How to Import From Indonesia

How to Import From Indonesia
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How to Import From Indonesia: Full Guide

When attempting to import goods from Indonesia to the United States and Canada. These challenges include locating reliable suppliers, understanding the regulatory requirements and customs procedures specific to Indonesia, overcoming potential language differences, and managing the intricacies of logistics and international shipping. Yet, the potential of accessing Indonesia’s diverse market and extensive product range makes these challenges worthwhile. Many of these difficulties can be significantly reduced by collaborating with the right digital freight forwarder.

In this comprehensive guide, we examine the challenges and nuances that you, as an SMB, face when importing from Indonesia. Our mission is to offer you valuable insights to help you succeed with your importation efforts. We will highlight how an experienced freight forwarder can adeptly tackle these challenges, paving a smoother route for your global trade activities.

Setting up and Understanding Your Import Strategy is the First Step

As you begin your import journey from Indonesia, it’s crucial to learn about the key players involved in this process. Their collective efforts ensure seamless goods transportation, compliance with rules, and a fluid implementation of the importation steps. 

The following is a brief list of the key players:

  • Importer/Buyer: This represents you, an SMB seeking to diversify its offerings by importing goods from Indonesia.
  • Indonesian Customs: This department supervises exports from Indonesia, ensuring they conform to all local regulations and norms.
  • Customs in the USA or Canada: Their responsibility is to confirm that all inbound products adhere to local statutes, protocols, and quality standards while applying any relevant duties or tariffs.
  • Digital Freight Forwarder: This is where Ship4wd steps in. We act as the bridge between you and the Indonesian exporter, managing shipping operations, tackling logistical challenges, and assisting with customs clearance to guarantee the successful arrival of your products.

For an SMB, coordinating your shipping activities becomes more efficient when you actively engage with these key players. By securing the services of a freight forwarder as your trusted partner, you can focus on your core business tasks – exploring new markets, opening up new opportunities, and growing your business.

Understanding the Indonesian Market

Nestled within its vast archipelago, bathed in cultural richness, Indonesia has a thriving consumer market. With a population of more than 270 million, most of whom are young, with an average age of 30, it is a country that is rapidly developing. The urban centers, in particular, are hubs of rapid transformation and modernization, making Indonesia a promising destination for international commerce.

As Southeast Asia’s largest economy, Indonesia stands as a significant hub for global trade, excelling in various sectors such as electronics, agriculture, textiles, footwear, and natural resources. The tropical climate supports a wide variety of agricultural activities, making Indonesia one of the world’s primary sources of spices, tropical fruits, and essential oils. 

Indonesia’s trade strategy is anchored in its involvement in several regional partnerships and agreements, such as the Association of Southeast Asian Nations (ASEAN) and the Regional Comprehensive Economic Partnership (RCEP). These agreements bolster its trading relationships, ensuring smoother export and import processes with member countries.

Indonesia’s growing importance in the global trading landscape has gained attention. To illustrate, in 2022 alone, the amount of trade between the United States and Indonesia increased to an impressive level, reaching a total of $47.5 billion. Out of this, Indonesia’s exports to the US alone accounted for a remarkable $34.5 billion, further reinforcing its position as a dominant trade partner.

Make Sure Your Supplier Complies with Indonesia’s Export Regulations and Compliance

When importing products from Indonesia to the United States or Canada, it’s generally the duty of your Indonesian supplier to secure export licenses and manage export procedures.

During this stage, as an importer or buyer, your main priority should be to settle on the appropriate Incoterm, detailing the exact responsibilities of each party involved.

Below is a concise summary of the compliance and regulations that your Indonesian partners need to follow.

Customs Declaration

When your Indonesian partner exports products from Indonesia, they must furnish a detailed customs declaration. This declaration should cover the following elements:

  • Consignor and Consignee: Information about the exporter (seller) in Indonesia and the importer (buyer) in the target country.
  • Description of Goods: An accurate and comprehensive description of the items being shipped, which may also highlight their material composition if pertinent.
  • Value of Goods: The total cost or value of the products being exported out of Indonesia, generally used to compute customs duties and taxes.
  • Country of Origin: This refers to Indonesia, where the goods were produced or assembled.
  • Tariff Classification: Harmonized System (HS) codes are employed to classify the products for customs duty calculations.
  • Purpose of Shipment: The intent behind transporting the goods, be it for retail, as samples, personal use, or other possible purposes.
  • Shipping Details: Particulars concerning the mode of transport, inclusive of details like the vessel or flight number and the port or airport of entry.

While the precise requirements may vary based on the product type and the specific regulations of the importing country, these elements outline the usual components typically found in a customs declaration when exporting from Indonesia.

Export License (Indonesian Supplier)

When dealing with suppliers in Indonesia, it’s crucial to ensure they comply with local regulations and have the necessary licenses and permits for exporting goods. Here’s a general overview:

  • Business Operating Permit: Your Indonesian supplier must have a valid business permit. This could be a Trading Business License, Industrial License, or relevant permits based on their type of operations. This documentation ensures they are legally recognized to conduct business in Indonesia.
  • Exporter Identification: While there isn’t a singular “export license,” your supplier should have an “Export Identity Number (APE)” or similar credentials, which will verify their eligibility to export products out of Indonesia.
  • Compliance with Specific Export Regulations: Depending on the nature of goods, specific additional licenses or permits may be necessary. It’s advisable to confirm with your supplier that they are compliant with these, ensuring a smooth export process.

