SCA - INDONESIA 2023 - Compressed

STANDARDS COMPLIANCE
ANALYTICS
BORDER REJECTIONS IN MAJOR GLOBAL MARKETS
INDONESIA
1
DISCLAIMER
Copyright © 2023 United Nations Industrial Development
Organization.
This document has been produced without formal United Nations

editing. The designations and the presentation of the material in this
document do not imply the expression of any opinion whatsoever
on the part of the Secretariat of the United Nations Industrial
Development Organization (UNIDO) concerning the legal status of
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delimitation of its frontiers or boundaries, or its economic system
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document may be freely quoted or reprinted, but acknowledgement
is requested. For reference and citation please use: United Nations
Industrial Development Organization. 2023. Standards Compliance
Analytics - Border Rejection in Major Global Markets Indonesia.
November 2023
2
INTRODUCTION
Technical regulations and standards are increasingly United States (US). The objective of this report is to
prevalent and continuously evolving in the international gain insights into the challenges faced by Indonesia in
trade of food and nonfood (industrial) products. complying with product quality and safety standards
Moreover, there is evidence that many developing and regulations in agri-food trade, both within regional
countries face challenges in complying with the safety and global markets.
and quality requirements that these regulations and
The present report was prepared by UNIDO and was
standards lay down. Since 2008, UNIDO has consistently
validated during a roundtable workshop. During
gathered evidence on trade related-challenges and their
this workshop, valuable feedback was provided by
evolution, particularly in the area of compliance with
attendees from the Ministry of Marine Affairs and
international market requirements, including quality,
Fisheries (MMAF), the Ministry of Agriculture (MoA),
certification, and labeling.
the Ministry of Trade (MoT), the Ministry of Industry
In their efforts to improve compliance, the challenge (MoI), the Food and Drugs Authority (BPOM), the
for national governments and donors is to allocate National Standardization Agency (BSN), and the Food
scarce financial and technical resources amongst a and Beverage Entrepreneurs’ Association (GAPMMI)
plethora of capacity building needs. Therefore, there as well as from fisheries’ associations. Based on the
is a need to identify where the most acute compliance analysis of the rejection data and consultation with
challenges are faced—in a trade context this means various stakeholders, recommendations are provided
identifying the products and markets with the highest and can be divided into three categories: National
rates of non-compliance—thus, recording rejections. To quality infrastructure system; Industry compliance,
address this need, the Standards Compliance Analytics competitiveness, and sustainability; and Culture for
(SCA) tool can be used to leverage rejection data and quality.
determine the key compliance challenges faced by
The report was developed under the Global Quality and
exporting countries. Consequently, this tool enhances
Standards Programme (GQSP), funded by Switzerland
the targeting of investments in building relevant
through its State Secretariat for Economic Affairs (SECO).
compliance capacities. More detailed information about
the SCA tool can be found in the Annex. The UNIDO Knowledge Hub offers abundant information,
online trainings, and digital tools about Quality
Using the SCA tool, this report analyzes the trends and
Infrastructure, including the SCA tool. Any feedback
patterns of Indonesian agri-food import rejections in
and comments on this report are welcomed and can be
five major international markets, namely Australia,
addressed to knowledgehub@unido.org.
China, the European Union (EU-28), Japan, and the
3
CONTEXT
4
A. COUNTRY PROFILE
Country The Republic of Indonesia

