Indonesia Cancels PI Import Approval Requirement for Cosmetics

Terms:

Import Approval (PI): A business permit in the import sector granted by the Minister of Trade that allows a company to carry out import activities;
Surveyor Report (LS): A written document that reports the results of the verification or technical investigation conducted by a surveyor. It states the conformity of the imported goods.

Background

On October 6, 2023, the President of Indonesia issued directives to tighten the importation of certain commodity groups. The aim is to protect Indonesian domestic public, small and medium-sized enterprises (SMEs), and domestic industries.

Specifically, 8 commodity groups are subject to stricter import controls:

a. Ready-made garments and other finished textile goods

b. Toys

c. Electronics

d. Footwear

e. Bags

f. Traditional medicine and health supplements

g. Cosmetics and household health supplies

This action responds to the growing presence of imported goods in the local market and the rising sales of imported products through e-commerce platforms. To address this, the import management for these items transition from post-border control to border control. The trade procedure of the latter involves obtaining Import Approval (PI) and Surveyor Report (LS), as stipulated in Minister of Trade Regulation No. 36 of 2023 regarding Import Policies and Regulations. This regulation came into effect for shipments from Indonesian Migrant Workers since December 11, 2023, and for other provisions starting from March 10, 2024.

Prior to May 17, 2024, the Indonesian Minister of Trade issued two revisions to Regulation No. 36 of 2023, i.e., Regulation No. 3 of 2024 and Regulation No. 7 of 2024. They primarily addressed regulations pertaining to personal belongings and the technical aspects of submissions.

By May 2024, a backlog of approximately 26,000 containers had stranded at the ports, which raised the industry’s and the public’s concerns. This resulted from the barriers for overseas goods to enter Indonesia imposed by Minister of Trade Regulation No. 36 of 2023. To address this issue, the Indonesian President instructed an immediate revision of Regulation No. 36 of 2023. This led to the issuance of Minister of Trade Regulation No. 8 of 2024, which replaced the previous Regulation No. 3 of 2024 and Regulation No. 7 of 2024.

The primary change introduced by Minister of Trade Regulation No. 8 of 2024 in the cosmetics and household goods sectors was the cancellation of the requirement for Import Approval (PI) applications. This change, effective from May 17, 2024, applies to 38 HS codes within the cosmetics and household goods product categories. The table below outlines the legal basis and customs clearance documentation for exporting cosmetics to Indonesia before and after the revisions.