doing business in indonesia: cosmetic industry and product registration in indonesia

Doing Business in Indonesia:Cosmetic Industry and Product Registration in IndonesiaJakarta, August 2016

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Contents

Background of Cosmetics in Indonesia

Cosmetic Regulations

Company Profile

Indonesian Cosmetic Industry

Cosmetic Product Registration

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What is Cosmetics in Indonesia?

According to the BPOM (National Agency of Drug and Food Control in Indonesia), cosmetics is substance or preparation intended to be used on the outside of the human body (epidermis, hair, nails, lips and genital organs exterior), or teeth and oral mucous membranes, especially to clean, perfume, change the appearance, and / or improve body odor and or protect or maintain the body in good condition.

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Cosmetic Category in Indonesia (1)• Creams, emulsions, lotions, gels and oils for skin (hand, face,

feet, etc.)• Face masks (with the exception of chemical peeling products)• Tinted bases (liquids, pastes, powders)• Make-up powders, after-bath powder, hygienic powders, etc• Toilet soaps, deodorant soaps, etc• Perfumes, toilet waters and eau de Cologne• Bath or shower preparations (salts, foams, oils, gels, etc)• Depilatories•Deodorants and anti-perspirants• Hair Care products

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Cosmetic Category in Indonesia (2)• Shaving product (creams, foams, lotions, etc)• Product for making-up and removing make-up from face and

the eyes• Product intended for applications to lips• Product for care of the teeth and the mouth• Product for nail care and make-up• Product for external intimate hygiene• Sunbathing products• Products for tanning without sun• Skin Whitening products• Anti-wrinkle products

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Company Profile



Cosmetic Industry in Indonesia –Market Demand

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• The cosmetics sector has recently seen 10% - 15% growth due to increases in disposable income and aggressive marketing efforts. While people in the urban areas of Indonesia are the biggest buyers of cosmetic products, the rural population is showing higher interest in personal care products.

• Domestic manufacturers are successful in the middle and low-end market segment, and supply most of the local demand.

• The large Muslim population in Indonesia is a huge potential market for halal beauty products, with a growing number of consumers trying such products in 2015. The majority of halal beauty products is still offered by local manufacturers.

Source US Commercial Service: Cosmetic and Toiletries Market Overview in 2015

www.cekindo.com

Cosmetic Industry in Indonesia –Market Demand

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• The sales prospects remain good with steady growth projected over the next two years.

• The demand for cosmetics and toiletries has increased substantially over the past years. Imported cosmetics with international brands have strong hold of the market, with about 70% share. Local brands make up about 20% of the market while the rest belongs to illegal imports, which are mostly from China.

• The international brand market is mostly dominated by U.S. and European companies such as Unilever and L’Oréal. Despite rapid growth in the industry and sharp competition among brands, Indonesia is still a good potential market for imported cosmetics.

Source US Commercial Service: Cosmetic and Toiletries Market Overview in 2015

www.cekindo.com

Cosmetic Industry in Indonesia – Import Value

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• According to BPS (Central Bureau of Statistics in Indonesia), the 3-years figures of imported cosmetics and toiletries in Indonesia stated as follows:– In 2013 for USD 541.6 million– In 2014 for USD 483.9 million– In 2015 for USD 453.4 million

• The total import value slightly decreased in 2014 and 2015, primarily due to the drastic fall in Rupiah/Dollar currency exchange, where Rupiah has lost 10% of its value against the dollar since November 2013

Cosmetic Industry in Indonesia – Skin Care

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• In the cosmetics sector, skin care products accounted for more than 76% of total imports. Business sources predict that the market size and sales for skin care products will continue to increase due to the growing awareness of the value of skin-care treatment for both males and females.

• Cosmetics play an increasingly important role in the daily lives of Indonesians and the skincare market, meanwhile, is growing so much that cosmetic companies are even starting to take aim at men.

• An increasing Cosmetics, Toiletries and Skincare number of men, as well as working women, are more concerned about their skin care, driving the demand for men-oriented products, as well as anti-aging and skin whitening products. The market for both local and imported anti-aging and whitening products still has potential to grow.

Cosmetic Industry in Indonesia – Wedding and Spa

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• The growth potential is also affected by increased demands from the service industry such as beauty parlors and spas.

