the firm, and to form binding contracts with third parties, except for partners who are not allowed to do so (Article 17, Indonesian Commercial Code).

Limited partnerships

Limited partners are not permitted to manage or work in a partnership, even with powers of attorney. Other partners have the authority/capacity to enter into contracts (Article 20, Indonesian Commercial Code).

Limited liability companies

All members of the board of directors can represent a company, as long as its articles of association do not provide otherwise (Article 98, Law No. 40 of 2007 on Limited Liability Companies (Company Law)). There are exceptions to this, such as in cases of conflict of interest. There are also some actions that require prior approval of the company's general meeting of shareholders. For example, assigning the company's assets and putting more than 50% of the company's assets down as security for a debt in one or more separate or inter-related transactions. Other provisions can be found in each company's articles of association, such as a requirement to seek approval from the board of commissioners for certain actions.

Co-operatives

The management committee of a co-operative is authorised to represent the co-operative inside and outside court, meaning that the management committee has the authority/capacity to enter into contracts (Article 58 paragraph 2 and Article 59 paragraph 1, Law No. 17 of 2012 on Co-operatives).

Insolvency

In insolvency situations, the liquidators' authority to enter into contracts is limited to the settlement of assets (Article 149, Company Law).

 
5. What are the essential requirements to create a legally enforceable contract?

Substantive requirements

A contract will only be valid when the following requirements are fulfilled (Article 1320, Indonesian Civil Code):

  • There is consent from all parties.

  • All parties are capable of entering into an agreement.

  • The contract has a particular object.

  • The contract has a lawful cause.

Indonesia applies the freedom of contract principle, provided that the subject matter of the contract is legal. The substance of certain contracts covering specific matters is regulated (for example, the content of consumer financing contracts is regulated by the Financial Service Authority).

Formal requirements

An agreement is deemed to have been concluded between the parties as soon as they reach a consensus on the subject matter and the price. Generally, there are no formal requirements to create a legally enforceable contract (Article 1458, Indonesian Civil Code).

Some contracts must be drawn up by a notary including, among others, most contracts that involve immovable goods.

Contracts in electronic form (e-mail, web-based, or otherwise) are legally enforceable. Electronic information and/or electronic records are lawful provided that the information contained in them is accessible, displayable, assured as to its integrity, accountable and accurately reflects the situation (Article 6, Law No. 11 of 2008 on Electronic Information and Transactions).

There are rules on which language can be used when concluding contracts (Article 31, Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem):

  • The Indonesian language must be used in memorandums of understanding or agreements involving state institutions, government institutions of the Republic of Indonesia, Indonesian private sectors or Indonesian individual citizens.

  • Memorandums of understanding or agreements involving a foreign party can also be written in the national language of the foreign party and/or English.

Translation of a contract into Indonesian is required in all cases.

 

Price and payment

6. If price provisions are not agreed by the parties, does local law impose requirements in relation to price (for example, the time, method and place of payment)?

Price determination is not regulated under Indonesian law, but if price provisions are not agreed by the parties then payment must be made at the time of delivery and the place of payment is the location where delivery occurs (Article 1514, Indonesian Civil Code).

There are various ways in which payments can be effected, although Indonesian laws do not specify how payments can be effected in sales transaction.

There is an obligation to use rupiah for the payment of transactions performed within Indonesia. Prices for any goods and/or services must also be quoted in rupiah (Circular Letter of Bank Indonesia Number 17/11/DKSP dated 1 June 2015 concerning the Obligation to Use the Rupiah in the Territory of the Unitary State of the Republic of Indonesia in furtherance of the issuance of Regulation of Bank Indonesia Number 17/3/PBI/2015, effective on 31 March 2015 for cash transactions and 1 July 2015 for non-cash transactions, and the Currency Law No. 7 of 2011 dated 28 June 2011).

There are exceptions to this rule in connection with international trade for:

  • Export/import of goods from/to Indonesia.

  • Cross-border trade in services through online or call centre purchases, or through an expert seconded by his principal office to Indonesia.

  • Consumption abroad (for example, Indonesian citizens studying abroad or undergoing medical treatment in hospitals abroad).

 

Delivery

7. If delivery provisions are not agreed by the parties, does local law impose requirements in relation to delivery (for example, the time, method and place of delivery)?

If delivery provisions are not agreed by the parties, delivery must take place at the location where the goods are being sold, at the time of the sale (Article 1477, Indonesian Civil Code).