Continent Southeastern Asia
Population 273.8 million (2021)
GDP USD 1.186 trillion (2021)
GDP per capita USD 4,333 (2021)
Value added by Agriculture, Forestry and Fishing 12.4 % of GDP (2022)
Food Safety Index 100 (2017)
Logistics Performance Index (overall) 3 (2023)
3 Year Average of Food Production 161 (2015–2017; unit: USD 1 per capita)
Indonesia has recently lost its prized upper middle higher export and fiscal earnings. Nevertheless, the
income status, a mere year after achieving it, as the country is feeling the pressures of rising prices and
region’s largest COVID-19 outbreak reversed the country’s tightening external finance.3
progress in poverty reduction and employment. As of
The Logistic Performance Index (LPI) measures the
2020, the World Bank downgraded Indonesia to lower
efficiency of trade-related logistics activities in a
middle income1 status due to its gross national income
country, including international shipment, logistics
(GNI) per capita falling from USD 4,050 to USD 3,870,
quality, customs clearance, infrastructure, and tracking
a decline of 4.44%. In 2019, Indonesia had advanced
and tracing. Thus, a higher LPI score indicates better
to upper middle income status with a GNI per capita of
logistics performance and greater competitiveness in
USD 4,1402, its first time in that band since rankings
the global market. A key component of the country’s
going back to 1988. In late 2021, Indonesia’s growth
exports business, Indonesia’s LPI is presented in Table
rate accelerated after recovering from the devastating
1.4 The overall LPI score is 3, and Indonesia is ranked
COVID Delta variant outbreak, ending the year with a
61stout of 139 countries in the study. Unfortunately,
3.7% growth rate. This positive momentum carried into
Indonesia’s ranking dropped 15 places in just five years,
the first quarter of 2022, with the economy expanding
falling from 46th place in 2018. This decline could be
by 5.1% (year-on-year), despite a brief spike in COVID-19
due to challenges that revolved around labor relations,
cases. Since the end of 2021, the drivers of growth have
pricing, and a lack of transparency when setting
gradually shifted from exports and public consumption
regulations and standards and implementing them.5
towards private consumption and investment. However,
the global economic environment has been disrupted
by the ongoing war in Ukraine since February 2022. This
has led to rising commodity prices and de-risking in 3
World Bank (2022). Financial Deepening for Stronger
global financial markets. In the near term, Indonesia has Growth and Sustainable Recovery. https://openknowledge.
worldbank.org/bitstream/handle/10986/37584/
benefited from a positive terms-of-trade effect through IDU087850cba0b204043f608dea019acef5f2be1.pdf?sequence=5
1
World Bank. World Bank Country and Lending Groups. https:// 4
World Bank. Logistics Performance Index (LPI) – International
datatopics.worldbank.org/world-development-indicators/the- Scorecard Page - Indonesia. 2023. https://lpi.worldbank.org/
world-by-income-and-region.html international/scorecard/line/C/IDN/2023
2
World Bank (2021). GNI per capita, Atlas method (current $) – 5
International Trade Administration. Indonesia- Market challenges.
Indonesia. The World Bank Data. https://data.worldbank.org/ ITA. https://www.trade.gov/country-commercial-guides/indonesia-
indicator/NY.GNP.PCAP.CD?locations=ID market-challenges
5
TABLE 1: INTERNATIONAL LPI IN 2023 – INDONESIA
DATA TABLE
(Toggle Rank and Score for Subindicators)
Country Year LPI Score Customs Infrastructure International Logistics Tracking Timeliness
shipments competence & tracing
Indonesia 2023 3 2.8 2.9 3 2.9 3 3.3
The Global Competitiveness Index (GCI) comprises 19%11 of Indonesia’s GDP in 2021 employing 22.7%12
up to 103 indicators derived from a combination of of the population in 2020 and representing the most
data sources from international organizations and popular subsector in terms of foreign direct investment
the World Economic Forum’s survey. It encompasses (FDI).13 For the last decade, the services sector has
various factors, including institutions, infrastructure, continued to rise in importance in its contribution to
Information and Communications Technology (ICT) Indonesia’s economy. Indeed, it accounted for 42.8%14
adoption, macroeconomic stability, health, skills, of its GDP in 2021 and employed half of the workforce.15
product market, labor market, financial system, market The services sector has surpassed the agriculture and
size, business dynamism, and innovation capability, industrial sectors in terms of contribution to GDP.
among others. The GCI provides a score ranging
between 1 to 100. In 2019, Indonesia obtained a score
of 64.63, ranking 50th, and experienced a five-place
decline compared to the previous year, indicating a
modest decrease in its GCI score. Within the Association
of Southeast Asian Nations (ASEAN), Indonesia secured A. AGRICULTURE SECTOR
fourth place, trailing behind Singapore (1st), Malaysia The Indonesian agriculture sector, including the
(27th), and Thailand (40th). Noteworthy strengths fisheries sub-sector, presents a contrasted picture. On
of Indonesia include its market size (82.4, 7th) and one hand, it enjoys a strong hold over certain export
macroeconomic stability (90.0, 54th). However, there crops including palm oil, cocoa, rubber, seafood, and
is definite room for improvement across various pillars coffee. On the other hand, it suffers from a persistent
of the index, particularly in areas such as technology dependence on imports to cover its basic products’
accessibility and innovation.6 needs including wheat, soy, milk, and meat. It is no
The agriculture sector, which includes the forestry wonder then that since its independence in 1945,
and fisheries sub-sectors, contributed to 13.3%7 of Indonesia’s top priority has been to achieve self-
Indonesia’s gross domestic product (GDP) in 2021 and sufficiency as to ensure its food security.16 For the
employed 29% of the workplace in 2021,8 according last few years, access to food has increased and
to the World Bank. The industrial sector accounted undernutrition has decreased although the disparity
for almost 41.4%9 of the country’s GDP in 2022, and across regions remains significant with more than 20
employed 22%10 of the active population in 2021. This million people still facing the risk of hunger and 9.8%
sector is focused on food processing, garments, textiles, of the population, or 26.4 million people, still living
shoes, machine-building, mining, coal, steel, cement, under the national poverty line in 2020.17
chemical fertilizer, glass, tires, oil, and mobile phones.
Its two main subsectors are mining and manufacturing. 11
World Bank (2021). Manufacturing, value added (% of GDP) –
The latter, which refers to a segment of the economy in Indonesia. The World Bank Data. https://data.worldbank.org/
indicator/NV.IND.MANF.ZS?locations=ID
which raw material is converted into tangible output 12
Trading Economics (2021). Indonesia – Employment in Industry (%
‘products’ through value addition, contributed to nearly of Total Employment). https://tradingeconomics.com/indonesia/
employment-in-industry-percent-of-total-employment-wb-data.html
13
Dezan Shira & Associates (2022). Doing business in Indonesia.
Economic Indicators and Indonesia’s GDP, FDI, and Trade trends.
https://www.aseanbriefing.com/doing-business-guide/indonesia/
why-indonesia/indonesia-economy#:~:text=Foreign%20
6
Schwab, K. World Economic Forum. 2019. The Global investment%20in%20Indonesia%20in,US%24108%20billion)%20
Competitiveness Report 2019. https://www3.weforum.org/docs/ in%202024.
WEF_TheGlobalCompetitivenessReport2019.pdf 14
World Bank (2021). Services, value added (% of GDP) – Indonesia.
7
World Bank (2022). Agriculture, forestry, and fishing, value added (% The World Bank Data. https://data.worldbank.org/indicator/NV.SRV.
of GDP) – Indonesia. The World Bank Data. https://data.worldbank. TOTL.ZS?locations=ID
org/indicator/NV.AGR.TOTL.ZS?locations=ID 15
World Bank (2021). Employment in services (% of total employment)
8
World Bank (2021). Employment in agriculture (% of total – Indonesia. The World Bank Data. https://data.worldbank.org/
employment) – Indonesia. The World Bank Data. https://data. indicator/SL.SRV.EMPL.ZS?locations=ID
worldbank.org/indicator/SL.AGR.EMPL.ZS?locations=ID 16
Ministère de l’Agriculture et de la Souveraineté Alimentaire (2019).
9
World Bank (2021). Industry (including construction), value added Contexte agricole et relations internationales – Indonésie. https://
(% of GDP)- Indonesia. The World Bank Data. https://data.worldbank. agriculture.gouv.fr/indonesie
org/indicator/NV.IND.TOTL.ZS?locations=ID 17
World Food Programme (2020). SMERU Research Report. Strategic
10
World Bank (2021). Employment in industry (% of total employment) Review of Food Security and Nutrition in Indonesia. https://
– Indonesia. The World Bank Data. https://data.worldbank.org/ docs.wfp.org/api/documents/WFP-0000119830/download/?_
indicator/SL.IND.EMPL.ZS?locations=ID ga=2.41355170.1400766196.1642189974-1483160441.1642189974
6
Since 2014, significant investments have been made 2020, around 9.9M tons was seaweed (42.8%), 7.7M
in palm oil, which has become a flagship agricultural tons were captured fish, while the remainder was from
product of Indonesia. Indonesia is now the largest aquaculture (5.54M tons). In 2022, the total export
exporter in the world of palm oil. In 2022, its total value of fisheries from Indonesia reached $6.24B.24
palm oil exports amounted to 45.58 million metric
In 2021, cereal production reached 74.4M metric tons, a
tons and this amount actually increased in 2021 despite
2.71% annual increase from 21.6M metric tons in 1972.25
reduced demands from its key market India, which has
As for rice, paddy production reached an estimated
introduced higher import duties on palm oil.18 Together
54.4M tons in 2021 showing an increase from 19.4M
with Malaysia, Indonesia remains the world’s leading
tons in 1972 reaching an average annual growth rate of
producer and exporter of palm oil. In addition, while
2.23%.26 Vegetables production increased from 2.39M
Malaysia exports most of the palm oil it produces,
tons harvested in 1972 to 13M tons in 2021 growing at
Indonesia is also one of the world’s biggest consumers
an average annual growth rate of 3.85%.27 Indonesia’s
of palm oil as it uses it as both an edible oil and for
roots and tubers production exhibited fluctuations in
biofuels.19 Along with the palm oil and sugar industries,
recent years but generally showed an increasing trend
the private sector joined hands with the government in
over the 1972-2021 period, reaching a production of
developing its fisheries. Exports of cultivated shrimps
21.1M tons in 2021.28
from large farms in western Java and southern Sumatra
have seen a boom in recent years.20
Agriculture exports:
Agricultural production: During the last five years, Indonesian exports have
increased from USD 164B in 2016 to USD 248B in 2021;29
Indonesia is one of the world’s largest producers thus ranking Indonesia as the 27th exporter in the world.
and exporters of agricultural products such as palm The most recent exports comprised coal briquettes (USD
oil, natural rubber, cocoa, seafood, coffee, rice, and 28.4B), palm oil (USD 27.3B), petroleum gas (USD 8.1B),
spices. In recent decades, the agricultural sector was ferroalloys (USD 7.2B), and large flat-rolled stainless
a major source of employment in the country. However, steel (USD 6.7B). The most common destinations for
its contribution to the country’s GDP has declined as these exports were China (USD 54.5B), the United States
the country has shifted towards industrialization. This (USD 26.2B), Japan (USD 18.6B), India (USD 14.5B), and
shift can be observed when noting that Indonesia’s Singapore (USD 13B).
agricultural contribution to the country’s GDP amounted
to USD 157.5B in 2021. In relative terms, the agricultural As for the agricultural sector, Indonesia exported palm
share of GDP had been steadily increasing, peaking at oil valued at USD 27.3B in 2021, allowing it to become
15.3% in 2009, but it then dropped to 13.3% in 2021.21 the largest exporter of palm oil in the world. This highly
sought-after agricultural product was mainly exported
Indonesia spans 1.877 million square kilometers,22 with to China (USD 4.22B), India ($3.45B), Pakistan (USD
approximately 14% considered arable land in 2020. The 2.84B), the US (USD 1.38B), and Bangladesh (USD
share of arable land has increased from 9.9% in 1969 1.36B). Indonesia exported USD 10.4B in 2021 in
to 14% in 2018, an annual growth of about 0.77%.23 foodstuffs and was the 19th largest exporter of foodstuffs
Indonesia consists of 17,508 islands covering an area in the world. The main destinations were the US (USD
along the equator between the Indian and Pacific 1.72B), China (USD 1.07B), the Philippines (USD 971M),
oceans. In the fisheries sector, with a total production Malaysia (USD 665M), and Vietnam (USD 616M).30
of more than 21.8 metric tons of various commodities In 2021, Indonesia exported a total of USD 4.17B in
(including seaweeds, which amounted to 11M tons), animal products and the main destinations were the
Indonesia ranked second among producers of fisheries US (USD 1.46B), China (USD 912M), Japan (USD 429M),
in the world after China in 2020. During the same year, Singapore (USD 184M), and Hong Kong (USD 9153M)31.
the total production of the fisheries sector amounted
to 23.16M tons, a small increase compared to the 24
UNIDO (2023). Global Quality and Standards Programme (GQSP)
Phase 2. Project Document.
production in 2015 (3.8%). Of the total production in 25
Knoema (2021). Cereals production quantity. https://knoema.com/
18
Statista Research Department (2020). Agriculture/Farming. Vo- atlas/Indonesia/Cereal-production
lume of total palm oil exports Indonesia. https://www.statista.com/ 26
Knoema (2021). Rice, paddy production quantity. https://knoema.
statistics/706786/production-of-palm-oil-in-indonesia/#:~:text=In- com/atlas/Indonesia/topics/Agriculture/Crops-Production-Quantity-
donesia%20is%20the%20world%27s%20top,the%20beginning%20 tonnes/Rice-paddy-production
of%20the%20year. 27
Knoema. Indonesia - Vegetables primary production quantity.
19
Statista Research Department (2021). Agriculture/Farming. Palm https://knoema.com/atlas/Indonesia/topics/Agriculture/Crops-
oil industry in Indonesia. https://www.statista.com/topics/5921/ Production-Quantity-tonnes/Vegetables-primary-production
palm-oil-industry-in-indonesia/ 28
Knoema. Indonesia - Roots and tubers production quantity. https://
20
Britannica. Economy of Indonesia. https://www.britannica.com/ knoema.com/atlas/Indonesia/topics/Agriculture/Crops-Production-
place/Indonesia/Economy Quantity-tonnes/Roots-and-tubers-production
21
World Bank (2021). Agriculture, forestry and fishing, value added 29
Observatory of Economic Complexity (2021). Country Profile-
(% of GDP)-Indonesia. The World Bank Data. https://data.worldbank. Indonesia. OEC. https://oec.world/en/profile/country/idn
org/indicator/NV.AGR.TOTL.ZS?locations=ID 30
Observatory of Economic Complexity (2021). Foodstuffs in Indonesia.
22
World Bank (2020). Land area (sq. km). Indonesia. https://data. OEC. https://oec.world/en/profile/bilateral-product/foodstuffs/
worldbank.org/indicator/AG.LND.TOTL.K2?locations=ID reporter/idn
23
Trading economics (2021). Arable Land (% of Land Area)- Indonesia. 31
Observatory of Economic Complexity (2021). Animal products in
https://tradingeconomics.com/indonesia/arable-land-percent-of- Indonesia. OEC. https://oec.world/en/profile/bilateral-product/
land-area-wb-data.html animal-products/reporter/idn
7
Fishery products are among the most exported products to the 390.2 trillion rupiah in 2019 (USD 1 = 14,020
from Indonesia and in 2022 the total fisheries’ exports rupiah).32 Although not one of the top destinations for
amounted to 1.22M tons valued at USD 6.24B, which Indonesian food exports, it is interesting to note that
was an increase from 1.08M tons valued at USD 4.52B in the export of agricultural products to the EU as shown
2017. The main seafood products exported were shrimp, in Figure 133 has shown a dramatic 42% increase from
tuna/skipjack, marine fish, and seaweed with the main 2019 to 2022.
export markets being the US, Japan, and other Asian 32
Reuters (2020). Agriculture exports up 15.8%. Reuters Staff -
countries. Indonesian agricultural exports grew 15.8% Indonesia. https://www.reuters.com/article/indonesia-agriculture-
in 2020 compared to 2019 according to Indonesia’s idUSL4N2K013G
33
EU Commission Directorate-General for Agriculture and Rural
agricultural minister in his address to the parliament. Development (2023, April 18). AGRI-FOOD TRADE STATISTICAL
The Minister also specified that agricultural exports FACTSHEET European Union - Indonesia. EU Commission. https://
reached 451.8 trillion rupiah (USD 32.23B) compared agriculture.ec.europa.eu/system/files/2023-05/agrifood-indonesia_
en.pdf
FIGURE 1: STRUCTURE OF EU AGRI-FOOD TRADE WITH INDONESIA, 2012–2022
8
In its current Master Plan for the Acceleration and
Expansion of Indonesia’s Economic Development
C. INTERNATIONAL (MP3EI), the government vowed to streamline the