After securing the necessary licenses and permits, a seller from Indonesia should be well-versed in the tax implications linked to exporting. Here’s an insight into what they might face:

  • Value Added Tax (VAT): In Indonesia, numerous exported goods are levied at a 0% VAT rate. However, it’s vital to recognize that this might not be applicable to all product categories. Consequently, the exporter might have the opportunity to reclaim any VAT incurred on products and services connected to the exported items.

The information provided gives a general perspective, but exporters should engage with local tax and trade specialists to ensure thorough compliance.

Negotiating Contracts and Incoterms with the Indonesian Seller

When importing goods from Indonesia, SMBs must have a clear understanding of Incoterms such as ExWorks (EXW), Free On Board (FOB), and Free Carrier (FCA).

Incoterms, an abbreviation for International Commercial Terms, are a set of standardized protocols that define the roles and responsibilities of both buyers and sellers in relation to the transportation and delivery of goods in sales contracts. These terms shed light on various aspects of your contract, including which party covers transportation expenses, the specific moment when risk transitions from the seller to the buyer, and who is responsible for obtaining cargo insurance.

For instance, under FOB, the Indonesian seller is accountable for the products up until they are placed on the shipping vessel. With EXW, the buyer takes on responsibility right from the time the products leave the Indonesian seller’s facility. Conversely, in FCA, the Indonesian seller hands over the goods to a transportation method selected by the buyer. Mastery of these terms is fundamental for a seamless import procedure from Indonesia.

Please find below the 11 Incoterms as provided by the International Chamber of Commerce (ICC):

  • EXW (Ex Works).
  • FCA (Free Carrier).
  • CPT (Carriage Paid To).
  • CIP (Carriage and Insurance Paid To).
  • DAP (Delivered At Place).
  • DPU (Delivered At Place Unloaded).
  • DDP (Delivered Duty Paid).
  • FAS (Free Alongside Ship).
  • FOB (Free On Board).
  • CFR (Cost and Freight).
  • CIF (Cost, Insurance, and Freight).

Explore further about Incoterms here.

Even though these Incoterms are globally acknowledged, it’s imperative to distinctly specify your selected Incoterm in the sales contract when importing items from Indonesia or any other location. It is essential that both parties possess a clear understanding of their duties under the selected term to minimize or completely eliminate any possible disputes and misunderstandings.

Choosing Your Shipping Options and Handling Logistics

Navigating the intricacies of importing goods from Indonesia demands careful consideration of shipping options and effective management of logistics. The best choice is influenced by factors like your financial plan, the quantity and weight of your commodities, and the delivery timeframe.

While air freight can be utilized for transporting goods from Indonesia, sea freight frequently stands out as the preferred choice for businesses interested in conveying large quantities or those without pressing delivery deadlines. Full Container Load (FCL) and Less than Container Load (LCL) can be used as potential shipping methods. FCL is best suited for substantial consignments, letting businesses exclusively occupy a container for their goods, whereas LCL amalgamates your products with other consignments in a shared container.

There are a variety of delivery strategies available, including port-to-door, port-to-port, and door-to-door. By hiring an experienced freight forwarder to manage this multilayered process, logistics become more fluid, and the task of coordinating with various service providers is rendered unnecessary.

It’s also vital to guarantee your goods have cargo insurance coverage to protect against unforeseen transit damages or losses.

Additionally, staying up-to-date on essential shipping documents, like the Bill of Lading, is crucial for ensuring seamless shipping operations.

How Freight Forwarders Streamline Your Shipping Operations

Utilizing freight forwarders can significantly improve the effectiveness of your shipping operations, mainly when dealing with the complexities of international commerce.

  • Researching: Freight forwarders present an extensive array of shipping strategies along with additional services, including FCL and LCL, customs clearance, financing options for SMBs, and secure payment options. Their enduring partnerships with carriers and other service providers give them a distinct advantage, allowing them to streamline processes and negotiate more effectively compared to SMBs operating independently.
  • Execution: Freight forwarders take charge of logistics, supervising the entire shipping process to guarantee the secure transportation of your goods from Indonesia.
  • Insurance & Advanced Tracking: Typically, these experts offer cargo insurance to protect your merchandise during its journey. Moreover, they provide advanced tracking systems, allowing you to monitor your consignment’s progress and be promptly informed of any unexpected developments.