A seller has two main obligations (Article 1474, Indonesian Civil Code):

  • To deliver the sold assets.

  • To safeguard them.

The costs of delivery are borne by the seller, and the pick-up costs are borne by the buyer (Article 1476, Indonesian Civil Code). The obligation to deliver the assets includes anything that is attached to it that is intended for the owner's permanent use, including evidence of ownership (if it exists) (Article 1482, Indonesian Civil Code). The seller must deliver the goods being sold in their entirety, as stipulated in the agreement (Article 1483, Indonesian Civil Code).

The duty of the buyer to accept the goods is not provided for under the Indonesian Civil Code.

There are no particular rules on packing and removal of packaging materials.

 

Passing of title and risk

8. If not agreed by the parties, when does title to the goods pass to the buyer?

If not agreed by the parties, title of the goods passes according to the law (Article 1459 and Articles 612, 613 and 616, Indonesian Civil Code).

Ownership rights over the goods being sold do not pass to the buyer until after delivery has taken place (Article 1459 and Articles 612, 613 and 616, Indonesian Civil Code).

Delivery of movable property, with the exception of intangibles, must take place in a single handover carried out by the owner or on his behalf, or by delivery of the keys to the building in which the property is located. Delivery is not required where the individual entitled to the property already has the goods in his possession (Article 612, Indonesian Civil Code).

The transfer of registered debts and other intangible property is effected through notarial or private deed (Article 613, Indonesian Civil Code). The delivery of bearer claims for indebtedness must take place by handover; by submission and endorsement of the paper for registered claims for indebtedness.

Delivery or order of immovable property is effected by publication of the deed (Article 616, Indonesian Civil Code).

 
9. Are retention of title clauses enforceable in your jurisdiction? If so, what are the requirements to create a legally enforceable retention of title clause?

A seller can hold the goods until the buyer pays the price (Article 1478, Indonesian Civil Code). The title will only be transferred when the goods are transferred. Therefore, the seller holds title if it holds the goods.

 
10. If not agreed by the parties, when does risk in relation to the goods pass to the buyer?

If not agreed by the parties, risk in relation to the goods passes to the buyer when the goods are handed over and title is transferred (Articles 1461 and 1462, Indonesian Civil Code). Until then, the risk remains with the seller.

 

Variation and assignment

11. What are the main ways and formalities to transfer contractual rights?

The main ways to transfer contractual rights are cession, novation and subrogation (Articles 613, 1400 and 1413, Indonesian Civil Code).

The transfer of registered debts and other intangible property must be effected through an authentic or private deed, in which the rights to such objects are transferred. The delivery of bearer claims for indebtedness takes place by handover, or by submission and endorsement of the paper (Article 613, Indonesian Civil Code).

Subrogation or assignment of a creditor's rights to a third party who has paid that creditor arises by agreement or by law (Article 1400, Indonesian Civil Code).

Debt novation arises in the following three circumstances (Article 1413, Indonesian Civil Code):

  • For the benefit of the creditor, the debtor enters into a new debt obligation that replaces and extinguishes the original debt.

  • A new debtor replaces the original debtor, whom the creditor releases from his debt.

  • Pursuant to a new agreement, a new creditor replaces the original creditor and in respect of the latter, the debtor is released from his obligations.

 
12. What are the main rules relating to waiver of contractual rights?

In principle, a party remains bound by its obligations under a contract until it is released from it. Contracts are irrevocable, except by mutual consent, or pursuant to reasons provided by law (Article 1338 paragraph 2, Indonesian Civil Code).

 

Enforcement and remedies

13. What are the seller's obligations in relation to the description and quality of the goods?

Article 1338 of the Indonesian Civil Code applies the freedom of contract principle, although there may be some terms on description and quality implied into a contract in the absence of agreement between the parties. The terms include, among others, that:

  • A seller must provide a warranty against hidden defects in the goods sold (Article 1504, Indonesian Civil Code).

  • A seller is responsible for any hidden defects (Article 1506, Indonesian Civil Code).

Product liability is covered by the Indonesian Civil Code and Law No. 8 of 1999 on Consumer Protection (Consumer Protection Law). A seller must return the purchase price and compensate a buyer for costs, damages and interest (Article 1508, Indonesian Civil Code). In addition, business owners must provide compensation, indemnity and/or replacement if the goods and/or services that were received or used do not comply with the agreement (Article 7 paragraph (g), Consumer Protection Law).