investment and regulatory environment for sectors,
TRADE such as agribusiness, mining, health, education,
and information and communications technology.
Since 1995, Indonesia has been a member of the World This would open up a range of opportunities for
Trade Organization (WTO) and prior to that a member Australian businesses. Currently, Australia’s annual
of the General Agreement on Tariffs and Trade (GATT) two-way-trade with Indonesia is a mere USD 14.8B,
since 24 February 1950.34 Indonesia is a member of which means that only 2.2% of Australia’s total trade
the Association of South East Asian Nations (ASEAN),35 is with Indonesia.40 Finally, the European Free Trade
which translates into being a member of the ASEAN Association (EFTA) States of Iceland, Liechtenstein,
Free Trade Area (AFTA). Other members of AFTA include Norway, and Switzerland signed a Comprehensive
Brunei, the Philippines, Vietnam, Laos, Myanmar, Economic Partnership Agreement (CEPA) with Indonesia
Malaysia, Singapore, Thailand, and Cambodia. Together, on 16 December 2018. The EFTA-Indonesia CEPA entered
AESAN members adopted a Food Safety Policy in 2015.36 into force on 1 November 2021 after the ratification of
ASEAN, and by extension Indonesia, has concluded the all parties.41
Regional Comprehensive Economic Partnership (RCEP).
RCEP is a free trade agreement, which entered into force
on 1 January 2022, between its members and its five
FTA partners (Australia, China, Japan, New Zealand, and
the Republic of Korea). Indonesia also has preferential
trade agreements in place with India and Hong Kong.
The EU and Indonesia have been strengthening their
ties in recent years, with discussions on a bilateral trade
agreement dating back to 2016. This can be noted from
the amount of bilateral trade between the two blocs
amounting to EUR 20.6 billion in 2020, with EU exports
worth EUR 7.2B and EU imports EUR 13.3B. The EU is
Indonesia’s fifth largest trading partner while Indonesia
is the 31st global trading partner for the EU and the fifth
EU partner in AESAN in 2020.37
As Australia’s closest neighbor, Indonesia presents
unlimited potential as an emerging economic
powerhouse with a growing middle class. Indonesia
and Australia have signed the Indonesia-Australia
Comprehensive Economic Partnership Agreement (IA-
CEPA), which came into force in July 2020.38 The IA-
CEPA’s structure is founded on five guiding principles:
improving economic and development partnerships,
fostering intercultural understanding through social,
artistic, and cultural exchanges, developing maritime
cooperation, and promoting the stability and prosperity
of the Indo-Pacific region. Additionally, Australian
businesses can benefit from majority ownership
of enterprises in certain industries in Indonesia,
such as telecommunications, construction services,
wastewater management, and tourism, thanks to the
agreement’s expanded market access for services and
investments.39
34
World Trade Organization (2022). Indonesia and the WTO. https://
www.wto.org/english/thewto_e/countries_e/indonesia_e.htm
35
Britannica. Indonesia Trade. https://www.britannica.com/place/
Indonesia/Economy
36
ASEAN Secretariat 2016. ASEAN Food Safety Policy. https://
asean.org/wp-content/uploads/2021/01/ASEAN-Food-Safety-
Policy-1.pdf
37
European Commission (2021). Indonesia - EU trade relations with
Indonesia. Facts, figures and latest developments. https://policy.
trade.ec.europa.eu/eu-trade-relationships-country-and-region/
countries-and-regions/indonesia_en
38
Australian Government (2020). Indonesia - Australia Comprehensive
Economic Partnership Agreement. https://www.dfat.gov.au/trade/
agreements/in-force/iacepa/indonesia-australia-comprehensive- 40
Asialink Business (2020). Indonesia’s Trade Agreements. https://
economic-partnership-agreement asialinkbusiness.com.au/indonesia/conducting-business-in-
39
Australian Government. Indonesia-Australia Comprehensive indonesia/indonesias-trade-agreements?doNothing=1
Economic Partnership Agreement: Outcomes. https://www.dfat. 41
European Free Trade Association (2021). Indonesia Free Trade
gov.au/trade/agreements/not-yet-in-force/iacepa/ia-cepa-key- Agreement. https://www.efta.int/free-trade/Free-Trade-Agreement/
outcomes-for-australia Indonesia
9
STANDARDS
COMPLIANCE ANALYSIS
10
The National Quality Infrastructure (NQI) is the
institutional framework that establishes and implements
A. COMPLIANCE WITH standardization including conformity assessment
services, metrology, and accreditation. In Indonesia,
REGULATIONS IN standardization and conformity assessment fall under
Act No 20/2014. The Act represents the highest national
AGRI-FOOD TRADE policy containing a provision on the formulation and
implementation of the Indonesia National Standard
Rapid growth of international trade has resulted in the (SNI), conformity assessment activities, accreditation
development of product and service standardization of Conformity Assessment Bodies (CABs), national
in all industrial sectors in Indonesia. Some safety, measurement standards, principles of Good Regulatory
quality, and performance standards are voluntary, Practices (GRP), etc. Thus, this Act serves as the legal
but serve as valuable product differentiators; while umbrella for the arrangement of NQI in Indonesia. The
other standards are cited in technical regulations as National Standardization Agency (BSN) is mandated
mandatory minimum requirements for market access. by the law to formulate the National Policy on
In Indonesia, food safety is regulated in several primary Standardization and Conformity Assessment providing
and secondary legislations, such as Act 18/2012 on national reference to the respective stakeholders in
Food, which mandates that food must meet some the implementation of National Regulation No 34/2018
criteria or requirements. This Act was then translated on the National Standardization and Conformity
into delegated legislations, namely government Assessment System. The provisions of Law No 20/2014
regulation 86 of 2019 on food safety. Every step in the and National Regulation No 34/2018 provide the
food chain must comply with food safety regulations in necessary legal pillars which effectively buttress NQI in
order for that food to be considered safe to consume. Indonesia. In addition to BSN, other organisms include
Food safety is legally defined in Indonesia as pertaining the National Accreditation Agency (KAN), the National
to the conditions and efforts being made to ensure that Metrology Institute, and the National Measurement
food is safe, hygienic, high quality, nutritious, aligned Standards Laboratory (SNSU).
with religious beliefs and cultural needs, and free from
biological, chemical, and other contaminants that can At the end of 2020, the new National Measurement
interfere with, harm, and endanger human health Standards Laboratory of BSN (NMI building) became
(Article 67).42 operational, equipped with the necessary measurement
standards and supporting equipment to meet national
One of the most alarming food safety issues is food requirements. This facility plays an essential role,
adulteration as harmful additives are used to artificially particularly in providing traceability for biological
modify the appearance, enhance the taste, texture, testing and calibrating medical instruments. Currently,
and the storage life of food products.43 Regulation it is in the initial stages of establishing traceability
No 33/2012 on food additives specifically stipulates for biological testing, with a specific focus on halal
the permitted types of additives and the amount of food testing and food microbiology. Every institution
the substances that can be added. Other regulations conducting mandatory and voluntary conformity
pertaining to food safety include Law No 8/1999 assessment services in accordance with SNI must obtain
on Consumer Protection, with which businesses accreditation from KAN. However, some laboratories,
that distribute food in Indonesia need to comply; certification bodies, and inspection bodies that provide
government Regulation No 28/2004 on food safety, domestic conformity assessment services either lack
quality, and nutrition; Regulation No 69/1999 on Food accreditation or operate outside the scope covered by
Labeling and Advertisement; and Law No 7/2014 on their accreditation. Conformity Assessment Institutions
trade, which may impose mandatory national quality (referred to as LPK in Indonesia) must demonstrate
standards on food products and on the way they are competence in meeting the requirements set by BSN
produced, etc.44 To thoroughly assure food safety in and obtain accreditation from KAN. LPKs accredited
Indonesia, the government formed a state agency called by KAN are authorized to issue certificates within the
National Agency for Drug and Food Control (NADFC). boundaries of their accreditation scope.
NADFC is responsible for supervising and controlling the
food chain from production to distribution, and then to By the end of 2017, there were a total of 1,815
consumption. While collaborating with the Ministry of LPKs45 accredited by KAN, comprising 1,162 testing
Health, the agency is also partly in charge of developing laboratories, 249 calibration laboratories, 55 medical
food safety standards, pre-market certification, and laboratories, 80 inspection institutions, 13 proficiency
post-market supervision. test organizers, and 256 certification bodies. Within the
fisheries sector, there were 17 BKIPM Fish Quarantine
and Inspection Agencies (BKIPM/FQIA) of MMAF and
85 KAN - ISO 17025 accredited testing laboratories.
42
Aprilianti, I. Amanta, F. (2020). Promoting Food Safety in Indonesia’s
Online Food Delivery Services, Policy Paper, No. 28. Center for
Remarkably, all 47 laboratories operating under the
Indonesian Policy Studies (CIPS). https://www.econstor.eu/ MMAF umbrella successfully obtained accreditation in
bitstream/10419/249408/1/CIPS-PP28.pdf accordance with ISO 17025. By June 2023, there were a
43
Wahlqvist, M. (2011). Food & Nutrition: Food and Health Systems total of 560 KAN accredited inspection and certification
in Australia and New Zealand. Allen & Unwin.
44
Asia Pacific Food Law Guide (2020). Indonesia - Food product 45
United Nations Industrial Development Organization. (2021). Global
and safety regulation. https://resourcehub.bakermckenzie.com/ Quality and Standards Programme. Indonesia. https://hub.unido.
en/resources/asia-pacific-food-law-guide/asia-pacific/indonesia/ org/sites/default/files/publications/Fact%20Sheet%20GQSP%20
topics/food-product-and-safety-regulation Indonesia_Jan%202021.pdf
11
bodies in Indonesia comprising 137 inspection The Quality Infrastructure for Sustainable Development
bodies and 423 certification and verification bodies (QI4SD) Index, developed by UNIDO, provides a
accredited in various schemes, including environmental framework of indicators that summarizes the overall
management systems, products, processes and state of development of a country’s and/or region’s
services, quality management systems, HACCP systems, Quality Infrastructure (QI) readiness to support the
Occupational Health and Safety Management Systems, Sustainable Development Goals (SDGs). Countries are
Indonesian Sustainable Palm Oil (ISPO), and the Special organized into GDP groups and within these groups,
Hajj and Umrah Certification, among others. On 6 June countries are ranked based on their QI readiness to
2023, KAN received a Mutual Recognition Arrangement implement the SDGs. It is important to note that the
(MRA) certificate from the Asia Pacific Accreditation majority of the ranking information relates to ranks
Cooperation Incorporated (APAC) recognizing its within these groups and that even within the same GDP
conformity assessment services and results in several groups, countries vary considerably in size and other
new scopes and sub-scopes including the Validation growth indicators. The data from the INetQI (International
and Verification Greenhouse Gas under ISO 14065:2013, Network on Quality Infrastructure) organizations was
the Environmental Information (ISO 14065:2020), the collected from February to June 2021. However, the data
Food Safety System Certification 22000 FSSC 22000 year might differ from the year of collection as these
(ISO/TS 22003 / ISO 22000), and the Anti-Bribery organizations have different timeframes for updating
Management Systems ABMS (ISO 37001). their own information.
QI4SD is a multidimensional concept and is decomposed
into the following five dimensions that are captured with
36 indicators from combined data sources: Metrology,
Standardization, Conformity assessment, Accreditation,
and Policy. Indonesia has a QI4SD Index score
Quality Infrastructure for of 56.0, ranking it 34th out of the 137 assessed countries.
With regard to the five dimensions, Indonesia has a
Sustainable Development value of 35.4 for Metrology, 54.4 for Standardization,
13.1 for Conformity Assessment, 82.7 for Accreditation,
Index: and 94.5 for Policy.
Indonesia has done well in the following areas:

