Indonesia's Horticultural Products and the Trade Ministry's Regulatory Framework

With fertile soils and supportive climatic conditions, production of horticultural products (such as fruits, vegetables, or herbal medicines), should be thriving in Indonesia. In reality, however, Indonesia's horticultural production has not been able to meet domestic demand of Indonesia. Various factors lay behind this situation. But in essence it comes down to a lack of productive farmers, while demand has risen steadily. In this given situation, horticultural products should be imported. If not, prices will rise significantly.

In recent years, imports of horticultural products have grown continuously. Based on data from the Central Statistics Agency (Badan Pusat Statistik), a governmental agency that releases Indonesia's official statistics, the value of horticultural imports in 2008 was USD $881.6 million. In 2011, however, it had increased to USD $1.7 billion.

For Indonesian horticulture farmers a problematic situation occurs as the imported horticultural products are often cheaper than the locally-produced horticultural products. For this reason, the Indonesian government has tried to put a stop to massive imports by applying trade restrictions regarding horticultural imports. These restriction were issued by Indonesia's Trade Ministry. However, due to these regulations prices of certain products skyrocketed (such as garlic, onions and chili).

Therefore, the Trade Ministry felt the need to revise the trade restrictions through Trade Minister Regulation No. 16 Year 2013, titled 'Horticultural Products Import Policy'. The revision was done in order to simplify the process of import licensing and, secondly, to further ease regulations concerning import administration. Lastly, it aims to ensure certainty for the country's horticulture businesses.

In the new framework, the government has reduced the number of horticultural products that are government-regulated to 39. In the previous framework (Ministry of Trade Regulation No. 60 2012) there were 57 of these products. Some products that are no longer government-regulated are garlic, garlic powder, chili powder, chrysanthemum, heliconia flowers, orchids, and various processed horticultural products. A number of still government-regulated horticultural import items are fresh potatoes, bananas, grapes (both fresh and dried), and jam.

Within the new regulatory framework there are a number of important provisions. First, imports of horticultural products can only be done by Producing Importers (Importir Produsen) and by Registered Importers (Importir Terdaftar). Producing Importers are those industrial companies that use horticultural products as raw materials or auxiliary materials in the production process and do not trade or transfer the imported horticultural products to another party directly. The Registered Importers are those companies that import horticultural products for the purpose of trade by transferring it to other parties. The regulations also state that for every imported horticultural product the recommendation of the Ministry of Agriculture is required.

The request for permits of Producing Importers, Registered Importers and Horticultural Import Approvals of the Trade Ministry are served through the online system (INATRADE). The ministry, through its Commerce Services Unit will complete the permit issuance (or rejection) in a maximum period of two working days after a request has been filed.

Lastly, imports of horticultural products need to be verified or technically tested in the harbor of origin by an appointed surveyor. Companies that import horticultural products must always comply with legal requirements regarding quarantine, packaging, and labeling.

By.Indonesia Investments