 
14. What are the different types and legal status of contractual terms in your jurisdiction?

Under the freedom of contract principle and to the extent permitted by law, the parties can freely determine the terms and conditions of a contract. This includes representations and warranties, and express/implied terms including provisions regarding breach of the contract and its implications. All terms are subject to Articles 1320 to 1321 of the Indonesian Civil Code. A contract will only be valid when the following requirements are fulfilled (Article 1320, Indonesian Civil Code):

  • The parties consent to it.

  • The parties are capable of entering into the agreement.

  • The contract has a particular object.

  • There is a lawful cause.

With respect to breach, a non-defaulting party can request from the defaulting party compensation for costs, damages and interest arising from non-fulfilment of its obligations under a contract (Article 1243, Indonesian Civil Code). If it is not specified that a breach or other conditions would cause termination of the contract, the non-defaulting party can request termination from the court judge with competent jurisdiction (Article 1266, Indonesian Civil Code).

 
15. What are the key rules on privity of contract and third party rights?

A third party can enforce its rights under a contract to the extent that the contract regulates the rights of such party. The rights become irrevocable if the relevant third party declares his intention to exercise them under the contract (Article 1317, Indonesian Civil Code).

 
16. What are the rules relating to invalidity, misrepresentation and mistake relating to contracts?

Invalidity

A contract will only be valid on fulfilment of the following requirements (Article 1320, Indonesian Civil Code):

  • Subjective requirements:

    • the parties consent to it; and

    • the parties are capable of entering into an agreement in accordance with the applicable laws.

  • Objective requirements:

    • the contract has a particular object; and

    • the contract has a lawful cause.

If the subjective requirements are not fulfilled, a party to the agreement is entitled to request its termination.

With regard to capacity to enter a contract, the following applies (Article 1446, Indonesian Civil Code):

  • If a contract is entered into by a minor or a person under custody, it will be null and void.

  • Any contract entered into by married women or minors who have obtained a statement stating their equality of maturity will only be null and void if the contract exceeds their authority.

If the objective requirements are not fulfilled, the contract will be null and void.

Misrepresentation and mistake

The Indonesian Civil Code does not specifically regulate or distinguish between misrepresentation and mistake. However, in relation to the sale of goods:

  • A sale and purchase contract will be null and void and the buyer entitled to demand compensation for costs, losses and interest, if the buyer does not know that the purchased goods were owned by a third party.

  • The purchase will be cancelled if, at the time of sale of the goods, the goods have vanished.

If a contract does not distinguish between misrepresentation and mistake, a non-defaulting party is entitled to request from the defaulter compensation for costs, damages and interest arising from the non-fulfilment of its obligation (Article 1243, Indonesian Civil Code). In addition, if the contract does not specify that a breach or other conditions would cause termination, the non-defaulting party can request termination from a judge (Article 1266, Indonesian Civil Code).

 
17. What are the main performance and discharge rules relating to contracts?

The parties to a contract are free to specify clauses relating to discharge under the freedom of contract principle. Parties can agree termination on the basis of expiry, mutual agreement, and/or breach of contract. Conditions for termination due to non-fulfilment of a contractual obligation are implied, so termination of a contract on this basis must be requested from a judge (Article 1266, Indonesian Civil Code).

If conditions for termination are not stipulated in the contract, the judge will be free, on request from the defaulting party, to grant up to one month for the outstanding obligation to be fulfilled. The non-defaulting party also has the option to force the defaulting party to fulfil the contract, or to claim termination with compensation for costs, damages and interest (Article 1267, Indonesian Civil Code).

In conclusion, a non-defaulting party is entitled to request termination of a contract, whether or not such right is contemplated in the contract.

The parties to a contract are free to determine clauses on force majeure and frustration. There are no specific requirements under the law relating to either of these matters. If a party cannot prove the occurrence of force majeure, that party must compensate for costs, losses and interest. But such losses and interest need not be compensated if it can be proved that failure to fulfil the contract was caused by force majeure (Articles 1244 and 1245, Indonesian Civil Code).

 
18. What are the main remedies and rules for losses and damages for breach of a sale of goods contract?

An agreement is entered into for the purpose of giving something, doing something or not doing something (Article 1243, Indonesian Civil Code).

Under a contract to give something, if the debtor becomes incapable of delivering the property or has not properly maintained the property for preservation, he must reimburse the costs, with damages and interest to the creditor (Article 1236, Indonesian Civil Code).