Strengths Dimension Rank Value Unit
Adopted ISO standards Standards 17 16 Number
Membership of IQNet Conformity 25 4 Composite score
QI4SD Index
Number (XL group)
of recognised Conformity 29 8,810 Number
certificates (ISO)
Accreditation
100
The report identified the following weaknesses which Indonesia should focus on improving:
n
ia
ed
Weaknesses Dimension Rank Value Unit

M
N
Conformity Standards
ID
Participation in IEC technical Standards 48 78 Number

10
committees
Number of recognised Conformity 52 367 Number
certificates (IQNet)
Membership of ITU Standards 53 3 Composite score
Metrology Policy
60 70 80
Within its GDP group, Indonesia ranked on the three pillarsIDN
of sustainable development
Median (XL(people,
group) prosperity, and
planet) as follows:
P−Scores
Prosperity Rank: 15/16

l
Planet Rank: 16/16
l
People Rank: 16/16
l
0 25 50 75 100
Vertical lines represent in−group median scores. Ranks are within GDP group (XL)
More details about the QI4SD Index can be found at https://hub.unido.org/qi4sd/
12
13
B. REJECTION ANALYSIS Aggregate rejection rate:
The Aggregate Rejection Rate (ARR) is the simple sum of
the annual number of rejections over the study period.
Sanitary and phytosanitary (SPS) measures are aimed
Increases in the number of rejections can reflect both
at protecting the safety and health of consumers and
increases in the volume of exports and in the rate of
complying with them applies to both domestic products
non-compliance to product quality and safety standards
as well as exports. When food and feed products
and regulations. While the ARR is used to compare
get rejected at the borders, the consequences can
how well Indonesian food exports are performing in
be extremely dire and costly. The total cost of these
the various markets, it is important to note that each
rejections includes the loss of the export products (as
country can apply different approaches to inspection.
they are usually destroyed by the importing country),
For instance, the US rejection data excludes meat,
transportation costs, freight and insurance, and related
poultry, and their products. Additionally, not all
expenses. In addition to the loss of earnings, rejections
importing countries included in the data set track the
damage the exporting country’s reputation and the
volume, size, and value of the consignments in their
importing country may lose trust in the quality and
rejection data. Consequently, a more in-depth sub-
safety of products coming from the exporting nation,
analysis is necessary to facilitate the comparison of
thereby reducing the country’s export competitiveness
the number of rejections of a specific country’s food and
in the long term. Exporters may need to sell rejected
feed exports with the volume of food and feed products
products at a discount to account for the risk and risk
exported by that country to a particular market.
joining the list of producers facing reinforced checks
(as in the case of exports to the EU).46 As the data set Although analyzing border rejection data proves quite
of border rejections currently spans the period of 2010 useful in determining some of the causes of non-
to 2020, the effects of the COVID-19 pandemic which compliance to food safety standards, it is important
started in early 2020 will not be seen yet and therefore to use caution and keep in mind that it is not the only
are not discussed in this report. indicator of non-compliance. For instance, if a certain
food and feed product cannot get exported due to an
inability to access a certain market for non-compliance
reasons, it will not be included in the border rejections
data set that is being analyzed (as no exports mean no
rejections). Accordingly, this analysis should be used
46
Kareem, F. O., Brümmer, T. L., & Martinez-Zarzoso, I. (2015). Food hand-in-hand with other sets of data and indicators to
safety standards, compliance and European Union’s rejection get a broader picture of the short-term and long-term
of African exports: The role of domestic factors. GlobalFood issues plaguing the quality infrastructure landscape of
Discussion Papers, 74. https://www.econstor.eu/bitstre a specific country.
am/10419/121845/1/837623928.pdf
TABLE 2: AGGREGATE NUMBER OF REJECTIONS OF INDONESIAN FOOD AND FEED (HS 1-23) EXPORTS DURING 2010–2020
Markets 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total %
Australia 28 48 24 28 18 14 9 33 44 20 51 317 12%
China 30 30 23 35 41 34 182 85 14 27 41 542 20%
EU-28 23 19 33 19 28 21 36 22 23 9 7 240 9%
Japan 44 19 23 25 17 17 20 17 11 9 7 209 8%
United 129 86 52%
313 231 174 108 70 97 95 58 73 1,434
States
Total 438 347 277 215 174 183 342 215 165 194 192 2,742 100%
14
Table 2 and Figures 2 and 3 show that the US market accounted for more than half of the total share of rejections
(52%) while China accounted for a fifth of them (20%) during the period of 2010 to 2020. The other three markets
have a similar share of rejections (between 8 and 12%). The aggregate number of rejections for food and feed
among Indonesian exports for the five markets has decreased by 56% from 438 to 192 during the period of 2010 to
2020. This is remarkable effort that deserves to be acknowledged and commended. This decrease in the number
of rejections is not as a result of a decrease in exports, as exports have increased during the same period.
FIGURE 2: EVOLUTION OF THE GLOBAL NUMBER OF REJECTIONS FOR INDONESIA FOR THE 5 MARKETS, 2010-2020
Figure 2: Evolution of the global number of rejections for Indonesia

