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Legal Updates | Ministry of Trade Introduces New Restrictions on Import of Forestry Products

The Ministry of Trade issued Regulation No. 78/M-DAG/PER/10/2014 on Provisions on Import of Forestry Products as amended by Regulation No. 07/M-DAG/PER/1/2015 (together "Reg. No. 78") which became effective on 1st September 2015. As discussed below, this regulation introduces new restrictions and administrative requirements for the importation of forestry products.

Key Points

Below are some key points stipulated under Reg. No. 78:

  1. Only entities that have been acknowledged as Producer Importer - Forestry Product ("Producer Importer") or stipulated as a Registered Importer - Forestry Products ("Registered Importer") can import the forestry products listed in its Annex I, and only Registered Importer can import forestry products listed in its Annex II.
    Producer Importers can import the products listed in Annex I as raw materials or auxiliary materials for a self-production process, and are not allowed to trade and/or transfer the products to other parties.
    Registered Importers can import the products listed in Annex I only for the interests of domestic industry, and are obligated to further process the products listed in Annex I before the Importers trade the products overseas.
    Samples of details of products listed in Annex I and Annex II are set out below as an attachment of this client alert.
  2. Producer Importers and Registered Importers must submit an application electronically through INATRADE portal to the Directorate General of Foreign Trade (DGFT).
  3. Producer Importers are obliged to obtain a recommendation from the Minister of Forestry or other appointed authorities while Registered Importers must obtain an Import Approval from the Minister of Trade (along with a recommendation from the Minister of Forestry or other appointed officials). Currently, there is no further guidance on who the appointed officials are and this may be a source of delay in the issuance of recommendations for import approvals.
  4. Any forestry products that are imported not in line with Reg. No. 78 must be re-exported or destroyed. Any costs arising from the re-exportation or destruction are borne by the importers.

Affected Products

The issuance of Reg. No. 78 affects (i) forestry products and finished material products derived from the forests for direct consumption or industrial use, for instance: timber, rattan, charcoal, mechanical pulps and fibre boards etc.; and (ii) finished products derived from forestry products for direct consumption or commercial use, for instance: kitchen appliances, decorative products, packaging, tissue and paper products, stationary, furniture and household products (for further details please see Annex I and Annex II).

Key Take-aways

  1. Reg. No. 78 sets out the principles of the importation of forestry products as well as re-emphasizing the current general import principles, such as that raw materials are imported not to be directly transferred or traded. Unfortunately, there are still provisions that are unclear and may need to be further elaborated. For instance, there is no further guidance on who the appointed officials responsible for the issuance of recommendations are. This may be a source of delay in the issuance of the recommendations for e.g. import approvals.
  2. Still on the recommendations, Reg. No. 78 re-introduces the concept of multi-layer import approvals where there are recommendations (applicable for both Producer Importers and Registered Importers), and Import Approvals (applicable for Registered Importers) that must be obtained before the actual importation process. This alone may require the importers to carefully plan the lead time for the importation of the forestry products; otherwise they may face additional waiting time at the ports.
  3. Given the current economic conditions and the pressure from the business actors, there is a possibility that this regulation will be revisited in the near future. However, until there is an amendment or alteration to Reg. No. 78, importers must still comply with its provisions.

Annex I: Samples of Restricted Forestry Products that can be Imported by Producer Importers and Registered Importers

Samples of Restricted Forestry Product that can be Imported by Producer Importers and Registered Importers 

Annex II: Samples of Restricted Forestry Products that can be Imported by Registered Importers

Samples of Restricted Forestry Product that can be Imported by Registered Importers 

Hadiputranto, Hadinoto & Partners, Member of Baker & McKenzie International - 22nd september 2015

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
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Corruption Index: 90/176 (TI, 2016)