If a debtor fails to deliver property due under the contract, then the property is his responsibility from the date of the failure (Article 1237 paragraph 2, Indonesian Civil Code).

A debtor must reimburse any costs, damages and interest if he fails to fulfil his obligations under a contract to do or not do something (Article 1239, Indonesian Civil Code).

A non-defaulting party can request termination or fulfilment of a contract. Even if the contract does not have a termination clause, a judge can grant a defaulting party a maximum of one month to fulfil an obligation (Article 1267, Indonesian Civil Code).

If goods cannot be delivered by the seller due to his negligence, the buyer can cancel the purchase, and vice versa (Articles 1480 and 1517, Indonesian Civil Code).

Subject to the terms and conditions of any prevailing laws, the main remedies for breach of a sale of goods contract are:

  • Fulfilment of the contract.

  • Fulfilment of the contract and compensation for costs, losses and interest.

  • Compensation for costs, losses and interest.

  • Termination of the contract.

  • Termination of the contract and compensation for costs, losses and interest.

Regarding compensation, the Indonesian Civil Code provides as follows:

  • "Costs" means the costs incurred by the non-defaulting party. "Losses" means the losses suffered by the non-defaulting and the "interest" means any profit he should have enjoyed (Article 1246, Indonesian Civil Code).

  • The costs, losses and interest referred to in Article 1246 mean the real costs, losses and interest or the costs, losses and interest which could have been expected at the time the contract was entered into. If non-fulfilment of the obligation is attributable to deception by the defaulting party, such party must reimburse the losses and interest which directly result from non-fulfilment (Articles 1247 and 1248, Indonesian Civil Code).

The duty to mitigate losses can be agreed between the parties.

 
19. What are the buyer's remedies for breach of a sale of goods contract?

A buyer can cancel his purchase if the goods are never delivered, subject to Articles 1266 and 1267 of the Indonesian Civil Code (Article 1480, Indonesian Civil Code). If the goods are delivered late or other terms are breached, the buyer has the right to request fulfilment of the outstanding obligations, termination of the contract and/or compensation for costs, losses and interest, subject to the terms and conditions of relevant laws.

 
20. What are the seller's remedies for non-payment or late payment?

A seller can cancel the purchase of goods for non-payment or late payment by the buyer, subject to Articles 1266 and 1267 of the Indonesian Civil Code (Article 1517, Indonesian Civil Code).

 

Exclusion of liability

21. What are the main rules relating to excluding contractual liability? Are exclusion clauses enforceable in your jurisdiction? If so, what are the requirements to create a legally enforceable exclusion clause?

To the extent permitted by law, parties are free to agree exclusion clauses and there are no key drafting rules that must be followed to make them effective.

 

Choice of law

22. Will local courts recognise a choice of foreign law in a sale of goods contract? Are there any mandatory local rules that apply, despite a choice of foreign law?

Parties are free to determine the law applicable to a contract. Local courts will recognise a choice of foreign law in a sale of goods contract, as there is no rule prohibiting the use of foreign law.

Contracts subject to foreign law can only be used as supporting evidence in a local court. Local laws that apply to the party and/or territory where the transaction took place will remain applicable.

 
23. If the parties do not make a choice of law, what rules determine the law applicable to a sale of goods contract?

If the parties do not make a choice of law, the principles of international civil law determine the law applicable to a contract, which is determined based on:

  • The location where the contract was entered into.

  • The national law of the relevant judge.

  • The law that applies to the most significant party to the contract.

 

Choice of jurisdiction

24. Will local courts recognise a choice of foreign jurisdiction in a sale of goods contract? Are there any mandatory local rules that apply, despite a choice of foreign jurisdiction?

Parties are free to include a choice of jurisdiction clause for a sale of goods contract and local courts will recognise such choice. However, a decision in a foreign jurisdiction cannot be implemented in Indonesia. Foreign judgments are unenforceable in Indonesia, except for certain matters specified in other laws (Article 436, Indonesian Civil Code).

 
25. If the parties do not make a choice of jurisdiction, what rules determine the jurisdiction applicable to a sale of goods contract?

The choice of jurisdiction will be determined by mutual agreement between the contracting parties.

 

Arbitration

26. Are arbitration clauses commonly included in sales of goods contracts in your jurisdiction?

An arbitration clause can be inserted into a contract by agreement. Indonesia is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which is ratified into Indonesian law by Presidential Decree No. 34 of 1981. An arbitration agreement or arbitration clause in a contract eliminates the authority of the local court to settle any dispute arising from the contract (Article 3, Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (ADR Law)).