for the 5 Markets, 2010 - 2020
500
450
400
350
300
250
200
150
100
50
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
FIGURE 3: FIGURE 3: SHARE OF REJECTIONS BY MARKET, 2010-2020
Figure 3: Share of rejections by market, 2010 - 2020
12%
20%
52%
9%
8%
020 Australia China EU-28 Japan United States
15
Table 2 and Figures 3 and 4 demonstrate that the number of rejections for the European market has been low and
stable. For the Australian market, it has been low but unstable as it suffered from a slight increase during 2017-
2018. In contrast, the Japanese and US markets have seen a significant decrease in rejections going from 44 in
2010 to 7 in 2020 for the Japanese market (an 84% decrease) and 313 in 2010 to 86 in 2020 for the American
one (a 73% decrease). This stresses the fact that Indonesia has made incredible efforts in reducing the number
of rejections in the American and Japanese markets. For the Chinese market, the number of rejections has been
overall stable. However, it experienced a significant spike in 2016 with 182 rejections as opposed to 34 rejections
recorded the previous year.
FIGURE 4: EVOLUTION OF ARR BY MARKET, 2010-2020
FIGURE 5: GLOBAL NUMBER OF REJECTIONS FOR ALL MARKETS, 2010-2020
16
Table 2 and Figures 4-6 show that the share of Chinese rejections has fluctuated significantly during the recorded
decade (7% in 2010, 53% in 2016, and 8% in 2018). However overall, they have not declined. As the Chinese market
is one of Indonesia’s primary export markets, it is important for Indonesia to focus on reducing rejections there.
For the Australian market, its share of total rejections has significantly increased from 6% in 2010 to 27% in 2020.
This phenomenon should be further investigated to assess if it is related to an increase of exports or to an increase
in non-compliance. Conversely, rejections from the EU-28 market have been relatively stable and have decreased
from 23 in 2010 to 7 in 2020 (a decrease of 70%). In the following sections, other indicators will be examined to
better our understanding of these fluctuations.
FIGURE 6: SHARE OF REJECTIONS FOR INDONESIAN FOOD AND FEED EXPORTS BY MARKET, 2010-2020
Figure 6 : Share of rejections for Indonesian Food and Feed exports by market, 2010- 2020
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Australia China EU-28 Japan United States
17
Unit rejection rate:
The Unit Rejection Rate (URR) is defined as the number World Bank income bracket to which Indonesia belongs,
of rejections per USD 1 million of imports. The colored which is the upper middle income level in 2020 (the
charts represent the URR for Indonesian food and feed grey line). The URR indicator accounts for changes in the
(HS 1-23) products for a specific market during the volume of exports such that it provides a direct measure
period of 2010 to 2020. Indonesia’s URR (the colored of the rate of non-compliance. A higher URR shows a
line) is being compared with the average URR for the higher rate of non-compliance of Indonesia with regard
to food safety and quality regulations.
FIGURE 7: URR FOR INDONESIAN FOOD AND FEED (HS 1-23) EXPORTS TO THE 5 MARKETS, 2010–2020
Aus t r alia
Upper middle income
1.684
1.500 1.500
Aus t r alia
Unit r eject ion r at e

Upper middle income
1.000 1.000
UR R AVG
1.684
0.771
1.500 0.700 1.500
0.829
0.542 0.552
0.500 0.500

0.241
1.000 1.000
UR R AVG
0.052 0.167
0.112 0.123 0.265 0.131 0.170
0.146 0.070
0.771 0.213
0.170 0.164 0.037
0.000 0.700 0.104 0.070 0.000
0.829
2009 2010 2011 2012 0.5422013 2014 2015 2016 0.552
2017 2018 2019 2020 2021
0.500 0.500
China
0.241
Upper0.052
middle income 0.167
0.112 0.123 0.265 0.131 0.170
0.146 0.070 0.213
0.170 1.706 0.164 0.037
0.000 0.104 0.070 0.000
1.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1.50
China
Upper middle income

1.0 1.00
UR R AVG
1.706
1.5 1.50
0.637
0.606
0.728
0.5 0.50
1.0 0.324 1.00

UR R AVG
0.115 0.010
0.011 0.049 0.018 0.206 0.025
0.007 0.005 0.140 0.008 0.003
0.037
0.0 0.022 0.637 0.00
0.010 0.606 0.005 0.007
0.728
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0.5 0.50
E U-28
0.010 0.324
0.115
Upper middle income
0.011 0.049 0.018 0.206 0.025
0.007 0.005 0.140 0.008 0.003
0.037
0.0 0.072 0.022 0.00
0.07 0.010 0.005 0.007 0.070
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0.06 0.060
E U-28
0.05 Upper middle income 0.050
0.072
UR R AVG
0.07 0.070
0.04 0.040
0.06 0.060
0.03 0.030
0.021
0.05 0.019 0.050
0.02 0.017 0.020
0.023
18 0.013
R R AVG
0.016 0.009
0.04 0.008 0.040
0.01 0.007 0.012 0.010
0.005 0.005
1.0 1.00
1.5 1.50
Unit r eject ion r at eUnit r eject io

UR R AV
0.010 0.324
0.115
0.049 0.018 0.206 0.025
0.007 0.005 0.140 0.011 0.008 0.003
0.637
0.037 0.606
0.0 0.022 0.728 0.00
0.010 0.005 0.007
0.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.50
1.0 1.00
UR R AVG
E U-28 0.324
0.115 0.010
0.606 0.637
0.049 0.206
0.007 0.005 0.140 0.011Upper0.728
middle
0.008 income 0.018 0.003 0.025
0.037
0.0 0.022 0.00
0.5 0.010
0.072 0.005 0.007 0.50
0.07 0.070
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0.010 0.324
0.06 0.115 0.060
E U-28 0.049 0.206
0.007 0.005 0.011 0.008 0.018 0.003 0.025
0.037 0.140
0.0 0.022 Upper middle income 0.00
0.05 0.010 0.005 0.007 0.050
0.072 2010
2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0.07 0.070
UR R AVG
0.04 0.040
E U-28
0.06 0.060
0.05 0.072 0.021 0.050

0.07 0.019 0.017 0.070
0.02 0.023 0.020
0.013
UR R AVG
0.04
0.06 0.016 0.009 0.040
0.060
0.01 0.008 0.010
0.007 0.012 0.005 0.004 0.005 0.004
0.006 0.013 0.002
0.03
0.05
0.00 0.004 0.003 0.005 0.002 0.030
0.050
0.000
0.021
2009 2010 2011 2012 2013 2014 2015 2016 2017
0.019 2018 2019 2020 2021
UR R AVG
0.02 0.017 0.020

0.04 0.023 0.040
0.013
J apan 0.009
0.016
0.01 0.008 0.010
0.03 0.007 0.012Upper 0.030
middle income
0.005 0.004 0.005 0.004
0.006 0.013 0.002
0.021
0.001.5 0.004 0.003 0.005
1.436 0.019 0.002 1.500
0.000
0.02 1.307 0.017 0.020
0.023
2009 2010 2011 2012 2013 2014 2015
0.013 2016 2017 2018 2019 2020 2021
0.016 0.009
0.01 0.008 0.010
J apan 0.007 0.012 0.005 0.004 0.005 0.004
0.006 0.013 0.002
1.0
0.00 0.004 0.003 0.005
Upper middle income 0.002 1.000
0.000

1.5 2009 2010 2011 2012 2013 1.4362014 2015 2016 2017 2018 2019 2020 2021 1.500
UR R AVG
1.307
J apan

1.01.5 1.436
1.500
1.000
e r eject ion r at e
1.307
UR R AVG
0.014 0.017 0.019 0.020 0.021 0.028 0.013

0.014 0.015
0.040 0.035
0.0 0.050 0.068 0.046 0.005 0.000
1.0 0.017 0.013 0.008 0.007 1.000
Unit
0.5 0.500
Unit r eject ion r at

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
UR R AVG
Unit ed S t at es
0.017 0.019 Upper middle income

0.020 0.021 0.028 0.013
0.5 0.014 0.014 0.015 0.500
0.040 0.035
0.0 0.050 0.068 0.046 0.005 0.000
1.301 0.017 0.013 0.008 0.007
1.2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1.200
Unit ed S t at es 0.014 0.017 0.019 0.020 0.021 0.028 0.013

1.0 0.014 0.015 1.000
0.040 0.035
0.0 0.050 0.068 0.046 0.005 0.000
Upper middle income 0.017 0.013 0.008 0.007

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0.8 1.301 0.800
UR R AVG
1.2S t at es
Unit ed 0.621 1.200
0.6 0.600
Upper middle income
1.0 1.000
1.301 0.364
0.4 0.400
at e r eject ion r at e
1.2 1.200
0.8 0.200 0.229 0.800
0.201
UR R AVG
0.2 0.155 0.200

