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Indonesia – Tougher Rules For Cellular Phone Imports.

17 June, 2013

 

 

At the end of 2012, the Minister of Trade issued a new regulation that specifically governs the importation of, among other items, cellular phones. Before the new regulation, cellular phone imports were covered by a more general Minister of Trade regulation that lumped together a lot of different products.

 

Imports of cellular phones soared in the years leading up to the new regulation. The Jakarta Post newspaper reported in late 2012 that, based on the records of local surveyors PT Sucofindo and PT Surveyor Indonesia, Indonesia imported 25 million mobile phones in 2009, 43 million in 2010 and 45 million in 2011. The import value increased to US$2 billion in 2010 from US$1.6 billion in 2009.

 

Another newspaper, the Jakarta Globe, quoted Deddy Saleh, the Director General of Foreign Trade at the Ministry of Trade, as saying the “recorded import of mobile phones is around 40 million units a year, but industry players estimate that illegal imports could be twice that.”

 

With that background, the Minister of Trade issued Regulation No. 82/M-DAG/PER/12/2012, dated December 27, 2012, regarding Provisions on the Importation of Cellular Phones, Handheld Computers and Computer Tablets (“MOT Reg 82”). In a press release accompanying the issuance of MOT Reg 82, the Ministry said its aim was to protect consumer interests by improving the supervision of imports to ensure they met quality standards.

 

Under MOT Reg 82, importers of cellular phones are required (i) to be established as a Registered Importer (Importir Terdaftar or IT) of cellular phones; and (ii) have Importation Approval (Persetujuan Impor or PI) for cellular phones from the Director General of Foreign Trade at the Ministry of Trade.

 

One of the requirements to become a Registered Importer of cellular phones is that the importer must have experience either as an importer of cellular phones or as a distributor of cellular phones in Indonesia. There is no minimum period for such previous experience. As long as an importer is established as a Registered Importer under the previous Regulation and has obtained either a Surveyor Report that indicates that the company has previously imported cellular phones or an Import Declaration of cellular phones, it can apply to become a Registered Importer of cellular phones under MOT Reg 82.

 

That is contingent, of course, on its providing the required supporting documents listed in MOT Reg 82. Note that while there is no minimum previous experience as a cellular phone importer required to become a Registered Importer, MOT Reg 82 does require that distributors of cellular phones have at least three years of experience in this field.

 

The result of these requirements is that newly established trading companies are in danger of finding themselves unable to become Registered Importers of cellular phones, leaving them unable to import cellular phones for at least three years. They could be forced to appoint another company that has become a Registered Importer of cellular phones under MOT Reg 82 to import the cellular phones during that period and distribute the cellular phones obtained from that importer.

 

MOT Reg 82 specifies the documents a company must provide to prove it has three years of experience as a distributor. These are:

 

1. Trading Business License;
2. Distributor Certificate of Registration (Surat Tanda Pendaftaran or STP) of Goods within the country or overseas for cellular phones issued by the Directorate General of Domestic Trade; and
3. Letter of Appointment or cooperation as a distributor of cellular phones from a cellular phone importer.

 

Interestingly, or worryingly, it is not possible for a foreign capital investment (Penanaman Modal Asing or PMA) company to provide an STP since under the relevant Minister of Trade regulation, an STP is only granted to wholly owned Indonesian companies. This could result in the restriction of foreign investment in the importation and distribution of cellular phones even though this line of business is open for 100-percent foreign ownership based on Indonesia’s so-called Negative Investment List.

 

There is still confusion regarding this issue, though Ministry of Trade officials have verbally confirmed that MOT Reg 82 is not aimed at restricting foreign investors from engaging in the importation and distribution of cellular phones. It will be interesting to see how the Ministry reconciles this issue.

 

On a separate note, MOT Reg 82 requires a Registered Importer of cellular phones to trade and/or transfer the imported cellular phones to distributors, not to retailers. This particular provision contradicts the normal business practice of importers, who usually also act as distributors and sell their imported products directly to retailers.

 

SSEK

 

For further information, please contact:

 

Christina Natalia Soela, Soewito Suhardiman Eddymurthy Kardono
christinasoela@ssek.com 
 

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