Local courts recognise and enforce arbitration awards made both locally and abroad. However, foreign or international arbitration awards will only be acknowledged and enforced in Indonesia if the following requirements are fulfilled (Article 66, ADR Law):

  • The award was made by an arbitrator or board of arbitrators in a country that has a bilateral or multilateral agreement with Indonesia on the recognition and enforcement of international arbitration awards.

  • The award is within the scope of Indonesian trade law.

  • The award is in line with public order.

  • An exequatur from the Supreme Court is obtained through the Jakarta Pusat District Court to enable the award to be enforced.

 

Storage of goods

27. How is title to goods in storage protected and evidenced? Are warehouse receipts recognised as documents of title in your jurisdiction?

Warehouse receipts are recognised as documents of title under Law No. 9 of 2006 on the Warehouse Receipts System (Law No. 9/2006). A warehouse receipt is defined as evidencing the ownership of goods that are stored in a warehouse and issued by the warehouse manager (Article 1 paragraph (2), Law No. 9/2006).

Law No. 9/2006 does not specifically regulate or distinguish between negotiable and non-negotiable documents of title. Generally, Law No. 9/2006 provides that warehouse receipts can be assigned, used as a guarantee for a debt, or used as a document for delivery of goods. In addition, warehouse receipts and their derivatives can be traded on and outside the stock exchange.

 
28. What conditions and formalities must warehouse receipts comply with?

Law No. 9 of 2006 on the Warehouse Receipts System provides for the following conditions and formalities relating to warehouse receipts:

  • Warehouse receipts can only be issued by a warehouse manager who has obtained approval from the supervisory board. The supervisory board is the board under the Ministry of Trade which is authorised to develop, regulate and supervise the warehouse receipts system.

  • The administration of warehouse receipts must be performed by a registration centre that has obtained approval from the supervisory board.

  • Warehouse receipts can be issued in a script (warkat) or non-script form.

  • There are two kinds of warehouse receipt:

    • registered warehouse receipts specifying the name of the party authorised to receive delivery of the goods; and

    • on-demand warehouse receipts which contain the demand of the party authorised to receive delivery of the goods.

  • Warehouse receipts must contain at least the:

    • title of the receipt;

    • type of receipt (registered warehouse receipt or on-demand warehouse receipt);

    • name and address of the owner of the goods;

    • location of the warehouse;

    • date of issue;

    • number of issue;

    • expiry date;

    • description of goods;

    • cost of storage; and

    • signature of the owner of the goods and the warehouse manager.

 
29. Are other interests over goods in storage recognised?

A guarantee for debt or collateral can be imposed on the receipts but not on the goods. If the holder of a warehouse receipt is in default, the warehouse manager can sell the warehouse receipt directly or through public auction in accordance with the law and subject to approval from the supervisory board (see Question 28).

 

Imports

Customs authority

30. What is the authority responsible for enforcing customs laws and regulations? Are certain goods subject to specific examination procedures?

The authority responsible for enforcing customs laws and regulations is the Directorate General of Customs and Excise.

There are certain commodities subject to specific examination procedures and applicable laws.

An official from the Directorate General of Customs and Excise has special authority to act as an investigator in criminal investigations relating to customs (Article 112, Law No. 10 of 1995 on Customs (Law No. 10/1995)). This authority includes:

  • Receiving reports or information concerning customs crimes.

  • Summonsing persons for interrogation as a suspect or a witness.

  • Researching, searching and collecting information concerning customs crimes.

  • Arresting a person suspected of committing customs crimes.

  • Asking for information and evidence from a person suspected of customs crimes.

  • Photographing and/or recording any person, goods, transportation, or anything that can be used as evidence of customs crimes.

  • Examining records and accounting records required by Law No. 10/1995 and related accounting records.

  • Collecting fingerprints.

  • Searching houses, clothes, or body searches.

  • Searching places or transporting and inspecting goods contained in them suspected of being involved in customs crimes.

  • Confiscating objects that are strongly suspected to be items that can be used as evidence in relation to customs crimes.

  • Providing safety signs and securing anything that can be used as evidence in relation to customs crimes.

  • Bringing in the experts required in relation to the investigation of customs crimes.

  • Ordering those who are suspected of committing customs crimes to stop, and checking the personal identification of the suspects.