0.019 0.032 0.621
1.0 0.142 0.206 0.068 0.017 1.000
0.6 0.038 0.027 0.026 0.013 0.600
0.0 0.090 0.111 0.068 0.116 0.020 0.000
Unit r eject ion rUnit
0.8 2009 2010 2011 2012 2013

0.364 2014 2015 2016 2017 2018 2019 2020 2021 0.800
UR R AVG
0.4 0.400
0.621
0.200 0.229
0.6 0.201 0.600
0.2 0.155 0.200
0.019 0.032
0.142 0.206 0.068 0.017
0.038
0.364 0.027 0.026
0.00.4 0.090 0.111 0.013 0.068 0.116 0.020 0.400
0.000
2009 2010 2011 2012

0.200 2013 2014 2015
0.201 0.229
2016 2017 2018 2019 2020 2021
0.2 0.155 0.200
0.019 0.032
0.142 0.206 0.068 0.017
0.038 0.027 0.026
0.0 0.090 0.111 0.013 0.068 0.116 0.020 0.000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
According to Figure 7, Indonesia’s URR in the Australian 0.002 and 0.007 and lower than the average URR of
market for food and feed products has been about 0.1 all upper middle income countries as classified by the
during the period of 2010-2020, which means that World Bank. A similar situation can be noted for the
for every USD 10 million of imports from Indonesia to other three markets, in particular for the American
Australia, there is about one rejection. For the EU-28 market in which the URR has steadily decreased from
market, the URR has been stable and very low between 0.14 in 2010 to 0.02 in 2020.
19
Relative rejection rate
indicator:
The bar charts in Figure 8 display the distribution of
the Relative Rejection Rate (log ratio) across markets
for Indonesian food and feed (HS 1-23) exports in 2020.
The Relative Rejection Rate (RRR) shown (log ratio) is
the natural logarithm of the ratio of Indonesia’s share of
total rejections to share of total imports. The indicator
provides a convenient measure of the performance of
countries relative to one another in a year or over a
period of time. A higher RRR (log ratio) for Indonesia
implies poorer performance with regard to compliance
with food safety and quality regulations in that market
relative to the other markets.
FIGURE 8: RRR FOR INDONESIAN FOOD AND FEED (HS 1-23) EXPORTS IN 2020
1 0.000
Ln(share of rej to share of imports)
5.000
M edian M edian
M edian
M edian
0.000
M edian
-5.000
Aust r alia China EU-28 J apan Unit ed St at es
TABLE 3: RRR FOR INDONESIAN FOOD AND FEED (HS 1-23) EXPORTS IN 2020

Median Indonesia Median Indonesia Median Indonesia Median Indonesia Median Indonesia
0.598 0.224 0.541 -0.543 - 1.031 -2.297 0.223 -0.644 0.858 -0.202
The RRR as shown in Figure 8 and Table 3 is lower exporting countries in terms of food safety in those
for Indonesia in all five markets compared to the two markets. Similarly, Indonesia performed well and
median RRR of all the other countries. Indonesia’s above average in the American and Japanese markets.
best performance was in China (median = 0.541 and However, Indonesia’s RRR in the Australian market is
Indonesia’s RRR = -0.543) and in the EU market (median lower than the median RRR and thus could be improved.
= -1.031 and Indonesia’s RRR = -2.297). This means that This entails ameliorating its compliance with food safety
Indonesia performed much better on average than other regulations in the Australian market.
20
C. REASONS FOR
REJECTION
Frequency of reasons for

rejection:
The frequency of reasons for rejections is the total
counts of consignments rejected at the border of entry
for a particular reason. Examples of possible reasons
for rejection include labeling, hygienic condition,
adulteration, missing document, additive, bacterial
contamination, pesticide residues, veterinary drugs
residues, mycotoxins, heavy metal, and packaging. The
“aggregate frequency of reasons for rejection” can be
different from the “aggregate number of rejections” as a
single consignment can be rejected on multiple grounds.
To analyze the reasons for border rejections, we need
to select a specific year. The “aggregate frequency of
reasons for rejection” will simply be referred to as the
“frequency of reasons for rejection” for simplicity.
General reasons for rejection:
TABLE 4: FREQUENCY OF REASONS FOR REJECTION (NUMBER & %) OF INDONESIAN FOOD & FEED (HS 1-23) EXPORTS
TO THE 5 MARKETS IN 2020
Australia China EU-28 Japan US Total

Indonesia
Numbers % Numbers % Numbers % Numbers % Numbers % Numbers %
Additive 2 0% 169 30% 6 2% 15 7% 175 6% 367 8%
Adulteration 6%
/ missing 31 8% 58 10% 12 5% 1 0% 169 6%
document 271
Bacterial 29%
82 20% 125 22% 32 13% 108 52% 935 31%
contamination 1,282
Heavy metal 0 % 16 3% 51 21% 2 1% 1 0% 70 2%
Hygienic 33%
condition / 0 0% 49 9% 21 9% 31 15% 1,369 45%
controls 1,470
Labeling 191 48% 59 11% 2 1% 0 0% 124 4% 376 8%
Mycotoxin 30 7% 1 0% 68 28% 21 10% 24 1% 144 3%
Other 5%
59 15% 3 1% 20 8% 17 8% 128 4%
contaminants 227
Other 1%
microbiological 0 0% 21 4% 14 6% 0 0% 0 0%
contaminants 35
Others 0 0% 36 6% 15 6% 2 1% 4 0% 57 1%
Packaging 0 0% 19 3% 2 1% 0 0% 0 0% 21 0%
Pesticide 0%
0 0% 2 0% 2 0% 11 5% 1 0%
residues 16
Veterinary 3%
7 2% 2 1% 1 0% 1 1% 106 3%
drugs residues 117
Total 402 100% 560 100% 246 100% 209 100% 3,036 100% 4,453 100%
21
FIGURE 9: FREQUENCY OF REASONS FOR REJECTION (%) OF INDONESIAN FOOD & FEED (HS 1-23) EXPORTS TO THE
5 MARKETS IN 2020
5% 1%1% 3%
3% 8%
R eas ons f or R eject ions
8%
Addit ive
6% Adult er at ion/mis s ing document
B act er ial cont aminat ion
Heavy met al
Hygienic condit ion/cont r ols
Labeling
M ycot oxins
Ot her cont aminant s
Ot her s
Ot her s micr obiologica l cont aminant s
Packaging
29%
Pes t icide r es idues
33%
Vet er inar y dr ugs r es idues
2%
Table 4 and Figure 9 present the aggregate frequency its two primary causes of rejections, which collectively
of reasons for rejection of food and feed products account for nearly two-thirds of all rejections: bacterial
exported from Indonesia into the five markets in 2020. contamination (represented by the gray color in Figure 9)
The year 2020 was selected as it represents the most and hygienic conditions/controls (blue color). Notably,
recent data available in the data set. The frequency these findings align with the analysis conducted by
of reasons for rejection indicates the total count of MoA.
consignments rejected at the border of entry due to
specific reasons. This indicator plays a crucial role
in assisting exporting countries in identifying areas
for capacity building, particularly in addressing key
reasons for rejection in order to achieve or enhance Reasons for rejection by
compliance with international trade standards. The
primary causes of rejections for Indonesia, accounting market:
for 62% of all rejections, were hygienic conditions/ Figure 10 illustrates the frequency of reasons for
controls (33%) and bacterial contamination (29%) in rejection of Indonesian food and feed products in each
2020. Additional reasons included additives (8%) and of the main markets.
labeling (8%). Indonesia could focus its efforts to reduce
22
FIGURE 10: FREQUENCY OF REASONS FOR REJECTION OF INDONESIAN FOOD & FEED (HS 1-23) EXPORTS BY MARKET
IN 2020
Aus t r alia China E U-28
J apan Unit ed St at es

