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government regulation came into effect on Wednesday, restricting the import of finished goods to boost local investment.

The regulation, which covers general importers, was expected to spur industrial growth, particularly in the manufacturing industry, and tighten monitoring of imports, Deputy Trade Minister Bayu Krisnamurthi said on
Thursday.

In a change from the old policy, under the new regulation, a general importer is allowed only to import products of the same category.

Previously, general importers were allowed to import several different types of goods.

Meanwhile, producer-importers will be allowed to import capital goods, raw materials and intermediary goods to support manufacturing under the new rule.

Producer-importers are also authorized to import finished goods for market testing and to complement production under specific quotas and time frames in consultation with relevant agencies such as the Industry Ministry, the Health Ministry and the Food and Drug Supervision Agency.

“Importers should comply with the regulation by December 31 this year at the latest. Companies should register to get importer licenses and adjust their importation activities before the set deadline,” Bayu told reporters during a press conference at his office in Jakarta.

Indonesia imports around 8,000 different types of products under its harmonized system of classification, which has 21 sections.

Industrial firms have long raised concerns about the entry of finished goods into the nation that are often sold for prices less than those of locally made items, giving more ground to foreign manufacturers in the local market.

The regulation replaced a 2010 Trade Ministerial Regulation on the importation of goods.

One article of the regulation was recently annulled by the Supreme Court, which said that it encouraged imports at the expense of promoting local production.

Entrepreneurs lauded the new regulation as a significant step in improving the local investment climate.

Sofjan Wanandi, the chairman of the Indonesian Employers’ Association (Apindo), called the new regulation “pro-investment”, saying it would boost investment in the nation.

“We are optimistic that the regulation can attract new investments as well as stimulate investors to set up production centers in Indonesia,” he told The Jakarta Post over the telephone.

He added that specific arrangement on restricted import quotas and time frames would also finally stimulate producers to process raw materials locally, given the potential rising economy of scale in production.

Separately, Ade Sudrajat, the chairman of the Indonesian Textile Association (API), said that the new regulation would improve the investment climate by generating more jobs.

Apart from improving the investment climate, the new regulation could also help early detection whenever there was influx of imported goods, he added.