Since enactment of the Law No. 7 of 2014 on Trade, the registration of warehouses has been mandatory. Several types of sanctions will be imposed for non-compliance, namely temporary closure and/or penalty up to Rp2,000,000,000.00.
Recently the government issued Government Regulation No. 33 of 2019 on Imposition of Administrative Sanctions to Warehouse Owners Who Fail to Conduct Warehouse Registration (“GR No. 33/2019“), which further regulates the classification of warehouses based on their size and storage capacity as well as procedure of imposition of sanctions for non-compliance. GR No. 33/2019 will be in effect starting from 6 November 2019.
Under GR No. 33/2019, registration of warehouses will be conducted online and submitted to the relevant regent or mayor where the warehouse is located, or to the governor if the warehouse is located in Jakarta. As proof of registration, the regional authority will issue the so-called Warehouse Registration Certificate (locally known as Tanda Daftar Gudang or “TDG“) to the warehouse owner.
What’s a Warehouse?
A warehouse is defined as an immovable space, whether closed or open, which is not publicly accessible and shall be used specifically as a place to store tradeable goods (not for personal needs). Any individual or business entity that owns a warehouse, either to be managed independently or leased to third party), is called a warehouse owner.
A closed warehouse is a closed building with or without refrigeration (normally used to store fresh consumables), while an open warehouse is an open space with partitions (normally used to store non-consumable raw materials).
A silo or tank warehouse is a specific space which construction is made of steel, iron, concrete or wood and designed to store liquid, gas, bulk or seeds.
What Classifies As a Warehouse?
Warehouse owners are required to register their warehouses based on the following classifications:
|Class A closed warehouse||100 m2 – 1,000 m2||360 m3 — 3,600 m3|
|Class B closed warehouse||> 1,000 m2 – 2,500 m2||> 3,600 m3 – 9,000 m3|
|Class C closed warehouse||> 2,500 m2||> 9,000 m3|
|Class D closed warehouse||Unspecified, but must be in the form of a silo or tank||At least 762 m3 or 500 tons|
|Open warehouse||At least 1,000 m2||Unspecified|
Any manufacturer who has obtained Industrial Business License (locally known as Izin Usaha Industri or “IUI“) is not required to register its warehouse, because the IUI will simultaneously serve as TDG. For manufacturers who have not obtained IUI, it is still unclear whether they will be required to separately obtain TDG in order to operate their warehouses.
Sanctions for Non-compliance
The regional authority (i.e. regent, mayor or governor) can impose administrative sanctions under the following phases:
|1st phase||Written warnings||A non-compliant warehouse owner will be served with a 1st written warning. If the warehouse owner does not respond within 14 business days, the regional authority will issue the 2nd written warning.
If there is still no response within 14 business days after issuance of the 2nd warning, the regional authority will proceed to the 2nd phase sanction.
|2nd phase||Temporary closure||Temporary warehouse closure will be imposed on the 15th business day after issuance of the 2nd written warning, which closure shall continue until until the warehouse owner obtains the TDG.
During temporary closure, the warehouse owner may still discharge goods out of the warehouse but is prohibited from loading any new goods into the warehouse.
If the warehouse owner still hasn’t obtained TDG in 30 business days since the starting date of temporary closure, the regional authority will impose the final phase sanction.
|Final phase||Administrative penalty||The penalty amount will be calculated according to the total number of days of non-compliance and the warehouse classification. The longer the non-compliance, the higher the penalty.
The penalty range from Rp2,500,000.00 up to Rp2,000,000,000.00 per warehouse, as further detailed in the Attachment to GR No. 33/2019.
Our Corporate Practice Group
We advise clients on legal issues that may affect their day-to-day operations, as well as on the extraordinary events that may have significant ramifications for their businesses. We are equally comfortable in providing general corporate maintenance services, ranging from performing compliance legal due diligence to handling the process of obtaining governmental licenses and approvals.