• More people seek professional help for facial and skin treatment, stimulating the growth in sales for skin care products. More new upscale beauty salons and skin care clinics were opened in shopping centers. The number of professional hair care salons selling specialty products has also increased.

• Wedding spa or pre-wedding body and beauty treatment has become a trend in Indonesia, contributing to the growth of the skin care market.

• The Indonesian spa industry is widely recognized particularly in the hotel and resort areas. There are increasing opportunities for spa aromatherapy supplies, since local producers lack the research capabilities to develop quality products.

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Skincare Products

Massage Products

Haircare Products

Best Sales Prospect

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Contents



Company Profile



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Cosmetics RegulationsThe latest regulations issued by the Head of BPOM regarding cosmetics:• Number 18 Year 2015 : Technical Requirements for

Cosmetic Materials• Number 19 Year 2015 : Technical Requirements for

Cosmetics• Number 1 Year 2016 : Technical Guidelines for Control of

Cosmetic Advertising• Number 11 Year 2016 : Application Guidelines for Hygiene

Sanitation and Documentation in Cosmetic Industry Group B

.

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Import Regulations• Based on BPOM regulations Number 27 Year 2013

regarding The Control of Food and Drug Entry to Indonesia, stating that for all food and drug, includes cosmetics entering Indonesia shall possess:– Product license– Fulfill prevailing import law– Obtain approval from the Head of BPOM for Import

Notification Letter (SKI) that is valid for one-time of importation.

• There is no formal import barrier on cosmetics. The import duty for cosmetics is 10% plus 10% VAT. Rates are 0-5% for products originating in ASEAN FTA members.

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Halal Certification• Halal certificate is issued by the Indonesian Council of

Ulama (MUI) based on assessment conducted by the Assessment Institute for Foods, Drugs, and Cosmetics of The Indonesian Council of Ulama (LPPOM MUI).

• Government bodies responsible for food controlling:– Ministry of Agriculture for meat and animal based

foods– National Agency for food and drug control (BPOM) for

food packaged product• It is mandatory to have Halal certification for food

products, however for cosmetics products is not mandatory yet.

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Company Profile



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Cosmetics Registration Overview• The role of the National Agency of Drug and Food Control

(Indonesian acronym BPOM) in to regulate and control the registration, distribution, and quality of cosmetics.

• All cosmetic products (manufactured locally or imported) shall be registered at BPOM to obtain notification of cosmetic product to be able to be distributed legally in Indonesia.

• The cosmetic products shall be registered under Indonesian company, as distributor or agent in Indonesia (it is not allowed to be registered by foreign company or individual).

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• The product license is valid for 3 years only under 1 company. Meaning that after registration, this company will receive some kind of exclusivity on the products, since this company holds the product license and without their approval, the principal or exporter is not able to change the company or make any registration under the other distributor.

• Cosmetics registration in Indonesia takes around 1,5 - 2 months. The registration lifetime of cosmetics is until 3 years as long as still meeting the prevailing provisions and extendable through re-registration of cosmetics product.

Cosmetics Registration Timeframe

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Products Registered at BPOM by end of July 2016

7 days ago From 201630 days ago

Food & Beverage

Food Supplement

Cosmetics

Traditional Drug Food Supplement

Drug

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Cosmetics Registration Process – Legal Entity Registration

Fill out legal entity online registration form

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Submit legal entity hard copy documents to BPOM

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Verification process3

Login data is activated and able to register products

4a Returned to be completed or corrected

4b

Complete Incomplete

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Cosmetics Registration Process – Product Registration

Fill out product online registration form

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Submit product hard copy documents to BPOM

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Payment to BPOM3

Payment verification4 Product ID issued5

Incorrect

Correct

Rejected to be corrected or completed

7bBPOM Notification issued

7a

Verification template and formula evaluation

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Not suitableSuitable

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Registration Requirements – Company documents

• Article of Association and its’ amendments• Deed of Establishment and its’ amendments• Domicile letter• Tax ID• Business License – stating cosmetics trading• Company Registration Certificate• Import License – which covers cosmetics product

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Registration Requirements –Product Documents

• Letter of Authorization (LoA) – from Principal / Exporter to Distributor / Agent in Indonesia, shall be legalized by Indonesian Embassy in the origin country

• Certificate of Free Sales (CFS) from origin country – legalized by Indonesian Embassy in the origin country

• Good Manufacturing Procedure (GMP)• Certificate of Analysis (CoA) – with detail % of each

ingredients• Relationship Letter – if the Principal is different with the

Manufacturer

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Registration Requirements –Language and Labelling

LANGUANGE REQUIREMENT• Bahasa Indonesia or English is accepted.

