Limitation of Import Duty Exemption

Under the Minister of Finance Regulation No. 176/PMK.011/2009 (MoF Regulation), certain machines, goods, and materials that were imported and used in several industrial sectors in the country have enjoyed the exemption from import duties that would normally be imposed. However, the recently issued Minister of Industry Regulation No. 19/M-IND/PER/2/2010 (MoI Regulation) requires some additional conditions as to how that exemption is to be awarded.

For a brief overview of the MoF Regulation, see ILB No. 1239 20/11/2009.

The MoI Regulation bars the exemption based on the MoF Regulation to be granted in the event the imported machines, goods, and materials have been locally produced (Article 1 (1)). The locally produced machines, goods, and materials are specified in a list provided in the Attachment to the MoI Regulation, and such a list will annually be reviewed.

It is clear to say that the MoI Regulation, particularly the list, must be used as a reference every time an import duty exemption is granted in accordance with the MoF Regulation.     

Furthermore, it must be noted that although the imported machines, goods, and materials have been produced in the country, those imports can still enjoy the exemption, provided that the locally produced machines, goods, and materials have not satisfied (1) the required quantity, or; (2) the required machines, goods, and / or materials specifications. In this case, the technical considerations of the relevant Director General of Industrial Development are necessary and must be taken into account.

The MoI Regulation has been in force since 4 February 2010.