  • Discontinuing an investigation.

  • Taking other necessary measures for the smooth investigation of customs crimes.

 

Import duties, tariffs and rates

31. What are the main customs import tariffs and duties?

General tariffs and rates

General import tariffs are a maximum of 40% of the customs value for calculation of import duties (Article 12, Law No. 17 of 2006 (amending Law No. 10 of 1995 on Customs)). Import tariffs are different depending on the type of goods.

Preferential tariffs

There are preferential tariffs for certain countries or goods under specific agreements, as follows:

  • ASEAN- China.

  • ASEAN-India.

  • ASEAN-Korea.

  • ASEAN-New Zealand.

  • ASEAN Trade in Goods Agreement (ATIGA).

  • Indonesia-Iran.

  • Indonesia-Japan.

  • Indonesia-Pakistan.

 

Non-tariff barriers to imports

32. Are there non-tariff barriers to imports into your jurisdiction?

Non-tariff barriers to imports are different depending on the goods. These barriers are regulated under a Ministerial Decree for each item. Non-tariff barriers take the form of special licences (such as licences for importers, manufacturers, registered importers and import approvals) and quotas.

 
33. Can customs decisions and import restrictions be challenged?

Customs decisions and import restrictions can be challenged (Articles 93, 93A, 94 and 95, Law No. 17 of 2006 (amending Law No. 10 of 1995 on Customs)).

The general procedure is to file a written objection with the director general within 60 days from the date of determination.

 

Trade remedies

Regulatory framework

34. What are the main regulations and authorities responsible for investigating and deciding on trade remedies?

Regulatory framework

The main regulation on trade remedies is Government Regulation No. 34 of 2011 on Anti-Dumping, Countervailing Measures, and Safeguard Measures.

WTO rules on trade remedies are implemented in Indonesia.

The relevant legislation on anti-competition, anti-bribery and corruption includes:

  • Law No. 5 of 2007 concerning Prohibition of Monopoly Practices and Unfair Business Competition.

  • Law No. 20 of 2001 on the Amendment of Law No. 31 of 1999 on the Eradication of Corruption.

Regulatory authority

The regulatory authorities are the:

  • Indonesian Anti-Dumping Committee (Komite Anti-Dumping Indonesia), for anti-dumping and countervailing measures.

  • Indonesian Trade Security Committee (Komite Pengamanan Perdagangan Indonesia), for safeguard measures.

 

Investigations and enforcement

35. What are the requirements and procedure to start trade remedies investigations?

Anti-dumping

The procedure for investigations is as follows:

  • An investigation is started up to 30 business days after a complete petition is lodged.

  • The Anti-Dumping Committee conducts a review of the petition and either accepts or rejects it. If it is accepted, a public announcement is made and an investigation starts.

  • The investigation stage takes 12 months (extendable to a maximum of 18 months).

  • The anti-dumping import duty enactment process can take up to 75 business days.

Safeguard measures

The procedure for investigations is as follows:

  • An investigation is started up to 30 business days after a complete petition is lodged.

  • The Trade Security Committee conducts a review of the petition and either accepts or rejects it. If it is accepted, a public announcement is made and an investigation starts.

  • The investigation stage can take an unspecified amount of time.

  • The safeguard measure enactment process may take up to 75 business days.

Countervailing measures

The procedure for investigations is as follows:

  • An investigation is started up to 30 business days after a complete petition is lodged.

  • The anti-dumping committee conducts a review of the petition and either accepts or rejects it. If it is accepted, a public announcement is made and an investigation starts.

  • The investigation stage can take an unspecified amount of time.

  • The countervailing measure enactment process may take up to 75 business days.

Foreign parties importing goods into Indonesia can make representations, access documents, or be heard during the investigation stage.

 

Appeals

36. Is there a right of appeal against the authority's decision? What is the applicable procedure?

There is a right of appeal against the authority's decision. The appeal is made to the administrative court.

The applicable procedure is as follows:

  • The claimant goes to the administrative court with the necessary documents.

  • An officer of the court receives the completed lawsuit/application and forwards the file to be examined by the clerks who declare it complete or incomplete.

  • The clerks examine the case file.

  • The claimant pays a fee and submits proof of payment.

  • The officer of the court records the lawsuit in the register and processes the claim.

  • The officer submits a copy of the lawsuit to the claimant.

  • The parties to the dispute are summoned to court by means of registered letters for dismissal of proceedings or examination/preparation.

