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If you’re an eCommerce merchant based in Singapore, you may be thinking of expanding beyond the country to capture a larger pool of consumers for your product. With Singapore’s geographical proximity to many countries in Southeast Asia, this can prove advantageous when shipping your products internationally.
When it comes to expansion within Southeast Asia, no other market stands out more than Indonesia, due to it having the largest eCommerce market size in Southeast Asia. The archipelago’s eCommerce industry is expected to grow to USD 50 billion by 2024 from its 2020 value at USD 26 billion.1 Additionally, Indonesia has a high number of internet users, standing at 175.4 million people in 2020, and 88% of these internet users have bought a product online.2 To find out more about this market, we’ve covered its details extensively in our country guide to Indonesia.
In Indonesia, most eCommerce purchases take place within the Jabodetabek or Greater Jakarta region, which includes Jakarta, Bogor, Depak, Tangerang, and Bekasi. This metropolitan area is a 2 hour flight away from Singapore, and is the most populous area in Indonesia. Because of the developed infrastructures in place, the region is able to support eCommerce transactions and deliveries to its residents.
However, with the recent spread of COVID-19, flights into Indonesia have been limited in an effort to curb the pandemic. When shipping internationally into Indonesia from Singapore, it helps to stay updated of any regulatory changes in Singapore and Indonesia so that you can plan out your logistics supply chain accordingly.
While the logistics supply chain from Singapore to Indonesia can vary depending on your requirements, shipping from Singapore to Indonesia would usually follow these steps.
The first mile stage in international shipping refers to the first stage of the shipping supply chain, where it either leaves the merchant’s address, be it a storefront, office, or warehouse. Prior to your goods leaving your storage facility, the product has to be packaged and labelled appropriately to facilitate smooth cross border shipping.
Packages may sometimes go through bumpy rides such as turbulence during the shipping process. Having extra padding for fragile items, like bubble wrap and packing peanuts, is recommended to prevent your products from bouncing around or getting deformed during shipping. To learn more about the best practices in packaging your goods, we’ve covered this topic in our packaging guide.
Additionally, shipping labels and the appropriate customs documentation must be accessible for customs officers to inspect the shipment. You can check out our guide on labeling your shipments which you can also find in our resources for B2C shipping to Southeast Asia.
Once the shipment is ready to be passed to your shipping partner, you can choose to drop off your parcel at your shipping partner’s drop-off point, or have it picked up from your address. Most shipping partners would have a cut-off time for submitting orders for drop offs and pick ups so that they can optimise their route.
If your shipment is a B2C parcel, it typically has to be consolidated at a transportation hub along with other packages with the same destination country before it can be sent for customs clearance. Since B2B shipments are already consolidated, the shipment can be transported directly to the origin warehouse for customs clearance.
Some warehouses you could consider in Singapore also have transportation hub capabilities, and are able to sort your parcels and have it ready for customs clearance within the same location such as those within Singapore’s Free Trade Zone.
Free Trade Zone warehouses also have the benefit of deferring tax charges on non-dutiable goods until they enter a country’s official borders, which helps with both cash flow and also as a storage area for regional hubs in Southeast Asia.
As your shipment arrives at the origin port or airport, the parcel would need to be cleared by Singapore’s customs for export. This is where the customs officers will inspect the parcel’s contents and shipping documents and determine if it’s exportable from Singapore. If you’re planning to ship with B2B, you may want to check if you need to produce specific customs documentation for export in Singapore’s Customs website.3
When it comes to freight, shipping your goods from Singapore to Indonesia can be done in two ways - air freight and sea freight.
For merchants shipping B2C parcels, air freight is the faster option, especially if you don’t have a consistent order volume and need your parcels to reach the destination country quickly.
To ship into the Jabodetabek region in Indonesia, your shipment will typically leave via Changi International Airport (SIN) and then enter Soekarno Hatta Airport (CGK). Usually, air freight’s speed makes it the preferred option for eCommerce merchants who want to test the market, as inventory will mostly be held in Singapore. However, due to the limited number of flights due to the COVID-19 pandemic, prices for air freight have increased from the lack of cargo space. The limited number of flights may also cause delays and affect the delivery timing for shipments.
