COVID-19 Pandemic: Guidelines for the Imposition of Government-Borne Import Duty to Certain Industries

On 8 October 2020, the Minister of Industrial Affairs of the Republic of Indonesia issued a new regulation which provides a guideline for the utilization of import-duty facilities borne by the government/Bea Masuk Ditanggung Pemerintah (“BMDTP Facility”). This new regulation is intended to support the implementation of the BMDTP Facility as provided by the Minister of Finance (“MoF”).

Legal Frameworks: Our below executive summary refers to the following prevailing laws and regulation:

  1. MoF Regulation No. 134/PMK.010/2020 on Government-Borne Import Duty for Imports of Goods and Materials Which Are Used to Produce Goods and/or Services by Certain Industrial Sectors Impacted by the Corona Virus Disease 2019 Pandemic (COVID-19) (“MoF Regulation 134/2020”) 

  2. Minister of Industry Regulation No. 31 of 2020 on Implementing Guidelines for the Utilization of Government-Borne Import Duty Facilities for Imports of Goods and/or Services by Certain Industrial Sectors Affected by the Corona Virus Disease 2019 (Covid-19) Pandemic (“MoI Regulation 31/2020”)

Main Keys on the Guidelines for the Imposition of BMDTP Facility: We have managed to provide you the following main keys regarding guidelines for the imposition of the BMDTP Facility.

Scope of the Goods and Materials: We note that BMDTP Facility will be granted to various goods and materials that fulfill the following requirements:

  1. Goods and materials have yet to be produced domestically;

  2. Goods and materials are produced domestically but have yet fulfilled the required specifications; or

  3. Goods and materials are produced domestically but in limited amounts that are not sufficient for the relevant industrial requirements according to recommendations made by the relevant ministries or agencies (Art. 2 (2) of MoI Regulation 31/2020).

In addition to the above, the imported goods and materials must not subject to (i) 0% import duty, (ii) imposed by  0% import duty based on international contracts, (iii) anti-dumping import duty or temporary anti-dumping import duty, safety-measure import duty or temporary safety-measure import duty, return import duty or retaliatory-measure import duty; or (iv) destined for storage in bonded-storage areas (Art. 2 (3) of MoI Regulation 31/2020).

Application to Obtain BMDTP Facility: On the eligibility, to obtain a BMDPT Facility, a company must apply for the issuance of BMDPT Facility recommendation to the Director of Industrial Development (“Director”) (Art. 6 (1) of MoI Regulation 31/2020).

We note that the list of documents that shall be submitted comprises of: (i) a list of goods and materials for which BM-DTP, and (ii) an Industrial Verification Certificate/Surat Keterangan Verifikasi Industri (“SKVI”) (Art. 6 (2) of MoI Regulation 31/2020).

Please kindly note that the industrial company shall submit a certain required document for SKVI issuance to the Verification Management Agency/Lembaga Pelaksana Verifikasi (“LPV”) through the National Industrial Information System/Sistem Informasi Industri Nasional (“SIINas”) (Art. 10 and 11 of MoI Regulation 31/2020). Lastly, the LPV then will issue the SKVI upon the completion of the initial and final verification process (Art. 12 (2) of MoI Regulation 31/2020).

Utilization of BMDTP Facility: We note that all imported goods and materials that utilize BMDTP Facility are subjected to: (i) be used to produce goods and/or services for domestic consumption; (ii) be utilized in accordance with their stated purposes; and (iii) must not be handed over to any other parties (Art. 21 (1) of MoF Regulation 134/2020).

Mandatory Reporting: Industrial companies are obliged to submit the following mandatory report with details set out in the below table.

Mandatory Report

Remark

Customs report notification

This report shall be submitted to the Director-General of Industrial Development (“Director-General”) at the latest of 4 January of the following year. Failure to submit such report will result in the relevant company paying for calculated payable import duty (Art. 28 (1) and (2) of MoI Regulation 31/2020).

Import-realization report

This report must be submitted by industrial companies to the Director-General, the Director-General of Resilience, Territory and International Industrial Access, and the Secretariat of the Director-General at the latest by 6 January of the following year via the SIINas (Art. 29 (3) of MoI Regulation 31/2020).

Sanctions of Violation:  We note that the violation of certain provisions will be imposed on sanctions with details as set out in the below table.

Obligation

Sanction of Violation

Submission for BMDTP Facility

The Director-General will impose administrative sanctions in the form of written reprimands (“Written Reprimand”) if the company fails to apply for a BMDTP recommendation within 30 (thirty) business days after the issuance of SKVI (Art. 37 (1) of MoI Regulation 31/2020).

 

If the industrial companies fail to submit for BMDTP Facility after 7 (seven) business days of the issuance of Written Reprimand, the Director may shift the budget ceiling which has been allocated or which has yet to be realized to other industrial companies (Art. 37 (3) of MoI Regulation 31/2020).

Utilization of BMDTP Facility

The MoF will revoke its relevant decree on the granting of BMDTP for the import or release of goods and material. The industrial companies concerned will also have to complete the payment of the relevant import duty (Art. 21 (2) of MoF Regulation 134/2020).

The article above was prepared by Marshall S. Situmorang (Partner) and Aniendita Rahmawati (Associate). 

Disclaimer: The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances. For more information, please contact us at mail@nusantaralegal.com.