Qualifying Suppliers in Indonesia | Global Buyer’s Guide 2025

Indonesia is Southeast Asia’s largest economy, a member of the RCEP mega-trade pact, and home to deep supplier bases in food and beverage, agribusiness, garments and footwear, furniture, building materials, electricals, and electronics.

Partnerships with Indonesian suppliers can provide stable production capacity, cost advantages, and valuable supply chain diversification. But without careful planning and oversight, it can quickly turn into problems with compliance, delayed shipments, or quality and workforce issues.

This guide outlines what global buyers need to know in 2025 to find, evaluate, and onboard reliable Indonesian suppliers.

How Global Buyers Can Qualify Reliable Suppliers in Indonesia

To work with suppliers in Indonesia, it’s vitally important to follow a systematic qualification process to minimise risks and ensure reliability. The following points outline the essential factors to consider when assessing Indonesian suppliers.

1. Why Indonesia, and Why Now?

Scale + Stability. Indonesia’s population of over 280 million and steady ~5% GDP growth provide a large domestic market alongside strong export capabilities. The country joined the Regional Comprehensive Economic Partnership (RCEP) on January 2, 2023, enhancing tariff preferences and rules of origin across 15 economies, including China, Japan, and South Korea.

Policy Tailwinds. The government continues to streamline licensing through the Online Single Submission (OSS) system and expand standards and compliance programs. These reforms—though stricter—offer clearer rules and greater predictability for serious manufacturers.

Upgrading Industry. New and evolving local content (TKDN) requirements are driving sectors such as electronics and energy toward higher domestic value addition. This is an important context when qualifying suppliers for public procurement or state-linked customers.

Indonesia rewards structured qualification. Expect rigorous paperwork, but when managed proactively, it leads to predictable execution and access to credible factories.

2. Corporate Legitimacy: Verify the Basics First

Before assessing capability or price, confirm that your prospective supplier actually exists as a compliant business. Verification of legal identity and licensing is a critical first step in avoiding fraud, supply disruptions, or compliance breaches.

Checklist:

• NIB via OSS: Ask for the company’s Nomor Induk Berusaha (NIB), the universal Business Identification Number issued by Indonesia’s OSS platform. For importers, the NIB also serves as an Importer Identification Number (API) under current trade rules. Verify that the NIB is active and matches the legal entity name and address on licenses, invoices, and company stamps.
• Business Scope: Confirm the OSS-listed business activities (KBLI codes). If your supplier plans to import on your behalf, check that its NIB/API status aligns with its role (general importer vs manufacturer importer). Indonesian regulations now consolidate API into the NIB regime—ensure the supplier’s API-U/API-P status (if relevant) is properly reflected.
• Trade Compliance Flags: Some products face prohibitions or restrictions (LARTAS). Cross-check HS/BTKI codes against restricted lists before issuing purchase orders. Reputable suppliers will understand these constraints and the required technical permits.

A qualified supplier should be able to promptly furnish its NIB printout, deed of establishment and amendments, tax registration (NPWP), and—if applicable—clear API status aligned with its import or manufacturing role.

3) Mandatory Certifications: Halal, SNI, and Sectoral Approvals

a) Halal Certification (Food, Beverage, Cosmetics, Slaughter, and More)

Indonesia is rolling out mandatory halal certification in phases. As of October 18, 2024, halal labels are compulsory for many food and beverage products entering, circulating, or traded in Indonesia, with ongoing compliance checks by BPJPH (the halal authority). Smaller businesses and additional product categories have later deadlines, but enforcement for F&B has begun, including inspections of retail shelves. If your category is in scope, your Indonesian supplier—or your own brand if you import—must carry valid halal certification.

Recent guidance for international buyers highlights phased obligations extending into 2026 for certain categories and imported products. Always verify your exact product scope and timeline with BPJPH or an accredited halal body.

Supplier qualification tip: Request the halal certificate, its scope, and expiry, and confirm the certifier is recognized by BPJPH. Align your BOM and label artwork early to avoid relabeling or seizure risk.

b) SNI (Indonesian National Standard)

For a wide array of goods such as electrical cables, tires, steel, toys, and some electronics, SNI compliance is mandatory before sale. The regulator is BSN, and certification or testing is conducted through accredited bodies (LSPro). Always confirm whether your HS code triggers mandatory SNI and whether it requires pre-shipment certification or post-clearance market surveillance.

