ISRI learned on November 21 that the Indonesian Government finalized and simultaneously implemented new import regulations for all scrap commodities.
Based on an unofficial English translation summary
we later obtained, the regulations are worrisome for the following reasons:
- Only direct shipments will be allowed, defined as direct from the United States (or other supplier country) to Indonesia, i.e., no transshipment via Singapore, for example.
- The exporter must be listed on documentation so that the exporter can occasionally be verified. And the exporter can only send from their own country.
- The government may be considering prohibiting shipments from brokers and traders – that material can be sourced/exported only from processors.
The regulations also set out new permitting requirements for importers and exporters, and it is still unclear who is qualified to obtain the permits, such as only processors or will brokers and traders be allowed?
Furthermore, the regulation says that materials must be “clean” and “homogenous,” which our contacts interpreted as meaning the government is pursuing a zero contamination tolerance policy, but we are not so sure.
Lastly, the Indonesian government appeared to begin implementing the regulation immediately but without an assurance that their own agencies understand it. Thus, KSO-Sucofindo, which is responsible for overseeing implementation of inspection requirements, called a moratorium on imports beginning November 22 while they study the regulation.
As this follows a year of volatile policymaking in Indonesia, the uncertainties of doing business with this very important market continues to disrupt scrap flows still hunting for new markets post-China. Scrap consumers within Indonesia – particularly the paper industry which relies on foreign supplies to make up about half of its demand – continue to advocate for more open trade policies with their government, but this is a case of an environment ministry trying to protect the environment overriding trade and industry ministries trying to support jobs and manufacturing. ISRI’s has sent a number of messages to government contacts in Jakarta and the embassy in Washington asking for clarification and advocating for more lead-time, but we have yet to receive a response.
ISRI is organizing a trade mission to Indonesia and Malaysia in March. We will use the opportunity to showcase our industry and the high quality materials that are processed for export to Indonesia and around the world. A demonstration of collaboration between our members, potential customers and the government, we hope, will lead to a more rational policy in the future.
For more information about this article contact Adina Renee Adler at (202) 662-8514.