There are three main key players in a trading namely suppliers, distributors and retailers. Different names such as producers, manufacturers, wholesalers are sometimes used for the above terms.
Manufacturers or also called suppliers are business actors who produce or supply goods in the market.
Distributors are business actors who distribute the products acting on their own behalf or appointed by a manufacturer/ suppliers or act as an importer based on an agreement to carry out the business.
Wholesalers are business actors who sells various kinds of goods in bulk and not at retail.
Retailers are business actors whose main activity is to sell goods directly to end consumers.
It is also important to know that all business activities mentioned above cannot be held under one entity as it is regulated under the Government Law number 29/ 2021.
Importation
If you already have an established company, you should have a document from OSS called NIB, which serves as your business registration number as well as your API (Importer Identification number). If you are running a business in Indonesia, especially in the large trading or industry sector you need to know the difference between API-U and API-P.
API - U : refers to importation for transaction. This means goods that are imported to Indonesia will be distributed and sold to appointed distributors in Indonesia.
API - P : refers to importation for use. This means that imported goods are meant for your own use in order for your company to perform in the Indonesian market. For example, machines to be used in the production facility or gym equipment for your gym business in Indonesia
It is also important to check on the import tariffs. Every imported goods are classified under specific HS Codes. Based on the HS Codes, you will be able to know the import tariffs for each goods you import to Indonesia. For specific items, you may need to process the permit from respective ministries and meet the standards stated in the regulation. E.g. medical equipment.
Kindly note that freight forwarders do not have the license to import but they provide the service to bring the goods from point A to point B. So, if you don’t have the import license you can appoint a third party (Importer of Record) who has the license to import your goods to Indonesia.
Who can’t import goods?
Companies running their business in the retail sector, KBLI with index 47, are prohibited to do any importation of goods as regulated in Article 55 of the Government Law number 29/ 2021 . Hence, retail companies usually use a third party service to import goods or simply buy goods from the local suppliers.
Additional information:
Manufacturers who sell their product to distributors do not require additional license or permit for trading.
Micro and small manufacturers are allowed to sell directly to end consumers.
Importers who also acts as a distributor are allowed to transact directly with retailers.
Interested to set-up your own business in the Indonesian market? Contact our consultants for further information on how to set-up your business in Indonesia.
WhatsApp: +62 859-3323-1567
Email: contact@lglbee.com