Ask your supplier for:

• Their SNI certificate(s) and corresponding test reports,
• The LSPro that issued them, and
• Evidence of ongoing factory audits (many SNI schemes require surveillance).

When you need a reference list to start scoping, BSN publishes periodic updates. Many consulting houses compile practical summaries (useful for orientation), but always cross-check against the official BSN database for accuracy.

c) Sectoral and Safety Approvals

Depending on the product category, you may also need to verify sector-specific compliance:

• Electrical safety or EMC approvals tied to SNI schemes (for certain household appliances).
• MoH/National Agency registration for cosmetics or health-related products.
• BPOM (food and drug authority) approvals for processed foods or supplements.
• Environmental permits (AMDAL) for bespoke production with potential environmental impact.

Your supplier should know which approvals apply and provide valid evidence of compliance. A short scope of work (SOW) plus HS code usually helps their regulatory team confirm the applicable requirements.

4) Local Content (TKDN): When It Matters and Why

TKDN (Tingkat Komponen Dalam Negeri) quantifies local content in goods and services and is increasingly critical in public procurement, SOE projects, and regulated sectors such as electronics, energy, and telecom.

In 2025, Indonesia issued Minister of Industry Regulation No. 35/2025 simplifying certification and aligning incentives. Presidential Regulation 46/2025 sets procurement guidance emphasizing TKDN thresholds. Electronics and smartphone manufacturers, in particular, face rising local content expectations and stricter enforcement.

What Buyers Should Do:

• When the customer is a government body, utility, or SOE—or the project falls under a TKDN mandate—request the supplier’s TKDN certificate along with the calculation method (materials, labour, overhead) and validity period, as these certificates expire and must be renewed.
• In electronics, mobile devices, and power projects, confirm the current threshold and whether software or R&D credits can contribute (rules evolved in 2025).
• Non-compliance can disqualify bids or stall delivery. Build TKDN checks into supplier onboarding and purchase order clauses where relevant.

5) Taxes, VAT, and the “Total Landed Cost” Reality

Corporate Income Tax (CIT): The general CIT rate remains 22% for FY2025, with reductions for qualifying listed companies and reliefs for SMEs. When analyzing supplier financials, this helps contextualize pricing and margin structures.

VAT (PPN): Indonesia implemented changes in January 2025. Practically, buyers should confirm how suppliers are invoicing VAT. There was a transition to a 12% VAT framework with carve-outs and transitional calculations in January. By February 2025, the 12% rate applied to the standard tax base for luxury categories, while authorities and leading advisors described an effective continuation of 11% for non-luxury supplies through adjusted tax base mechanics. Do not assume; ask your supplier’s finance team how your specific category is treated in 2025 and ensure e-Faktur compliance.

VAT treatment influences cash flow and pricing parity; especially when comparing quotes with and without VAT, and for bonded-zone arrangements. Align early on invoice tax positioning and Incoterms.

6) Data protection and privacy in your supplier relationship

Suppliers that handle personal data such as employee information for deliveries, consumer warranty registrations, or device telematics must comply with Indonesia’s Personal Data Protection (PDP) Law No. 27/2022, which took full effect after the transition period ended in October 2024. The law outlines obligations related to legal basis, security measures, breach notifications, cross-border data transfers, and Data Protection Officer requirements based on the scale and risk of data processing, with further clarifications introduced in 2025.

Supplier qualification tip: Include a PDP compliance questionnaire in onboarding:

• Processing register and data map,
• Security certifications (e.g., ISO/IEC 27001),
• Incident response playbooks,
• Cross-border transfer safeguards (if data leaves Indonesia).

7) Anti-bribery and ethical trade: zero tolerance, explicit controls

Indonesia enforces anti-corruption laws through the KPK (Corruption Eradication Commission). While local practice varies, reputable counsel caution that facilitation payments are risky and likely treated as bribery under Indonesian law. Your supplier should have a code of conduct, training, and internal controls; you should reinforce that no “fees” are payable to speed up licensing, customs, or inspections.

