A country who's famed to be on the ring of fire in Southeast-Asia is usually known for its beaches, Komodo Dragons, Bali and if you have watched Anaconda, Borneo. The developing country has a lot to offer with 264 million population, it is a hotspot for e-commerce
The country in itself has lots of potential and is ripe for picking with the nation's purchasing power increasing and a GDP of $3.49 trillion. However, what stops the growth of the B2C market is the people and government. With the locals having a preference to local sellers and is adverse to international purchases and the government regulations being very strict and hard to traverse, many have found it hard to sell in Indonesia, and if they managed, import into the country is a tricky one.
In this guide, we will cover everything from import regulations to local options for selling and marketing your products in Indonesia.
Table of Contents
- Import into Indonesia
- How do you handle import duties and taxes?
- DDU - Delivered Duty Unpaid
- DDP - Delivered Duty Paid
- So how much is duties and taxes?
- The regulations for e-commerce import
- What can I not import?
- Importing cosmetics, supplements and medicine
Import into Indonesia
Import regulations is important when you are shipping internationally and it is good to know the regulations for import so that you would be in a better position to explain the process or even the regulation should there be any disputes between you and your customer.
So, let's get started!
How do you handle import duties and taxes?
Before we get into the process and the regulations, first you should understand the difference between importing methods to deal with duties and taxes. In logistics, when you are shipping, most commonly asked question by companies are, "Would you be shipping DDU or DDP?"
"What in the world is DDU and DDP?!", you ask?
DDU - Delivered Duty Unpaid
is a method of importation to a country with the duties and taxes not paid prior to import. This means one of two things:
- The duties and taxes will be paid by you when the duty and tax billing is issued.
- You want the customer to pay duties and taxes
For obvious reasons, we'd advise against the latter as that would cause further delays especially if your customer starts a complaint about the duties and taxes. For this reason alone, we advise that all duties and taxes and prepaid to avoid dispute and delays.
DDP - Delivered Duty Paid
is a method of importation to a country with the duties and taxes paid prior to import. This means that the duties and taxes and prepaid to the logistics company prior to shipping the parcels. The duties and taxes are then paid upon import and no further delays will happen.
This is the most common method for handling duties and taxes as it avoids delays and complications in delivering your parcels.
So how much is duties and taxes?
For any given 24 hour time period, an individual is allowed to import USD 75 worth of products. Reason I say import is because someone can order multiple things on different day, but if it is declared and imported on the same day, duties and taxes will be incurred for all parcels.
USD 75 per person per 24 hours
Now that you have the basics of paying for duties and taxes down and know the daily allowance, it is important to know how much they are! For Indonesia, there are a few terms you should get to know, and these are:
The way that these are calculated is using the following formula:
CIF * BM = Import Duties
CIF + BM = FOB
FOB * PPN = VAT/GST/Tax
FOB * PPH = Income Tax
Total duties and taxes = Import Duties + VAT + Income Tax
So for example, you are shipping an item worth $349:
Import Duties = $349 * 7.5% = $26.18
FOB = $349 + $26.18 = $375.18
PPN = $375.18 * 10% = $37.52
PPH = $375.18 * 10% = $37.52
Total duties and taxes = $26.18 + $37.52 + $37.52 = $101.22
Below you will see illustration calculations of duties and taxes assuming the individual's income tax has 10% incurred.
The above calculations are dependent on the parcel values and the individuals, however, it is a good indication as to how much duties and taxes will be incurred at most to the customer. This also allows you as merchants to pre-emptively charge them the duties and taxes upon checkout!
The regulations for e-commerce import
The rules of the game for Indonesia is fairly simple, e-commerce import is only to be used for importing goods that are for personal consumption only. What that means is, anything that is for resale or distribution is not allowed to be imported via this channel.
What does that mean as a merchant? You cannot fulfil orders that seems suspicious and large. I always advise merchants to occasionally check and flag high order amounts. Eg. someone orders 100 calculators from your store; c'mon, who's ever going to need 100 calculators? Ever.
If in the event that one or two of these orders does go through, the likelihood for the parcel to be seized is high. With Aersure, we ensure to communicate all potential problems from the time you provide us with your shipment details so that this does not happen!
Here's a rule of thumb, anything above 20 pieces for the same SKU, reject that order. You're better off not making the sale than be left with 20 less inventory and a headache.
What can I not import?
For Indonesia, not much. The usual list and common sense applies:
- Radioactive Materials
- Medical Equipment
- Drug paraphernalia
- Live animals
- Human/animal remains
- Religious goods
- Weird voodoo stuff
- The list goes on....
It is important to know what you are shipping. If you sell very unique trinkets or products that are out of the ordinary, you should flag that in advance and speak to your shipping company, or reach out to your dedicated account manager from Aersure and we will be able to advise how best to move forward.
Importing cosmetics, supplements and medicine
You are legally allowed to import cosmetics, supplements and medicine for personal consumption, however, there are a few regulations that you may need to comply with in order to import the goods.
If you are selling any of the above, it is important that you inform your customers that they would be required to comply with the following documentation:
- Government issued identification (KTP)
- Statement Letter (Acknowledgement of Personal Usage)
The above documents may be requested by the customs authorities should they inspect your parcels. In which case, the customer is legally obligated to comply or risk having the parcel seized.
How do you sell?
Importing is half the battle in Indonesia, much like other parts of Southeast-Asia, the other half is actually selling in the country you are trying to reach. Aersure can solve your shipping woes, but we can only advise you on how to sell. Kind of the point for this guide ;)
How do you reach the market?
The culture in Indonesia means that everyone loves to text and chat. The country is filled with a lot of successful 'blog shops' or small home businesses that operate previously purely on forums and blogs, hence, the name. The success of these businesses come from referrals and word-of-mouth, furthermore, each shop develops its own way of order management.
The management of orders range from pure memory brawn to books and excel sheets. In the mid 2000s, no blog shop had a proper system in place for order management.
Now, it's 2019 and the days of hectic orders are gone. Let's discuss the different ways of reaching the market!
Whoops! Time hasn't permit for more expansion yet. X-Commerce is coming and will supplement this portion of the guide. Stay tuned!
This page will be updated regularly to reflect changes (last updated 04 Jan 2019)