The Ministry of Trade’s Director General of Foreign Trade has issued a new regulation (No. 02/DAGLU/PER/1/2019 - DG Reg. 02) that sets out technical guidelines governing the mandatory insuring of prescribed imports/exports with domestic insurers pursuant to Minister of Trade Regulation No. 82 of 2017, as lastly amended by Minister of Trade Regulation No. 80 of 2018. DG Reg. 02 entered into effect on 16 January 2019.
B. Mandatory Insuring of Prescribed Imports/Exports with Domestic Insurers
Under Minister of Trade Regulation No. 82 of 2017, as amended, an exporter of coal or CPO and an importer of rice or goods to be used in Government procurement (“Prescribed Goods”) must take out marine cargo insurance for their shipments with a domestic insurance company or a consortium of domestic insurance companies (“Domestic Insurer”).
A Domestic Insurance Company refers to a general or shariah-compliant insurance company that is incorporated in Indonesia and is licensed by the Financial Services Authority (“OJK”).
A shipment of Prescribed Goods must be verified by means of an inspection conducted by a surveyor prior to loading, including as regards the use of a Domestic Insurer to insure the goods being shipped.
Non-compliance may lead to the imposition of administrative sanctions ranging from written reprimands to revocation of licenses.
C. DG Reg. 02: Key Provisions
A Domestic Insurer must be registered with the Ministry of Trade, and have a minimum paid-up capital of IDR 100 billion (approx. USD 7.1 million) and minimum equity of IDR 500 billion (USD 35.6 million).
To register with the Ministry of Trade, a Domestic Insurer must furnish a declaration attesting to its capacity/willingness to integrate its system with the Inatrade system, that is, the online trade-services system operated by the Ministry of Trade. In addition, it must be licensed by the OJK and be approved for registration by the Director General.
A Domestic Insurer is required to electronically submit data and information related to a marine cargo insurance policy for Prescribed Goods to the Director General using the Inatrade system within one day of the insurance cover being issued.
In a situation where a Domestic Insurer is unable as yet to furnish the required insurance data to the Director General using Inatrade, it may provide the data manually to the exporter/importer for submission to the surveyor assigned to verify the administrative requirements. The surveyor must then forward it to the Director General by not later than the tenth day of the following month. However, manual submission of insurance data is only permitted for an interim period six months following the issuance of DG Reg. 02 (that is, up to 16 July 2019).