  • An appeal hearing takes place.

 

Exports

Regulatory framework

37. What are the main requirements to export goods from your jurisdiction?

Requirements on exports are mainly provided in the following laws and regulations:

  • Law No. 17 of 2006 on Customs (as amended).

  • Regulation of the Minister of Trade of the Republic of Indonesia No. 13/M-DAG /PER/3/2012 on General Provisions in the Export Sector.

  • Regulation of the Minister of Finance No. 145/KMK.04/2007 on Customs Provisions in Export.

  • Regulation of the Director General of Customs and Excise No. P-40 /BC/2008jo. P-06/BC/2009jo. P-30/BC/2009jo. P-27/BC/2010 on Customs Procedures in the Export Sector.

  • Director General of Customs Regulation No. 18/BC/ 2012 on the Second Amendment to the Director General of Customs and Excise No. P-41 /BC/2008 on Export Customs Notification.

There are many regulations related to export because there are different regulations for different commodities.

The relevant authority is the Directorate General of Customs and Excise.

 
38. Are certain categories of goods subject to specific export quotas, restraints or other controls?

Some categories of goods are subject to specific export quotas, restraints or other control mechanisms. These specific export quotas, restraints or other control are different for each type of good.

Regulated exportable goods include:

  • Plantation products: coffee (roasted or unroasted), processed.

  • Forestry products: products made from rattan or wood.

  • Industrial products: acetate anhydride, phenylacetic acid, ephedrine, acetone, butanol.

  • Mining products: diamond, tin, gold.

Controlled exportable goods include:

  • Livestock products: breed stock cattle, non-breed stock cattle, buffalo, alligator leather, wet-blue, wild animals and plants.

  • Fishing products: napoleon fish, wrasse fish, seed fish.

  • Plantation products: palm kernel.

  • Mining products: gas, coke/petroleum, ore precious metals, silver, gold.

  • Industrial products: waste and scrap iron, stainless steel, copper, brass, aluminum, urea fertiliser.

Specific authorisations required for export of specific goods (for example, export licences) are different for each commodity and regulated under different regulations.

 

Penalties

39. What are the consequences of non-compliance with export regulations?

There are sanctions for:

  • Exporting without a customs declaration. This is liable to a minimum of one year and a maximum of ten years' imprisonment, and minimum fine of IDR50 million (maximum fine of Rp. 5 billion).

  • Delivering an untrue, false or forged customs declaration. This is liable to a minimum of two years' and a maximum of eight years' imprisonment, and a minimum fine of IDR100 million (maximum fine IDR5 billion).

  • Not submitting (or delay in submitting) cancellation of exports. This is liable to an administrative sanction in the form of a fine of IDR5 million.

  • Submitting the incorrect type and/or amount of goods. This is liable to administrative sanctions, from a fine of 100% of the export duty due up to a maximum of 1000% of the owed export duty.

 

International trade restrictions

Trade sanctions

40. Are there specific restrictions on trade with certain jurisdictions?

There are no specific restrictions on trade with certain jurisdictions.

 
41. What is the authority responsible for imposing trade restrictions?

The Directorate General of Customs and Excise is the authority responsible for imposing trade restrictions in the form of export and import restrictions

 
42. What are the consequences of non-compliance with trade restrictions?

There are no specific trade restrictions with any jurisdiction.

 
43. Are businesses subject to specific compliance requirements? What practical steps should a business take to ensure compliance with trade restrictions?

Not applicable.

 

Foreign trade barriers

44. What is the procedure for local exporters to complain against foreign trade barriers contrary to the WTO or other trade agreements?

The Directorate of Trade Defence in the Directorate General of International Trade within the Ministry of Trade helps local exporters in relation to complaints against foreign trade barriers.

 

The regulatory authorities

Ministry of Trade

W www.kemendag.go.id/en

Principal responsibilities. The Ministry of Trade formulates, imposes, and enforces trade-related policies, including import and export policies.

Directorate General of Customs and Excise (Ministry of Finance)

W www.kemenkeu.go.id/en

Principal responsibilities. The Directorate General of Customs and Excise of the Ministry of Finance performs the main duties of the Ministry of Finance in the customs and excise area, in accordance with the policies made by the Minister. It enforces governmental policies related to the trade of goods on the territory of Indonesia, and collects import duties and excise.



Online resources

Trade-related legislation

W www.kemendag.go.id/en

Description. Trade-related legislations in Bahasa Indonesia (no official English translation available).