Import Regulations and Customs Duties When Importing Goods from Indonesian 

Understanding import regulations and customs duties is essential when bringing in products from Indonesia. It’s vital for SMBs to follow these guidelines to guarantee a smooth import procedure. Critical aspects to bear in mind when importing from Indonesia to the US and Canada include:

Compliance Considerations When Importing to the USA and Canada

For Both Countries:
  • Quotas and Restrictions: Certain items imported to the USA and Canada from Indonesia might be subject to import quotas or restrictions. To ascertain which products are impacted, it’s advisable to refer to the US Customs and Border Protection website for regulations affecting US imports and the Canada Border Services Agency website for guidelines pertaining to Canadian imports.
  • Tariff Classification: Every product imported into the US and Canada must be appropriately classified using its respective Harmonized System code. This classification dictates the relevant duty rate and any possible import constraints.
  • Calculation and Payment of Duties: Being well-versed in how customs duties are determined and the procedure for their payment is crucial when importing to the US and Canada.
  • Product Standards and Regulations: It’s imperative to guarantee that the products being imported meet the US and Canadian standards concerning safety, quality, environment, and labeling.
For the United States:
  • US Customs Bond: For commercial imports into the USA from Indonesia, the US Customs and Border Protection (CBP) requires a customs bond. This bond acts as a financial guarantee, ensuring that the importer complies with all relevant regulations and laws and commits to the payment of import duties and related taxes.

For Canada:

  • Canadian Customs Assurance: For importing goods into Canada from Indonesia, certain importers need to secure a customs bond, commonly recognized as form D120, as mandated by the Canada Border Services Agency (CBSA). This bond serves as a testament that the importer is committed to meeting all relevant regulations, ensuring the payment of import duties, taxes, and any associated obligations.
  • Business Number (BN) Registration: For the importation of commercial goods into Canada, whether by a business entity or an individual, obtaining a Business Number (BN) for an import/export account is essential. The Canada Revenue Agency (CRA) provides this number.
  • Canadian Import Control List (ICL) Compliance: Should the products fall under the ICL, it’s crucial for importers to verify if any specific permits or licenses are required.

Documents and Other Considerations When Importing to the USA and Canada

Importing to USA and Canada:

  • Bill of Lading (BOL): This is a shipping document provided by the carrier to the shipper, acknowledging the receipt of goods and their current transit status. It can act as both proof of the carriage contract and a receipt for the transported goods.
  • Commercial Invoice (CI): This document captures the transaction details between the exporter and importer. It lists product descriptions, prices, quantities, delivery terms, details of both buyer and seller, payment conditions, and more. It serves as a cornerstone for customs in determining the value and appropriate duties.
  • Packing List (PL): A detailed list that itemizes the contents of the shipment, including specifications such as weight, dimensions, and the number of packages. This list assists customs officials in inspecting and verifying consignments.
  • Certificates of Origin (CoO): This document confirms the manufacturing origin of the goods. It plays a role in determining tariff rates and is vital for certain preferential trade agreements.

Importing to the USA:

  • Importer Security Filing (ISF): Often dubbed as “10+2“, the ISF is a mandate that needs electronic submission to US Customs and Border Protection (CBP) before dispatching cargo from Indonesia to the USA. Its purpose is to bolster security measures.
  • ACE Import Manifest Documentation: Overseen by the US Customs and Border Protection (CBP), this electronic system necessitates that carriers, importers, and freight forwarders provide their manifest data to CBP before the shipment reaches the USA. Utilizing this platform facilitates early risk assessment and expedites the customs clearance process.

Importing to Canada:

  • Canada Customs Invoice (CCI): For shipments valued at CAD 2500 or more entering Canada, a copy of this document is imperative. The CCI offers detailed insights about the items being transported from Indonesia to Canada, encompassing details about the seller, the purchaser, and other pertinent data.
  • Import Declaration: The importer completes this form to specify items shipped into Canada. It contributes to the monitoring and oversight of imports by Canadian customs officials.
  • ACI eManifest: An electronic system mandated by the Canada Border Services Agency (CBSA) requiring pre-arrival cargo details from parties involved in freight movement. This system enables Canadian authorities to assess inbound shipment risks and expedite customs clearance.

How a Freight Forwarder Can Streamline Import Regulations and Customs Duties Process

For SMBs, freight forwarders stand out as a valuable resource when navigating the complex web of regulations related to imports and customs. The expertise they have in handling imports from Indonesia ensures that businesses adhere to the necessary guidelines, preventing potential fines or unnecessary delays while helping minimize the challenges associated with global commerce.

Ship4wd is Your Trusted Partner for Importing Goods from Indonesia

As you navigate the complexities of importing goods from Indonesia, Ship4wd stands out as a valuable partner for SMBs. 

As your digital freight forwarder, our goal is to help you import a wide range of products from Indonesia based on our knowledge and experience, which is supported by a consistent track record of success. In other words, whether your imports are headed to the US, Canada, or other global destinations, you can count on us for instant shipping quotes to and from virtually anywhere in the world. Furthermore, our platform provides additional services like customs clearance, cargo insurance, advanced tracking, FCL (Full Container Load), or LCL (Less than Container Load), along with unique financing solutions, to streamline and enhance your importing operation.

On top of that, we provide top-of-the-line 24/7 customer support, ready to assist you with any questions you may have about your shipment or using our platform.

By utilizing Ship4wd, SMBs can simplify the complex process of importing goods from Indonesia. Register with Ship4wd today and let us handle your shipping needs, allowing you to focus on developing and running your business.

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