Your purchase contracts should embed anti-bribery clauses, audit rights, and termination for breach. Train your sourcing managers on red flags (e.g., vague “handling charges,” third-party “liaisons”).

8) Factory capability and quality systems: how to evaluate

On-site (or remote) audits remain the gold standard. Focus on:

• Quality systems. ISO 9001 status, calibration logs, incoming/outgoing QC, PPAP (if automotive), FMEA, and traceability.
• Process control. SPC charts, defect escape analysis, and containment protocols.
• Materials management. FIFO, supplier incoming quality levels, and counterfeit prevention.
• Regulatory build-in. For categories needing SNI, halal, BPOM, or safety approvals, verify evidence at line (labels, stamps, test reports, controlled documents).
• Capacity realism. OEE records, preventive maintenance schedules, tooling ownership, and surge capacity.
• People + EHS. Competency matrices, training logs, PPE usage, and environmental permits (AMDAL where required).

Remote alternatives: Use structured video audits and digital document rooms when travel is tough but plan a follow-up physical audit before large-scale ramp.

9) Social and labor compliance: your brand is on the line

Indonesia’s labor law framework evolved under the Job Creation reforms; minimum wages are set at the provincial level and updated periodically. Rather than chasing every legal nuance, qualify suppliers on standards and evidence:

• No forced or child labor (age and employment record checks).
• Working hours and overtime recorded and compliant; wage slips provided.
• Freedom of association respected.
• Health & safety programs and accident logs.
• Third-party audits (e.g., SMETA, WRAP, BSCI) where relevant to your brand commitments.

Cross-check any public controversies; media and NGO scrutiny has intensified across Southeast Asia. Human rights and privacy reporting in 2024–2025 underscores the reputational risks of ignoring civic and worker protections.

10) Logistics and customs: plan from HS code to label

Getting goods out of Indonesia smoothly usually comes down to the right HS/BTKI classification and proactive documentation:

• BTKI code alignment (Indonesia’s HS variant) with your Incoterms; misclassification triggers delays or unexpected permits (LARTAS).
• Labels and marks that reflect halal/SNI where mandated; mismatched packaging can be detained or relabeled at cost.
• Origin rules for RCEP or other agreements require coordinating the bill of materials and supplier declarations to unlock tariff preferences.

11) Commercial terms that actually work in Indonesia

• Payment terms. Many Indonesian SMEs prefer deposits and LC at sight. For stronger mid-caps, a 30–60-day open account is possible with credit insurance or rolling forecasts.
• Currency. Quotes are commonly in USD; if in IDR, clarify FX risk allocations and indexation.
• Tooling and IP. Define tooling ownership, maintenance, and buy-back clauses; specify confidential information handling under the PDP regime where personal data or telemetry is involved.
• Price adjustment. For TKDN-affected categories or volatile inputs (nickel, steel), embed a price-indexation or open-book mechanism.

12) Step-by-step: a practical supplier qualification workflow

Phase 1: Desk screening (1–2 weeks)

• Corporate check: NIB via OSS copy; API status if importing.
• Regulatory scope: Confirm SNI/halal/BPOM/environmental applicability by HS code.
• Quality pack: ISO certificates, process flow, equipment list, capacity statement, top 10 customers (anonymized if needed).
• Compliance pack: PDP posture (lawful basis, DPO if applicable), anti-bribery policy, code of conduct.

Phase 2: Technical + compliance diligence (2–4 weeks)

• Audit: On-site or structured remote; close any major findings with corrective action plans (CAPA).
• Product compliance: Secure valid SNI or test plan; line-trial labels; halal certificate if in scope.
• Pilot run: Pre-production batch with PPAP/FMEA (if relevant), full documentation set.
• Contracting: Insert TKDN clauses (if applicable), anti-bribery, PDP, audit rights, and liquidated damages for non-conformance.

