Indonesia Records Significant Trade Surplus: Govt' Imposes Export-Import Relaxation Amid Covid-19
According to recent data from Statistics Indonesia (Badan Pusat Statistik - BPS), Indonesia reported a total of US$ 13.94 billion in exports in February 2020, an 11% rise yoy, while total imports declined by 5.12% yoy to US$ 11.6 billion since imports from Indonesia’s largest trading partner dropped dramatically by 35.27% compared with the same period last year. In addition, non-oil and gas balance has tripled from last year’s USD$ 803.7 million surpluses to USD$ 3.3 billion surpluses.
Disruption in global supply chains culminated in increasing exports to Indonesia, but decreasing imports at the same time, primarily consumer goods, raw materials and capital goods, in the midst of shipments declining from China subsequent to the COVID-19 outbreak. Given the significant impact of the virus threat the Government issued Government Regulation in Lieu of Law Number 1 of 2020 on State Financial Policy and Stability of Financial Systems for the Management of Covid-19 and/or Encounter the Threat to National Economy and/or Stability of Financial Systems (“Perppu 1/2020“). Furthermore, President Joko Widodo’s Administration announced a relief package of Rp 405.1 trillion which is allocated into Rp 75 trillion for the social safety net, Rp 70.1 trillion for industrial support and Rp 150 trillion for the National Recovery Program.
President Joko Widodo issued Presidential Decree Number 9 of 2020 regarding the Amendment of Presidential Decree Number 7 of 2020 regarding the Task Force to Expedite Counter-measures Against The COVID-19. In order to accelerate imports on goods used for COVID-19 counter-measures, the Head of the National Disaster Management Authority (Badan Nasional Penanggulangan Bencan or BNPB) was appointed to grant exemption for licensing procedures in the trade and import sectors.
Import Licensing Arrangement and Simplification of Essential Goods and Production Materials
In order to maintain the availability and affordability of commodities and sustainability of industrial production, President Joko Widodo issued Presidential Regulation Number 58 of 2020 on Import Licensing Arrangement and Simplification (PR 58/2020) on April 8, 2020. PR 58/2020 regulates the types of commodities and production materials that are subject to the relaxation of licensing provisions, including: (i) Staple Goods and Foods; (ii) government food reserves; (iii) raw and auxiliary materials; (iv) goods and raw materials for disaster mitigation or handling; and/or (v) other needs identified by the Government.
Relaxation of Licensing Procedures for Horticultural Products
On 18 March 2020, the Minister of Trade (“MOT”) issued MOT Regulation Number 27 of 2020 on the Import Provisions of Horticultural Products, which relaxes the administrative procedures for issuing import licenses by eliminating import approvals and surveyor reports for the commodity. As of 7 February 2020, the Ministry of Agriculture issued a Recommendation on the Import of Horticultural Products (RIPH) to the Garlic Importers for a total of 103,000 tons. Further, Indonesian Competition Commission (KPPU) has requested the Government to impose strict sanctions on importers that purposely and without certain reason postpone the realization of garlic imports.
Non-Fiscal Stimulus Package
At a press conference on March 13, 2020, Ministry of Finance announced its second non-fiscal stimulus package in the form of:
Simplification and reduction of restrictions under the 749 Harmonized System (HS) code, consisting of 443 HS code for fishery products and 306 HS code for forestry products. Health certificates and V-legal documents will also no longer be required (unless required by the importing countries).
Simplification of producers on importing steel, alloy steel and its derivatives (raw materials) as well as several food commodities such as sugar, flour and salt as raw materials.
Acceleration of the import of medical devices and personal protective equipment in the form of exemption from the Surveyor Report in the country of origin or the port of origin, import relaxation is in place until 30 June 2020 and the shipment of the products must be accompanied by a Bill of Landing (B/L).
Acceleration of the Export-Import procedures for reputable traders. The government will provide incentives for reputable traders that have a high level of compliance. The incentives will be in the form of automatic response and approval of any application of certain restrictions of both exports and imports and surveyor report (LS) exemption for mandatory commodities.
Acceleration and Improvement of the Export-Import Process Service through the development of the National Logistics Ecosystem (NLE). NLE is platform which facilitates collaborative information system between government and private institutions to simplify and synchronize flows of information. Further, NLE is developed for data sharing and simplification of business process within export, import, trade and distribution activities. The NLE roadmap includes the integration of Indonesia National Single Window (INSW), CEISA (Customs and Excise), Inaport, Inatrade,, transportation system, warehouse system and more.
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