According to the International Trade Administration -ITA, Presidential Regulation No. 10 of 2021 on “Investment Business Fields” issued in February 2021, allows 100-percent foreign ownership in companies that import and obtain regulatory approval for medical devices. Previously, the 2016 Negative Investment List limited foreign ownership of companies that import and obtain regulatory approval of medical devices to a maximum of 49-percent.
This regulatory change is likely to result in more foreign investment in Indonesia because it provides foreign companies full legal control over the subsidiaries in Indonesia that obtain and control marketing authorization of their imported medical devices. It is also still possible for majority Indonesian-owned companies with regulatory expertise to obtain and hold the marketing authorization as the local representative of a foreign medical device manufacturer.
A Medical Device Distribution Certificate (Sertifikat Distribusi Alat Kesehatan or SDAK) from the Ministry of Health is a basic requirement for companies planning to market and import medical devices and diagnostic equipment into Indonesia.
Ministry of Health Regulation No. 14 of 2021, on “Standards of Business Activities and Products on the Implementation of Business License Based on Health Risk” further stipulates that companies that apply to be a wholesaler of laboratory equipment and/ or medical equipment for human use under Code 46691 of the Indonesia Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) are required to have a warehouse and to submit certification of Good Distribution Practices.
Based on Ministry of Trade regulations, companies in Indonesia are expected to engage one or more local distributors to distribute their medical device products to hospitals and clinics. To avoid duplication of efforts, some medical device importers outsource part or all of their warehousing functions to these local distributors, including quality control, packaging and labelling. (Source: International Trade Administration – ITA.)
Establish a Legal Business
Only legal companies registered in Indonesia and classified as distributors can register and distribute medical devices in Indonesia.
Medical Device Market Potential
According to International Trade Administration – ITA, “healthcare is a priority in Indonesia’s national agenda, and the central and regional governments continue to build and upgrade healthcare facilities. Indonesia currently has 2,925 hospitals, including 1,071 public and 1,854 private hospitals. In addition, there are over 10,134 public Health Community Centers (PUSKESMAS), which provide comprehensive basic healthcare and vaccinations. In 2020, the Indonesian government began a process of promoting the consolidation of state-owned public hospitals in order to increase operational efficiency and quality of care through standardization. PT Pertamina Bina Medika, also known as Pertamedika IHC (Indonesia Health Corp), is the holding entity for state-owned hospitals and ranks as the second-largest hospital group in Indonesia with more than 4,500 beds.”
Taxes on Imported Medical Devices in Indonesia
Medical equipment is subject to 5% – 30% import tax, depending on the type, in addition to the standard 10% value added tax (Source: Indonesia’s Minister of Finance Regulation No. 6/2017 on Stipulation of Goods Classification and Charge of Duty Tariff on Imported Goods). The Indonesian government prohibits the import of used or refurbished medical equipment. Indonesia’s Government Regulation No. 31/2019 will require many types of goods to be halal certified in the future and will require products that originated from haram (forbidden) material to be labelled accordingly. Voluntary halal certification is scheduled to begin in 2021 but certification will not be mandatory for medical devices until the following dates: Class A Medical Devices: 2026; Class B Medical Devices: 2029, Class C Medical Devices: 2034. (Source: International Trade Administration – ITA)
Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.
His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.
Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.
He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.
Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.
His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.
Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.
His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.
Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.
He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.
Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.