Indonesian Government Simplifies Completely Built-up Vehicles Export Regulation - Photo by Industry Ministry Office

JAKARTA (TheInsiderStories) – As an effort to boost export, Indonesian government simplifies completely built-up (CBU) vehicles export regulation. There are some easing for exporters in the regulation.

Based on the new policy, exporter can put CBU vehicles into customs loading space area before submitting goods export notice document. While previously, exporter must submit the document prior the vehicles loading.

Other than that, exporter doesn’t need export service note to put the goods into customs area. Revision of quantity and type of goods can also be done at least three days before the shipment. In the last regulation, every requirement must be fulfilled before entering customs area.

By this, Finance Minister Sri Mulyani Indrawati said that company could cut the inventory level by 36 percent. Moreover, logistic cost can be more efficient. On estimation, logistic costs such as storing, handling, and trucking can be diminished by Rp222.75 billion ($15.91 million), based on Rp750,000 efficiency per car unit and 297,000 units of car export last year.

Coordinating Minister for Economic Affairs (CMEA) Darmin Nasution expects that the procedure simplification could improve Indonesian export and slender trade balance deficit. He stated, “This simplification of export procedures is one of the short-term policies taken to immediately increase our exports.”

As data from the Association of Indonesian Automotive Industries, CBU exports throughout 2018 grew 14.44 percent to 264,553 units compared to the previous year. This achievement is the highest of previous years.

Nasution added, with the new regulation, the export process was accelerated by integrating data entered into the Indonesia Vehicle Terminal in-house system and the DGCE system, then barcode scanning was carried out against the vehicle identification number (VIN) of each motorized vehicle to be exported.

He assessed that there were three conveniences of the regulation. First, the export of CBU motorized vehicles can be entered into the Customs Area of ​​the loading place prior to the submission of the Goods Export Notification document (GEN). Second, the entry into the Customs Zone does not require an Export Service Note (ESN). Third, correction of the number and type of goods is carried out no later than three days from the ship’s departure date.

Nasution added, every motorized vehicle to be exported must submit GEN, deliver ESN, and if there is an error, correction of the number and type of goods must be done no later than before entering the Customs Zone, so that the time taken is longer.

In addition, it is necessary to have a complex grouping or export grouping process, such as based on the ship’s departure time, destination country, VIN, type of transmission, transportation facilities, and production time.

“The point is to eliminate several stages in exporting CBU vehicles and exporters get incentives in the form of saving export costs,” he said.

This convenience is expected to increase competitiveness advantages because the accuracy of the data is more guaranteed, because business processes are carried out automatically through data integration between companies, temporary landfills, and DGCE.

Then, there is a build-up efficiency in the exporters ‘warehouse, so that low inventory levels so that exporters’ warehouses can be used to stack CBU vehicles as a result of increased production capacity.

In addition, it can maximize the stacking period at the TLs Warehouse for seven days, because the grouping process and final quality control before GEN submission can be done at the TLs.

Finally, reducing trucking costs, because the number of trucks is reduced and logistics partners do not need to invest in large quantities of trucks, and the use of trucks is more efficient and maximal, because it is used every day and evenly distributed.

Since last year to carry out the weakening of Rupiah, Indonesian President Joko Widodo called exporters to bring more US dollars to Indonesia to stabilize the local currency. President wants the entrepreneurs to be able to bring in more US dollars and liquefy it in Indonesia.

According to the Chairman of the Association of Indonesian Entrepreneurs Hariyadi Sukamdani revealed there are still about 15 percent of foreign exchange that have not entered Indonesia. He said, president wants the 85 percent earning from export returned to the country.

The government continues to push for exports and relax regulations to reduce export barriers, improve the trade deficit, improve the current account balance, investment and control imports, said Nasution.

Data from the DGCE shows that a number of studies have been conducted to project the positive effects of these rules, for example by PT Astra Daihatsu Motor and the Association of Priority Path Companies.

In its study it was found that the simplification of this procedure reduced the average stock level, the need for trucks for transportation and logistics costs which consisted of man hour, trucking cost, direct and indirect materials.

According to the Association of Priority Track Companies with an estimated reduction in logistics costs related to storage and handling, the total cost efficiency obtained by the 5 largest exporters of CBU vehicles can reach Rp 314.4 billion a year.

So far, Indrawati explained that the additional competitiveness advantages are expected to have a positive impact on Indonesia’s trust as the largest vehicle producing country in Southeast Asia and the world’s 12 major export vehicles worldwide.

“According to the President’s direction, we must encourage competitiveness so that we can become number one in Asia through efficiency in export activities,” she said.

Meanwhile, Minister of Industry Airlangga Hartato stressed that one of the projects from the Making Indonesia 4.0 roadmap was the automotive industry, so that Indonesia became the production base of motorized vehicles, both internal combustion engines and electrified vehicles for domestic and export markets.

“Last year, CBU’ car exports were more than 264 thousand units, and in the form of Completely Knock Down around 82 thousand units, so that the total exceeded 346 thousand units with a value of $4 billion and an additional from automotive component exports worth $2.6 billion,” he said.

Reportedly that the trend of exports and imports of Indonesian motor vehicles continued to show improvement in the past five years. In 2014, exports were recorded at 51.57 percent and imports amounted to 48.43 percent. In 2015, exports reached 55.40 percent and imports amounted to 44.60 percent.

Furthermore, in 2016 exports amounted to 61.40 percent and imports amounted to 38.60 percent. Then, in 2017, exports were recorded at 53.16 percent and imports amounted to 46.84 percent. Finally, in 2018, exports were recorded at 63.56 percent and imports by 36.44 percent.

US$1: Rp14,000

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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