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How to differentiate your product in the Indonesian market
Imported products are viewed by locals in general to have superior quality to local products.
Competing suppliers of imported food and beverage products include Australia, United States, France, Netherlands, South Africa, Canada, Brazil, China, Japan, Korea, Pakistan, Malaysia and Thailand.
How to create and market brands
Television is the strongest form of advertising in Indonesia. Not all products are permitted to be promoted in public places.
Get general advice on creating and marketing export brands in the Export guide.
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How to use distributors
The distribution system is complex and infrastructure is still inadequate, especially outside big cities and the island of Java so the ability to move frozen and refrigerated products is limited.
There are 10 major cities in Indonesia that serve as distribution hubs. Products generally move to warehousing distribution facilities in the hubs, then to sub-distribution and wholesalers for delivery to retailers.
Get general advice on using agents and distributors in the Export guide.
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Exporting directly into the Indonesian market
There are no direct flights to Indonesia from New Zealand. It is common for exports to be sent via Singapore but this can incur extra importing duties and taxes.
Many government tenders for equipment that are open to foreigners require the use of a local agent.
An alternative to having your own base in the market, or using agents and distributors, is making direct contact with buyers and end users.
The do-it-yourself option, though low cost and a good way of getting a relatively low-risk feel for a market, is not an easy route to market.
Get general advice on exporting direct in the Export guide.
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Dealing with Customs and other regulations
Both external and internal trade has in the past been subject to a wide range of duties and taxes including quantitative controls, sole trading licences and other restrictions. Domestic trade has been similarly regulated and exclusive trading privileges for a number of products were in the hands of publicly or privately owned monopolies.
Non-tariff barriers are slowly being replaced with a more transparent tariff regime as well as a gradual reduction in the degree of tariff protection granted to domestic producers.
Quotas and licences
More than 95 percent of all tariff items may be imported by general importers. Both foreign and domestic companies may become registered importers. Importers can also become distributors.
Quantitative control on some imports is carried out through sole trading licences. Only an appointed company or companies can handle the import of some products such as liquor. A licence holder can be a state-owned enterprise or may be a private company if the import is for its own consumption. These licence requirements are to be phased out.
Tariffs and duties
A number of New Zealand exports are subject to various tariff and non-tariff regulations upon entering Indonesia (all tariffs are ad valorem except for sugar and rice that attract a specific duty rate).
Look up current and phased tariff rates for the agreement establishing the ASEAN-Australia-New Zealand Free Trade Area. Use tariff finder.
To encourage foreign investment, some benefits Indonesia provides for limited liability companies (PT) include:
- import duty holidays or reductions for imported capital goods, machinery, or equipment domestically unavailable for production.
- import duty holidays or reduction for raw materials or support material for production within a certain period and with certain conditions.
- value added tax holidays or postponement for imported capital goods or machinery or equipment domestically unavailable for production within certain periods.
Indonesia uses the Harmonised System (HS) of classification for its imports and exports. Various products are subject to value added taxes (PPN and VAT) and sales taxes on luxury goods (PPnBM).
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Meeting labelling and product requirements
Consider ‘halal’ issues and labelling when entering the Indonesian market. Food product registration is complex, often non-transparent and time consuming.
Packaging and labelling
Imported products packed for sale are required to have included on labelling the name of the product, list of materials used, net weight or net contents, name and address of the party who produces or imports the food into the territory of Indonesia, information on ‘halal’ and the expiry date, month and year.
Packaging may not mention 'no preservatives' and 'no artificial colours'. The information on the label must be printed in the Indonesian language, Arabic symbols and Latin letters.
Health regulations
All food products need to be registered with the Department of Health and given a DEPKES number. This number must be shown on the product labels. Imports of fresh and frozen foods (including meat, fruits, etc) require an accompanying phytosanitary certificate declaring that a product is suitable for human consumption. Processed imported food products for sale will require a registration number (‘ML’ number) issued from Indonesia’s food and safety authority (BPOM).
Prior to the shipment of live animals to Indonesia, a strict health protocol must be followed by the New Zealand Government and the Indonesian Directorate General of Livestock Services.
Product liability
Business agents are responsible for providing compensation for the damage, contamination, and / or losses sustained by consumers as a result of using their goods and / or services. Providing compensation doesn’t remove the possibility of a criminal lawsuit.
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For general advice on sales and marketing in offshore markets go to the Export guide.
Topics covered include:
(Additional source used on this page: RSM AAJ Associates)