Addit ive M ycot oxins Vet er inar y dr ugs r es idues
Adult er at ion/mis s ing document Ot her cont aminant s
B act er ial cont aminat ion Ot her s
Heavy met al Ot her s micr obiological cont aminant s
Hygienic condit ion/cont r ols Packaging
Labeling Pes t icide r es idues
Table 4 and Figure 10 demonstrate that in the American for rejection in 2020 were mycotoxin (28%), heavy
market (52% of all rejections) hygienic condition/ metal (21%), and bacterial contamination (13%). In the
controls was the most common reason for rejection Japanese market, the most frequent reasons for rejection
(45%) followed by bacterial contamination (31%). As were bacterial contamination which accounted for more
these two reasons represented more than three quarters than half of the reasons for rejection at 52%, hygienic
of the total rejections in this market, efforts must be condition/controls (15%), and mycotoxins (10%). Finally,
made to attempt to reduce these issues. The reasons for in the Australian market, the most common reasons for
rejection in the Chinese market (20% of all rejections) rejection of food and feed Indonesian exports in 2020
were additive (30%), bacterial contamination (22%), were labeling (48%), bacterial contamination (20%),
labeling (11%), and adulteration/missing document and others contaminants (15%). The rest of the reasons
(10%). In the EU-28 market, the most common reasons were less frequent with small shares of the pie chart.
23
Reasons for rejection for fish, crustaceans, molluscs and other
aquatic invertebrates (HS 03) by market:
As export rejections are more likely to occur for fishery worrisome to note that rejection of exports of Indonesian
products than for other products such as agricultural fishery products which were recorded as re-import in
or processed food, it is worthwhile estimating the terms of value rose dramatically by 332% from USD
economic impact of these rejections as well as delving 6.2M to USD 26.6M or the equivalent of Rp. 390B with
into the main reasons for rejections of this commodity. an average price of Rp. 42,239 per kg in 2021. In terms
Export rejections have a strong negative economic of volume, cases of export refusal in terms of volume
impact by raising transaction costs, reducing revenues, increased drastically by 534% from 1,459 tons to 9,254
and damaging the credibility and reputation of exporters. tons or around 462 40-foot containers (assuming 20
Economic losses can be estimated by adding the cost tons per container). In addition, cases of export refusal
of export failure, communication costs, laboratory by the US Food and Drug Administration (FDA) jumped
testing costs, transportation costs, and execution 205% from 76 cases in 2020 to 232 cases in 2021 based
costs. Between 2014 to 2016, the biggest economic on the entry number (shipment id). As the US market
losses were due to rejections of tuna commodities and represents the largest export market for Indonesian
amounted to USD 3M per year as can be seen in Figure fishery products, this constitutes a huge economic loss.
11. The overall losses mostly come from transportation The main reason for rejection was salmonella (88%)
cost (59% or USD 2.4M per year). 47 Furthermore, it is while the other less recurrent reasons were histamine,
labelling, and listeria.48
FIGURE 11: TOTAL ECONOMIC LOSSES DUE TO THE REJECTION OF INDONESIAN FOOD EXPORTS TO THE US, EU-28
AND JAPAN OF TUNA, SHRIMP AND NUTMEG COMMODITIES DURING 2014–2016
Total loss (thousand usd per
10000
3,011.26
1000 453.61
340.59
114.14
year)
100 46.29 48.21

27.39 24.56 29.02
10
United European Japan United European Japan United European Japan
States States States
Tuna Shrimp Commodities Nutmeg
47
Rahayu, W. P., Prasetyawati, C., Arizona, Y., & Adhi, W. (2020).
Economic Losses Estimation Due to Rejection of Indonesian 48
Indrotristanto, N., Andarwulan, N., Fardiaz, D., & Dewanti-Hariyadi,
Exported Food. Estimasi Kerugian Ekonomi Akibat Penolakan Pangan R. (2022). Prioritization of food – pathogen pairs in export refusals of
Ekspor Asal Indonesia. https://journal.itltrisakti.ac.id/index.php/ fishery commodities from Indonesia. Food Control, 131. https://www.
jmtranslog/article/view/368 sciencedirect.com/science/article/pii/S0956713521006149
24
TABLE 5: FREQUENCY OF REASONS FOR REJECTION (NUMBER & %) OF INDONESIAN FISH AND CRUSTACEANS,
MOLLUSCS AND OTHER AQUATIC INVERTEBRATES (HS 03) EXPORTS TO THE 5 MARKETS IN 2020
Indonesia Australia China EU-28 Japan US Total

HS-03 Numbers % Numbers % Numbers % Numbers % Numbers % Numbers %
Additive 0 0% 16 25% 4 4% 6 14% 133 5% 159 5%
Adulteration 3%
/ missing 1 2% 20 31% 17 18% 35 80% 12 0%
document 85
Bacterial 32%
11 21% 2 3% 0 0% 0 0% 913 34%
contamination 926
Heavy metal 0 0% 5 8% 42 44% 0 0% 0 0% 47 2%
Hygienic 46%
condition / 0 0% 11 17% 20 21% 0 0% 1,296 49%
controls 1,327
Labeling 7 13% 2 3% 1 1% 0 0% 60 2% 70 2%
Mycotoxin 0 0% 0 0% 0 0% 0 0% 0 0% 0 0%
Other 6%
26 50% 0 0% 9 9% 1 2% 128 5%
contaminants 164
Other 0%
contaminants 3
Others 0 0% 2 3% 2 2% 2 5% 3 0% 9 0%
Packaging 0 0% 1 2% 0 0% 0 0% 0 0% 1 0%
Pesticide 0%
0 0% 0 0% 0 0% 0 0% 0 0%
residues 0
Veterinary 4%
7 13% 2 3% 1 1% 0 0% 106 4%
drugs residues 116
Total 52 100% 64 100% 96 100% 44 100% 2.651 100% 2,907 100%
FIGURE 12: FREQUENCY OF REASONS FOR REJECTION (%) OF INDONESIAN FISH AND CRUSTACEANS, MOLLUSCS &
OTHER AQUATIC INVERTEBRATES (HS-03) EXPORTS TO THE 5 MARKETS IN 2020
4% 5% 3%
6%
2% Addit ive
Adult er at ion/mis s ing document
B act er ial cont aminat ion
Heavy met al
Hygienic condit ion/cont r ols
32%
Labeling
M ycot oxins
Ot her cont aminant s
Ot her s
Ot her s micr obiologica l cont aminant s
Packaging
Pes t icide r es idues
2% Vet er inar y dr ugs r es idues
46%
25
Figure 12 and Table 5 show the aggregate frequency was developed by BPOM. However, there is a possibility
of reasons for rejection of fishery products exported that not all rejections of fishery products are being
from Indonesia to the five markets in 2020. The main recorded as some rejected products can get destroyed
causes for rejection for Indonesia, which represent when entering the destination country and whose
over three quarters of all rejections, are hygienic rejections may not be recorded or can be re-processed
condition/controls (46%) and bacterial contamination and re-exported to other countries.
(32%). According to MMAF (BKIPM/FQIA), information
Figure 13 illustrates the reasons for rejection of
on border rejections of fishery products (HS 03) can
Indonesian fish, crustaceans, molluscs, and other
be obtained from several export destination countries,
aquatic invertebrates (HS 03) exports in each of the
with which Indonesia already has mutual recognition
main markets.
agreements (MRAs) and are recorded by the Indonesia
Rapid Alert System for Food and Feed (INRASFF), which
FIGURE 13: FREQUENCY OF REASONS FOR REJECTION OF INDONESIAN FISH AND CRUSTACEANS, MOLLUSCS &
OTHER AQUATIC INVERTEBRATES (HS 03) EXPORTS BY MARKET IN 2020
Aus t r alia China E U-28
J apan Unit ed S t at es

Addit ive M ycot oxins Vet er inar y dr ugs r es idues
Adult er at ion/mis s ing document Ot her cont aminant s
B act er ial cont aminat ion Ot her s
Heavy met al Ot her s micr obiological cont aminant s
Hygienic condit ion/cont r ols Packaging
Labeling Pes t icide r es idues
26
Figure 13 and Table 5 demonstrate that hygienic
condition/controls were the most common reason for
rejection followed by bacterial contamination (34%) in
the US market. The reasons for rejection in the Chinese
market were adulteration/missing document (31%),
additive (25%), hygienic condition/controls (17%),
and heavy metal (8%). In the EU-28 market, the most
common reasons for rejection in 2020 were heavy
metal (44%), hygienic condition/controls (21%), and
adulteration/missing document (18%). In the Japanese
market, the most frequent reasons for rejection were
adulteration/missing document, which accounted for
the majority of the reasons for rejection at 80% followed
to a much lesser degree by additive (14%). Lastly, in
the Australian market, the most common reasons for
rejection of Indonesian fishery exports in 2020 were
other contaminants (50%), bacterial contamination
(21%), and labeling (14%). The rest of the reasons were
less frequent with small shares of the pie chart.
D. COMPARATIVE
ANALYSIS
Country comparison:
TABLE 6: MAIN INDICATORS OF THE 3 COUNTRIES - INDONESIA, VIETNAM AND MALAYSIA
Indonesia Vietnam Malaysia

