Minister of Industry Regulation Number 5 of 2026 Governs Raw Material Supply Centers

Introduction

On 6 March 2026, the Ministry of Industry issued Minister of Industry Regulation Number 5 of 2026 on Raw Material and/or Auxiliary Material Supply Centers (“MoI Reg. 5/2026”), which took effect on 26 March 2026. This regulation aims to govern the mechanisms for designation, import implementation, reporting obligations, and sanctions applicable to business entities acting as Raw Material and/or Auxiliary Material Supply Centers for Small and Medium Industry Businesses (“SMIs”).

MoI Reg. 5/2026 revokes and replaces Minister of Industry Regulation Number 21 of 2021 on Import Raw Material and/or Auxiliary Material Supply Centers for Small and Medium Industries (“MoI Reg. 21/2021”). This regulatory update is intended to ensure the continuity of production processes in small and medium industries. In addition, MoI Reg. 5/2026 aligns the legal framework with the latest provisions under Presidential Regulation Number 61 of 2024 on the Commodity Balance and its amendments.

 

Comparison

The following table presents a comparison between MoI Reg. 5/2026 and MoI Reg. 21/2021:

 

Key Provisions

Criteria and Designation of Supply Centers

Pursuant to Article 5, the Minister designates Raw Material and/or Auxiliary Material Supply Centers based on several criteria that must be fulfilled by business entities, namely:

1. Being a legal entity incorporated and domiciled in Indonesia; 
2. Possessing a Business Identification Number functioning as a General Importer Identification Number (API-U); 
3. Engaging in business activities in the import and distribution of Raw Materials and/or Auxiliary Materials intended for SMI Businesses; 
4. Owning and/or controlling a place, building, and/or storage area for each commodity with a minimum area of 500 m² (five hundred square meters) in a single location; and 
5. Serving at least 5 (five) SMI Businesses, provided that such SMIs use Raw Materials and/or Auxiliary Materials in accordance with commodity group classifications under laws and regulations in the field of import policy and regulation, and have submitted their latest Industrial data in accordance with applicable laws and regulations. 

Application Procedures and Document Requirements

Article 6 elaborates the application mechanism for designation as a Supply Center, which must be submitted electronically through a SIINas account. Businesses must submit separate applications for each commodity group to be imported.

In this process, Article 6 paragraph (3) requires applicants to complete business entity identity data and the identity data of at least five SMI Businesses serving as distribution partners. In addition, applicants must upload a series of required documents, including copies of the deed of establishment, Business Licensing, proof of Annual Income Tax Return (SPT), and proof of tax payment for the past year.

Applicants must also demonstrate control over storage areas through ownership documents or warehouse lease agreements that already possess a Warehouse Registration Certificate (TDG) with a remaining lease period of at least one year. Furthermore, Article 6 paragraph (3) letter b number 8 requires applicants to have a computer-based internal control system capable of ensuring traceability of inventory and distribution, covering item descriptions, SMI identity, location, and distribution quantities based on tariff classifications.

Import Implementation Mechanism

Article 3 stipulates that the importation of raw materials and/or auxiliary materials may be conducted through the Commodity Balance or outside the Commodity Balance. If conducted through the Commodity Balance, Article 20 requires Supply Centers to submit proposed requirements no later than September of the year preceding the applicable Commodity Balance period. Conversely, if imports are conducted outside the Commodity Balance and the goods require LHVIKM, Article 21 requires Supply Centers to first request verification from the Verification Implementing Agency via SIINas.

Verification of SMI Capability

With respect to applications outside the Commodity Balance, Article 22 regulates the procedures for the implementation of SMI Capability Verification (VIKM) by the Verification Implementing Agency, which must be completed within a maximum of 20 days from the date the application is declared complete.

This verification includes:

1. Examination of the completeness of data and/or documents; and 
2. Field inspection to assess conformity between documents, actual conditions, and the production capacity of SMI Businesses. 

Article 23 paragraph (4) stipulates that the resulting LHVIKM is valid for a period of 3 years.

Reporting Obligations

Article 30 requires Supply Centers holding Business Licensing in the import sector to submit periodic reports electronically through SINSW. Business entities must report Import Approval documents and their amendments, import realization reports, and distribution realization reports to SMI Businesses. Such reports must be submitted every 6 months, with a deadline no later than the 15th day of the following month.

Prohibitions

Article 35 prohibits Supply Centers from selling or transferring imported raw materials and/or auxiliary materials to other parties for purposes other than the production needs of SMI Businesses as specified in the Ordering Contract.

 

Sanctions

Pursuant to Article 36 paragraph (1) and Article 38 paragraph (1), the Government is authorized to impose administrative sanctions on both Supply Centers and Verification Implementing Agencies. Article 36 paragraph (2) provides that sanctions for Supply Centers may include written warnings, recommendations for revocation of LHVIKM, recommendations for revocation of Business Licensing in the import sector, and/or revocation of designation as a Supply Center.

Regarding reporting violations, Article 37 paragraphs (1) and (2) stipulate that failure to fulfill reporting obligations will result in written warnings issued up to three consecutive times, each with a corrective period of five working days. If the Supply Center fails to comply after the third warning, the Government will revoke its designation. However, Article 37 paragraph (3) allows reinstatement if reporting obligations are subsequently fulfilled.

For violations involving the sale or transfer of imported materials outside SMI production needs, the Government will impose sanctions in the form of a recommendation to revoke import licenses to the relevant ministry in charge of trade, along with revocation of designation as a Supply Center, in accordance with Article 37 paragraph (4).

Article 37 paragraph (5) provides that discrepancies between administrative data and actual conditions may result in revocation of designation. Furthermore, Article 37 paragraph (6) states that if such discrepancies relate to the implementation of VIKM, sanctions may include recommendations for revocation of the issued LHVIKM.

The Government also supervises Verification Implementing Agencies that fail to submit activity reports or conduct verifications in violation of this regulation. Referring to Article 38 paragraphs (2) to (4), the Director General may impose written warnings up to three consecutive times, each with a five-working-day correction period. Failure to comply may result in revocation of the agency’s designation. Article 39 emphasizes that the imposition of administrative sanctions does not preclude the application of other legal sanctions under applicable laws and regulations.

 

Transitional Provisions

Articles 40 to 42 regulate transitional provisions for ongoing licensing processes. If a business entity is in the process of submitting a requirement plan or designation application at the time this regulation comes into effect, such processes must comply with the provisions of MoI Reg. 5/2026.

For entities that already hold Supply Center status under MoI Reg. 21/2021, Article 42 mandates the Government to conduct evaluations to assess compliance with the new criteria and requirements. If the evaluation determines that the entity fails to meet the updated requirements, the Minister and/or Director General is authorized to revoke its designation.

 

Closing

MoI Reg. 5/2026 aims to ensure the continuity of SMI production while aligning the legal framework with Presidential Regulation 61/2024 on the Commodity Balance. This regulation strengthens the qualifications of Supply Centers, requiring them to be legal entities in Indonesia, control warehouse facilities of at least 500 m² in a single location with a minimum remaining lease period of one year, and serve at least five SMIs.

Furthermore, the regulation clarifies import pathways, both through and outside the Commodity Balance, the latter requiring LHVIKM, and mandates inventory traceability systems and biannual reporting through SINSW. To ensure proper targeting, the Government prohibits the sale of raw materials outside SMI production needs and imposes sanctions up to license revocation, while also requiring evaluations of existing Supply Centers to ensure compliance with the updated provisions.