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Indonesian gov't set to restrict imports of finished goods

Publication Date : 14-04-2012

 

The Indonesian government will soon issue a new regulation to restrict imports of finished goods by general importers (traders) in a move to protect local investors in the manufacturing industry, a minister said.

Trade Minister Gita Wirjawan said in Jakarta on Friday that the regulation, which would be issued by the end of this year, was intended to support investors who had poured a large amount of investment into the domestic manufacturing sector.

The regulation may affect the importation of a wide range of products, including food and beverage, textile, automotive and electronics.

Producers would still be allowed to import finished products to support their business activities until such products could be produced at home, said Gita, who is also the chairman of the Investment Coordinating Board (BKPM).

Industrial companies have long appealed to the government to consider the restriction of imports of finished products to protect their business from cheaper foreign goods.

Local producers have said that the implementation of a free-trade agreement with China had resulted in an influx of cheaper products from the country.

"Basically, we want to provide incentives, certainties to whoever invests in production activities in Indonesia through our support and we aim to limit import activities by general importers who invest less than producers,” he said during a press conference at his office.

The new regulation would also boost domestic production further by restricting the period of allowable import of finished goods until they can be produced locally, Gita added.

The new regulation will revise Trade Ministerial Regulation No. 39/2010 on importation of finished goods. One of the regulation’s articles has been recently annulled by the Supreme Court because it was considered to encourage imports of finished goods.

The manufacturing industry is one of the largest contributors to the growth of Indonesia, which is Southeast Asia’s largest economy, and this year is expected to expand by 7.1 per cent.

Gita said that importation of finished goods would still be allowed for items required for further production, but he declined to elaborate further on the details.

Earlier, the Trade Ministry’s foreign trade director general Deddy Saleh hinted that the import of finished goods would still be allowed in several cases, including for producers testing the market for their new products produced by their overseas affiliations, for multinational firms exchanging products with their overseas affiliations, and for producers wanting to complete their lineups.

Electronic Producers Association (Gabel) deputy secretary-general Yeane Keet welcomed the planned regulation, saying that general importers (traders) had to be regulated as at present, they could import a wide-range of products and hold more than one import license.

"[Imported goods] would be better aimed at production so that they could boost the competitiveness [of our industry],” she told The Jakarta Post in a text message.

Indonesian Textile Association (API) chairman Ade Sudrajat also welcomed the regulation, but emphasised that the government applied strict measures to regulate general importers and closely supervise the circulation of goods in the domestic market.

"We support the regulation in the spirit that it will help the industry grow and contribute to job creation,” he told the Post via telephone.

The measure is intended to protect local producers who have spent a lot of money for their business.

 

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