Customs-related legislation

W www.sjdih.depkeu.go.id/Ind/

Description. Customs-related legislation in Bahasa Indonesia (no official English translation available).



Contributor profiles

Harry T Prabawa, Partner

Hanafiah Ponggawa & Partners (HPRP Lawyers)

T +62 21 570 1837
F +62 21 570 1835
E harry.prabawa@hplaw.co.id
W www.hprplawyers.com; www.hplaw.co.id

Professional qualifications. Indonesia, Himpunan Konsultan Hukum Pasar Modal; Indonesia, Perhimpunan Advokat Indonesia

Areas of practice. International trade.

Non-professional qualifications. Bachelor of Law (SH)

Recent transactions

  • Assisting and representing a Malaysian steel company in the Indonesian anti-dumping proceeding on imported steel product.
  • Assisting and representing a Chinese association and producers in the Indonesian safeguards proceeding on imported steel product.
  • Assisting and representing an Indonesian steel association and producers in Indonesian safeguard proceedings on imported steel product.
  • Assisting and representing Indonesian synthetic producers in Indonesian anti-dumping proceedings on imported fibre products.
  • Assisting and representing Indonesian petrochemical companies in Indonesian anti-dumping proceedings.
  • Assisting the Government of Indonesia in trade disputes on certains products with other countries.
  • Assisting several companies to apply industrial standards.

Languages. Indonesian, English

Publications

  • The Anticipation of Dumping Allegations on Exports & Protection in Domestic Markets, Bisnis Indonesia, 8 & 9 November 2011.
  • Safeguards Measures, Trade Instrument that need to be charged, Bisnis Indonesia, 6 & 7 June 2005.
  • Indonesian Safeguards against Imports, The Jakarta Post, 30 May 2005.
  • The Substances and Procedures of Safeguards Measures for Industries, Bisnis Indonesia, 11 Feb 2003.

Indria Prasastia, Associate Lawyer

Hanafiah Ponggawa & Partners (HPRP Lawyers)

T +62 21 570 1837
F +62 21 570 1835
E indria.prasastia@hplaw.co.id
W www.hprplawyers.com; www.hplaw.co.id

Professional qualifications. Indonesia, Lawyer

Areas of practice. International trade; financial services.

Non professional qualifications. Bachelor of Law (SH); LLM, M Sc

Recent transactions

  • Represented and provided practical and business oriented legal advice to, among others, APSYFI (the Indonesian Synthetic Fibre Producers Association), PT. Indorama Polypet Indoensia, PT. Indorama Ventures Indonesia, PT. Indorama Synthetics, Tbk., China Iron and Steel Association, Bahru Stainless Sdn Bhd, Malaysia, PT Kedaung Oriental Porcelain Industry, PT Sulindamills, PT Sulindafin in various international trade legal matters including trade remedies (anti-dumping proceedings, safeguards proceedings, countervailing duty), non-tariff barriers in Indonesia, free trade arrangements, compliance with foreign and domestic trade policies.
  • Provided legal assistance to Badan Koordinasi Penanaman Modal (BKPM) or Indonesian Investment Co-ordinating Board drafting the new template of the Indonesia bilateral investment treaty.

Languages. Indonesian, English

Hapsari Arumdati, Associate Lawyer

Hanafiah Ponggawa & Partners (HPRP Lawyers)

T +62 21 570 1837
F +62 21 570 1835
E hapsari.arumdati@hplaw.co.id
W www.hprplawyers.com; www.hplaw.co.id

Professional qualifications. Indonesia, Lawyer

Areas of practice. International trade; resources and infrastructure.

Non-professional qualifications. Bachelor of Law (SH)

Recent transactions

Representing and providing practical and business-oriented legal advice on various international trade legal matters including trade remedies (anti-dumping proceedings, safeguards proceedings, countervailing duty), non-tariff barriers in Indonesia, free trade arrangements, compliance with foreign and domestic trade policies to (among others):

  • The Indonesian Synthetic Fibre Producers Association (APSYFI).
  • PT. Indorama Polypet Indoensia.
  • PT. Indorama Ventures Indonesia.
  • PT. Indorama Synthetics.Tbk.
  • The China Iron and Steel Association.
  • Bahru Stainless Sdn Bhd, Malaysia.
  • PT Kedaung Oriental Porcelain Industry.
  • PT Sulindamills.
  • PT Sulindafin.

Languages. Indonesian, English


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