Bonded Zone Licensing
Business Company
3/1/20255 min read
Bonded Zone (KB) is an area designated by the government that is given special facilities in the form of ease of import duties, taxes, and licenses for certain industrial activities, such as manufacturing or assembly, which focus on exports. The main purpose of this area is to increase the competitiveness of domestic products in the international market and to attract foreign investment. This article will discuss in detail about the definition of bonded zones, their benefits, and the benefits that can be obtained by businesses operating in bonded zones.
1. What is a Bonded Zone?
Bonded Zone (KB) is an area or region designated by the government in Indonesia for industrial activities where most of the products or products are destined for export. This area is given fiscal and administrative facilities that allow companies or industries in it to reduce the burden of production costs and be more competitive in the global market.
Companies operating in bonded zones get facilities in terms of exemption from import duties on goods used for production, tax reduction, and faster licensing. In return, companies are required to export most of the products produced.
Bonded zones usually have complete infrastructure, such as roads, ports, and other facilities that support industrial activities and product distribution to the global market.
2. Benefits and Objectives of Bonded Zone
Bonded Zone has a number of benefits for both the government, business actors, and the national economy as a whole. The following are some of the main benefits and objectives of the existence of bonded zones:
a. Increasing Industrial Competitiveness
One of the main objectives of bonded zones is to increase the competitiveness of Indonesian products in the international market. With the facilities provided, such as import duty exemptions and tax reductions, production costs can be reduced, so that products become more competitive in the global market.
b. Attracting Foreign Investment
Bonded Zone also aims to attract investors, both domestic and foreign, to invest in Indonesia. The incentives provided, such as ease of taxation and import duty facilities, are an attraction for foreign companies to invest and build production facilities in this area.
c. Encouraging Exports
The Indonesian government through bonded zones seeks to increase the volume of exports. Since the majority of products produced in bonded zones are earmarked for export, this contributes directly to the increase in the country's foreign exchange reserves and economic growth.
d. Creating Job Opportunities
With the development of bonded zones, various industrial sectors operating in them open up new jobs. This contributes to reducing the unemployment rate in Indonesia and improving the welfare of the community around the bonded area.
e. Improving the Quality of Domestic Industry
Companies located in bonded zones often have access to the latest technology and production techniques, both from foreign and domestic investors. This can improve the quality of products produced and create innovation in various industrial sectors.
3. Advantages for Companies Operating in Bonded Zone
For businesses, operating in a bonded zone has a number of advantages that can increase business efficiency and profitability. Here are some of the main advantages:
a. Exemption from Import Duties and Taxes
One of the main advantages of operating in a bonded zone is the exemption of import duties on raw materials or goods imported for production purposes. Companies can also obtain exemptions or reductions in several types of taxes, such as income tax and value-added tax (VAT), as long as the goods are destined for export.
b. Easier Import and Export Process
The administrative process for importing raw materials and exporting finished products is faster and easier due to an integrated system. Companies operating in bonded zones do not need to pay import duties for raw materials or goods used in the production process, as long as the goods are not consumed domestically.
c. Complete Infrastructure Facilities
Bonded zones are usually equipped with adequate infrastructure to support the production and distribution of goods, such as ports, roads, warehouses, and other logistics facilities. This makes it easier for companies to distribute their goods to international markets.
d. Simplification of Licensing Procedures
The licensing process for companies located in bonded zones is faster and simpler compared to companies outside the area. The government provides ease of licensing so that businesses can focus more on their business development and operations.
e. More Flexible Goods Storage Facilities
Companies operating in bonded zones can store goods for a certain period of time without being subject to import duties as long as the goods have not been consumed in the domestic market. This provides flexibility for companies in managing their stock of goods.
4. Types of Bonded Zone in Indonesia
In Indonesia, there are two types of bonded zones that are commonly found, namely:
a. General Bonded Zone (KBU)
General Bonded Zone is an area used for manufacturing or assembling goods that will mostly be exported. In this area, companies can produce goods for export with more flexible facilities and receive fiscal incentives from the government.
b. Bonded Zone for Specific Use
This type of bonded zone is more specifically used for certain activities, for example for the textile, electronics, or automotive industries. This area is usually intended for industrial development that requires greater technology and investment.
5. Criteria for Companies that Can Operate in Bonded Zone
To be able to operate in a bonded zone, a company must meet a number of criteria set by the government, including:
Main purpose of export: Most of the products produced must be exported.
Sound finances: The company must demonstrate sufficient financial capability to carry out activities in the area.
Appropriate type of industry: Bonded zones favor industries that support manufacturing and assembly activities for export.
6. Bonded Zone Application Process
Companies that wish to operate in a bonded zone must submit an application to the Directorate General of Customs and Excise by attaching documents such as business licenses, export plans, and other technical information. Once the application is received and approved, the company can start production activities in the bonded zone.
7. Conclusion
Bonded Zone is one of the Indonesian government's efforts to encourage export-oriented industrial and trade activities. Through this area, companies can enjoy various facilities in terms of taxes, import duties, and simpler licensing, which ultimately increases the competitiveness of Indonesian products in the global market. In addition, bonded zones also provide great benefits to the Indonesian economy, such as increasing export volumes, attracting investment, and creating new jobs.
For businesses, operating in bonded zones can be a strategic choice to expand markets and improve operational efficiency.
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