Phase 3: Launch + continuous improvement

• Logistics rehearsal: Conduct a dry run of documentation, including the commercial invoice, packing list, certificate of origin, test reports, and e-Faktur details, to ensure the VAT treatment is correct.
• QBR cadence: Quarterly Business Reviews with KPIs (OTD, PPM, CAPA closure, forecast accuracy), and supplier development workshops.
• Re-certs + surveillance: Calendar SNI/halal/TKDN renewals; align on any regulatory changes.

13) Category-specific watch-outs

• Food & beverage: Mandatory halal labeling for in-scope categories is live; expect inspections. Ensure end-to-end halal assurance, including ingredient traceability and contract slaughter compliance where applicable.
• Electronics + smartphones: TKDN thresholds and enforcement continue to tighten; build local value-add plans (software, assembly, or components) with suppliers to protect market access.
• Power/renewables: TKDN rules and periodic relaxations (e.g., solar infrastructure) can change tender dynamics; confirm the current threshold and any temporary exemptions before locking BOMs.
• Household appliances, steel, tires, toys: Many SKUs require SNI, so do not ship prototypes without a clear certification path.

14) How trade agreements and tariffs can tilt the decision

Under RCEP, qualifying origin can reduce tariffs across key Northeast and Southeast Asian destinations. If you’re buying in Indonesia for redistribution across RCEP members, collaborate with your suppliers on origin documentation and component sourcing to meet content rules. That can materially change your landed-cost calculus and even your final assembly location.

Meanwhile, negotiations with the EU have advanced toward substantive conclusion; keep an eye on the timetable if Europe is in your route-to-market.

15) Governance: keep suppliers good by design

Great qualification is only the beginning. Bake in governance:

• KPIs that matter: On-time delivery, PPM/complaint rate, first-pass yield, and responsiveness to CAPA.
• Quarterly risk scans: Re-check OSS/NIB status, insurance, and legal disputes; scan for regulatory updates on VAT, halal, SNI, and TKDN.
• Dual-sourcing within Indonesia (e.g., Java vs Batam vs Surabaya) to spread seismic, weather, or port risk.
• Ethics + data refresher training for supplier account teams, with hotlines for raising concerns anonymously.

16) Red flags—walk away if you see these

• Reluctance to share NIB/OSS documents or mismatched legal names and addresses.
• “We’ll fix the certificate after shipment.” For SNI/halal categories, certification is pre-market, not optional.
• Requests for “speed money.” Treat as a compliance breach and disengage.
• No PDP posture despite handling customer or employee data. The transition period has ended; compliance is expected.

To build stronger, more transparent partnerships, learn how to set expectations with new overseas suppliers and establish clear communication from the start.

17) A concise document list to request from any Indonesian supplier

• Corporate & licensing: NIB (OSS), deed of establishment/changes, tax ID (NPWP).
• Regulatory: Applicable SNI certificates (with LSPro details), halal certificates (BPJPH-recognized), BPOM (if relevant), environmental permits.
• Quality & operations: ISO certificates, process flow, capacity statement, key equipment list, calibration plan, control plan, and sample COA/test reports.
• Compliance: PDP law compliance summary (roles, basis, transfer safeguards), anti-bribery policy, code of conduct (with whistleblowing channel).
• Commercial: Standard terms, VAT invoice samples (e-Faktur), and a breakdown of any TKDN certifications if bidding on public projects.

For a step-by-step guide on evaluating and integrating new vendors, explore our detailed [Supplier Onboarding Checklist] to ensure a smooth and compliant onboarding process.

Work with AMREP for Smarter Supplier Qualification in Indonesia

Qualifying suppliers in Indonesia demands more than a checklist approach. It requires developing a consistent, well-structured process that combines business verification, product compliance (halal and SNI), local content considerations (TKDN), strong quality systems, ethical trade practices, data protection, and tax accuracy. When done right, Indonesia transforms from a market hedge into a strategic sourcing powerhouse for the decade ahead.

Through AMREP’s Supplier Management Services, you gain the insight, structure, and local expertise needed to qualify reliable Indonesian suppliers and build a sustainable supply chain for the future.

Work with AMREP to simplify supplier qualification in Indonesia and turn challenges into opportunities for growth, trust, and lasting collaboration.