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REGULATION DIRECTOR GENERAL OF CUSTOMS AND EXCISE
No. 02/BC/2005

ON
ACCEPTABLE INSURANCE FOR SAFEGUARDING INTERNATIONAL TRADE TRANSACTIONS
AS COMPONENT OF CUSTOMS VALUE TO CALCULATE IMPORT DUTIES

THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE,

Considering:

• a. that the Director General of Customs and Excise considers it necessary to accommodate growing developments in the international trade;
• b. that there has been no provision on the types of acceptable insurance for safeguarding international trade transactions as component of customs value to calculate import duties;
• c. that based on the above considerations, it is deemed necessary to stipulate Regulation of the Director General of Customs and Excise on insurance as component of customs value to calculate import duties.

In view of:

• a. Law No. 10/1995 on Customs;
• b. Decree of the Minister of Finance No. KEP-690/KMK.05/1996 on Customs Value for Calculating Import Duties;
• c. Decision of the Director General of Customs and Excise No. KEP-81/BC/1999 on Guidelines for Determining Customs Value for Calculating Import Duties;
• d. Decision of the Director General of Customs and Excise No. KEP-07/BC/2003 on Guidelines for Implementing Customs Rules in the Import Sector;
• e. Circular of the Director General of Customs and Excise No. SE-21/BC/2002 on Customs Documents and Original Customs Documents;
• f. The Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce, Publication No. 500 and 400.

DECIDES:

To stipulate:

REGULATION OF THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE ON ACCEPTABLE INSURANCE FOR SAFEGUARDING INTERNATIONAL TRADE TRANSACTIONS AS COMPONENT OF CUSTOMS VALUE TO CALCULATE IMPORT DUTIES.

Article 1
General Provisions

Hereinafter referred to as:

• 1. Insurance means freight insurance.
• 2. Individual policy (closed) means a contract policy in freight insurance closed in each delivery of goods and the amount of policy is negotiated by the insurer and the insured for each delivery of goods.
• 3. Open/floating policy means a contract policy in freight insurance to be made in several deliveries of goods in accordance with those agreed upon by the insurer and the insured.
• 4. Open cover policy means a contract policy in freight insurance to be made in a certain period of time, for instance, 3 months, 6 months, etc. in accordance with those agreed upon by the insurer and the insured.
• 5. Insurance policy means a deed containing insurance made in writing and published by an insurance company or its underwriter.
• 6. Certificate of insurance means a document made based on declaration of goods proposed by the insured to the insurer to guarantee goods during the journey in each delivery of goods if the insurance is made for several deliveries of goods.
• 7. Underwriter means a company guaranteeing the relevant insurance company.
• 8. Original supplementary customs document means any supplementary customs document written/typed and signed by the person authorized to issue a document with or without corporate stamp as meant in Circular of the Director General of Customs and Excise No. SE-21/BC/2003.

Article 2
Types of Insurance

The types of acceptable insurance for safeguarding international trade transactions as component of customs value to calculate import duties are:

• 1. Individual policy (closed);
• 2. Open/floating policy;
• 3. Open cover policy.

Article 3
Individual (Closed)

Individual policy (closed) can be accepted as a component of customs value to calculate import duty if it meets the following criteria:

• 1. Issued by an insurance company or its underwriter;
• 2. Containing the validity period of insurance;
• 3. Closed no later than the date of loading goods onto the ship or the place for keeping transport means.

Article 4
Open/Floating Policy

Open/floating policy can be accepted as a component of customs value to calculate import duty if it meets the following criteria:

• 1. Issued by an insurance company or its underwriter;
• 2. Containing total insurance prices for several deliveries of goods and a maximum insurance price for each delivery of goods;
• 3. The validity period of open policy ends after all goods contained in the policy have been delivered no matter how long the delivery of all goods lasts;
• 4. Each delivery of goods must be complete with a certificate of insurance.

Article 5
Open Cover Policy

Open cover policy can be accepted as a component of customs value to calculate import duty if it meets the following criteria:

• 1. Issued by an insurance company or its underwriter;
• 2. Containing the validity period of policy (hour, month, and year) in addition to a maximum insurance price for each delivery of goods;
• 3. The validity period of open cover policy ends after the validity period of policy is over no matter how much is the total insurance price of the delivery of goods;
• 4. Each delivery of goods must be complete with a certificate of insurance.

Article 6
Importer's Obligation

(1) If the terminology used for the delivery of imported goods is not cost insurance and freight (CIF), at the time of delivering the imported goods the hardcopy of the importer's import notification (PIB) must be:

• a. complete with the original of insurance policy/individual policy (closed); or
• b. complete with the original of the certificate of insurance and a photocopy of open/floating policy and open cover policy.

(2) If insurance documents are not handed over or do not meet the criteria as meant in Article 3, Article 4, and Article 5, the insurance value is set at 0.5% of the cost and freight (CFR).

(3) If the terminology used for the delivery of imported goods is cost insurance and freight (CIF), the importer is not put under an obligation to enclose insurance policy at the time of handing over a photocopy of PIB.

Article 7
Conclusion

(1) When this Regulation of the Director General of Customs and Excise takes effect,

• a. Decision of the Director General of Customs and Excise No. KEP-89/BC/2000 dated December 4, 2000;
• b. other regulations that contradict this Regulation of the Director General of Customs and Excise; shall be declared null and void.

(2) This Regulation of the Director General of Customs and Excise shall take effect as from the date of stipulation.

For public cognizance, this Regulation of the Director General of Customs and Excise shall be announced by placing it in the State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
On February 16, 2005
THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE,
sgd
EDDY ABDURRACHMAN