Why Is Importing Used Machinery in SEZs a Strategic Option for Foreign Investors?
Importing capital goods or used industrial machinery is a strategic decision for many Foreign Direct Investment (Penanaman Modal Asing / PMA) investors establishing manufacturing facilities in Special Economic Zones (SEZ/KEK). This strategy allows companies to reduce initial Capital Expenditure (CAPEX), accelerate factory operational readiness (time-to-market), and deploy production lines with proven efficiency from parent facilities overseas.
The Indonesian Government grants special treatment for the movement of capital goods in SEZs as regulated under Ministry of Finance Regulation (PMK) No. 33/PMK.010/2021 regarding Tax, Customs, and Excise Treatments in Special Economic Zones. Used capital goods imported by SEZ Business Entities are entitled to Import Duty suspension as well as uncollected VAT or Sales Tax on Luxury Goods (VAT/STLGG). These incentives provide significant cash flow flexibility for investors during the initial industrial development phase.
However, importing non-new capital goods remains subject to trade Prohibitions and Restrictions (Larang dan Pembatasan / Lartas) regulations, as well as occupational safety and environmental standards in Indonesia. For foreign directors, procurement teams, and customs consultants, properly understanding the licensing requirements for used machinery imports is vital to prevent cargo detentions at entry ports (red line detention) or import rejections.
What Are the Legality Requirements and Mandatory Documents for Importing Used Machinery into an SEZ?
The government regulates the import of non-new capital goods to ensure incoming machinery remains fit for use, is not classified as hazardous waste, and safely supports national manufacturing processes.
As detailed in the customs treatment and SEZ import guidelines on the Ortax Data Center, key legality requirements that must be fulfilled by SEZ Business Entities include:
- Import Approval for Non-New Capital Goods (Persetujuan Impor Barang Modal Non-Baru / PI BMNB): A special permit issued by the Ministry of Trade through the National Industrial Information System (SIINas) portal and Risk-Based OSS (OSS RBA).
- Surveyor Report (Laporan Surveyor / LS) at Loading Port: Technical pre-shipment inspection results conducted at the origin country by an official independent surveyor to evaluate machinery seaworthiness, remaining economic lifespan, and serial number verification.
- Declaration of Machinery Fit-for-Use & Non-B3 Status: An official statement letter from company management certifying that the used machinery is in good operational condition, intended directly for internal production, and free from hazardous materials (B3).
- SEZ Facility Masterlist Registration: A detailed schedule of capital goods approved by the SEZ Administrator to secure state financial exemptions and suspensions.
5 Procedural Steps for Importing Capital Goods / Used Machinery into SEZ Factories
Navigating the import of used machinery requires a disciplined workflow between licensing teams, international freight forwarders, and integrated customs systems.
Referring to the supervision and services guidelines of the Directorate General of Customs and Excise, here are the 5 operational steps for importing used machinery into an SEZ:
- Submitting the Capital Goods Masterlist to the SEZ Administrator: Register technical specifications, estimated customs values, and machinery unit quantities into the Capital Goods Import Masterlist through the SEZ SINSW portal.
- Securing Import Approval (PI) & Surveyor Reports (LS): Obtain the PI permit from the Ministry of Trade and conduct a Pre-Shipment Inspection at the loading port by an authorized Surveyor to secure the Surveyor Report (LS) before cargo departure.
- Filing the Import PPKEK Customs Declaration: Upon cargo arrival at the Indonesian port, draft and register the SEZ Customs Declaration (PPKEK Impor) via the SINSW portal connected to CEISA 4.0.
- Physical Inspection & Laboratory Testing (If Required): Customs Officers assign a Red Channel for physical cargo verification to match machinery serial numbers, unit quantities, and field physical conditions against the LS and PI documents.
- Fixed Asset Recording in the IT Inventory System: Once the Goods Release Order (Surat Persetujuan Pengeluaran Barang / SPPB) is issued, machinery is transferred to the SEZ factory site and registered as Fixed Assets within the company’s IT Inventory module.
Comparison: Importing New Machinery vs. Used Machinery into an SEZ
| Evaluation Parameter | Importing New Capital Goods | Importing Used Capital Goods / Machinery |
| Trade Licensing (Lartas) | Relatively unrestricted (standard NIB regulations) | Mandatory Import Approval (PI BMNB) from Ministry of Trade |
| Origin Inspection | Surveyor Report (LS) not required | Mandatory Pre-Shipment Inspection (LS) by Surveyor |
| SEZ Customs Facilities | Duty Suspension & Uncollected VAT | Duty Suspension & Uncollected VAT |
| Customs Physical Verification | Channel assignment based on Risk Profile | High physical inspection priority (Red Channel) |
| IT Inventory Recording | Recorded as Capital Goods / Fixed Assets | Recorded as Capital Goods / Fixed Assets |
Asset Tracking of Used Machinery Using Host-to-Host IT Inventory BZone
Once used capital goods successfully arrive and are installed on the factory floor, companies must maintain traceability in their internal records to prevent findings during customs audits.
As explained in the SEZ IT Inventory Prune technical implementation guide, used machinery imported under SEZ facilities is subject to asset retention period rules. The machinery cannot be transferred, sold, or moved outside the SEZ without prior written authorization from Customs.
Category A Host-to-Host (H2H) IT Inventory applications such as BZone automatically segregate Capital Goods Fixed Asset entries from raw material production accounts. BZone connects the Fixed Asset module from the company’s ERP directly to CEISA 4.0, providing audit trails of machinery serial number histories, and facilitating real-time used machinery inventory reporting pursuant to PER-24/BC/2023 guidelines.
FAQ: Used Machinery Imports for PMA Factories in SEZs
Are all types of used machinery allowed into Special Economic Zones?
No. Allowed used machinery must qualify as capital goods directly linked to production processes with adequate remaining economic life. Used machinery categorized as hazardous waste (B3) or scrap metal is strictly prohibited.
How long is the mandatory asset retention period for facilitated used machinery in an SEZ?
Used machinery benefiting from Import Duty exemptions and VAT facilities must remain under SEZ supervision for a minimum of 2 (two) years from the date of import before applying for transfer or customs status change.
What happens if used machinery cargo arrives at the port without a Surveyor Report (LS)?
The cargo is deemed non-compliant with Lartas trade restrictions. Customs will reject the goods release, and the importer will be forced to re-export the cargo back to the country of origin at the company’s own expense.
Can used machinery from an overseas parent factory be leased by a PMA entity in an SEZ?
Yes, under a capital goods import scheme for leasing purposes. SEZ customs facility rules still apply, but the declaration mechanism on PPKEK and IT Inventory documents must explicitly reflect ownership status as leased assets.