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OR

Indonesia Executes New Scrap Import Regulations but with Chaotic Implementation

Dec 17, 2019, 14:18 PM by Paper Beat

ISRI learned on November 21 that the Government of Indonesia finalized import regulations for all scrap commodity imports. The rule is available only in the local language, but an unofficial translated summary and feedback from our contacts indicate that the policy is very restrictive. The policy includes following requirements:

  • Only direct shipments will be allowed, defined as direct from the United States 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.
  • There will be new permitting requirements for importers and exporters, although it remains 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. If so, it would contradict what ISRI learned during a visit to Indonesia in September: that the impurities threshold would be 2% at the outset and transition to 0.5% in two years.

Unfortunately, the regulation appeared to go into effect immediately but KSO-Sucofindo – the government agency responsible for overseeing its implementation, including pre-shipment inspections – was unprepared. Thus, the agency ordered a temporary moratorium on imports, and the pre-shipment inspection agencies, including Cotecna in the United States, informed its customers that "all shipments with inspection date after Nov. 22 need to be stopped...That means last inspection date will be Nov. 22."  

ISRI spoke to our contacts at Cotecna, but they have very little information about the regulation, implementation or when they will resume inspections. Our contacts within the Indonesian Government have not responded to several inquiries. We have also asked U.S. Government officials in Washington and Jakarta to help us obtain information as well as to help communicate our concerns with the new rules.