Indonesian customs or become a big obstacle to the development of Indonesian e-commerce?

Indonesia is the hottest Internet emerging market in Southeast Asia, with orders growing 5 to 10 times in recent years. With 260 million people and an average age of less than 30 years old, Indonesia will soon become the next e-commerce capital. Domestic business is difficult to do, e-commerce dividend period has passed, it is time to come out and see the outside world!

"One Belt, One Road" is a national policy and the road that China must take at this stage, with Trump so willfully throwing out another 200 billion dollars of goods to impose tariffs, China's road to the European and American markets will certainly be more difficult. The next 30 years of development will be the focus of all Chinese enterprises, there is no other way to seize the emerging markets to achieve the opportunity of overtaking corners just a year ago.

With 265 million people and a fast-growing middle class, Indonesia is an important stop for cross-border e-commerce into Southeast Asia. However, access to the region is not always smooth, with unpredictable customs regulations and rules being an obstacle.

Indonesia is one of the hardest countries to clear customs

In recent years, the government of Joko Widodo (Jokowi) has been working to help foreign companies open subsidiaries or branches in Indonesia. However, easy to register a business does not mean that the actual operation is very convenient, especially when it comes to the import of goods will encounter what difficulties?

First of all, before bringing a product to market, it is necessary to cross the barriers set by the government. If the product is related to food, health and beauty, you need to apply for an import permit and file the product with BPOM(Indonesian Food and Drug Supervision Agency) and fill out a series of paperwork. This step is essential for goods that require verification of compliance.

After the paperwork is filed, the company's goods enter customs through a "red channel," undergoing rigorous inspections to ensure that all goods are compliant, and after a long wait, months or even years, they are "upgraded" to the "yellow channel" and "green channel."

After the import of this pass, but also face various obstacles to localization. Setting up a local company to import goods and sell them to consumers requires a huge investment of money, people and resources.

Therefore, many international brands or retailers are trying to B2C cross-border e-commerce. More and more Indonesian Market places are also considering B2C cross-border models in the supply chain to attract more international brands, agents and so on.

Lazada and Shopee are representative of B2C e-commerce, and almost 100% of the goods on these two e-commerce merchants are imported from China, with low value. Amazon has not yet made a move in this market.

Why is cross-border B2C e-commerce in Indonesia enjoying a period of development?

On April 27, 2017, Indonesia adjusted the new regulations for imported shipments. Previously, the tax on cross-border e-commerce bulk packages was vague, and the previous "red light period" and "green light period" models were still used. (From December to March of each year, the red light period for Indonesian import clearance, Indonesian Customs will cooperate with other law enforcement departments to carry out strict inspection on import clearance, clearance procedures need more procedures and longer time than before, if improper operation, it will also incur more costs accordingly.)

However, when Finance Minister Sri Mulyani took office, he realized that the old customs clearance and taxation model was very flawed, and he rewrote the relevant import regulations.

At present, the basic principle is that shipments with a value of less than $100 are duty-free; Shipments with a customs value greater than US $100 and less than or equal to US $1,500 May be eligible for any of the following customs clearance processes: clearance with a consignment receipt (single duty 7.5%) or by filing a PIBK/PIB import declaration.

After the policy was clear, the phenomenon of arbitrary tariffs was basically eliminated, and the goods with high value also had a clear basis for charging. As a result, B2C cross-border e-commerce in Indonesia has ushered in a development peak.

What about food, health and beauty products?

The BPOM is responsible for setting customs and tax policies on food, health and beauty products, and regulations remain unclear. For future policy changes, we can take a look at the trend in Singapore.

Singapore is considering the feasibility of bypassing BPOM regulations for products such as food purchased and consumed by individuals. But the government is also worried that companies will illegally import goods under the guise of personal consumption. Singapore's approach is to ask the consignee directly, but it is unclear whether Indonesia will follow this approach.

There are rumours that the Ministry is reviewing the current import rules. It is possible that the overall tariff rate will be reduced, and it is also possible to impose a specific B2C e-commerce tax.

Most searched e-commerce sites in Indonesia in 2017

In 2017, Lazada and Tokopedia continued to be the most searched e-commerce sites by Indonesian consumers, ranking first and second respectively.

Searches for Shopee, which backs the SEA, continue to grow. In January 2017, there was a big gap in search volume between Shopee and Bukalapak; But by early December 2017, Shopee had reversed course. As a young market player, Shopee has also made a lot of efforts, such as: launching mobile shopping promotions and so on.

Consumer search and attention on e-commerce is influenced by activities & events:

lazada saw a small spike in search volume between March 19 and 25, thanks to its fifth anniversary.

During Ramadan (May 28 to June 17), all e-commerce sites saw an increase in search volume.

lazada's search volume saw a significant increase between June 11 and 17, as Alibaba increased its stake to 83% during this period.

The search volume of Tokopedi also increased during the period of October 1-7 due to Alibaba's large investment in it.

· Search volume increased during the shopee10.10 mobile online shopping campaign.

· During Double 11 and Double 12, the search volume curve of all e-commerce showed an upward trend.