On the other hand, sea freight is generally more cost effective for shipping in bulk. However, it is slightly slower than air freight. When managing your inventory, you’ll need to take into account the estimated delivery date so that you can plan out your supply chain accordingly.
The main port of Jabodetabek is the Port of Tanjung Priok at North Jakarta (IDTPP), and leaves from Singapore from the Port of Singapore (SGSIN). This mode of transport is preferred if you are looking to expand into Indonesia aggressively, and is typically paired up with having a local distribution centre within Indonesia for storage and fulfilment within the country.
With the COVID-19 pandemic around, sea freight could be a good alternative to air freight even for B2C deliveries considering the shortage of available international flights. While slightly slower compared to pre-COVID air freight timings, it is still preferable to facing possible delays if you choose air freight during this period.
Once your item arrives in Indonesia’s airport or port, your shipment will be transported into a customs warehouse for clearance. This is where the customs officers will inspect your parcel and shipping documents and determine if your product is allowed to enter Indonesia.
To clear customs for import into Indonesia, you or your shipping partner would generally need to provide the following documents:
If your item is below Indonesia’s de minimis rate of USD 3, then there is no need to pay additional import duties and taxes to the customs office. Currently in Indonesia, items below the de minimise just require a VAT payment of 10% of the order valuation.
The de minimis rate refers to a value threshold where fewer or no duties and taxes are charged if the shipment’s CIF value, which includes your good’s price, shipping fee, and insurance costs if any, is below that point. However, this only applies to goods that are delivered via air freight. Earlier in 2020, the Indonesian government revised their de minimis rates from USD 75. To find more information about this regulatory change, you can read our article here.
On the other hand, if your goods exceed the de minimis threshold, higher import duties and taxes like income tax will be levied on your shipment. You would have to pay a value-added tax (VAT) at 10%, and the import duties and income tax depend on the product category as declared by the harmonised systems code (HS code). You may find out the percentage of your import duties paid through Indonesia’s Directorate General of Customs and Excise website.4
However, with the COVID-19 pandemic around, the Indonesian government provided temporary duties and tax exemptions on products that are designed to fight the virus, such as hand sanitisers and personal protective equipment. You can find out more information in our article on this temporary regulation.
If you’re shipping a B2C parcel, you can choose to either pay for the import duties and taxes yourself or let your customers pay for the import duties and taxes. This is determined by the incoterms Delivered Duties Unpaid (DDU) and Delivered Duties Paid (DDP). While we strongly encourage you to opt for DDP to keep your shipping experience smooth for your B2C customer, it helps to familiarise with what these arrangements mean.
Once your shipment has cleared customs, it will enter the distribution stage of the shipping journey. If the consignee’s address is within the Jabodetabek region, your B2B shipments can be delivered directly to its destination. However, B2C parcels need to be at a transport hub to sort them out before the last mile journey can begin. However, if the address is beyond an address that can be reached by vans or trucks, an additional domestic flight will be needed before your shipments can be sorted or sent to last mile delivery.
The last mile delivery stage is where your parcel will be sent from the destination warehouse to your consignee’s address. In Indonesia, this stage of the delivery is done via vans or motorcycles. During the last mile delivery stage, your logistics service provider will ensure that your shipment is received by your consignee. According to Statista in 2019, around 1 in 10 online transactions are paid via cash on delivery.5 Thus, it helps to offer cash on delivery in order to win the trust of your eCommerce consumers.
Now that you know the full process of shipping your items from Singapore to Indonesia, you’re in a better position to choose a suitable shipping partner who can cover the entire logistics supply chain from first mile to last mile. When choosing a logistics service provider, it helps to consider the cost, speed, delivery experience, and your whole supply chain before committing to a shipping solution.
Considering the rapid adoption of eCommerce in Indonesia, expanding internationally into this market means that you’ll be riding the wave of eCommerce growth in the country. To impress your potential customers in Indonesia, it helps to have a reliable shipping partner that can deliver on time. That way you can impress your customers with your hottest items in stock while wowing them with efficient eCommerce delivery speeds.
Looking to ship internationally throughout Southeast Asia? Contact us to find out how.
We have other guides on how to ship from Singapore to Southeast Asian destinations here:
For more information on Singapore as a destination, we also have these guide here:
References
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