Asia-Pacific Update: Indonesia Cosmetics

On Jan. 1, 2008, the ASEAN Harmonized Cosmetic Regulatory Scheme was implemented, including a clause that required Good Manufacturing Practices (GMPs) in the cosmetic industry. This regulation encompasses the Southeast Asian nations Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist Republic of Vietnam; however, this column will focus on Indonesia. In Indonesia, GMP is known as Cara Produksi Kosmetik yang Benar (CPKB). In addition, on Jan. 1, 2010, the ASEAN Free Trade Agreement enacted a gradual reduction on the import duty of cosmetics, which will gradually be reduced from the current 15% to 5%.

Indonesia is home to approximately 700 cosmetic companies in its 19 provinces. In 2007, total cosmetic production reached 372 tons, with an average 12.5% increase of production from 2003 to 2007. While cosmetic exports reached US$ 122 million in 2007, cosmetic imports were estimated to reach US$ 250 million in 2008. Indonesian cosmetic companies follow yearly market trends; however, raw material suppliers often focus on developing natural ingredients. There is a belief in Indonesia that herbs, “jamu” in Indonesian, from trees, leaves, fruits, roots, etc. are good for treating and maintaining beauty on the skin, hair and body. In 2002–2006, a few large foreign companies left Indonesia and relocated to neighboring countries, as they found Indonesia an uncompetitive market for cosmetics.

Data shows that the Indonesian market is lucrative, but the Indonesian government has used local industry standards to prevent more multinational companies from entering the Indonesian market and protect the local industry players. In addition, the government has also used regulatory requirements to deter the marketing of imported cosmetics in Indonesia.

The ASEAN Harmonized Cosmetic Regulatory Scheme states an ASEAN member countries must accept products that have been registered in another ASEAN member country; however, the regulation leaves final approval up to member states.

The Indonesian Food and Drug Monitoring Agency (BPOM) has experienced overwhelming products in the market since online applications were allowed on Jan. 1, 2011, and monitoring these products has become to a challenge. The ASEAN Harmonized Cosmetic Regulatory Scheme (one among several ASEAN-China Free Trade Agreements (ACFTA)), allows cosmetic companies to submit an online application prior to distributing their products on the ASEAN market. This application must be done by a local agent or a distributor. According to a report by the Jakarta Post, the number of cosmetic products on the Indonesian market went from 12,000 in 2010 to nearly 30,000 in 2011. The report found that half of imported cosmetics were foreign.

A foreign company trying to register its product in Indonesia may face numerous obstacles, the first of which is translation. Translation into Indonesia’s national language, Bahasa Indonesia, is required on labels, and this translation may result in a deviation from original intention. In addition, the Ministry of Trade also applies Indonesian National Standards (SNI) to cosmetic products, where products are being tested according to its standard (RI No. HK03. This standard includes microbial, heavy metal and the prohibited material tests. Cosmetics in the Indonesian market must meet the safety, benefit, labeling, quality and claim requirements as stated in the Indonesia Codex Cosmetics and/or appropriate provisions of country’s national standards.

In May 2012, Indonesia again applied through the World Trade Organization (Notification No. WTO G/TBT/N/IND/57) to postpone adopting the ASEAN Free Trade Agreement.

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