The Use of Customs Law and Regulation to Support the Development of Small and Medium Business Enterprises: Evidence From Indonesia

Abstract

Small and medium enterprises (SMEs) have proven to be a reliable reflection of the national economy of many countries, including Indonesia. SMEs in Indonesia are well known for the uniqueness of their local crafts, but often face obstacles in business management. Hence, the Government of the Republic of Indonesia has introduced several packages of economic policies aimed at SME development. As a result, advanced and developed opportunities are provided to the SMEs. Furthermore, the Ministry of Finance, through its Customs Department, issued policies in its 2015 economic policy package to support SMEs to grow and to seize market opportunities at domestic, regional and international levels. As part of this policy package, SMEs were also provided with a relaxation of the provisions of the Import Facility for Export Purpose (IFEP) requirements, including the removal of cash guarantee or bank guarantee preconditions. However, this article identified that the facilities were only conferred to SMEs with industrial characteristics. Additionally, SMEs do not possess a Customs Identity Number (Nomor Induk Kepabeanan (NIK)), which is a requisite to import raw materials. As a result, an initiative has been introduced in the form of a collaboration between SMEs and the bonded logistic centre (BLC)—(known as SMEs– BLC) to provide an opportunity for SMEs to export their products through ‘bonded landfill’ arrangements.