On July 16, 2024, Indonesian media reported that the government will form a special task force to monitor illegal imports. This task force will consist of 19 ministries and agencies, including the Attorney General’s office and the police, overseeing the import of clothing, electronics, ceramics, shoes, and lamps.
The Indonesian government also plans to impose protective tariffs of up to 200% on certain imported products from China, aimed at protecting local industries while adding challenges for foreign entrepreneurs.
The formation of this task force was driven by significant discrepancies in textile trade data between Indonesia and its trading partners in the first quarter of 2024. Export data showed figures of $3.662 billion, while import data was only $1.164 billion, indicating the presence of illegal imports.
Trade Minister Zulkifli Hasan announced that Indonesia would impose protective tariffs of up to 200% on products such as shoes, clothing, textiles, cosmetics, and ceramics. This policy does not target any specific country, but many imported products from China will be affected.
Protectionism by the Indonesian government is not new to Chinese entrepreneurs. Policies such as the ban on the sale of imported Muslim clothing in 2021 and the minimum price restrictions for imported products on e-commerce platforms in 2023 are some examples. The closure of TikTok Shop in October 2023 also aimed to protect local small and medium-sized enterprises. These measures add difficulties for foreign entrepreneurs wanting to enter the Indonesian market.
E-commerce entrepreneurs in Indonesia must continually adapt to new regulations and ensure compliance with various certifications such as Indonesian National Standard (Standar Nasional Indonesia/SNI), National Agency of Drug and Food Control (Badan Pengawas Obat dan Makanan/BPOM), and halal certification. Although these challenges are not easy, compliance with regulations can provide a competitive advantage in the Indonesian market.
With increasingly stringent regulations, entrepreneurs in Indonesia must adapt and ensure compliance with regulations to remain competitive. Rising local protectionism adds challenges for those wanting to enter the Indonesian market, but with the right strategies, they can still achieve success.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti