After the enactment of Minister of Trade Regulation No. 70/M- DAG/PER/9/2015 on Importer Identification Number ("Regulation 70"), the Ministry of Trade ("MOT") recently issued a draft of a new regulation that may restore the previous exemption (API-P holders can import finished goods) which has been removed by Regulation 70. If this draft is passed to become a new regulations, API-P holders can continue to or re-import manufactured (finished) goods as complementary goods, test market goods, and goods for after-sales service to be traded subject to obtaining an import approval from the MOT.

Implications for API-P Holders

This new proposed regulation may resolve the issue that arises from the issuance of Regulation 70 that removes the exemption for API-P holders to import manufactured goods under certain criteria (i.e. test market goods and complementary goods) to be traded after obtaining a Producer Importer ("PI") license from the MOT.

The concept for importing manufactured goods to be used as test market goods, complementary goods or goods for after-sales service in the new regulation is generally the same as previously stipulated under Minister of Trade Regulation No. 27/M-DAG/PER/5/2012 on the Provisions of Importer Identification Number as lastly amended by Minister of Trade Regulation No. 84/M-DAG/PER/12/2012 ("Previous Regulation"). However, there is no specific terms of Producer Importer, the draft introduces the new term of Import Approval ("IA") from the MOT to import manufactured goods to be used as test market goods, complementary goods or goods for after-sales service. So, the imported manufactured goods can be traded and transferred to other parties after obtaining an IA (not PI license) from the MOT.

As you can see from the above, while complementary and test market products are already acknowledged under the previous PI license regime, after sales service is the new criteria which may be introduced. Products under after sales criteria must meet the following requirements (i) must be in new condition, (ii) can not be fully produced by the APIP holders or their availability in local market is still limited, and (iii) in line with the business license of the APIP holders. We may know further information on this matter once the regulation is issued.

What the draft says

We set out below a summary of the draft regulation:

  • API-P holders can import manufactured goods as test market goods, complementary goods or goods for after-sales service for the development of their business, and can trade and transfer those manufactured goods to other parties after obtaining an IA from the MOT.
  • The criteria for test market goods that can be imported by API-P holders are as follows:
  1. The goods are in new condition.
  2. The goods cannot be produced by the API-P holders.
  3. The importation of test market goods can be done for a limited time as stipulated by the MOT.
  • The criteria for complementary goods that can be imported by API-P holders are as follows:
  1. The goods are in new condition.
  2. The goods cannot be produced by the API-P holders.
  3. The goods are in accordance with the industrial business license, or other business licenses held by the API-P holders.
  4. The goods are produced by a foreign affiliated company.
  • The criteria for goods for after-sales services that can be imported by API- P holders are as follows:
  1. The goods are in new condition.
  2. API-P holders can not entirely produce the goods or the availability of the goods in local market is limited.
  3. The goods are in accordance with with the industrial business license, or other business licenses holds by the API-P holders.
  • API-P holders may apply for an IA through online application at HTTP:/inatrade.kemendag.go.id, and submit the following documents:
  1. A copy of industrial business license and other business licenses holds by the API-P holders.
  2. A copy of the valid API-P.
  3. Evidence of affiliation with a foreign company as required for importing manufactured goods.
  • Once API-P holders obtain an IA, API-P holders are obliged to submit a report regarding the import activity through the online system every three months.
  • IA can be revoked if the API-P holder:
  1. fails to submit the import report through the online system twice;
  2. is proven to have changed the data or information in the IA;
  3. is proven to have submitted false or wrong data or information as the requirements to obtain its IA after the issuance of the IA;
  4. conducts violations in customs matters based on information from the Customs office;
  5. is found guilty by a court decision that is legally binding in relation to the misuse of import approval.

Actions to consider

If this draft regulation is realized to become a new regulation, API-P holders can consider to apply for an IA once their PI license has expired (or maybe before it expires), so API-P holders can keep importing finished goods.

Conclusion

This new proposed regulation is likely to be welcomed by API-P holders as this new proposed regulation restores the exemption for API-P holders to import manufactured goods as test market goods, complementary goods or goods for after-sales service to be traded to other parties, which previously was removed by Regulation 70.

Especially in pharmaceutical sector, after the enactment of Regulation 70, this new proposed regulation will resolve the dilemma which will be faced by pharmaceutical manufacturing companies as the ones who can hold marketing authorizations of drugs under the prevailing Ministry of Health regulations, to import finished drugs since most of them (if not all) are API-P holders.