The Legal 500

Minister of Trade Regulation No. 59/M-DAG/PER/9/2012 ("MoTR 59/2012") has been issued to amend No. 27/M-DAG/PER/5/2012 ("MoTR 27/2012") on Importer Identification Numbers. The amendment has immediate effect, as of 21 September 2012, and revises the implementation of certain aspects of General Importer Identification Number ("API-U") and Producer Importer Identification Number ("API-P"). In accordance with Articles 4(1) and 5(1) API-U is given to importers for trade purposes, whereas API-P is given to importers for production purposes.

The highlight amendment is that MoTR 59/2012 is relaxing the MoTR 27/2012 restriction on API-U holders to only import a single type of goods. Previously, a company that holds an API-U was only allowed to import one category of goods stipulated in the Goods Classification System provided in Appendix I of MoTR 27/2012. Now, one API-U can be used to import goods that fall under more than one category of the Goods Classification System if the API-U holder has a special relationship with the foreign exporter or if the company holding the API-U is wholly or majority owned by the Government (e.g. stated owned enterprise).

Definition of a "Special relationship" is a relationship between a company holding an API and a company located abroad whereby one party has the capability to control the other party or has significant influence over the other party in line with applicable accounting standards. Furthermore, the form of a special relationship between an API-U holder and their counterpart, as provisioned under Article 4 (6) of the MoTR 59/2012, exists under the following conditions:

a.     There is a contractual agreement to share control of a certain economic activity;

b.     Share ownership;

c.     Articles of association

d.     Agent/Distributorship Agreement;

e.     Loan Agreement; or

f.      Supplier Agreement.

MoTR 59/2012 also relaxes the prohibition on the transfer of imported goods for API-P holders. Before, under MoTR 27/2012, holders of API-P were forbidden to transfer or trade the goods that they have imported to other parties. Article 5A of MoTR 59/2012 adds an exemption to the restriction that allows transfers of goods as long as the imported goods have been granted an import duty exemption facility and have been used by the holder of the API-P for a minimum of two years as of as of the date of the import duty notification date.

Furthermore, Article 9 of MoTR 59/2012 concerning criteria of complementary goods imported by an API-P holder, removed the requirement for an API-P holder to import complementary goods that the API-P holder is incapable of producing independently. The new requirements for importing complementary goods are: (i) importing complementary goods is permitted under the API-P holder's business permit, and (ii) the complimentary goods originate from an entity that has a special relationship with the API-P holder. In addition, Article 11 (3) of MoTR 59/2012 adds the API-P validity period is depending on the recommendation from the relevant technical agency at the central level.

Article 22 of MoTR 59/2012 adds a new requirement regarding supporting documents for an API-U application. In order to obtain an API-U to import goods classified in more than one section of the Goods Classification System, the applicant must enclose a statement letter with a duty stamp concerning the special relationship of API-U holder with the foreign company, and evidence of the special relationship that is legitimized by the Indonesian Embassy where the foreign company that has a special relationship is domiciled. However, there are no provisions concerning supporting documents for API-P that require a documentary evidence of a special relationship for API-P holders who wish to import certain industrial goods.

Since in the MoTR 59/2012, Article 33 concerning importation without API (for limited purposes, see Article 32 of MoTR 27/2012) has been deleted, therefore there is no longer an obligation to obtain import approval from Director of Import at the Ministry of Trade.

With the enactment of MoTR 59/2012, monitoring and evaluation of import policies has been increased. Under Article 34A of MoTR 59/2012 the Director General of Foreign Trade is obligated to supervise the import activities of API-U and API-P holders through post audits by coordinating with institutions that are authorized to issue an API, the Directorate General of Customs and Excise, and also the Minister of Finance. The post audit will supervise the following matters: the validity of import realization report, suitability of the imported goods according to the data that is listed in the API's document, and compliance of API's holders' conduct with importation legislation.

The issuance of API-U and API-P may be delegated by Minister of Trade to:

• ·      Head of Investment Coordinating Board ("BKPM") or Echelon 1 in Investment Services Department and/or Echelon 2 in Licensing Service Department: For foreign capital investment companies;
• ·      Head of Provincial Department: For local capital investment companies and other companies outside the BKPM and Director General of Foreign Trade's authority;
• ·      Director General of Foreign Trade: For Company or Contractor in Energy and Mineral Resources, and/or Oil and Gas fields;
• ·      Head of the One-Stop Service Provider ("OSSP"): For foreign capital investment companies other companies outside the BKPM and Director General of Foreign Trade's authority, if an OSSP has been established in the province.

Source: Minister of Trade Regulation No. 59/M-DAG/PER/9/2012 on the Amendment of Minister of Trade Regulation No. 27/M-DAG/PER/5/2012 on Importer Identification Number; www.hukumonline.com, ILB, 02/10/2012: Amendment to API Regulation Relaxes Restrictions on Imports

For more information please visit www.lgslaw.co.id