LABELLING REQUIREMENTS• Each product must state Notification Number• Production code• Expiry date• Manufacturer name and address• Importer and distributor name and address

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Contents



Company Profile



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Our VisionTo be leading consulting firm of business services to clients expanding and operating in Indonesia.

Our Mission To provide full-range of market-entry and corporate services to enable our clients to focus on their core business and activities in Indonesia and beyond.

PT. Cekindo Bisnis Grup is a leading consulting firm of Market-Entry and Corporate secretarial services to clients expanding and operating in Indonesia and further to Southeast Asia.

Our ValuesClient-focusedExcellence performanceKnowledgable locallyIntegrity moralNormative operations standardsDelivered on-timeOne stop services provider

Company Profile

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Our main services:

Business Set Up

Business Process

Outsourcing

Local Representation

Company Registration

License & Product Registration

Market Research & Analysis

Local Partner Selection

Trade Mission

Recruitment & HR Establishment

Payroll ProcessingAccounting & Tax

ReportingVisa & Work

PermitMystery Shopping

Local Distributor & Partner

Project Management & Coordination

Buying Agent Virtual &

Serviced Office

Cekindo Services

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Senior AdvisorProf. Dr. Rahardi Ramelan

Relevant Experience

Mr. Ramelan is currently Senior Advisor at PT Cekindo Bisnis Grup. Hi is a Research Professor at the Agency for the

Assessment and Application of Technology. The honorary degree of Doctor Honoris Causa from Monash

University, Australia and Northeastern University Boston.

Minister of State for Research and Technology of the Republic of Indonesia and Chairman of the Agency for Assessment and Application of Technology (BPPT) in the Seventh Development Cabinet of the Republic of Indonesia.

Minister of Industry and Trade in the Development Reforms Cabinet of the Republic of Indonesia and Chairman of National Logistic Agency.

Deputy Chairman for Industrial Analysis and Vice Chairman of the National Development Planning Agency of the Republic of Indonesia

Several management positions and responsibilities related to Indonesian Aviation industry, the Weapon industry.

Prof. Dr. Rahardi Ramelan

Profile Overview

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Principal ConsultantMichal Wasserbauer

Michal is currently Principal Consultant at PT Cekindo Bisnis Grup. He has more than 5 year‘s experience in the

Corporate Market research, Strategy and Evaluation Expansions, Business Consultancy, and Preparation of

Business Feasibility Studies. He has worked for various industries, namely Grocery and Marchandise Retail,

Energy, Medical Device, Heavy and Automation Industries.

+6281282300584 | [email protected]

Michal Wasserbauer

Market opportunities valuation Investment analysisPerformance management Feasibility studies

Strategy planningStakeholder managementMarketing consultancy

Profile Overview

Relevant Experience

Relevant Skills

Multinational grocery and general merchandise retailer: Capital Investment Appraisals

World‘s largest student and recent graduates-run organisation: Financial Controller

International consultation company: Market Expansion Consultant

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Principal ConsultantNurmia Agustina

Nurmia is currently Principal Consultant at PT Cekindo Bisnis Grup. She has wide experience in the areas of Business

Development, Legal Corporate Restrictions, Business Consulting, Project Management, Market Development &

Entry Strategy, Sales & Distribution, Management Strategy, Recruitment, Visa & Work Permit, and Change

Management. She has worked for various industries, namely Energy & Resources, Telecommunication, Retail,

Pharmaceutical & Medical, Financing, Non-Profit, IT and Heavy Industries.

+628119691987 | [email protected]

International Management company: Management & Legal consultant

Chamber of Commercial: Head of Business Processing Section

Nurmia Dwi Agustina

Corporate lawOutsourcing processesCompany formationAcquisitionsProject ManagementCompetitive Analysis

Business PlanningRisk ManagementTalent Management StrategyRecruitmentVisa & Work PermitChange Management

Relevant Experience

Relevant Skills

Profile Overview

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Selected Clients

PT. Cekindo Bisnis Grup

Grand Slipi Tower 9th floorJl. Letjend. S. Parman Kav 22-24Jakarta - 11480Indonesia

[email protected] +6221 80660999