GDP in billion USD – 2021 1.19 (trillion) 366.1 372.9
Total population in million – 2021 273.7 97.46 33.57
GDP per capita in USD – 2021 4,332 3,756 11,109
Value added by Agriculture, Forestry and 13.3% 12.6% 9.6%
Fishery – 2021
Human Development Index – 2020 0.705 0.703 0.803
3 Year Average of Food Production (2015 – 161 199 310
2017; unit: $1 per capita)
Logistics Performance Index (Overall) – 2023 3 3.3 3.6
Food Safety Index – 2017 100 93 N/A
Percentage of population employed in 29% 37% 10%
agriculture – 2019
Main exporting agricultural products – 2020 Soybeans, dairy Cotton, soybeans, Palm oil, rubber,
products, wheat, dairy products, cocoa, wood
cotton tree nuts
Main trading partners – 2020 Japan, China, USA, China, Japan, China, USA,
Singapore, South South Korea Hong Kong,
Korea Japan
Indonesia’s economy has shown incredible resilience interesting to compare Indonesia’s performance in the
by growing by 5.3% in 2022. It is further expected to global market with the performance of other ASEAN
grow by 5.2% in 2023 as domestic demand continues to countries, some of the most successful of which
recover, according to a report by the Asian Development are Vietnam and Malaysia. These countries have
Bank (ADB) released on April 2022. Higher prices for experienced a remarkable industrial development and
Indonesia’s commodity exports, however, should enjoy a privileged commercial and financial relationship
offset lower export volumes, keep a balanced current with China, which remains the most important economic
account and produce some revenue gains. It is therefore partner of all three nations.
27
Aggregate rejection rate:
The Aggregate Rejection Rate is shown for Indonesia, Vietnam, and Malaysia in Table 7.
TABLE 7: AGGREGATE NUMBER OF REJECTIONS OF FOOD AND FEED (HS 1-23) EXPORTS DURING 2010 – 2020
INDONESIA
Markets 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total %
Australia 28 48 24 28 18 14 9 33 44 20 51 317 12%
China 30 30 23 35 41 34 182 85 14 27 41 541 20%
EU-28 23 19 33 19 28 21 36 22 23 9 7 240 9%
Japan 44 19 23 25 17 17 20 17 11 9 7 209 8%
United 129 86
313 231 174 108 70 97 95 58 73 1,434 52%
States
Total 438 347 277 215 174 183 342 215 165 194 192 2,742 100%
VIETNAM
Markets 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total %
Australia 46 36 38 36 42 47 27 62 62 15 72 483 9%
China 63 63 48 36 104 73 71 113 80 119 236 1,006 18%
EU-28 70 107 67 75 120 80 63 69 55 49 38 793 14%
Japan 115 157 122 68 55 67 59 62 54 59 65 883 16%
United 283 126 42%
338 227 215 174 236 150 217 183 169 2,318
States
Total 632 590 490 389 557 417 437 489 420 525 537 5,483 100%
MALAYSIA
Markets 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total %
Australia 26 25 20 28 34 36 21 51 55 18 75 389 17%
China 110 146 137 148 177 138 72 168 32 30 63 1,221 53%
EU-28 9 8 10 10 6 6 6 5 6 7 6 79 3%
Japan 5 4 2 2 3 6 8 5 10 13 4 62 3%
United 32 5 24%
105 29 36 33 91 127 43 19 18 538
States
Total 255 212 205 221 311 313 150 248 121 100 153 2,289 100%
Table 7 and Figure 14 illustrate that the US border represent 1/5th at most of total rejections during 2010
rejections have the highest share of all rejections in to 2020 (20% for Indonesia and 18% for Vietnam). We
the five markets during 2010-2020 for Indonesian can therefore conclude that Indonesia and Vietnam
and Vietnamese exports at 52% and 42% respectively. should first focus on reducing border rejections of food
For Malaysia, the majority of rejections came from the and feed exports by the American authorities. Malaysia
Chinese market (53%). For the other countries, border on the other hand must make a targeted effort on the
rejections for goods entering the Chinese market Chinese market.
28
FIGURE 14: SHARE OF REJECTIONS OF FOOD AND FEED (HS 1-23) EXPORTS BY MARKET, 2010-2020
Vietnam
Indonesia
700
500
600
400
500
300 400
300
200
200
100
100
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Australia China EU-28 Japan United States Australia China EU-28 Japan United States
Malaysia
350
300
250
200
150
100
50
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Based on Figure 15, the share of US rejections compared all three countries’ exports, particularly for Malaysian
to other markets was quite high for Vietnamese and exports rising from 10% in 2010 to a striking 49%
Indonesian exports in 2010. Then, these figures in 2020. Finally, while the share of rejections in the
decreased for all three countries over the following Chinese market has increased for Vietnam, rising from
decade. Indeed, both Indonesia and Vietnam have 10% in 2010 to 44% in 2020, it has decreased for both
effectively managed to significantly reduce their US Indonesian and Malaysian exports over the studied
border rejections. This noteworthy performance has period. In the next section, another indicator, known
also been achieved by Malaysia, which has successfully as the Unit Rejection Rate, will be presented. This metric
reduced rejections in the US market from 105 in 2010 to allows for a true measure of non-compliance of products
merely five in 2020, representing a significant decline from a specific country in a particular market, regardless
from 51% of the total number of rejections in 2010 to of whether the number of exports into that market has
3% in 2020. Conversely, the share of rejections from increased or decreased.
the Australian market has witnessed an increase for
FIGURE 15: SHARE OF REJECTIONS OF THE EXPORTS OF THE 3 COUNTRIES BY MARKET, 2010-2020
Figure 15: Share of rejections of the exports of the 3 countries by market, 2010- 2020
100%
80%
60%
40%
20%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
29
Unit Rejection Rate:
The Unit Rejection Rate (URR) is defined as the number of rejections per USD 1 million of imports. The URR indicator
accounts for changes in the volume of exports such that it provides a direct measure of the rate of non-compliance.
The URR is shown for Indonesia, Vietnam, and Malaysia in Figure 16.
FIGURE 16: URR FOR FOOD AND FEED (HS 1-23) EXPORTS TO THE 5 MARKETS, 2010-2020
Upper middle income

5 5
2 2
1 1
0.5 0.5
0.241
0.167 0.170

0.2 0.146 0.2
0.123 0.131
0.142
0.1 0.1
UR R
0.112 0.070
0.090 0.052 0.049
0.05 0.040 0.068 0.070 0.05
0.038
0.032
0.027
0.019 0.019 0.026 0.018
0.02 0.017 0.015 0.020 0.02
0.010 0.014 0.017 0.017
0.010 0.014
0.01 0.007 0.013 0.008 0.01
0.007 0.011 0.007
0.005 0.008 0.008 0.007
0.006 0.005
0.005 0.005 0.005
0.005 0.005 0.005
0.004 0.004
0.003
0.002 0.003 0.002
0.002 0.002
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Lower middle income
7 7
6 6
5 5
4 4
UR R
3 3
2 2
1 1
0.156 0.132 0.108 0.103 0.068 0.116 0.060 0.136 0.129 0.078 0.130
0.180
0 0.040 0
0.027 0.049 0.019 0.051 0.047 0.050 0.043 0.040 0.042 0.030 0.035
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
M alays ia
W B income gr oup 2020

Upper middle income
4.0 4.0
3.5 3.5
3.0 3.0
2.5 2.5
UR R
2.0 2.0
1.5 1.5
1.0 1.0
0.5 0.5
0.060 0.061 0.068 0.120 0.072 0.099 0.112

0.029 0.032 0.050 0.037 0.159
0.0 0.060 0.0
0.003 0.003 0.003 0.004
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
M ar ket s
Aus t r alia China E U-28 J apan Unit ed S t at es
30
According to Figure 16, all three countries have URR well Relative Rejection Rate
below the average URR for their respective World Bank
income group across the five markets. The Indonesian Indicator:
URR for the five markets ranged from 0.02 to 0.2,
The bar charts in Figure 17 display the distribution of
which is similar to Malaysia’s performance. Vietnam
the Relative Rejection Rate (log ratio) across markets
has achieved a comparable performance as the other
for the exporting countries (Indonesia, Vietnam, and
two countries, while belonging to a different income
Malaysia) for food and feed (HS 1-23) exports in 2020.
group (lower middle income). It is important to note that
The Relative Rejection Rate (RRR) shown (log ratio) is
Indonesia’s URR curves fluctuated during the 2010–
the natural logarithm of the ratio of a country’s share of
2020 decade, whereas the URR curves for Vietnam and
total rejections to share of total imports. The indicator
Malaysia were much more stable throughout the same
provides a convenient measure of the performance of
period.
countries relative to one another in a year or over a
period. A higher RRR (log ratio) for a country implies
poorer performance with regards to food safety and
quality standards in that market relative to the other
markets.
FIGURE 17: RRR FOR FOOD AND FEED (HS 1-23) EXPORTS FOR INDONESIA, VIETNAM, AND MALAYSIA IN 2020
INDONESIA
Indones ia
Indones ia
10.000
r ej t ot s )har e of impor t s )
10.000
5.000
hare eofofimpor
M edian M edian
M edian M edian
5.000
0.000
o s har
M edian
Ln(s har e of r ej tLn(s
M edian M edian
M edian M edian
0.000
-5.000 M edian
-5.000
Viet Nam
VIETNAM
Viet 10.000
Nam
r ej t ot s )har e of impor t s )
10.000
5.000
hare eofofimpor
M edian M edian
M edian M edian
5.000
0.000
o s har
M edian
Ln(s har e of r ej tLn(s
M edian M edian
M edian M edian
0.000
-5.000 M edian
-5.000
M alays ia
10.000
M alays ia
31
f impor t s )
-5.000
MALAYSIA
M alays ia
10.000
Ln(s har e of r ej t o s har e of impor t s )
5.000
M edian M edian
M edian M edian
0.000
M edian
-5.000
Figure 17 show that in all five markets the Indonesian

RRR is lower than the median RRR in each market,
Relationship between the natural
which means that Indonesia is performing on average logarithm of share of rejections to
better than other countries. However, in the Australian
market, both Vietnam and Malaysia performed better the natural logarithm of share of
than Indonesia. In the European market, Indonesia
performed the best out of the three countries based imports
on its RRR of -2.297. Similarly, in the Chinese market, The scatterplot in Figure 18 presents the relationship
Indonesia outperformed Vietnam and Malaysia with an between the natural logarithm of share of rejections to
RRR of -0.543. In the Japanese market, Indonesia and the natural logarithm of share of imports for the food
Malaysia have a similar performance, while Vietnam and feed (HS 1-23) products for 2020 for a given market.
performed poorly (RRR = 1.482) compared to other In the scatterplot, exporting countries are identified
countries in that market (median RRR = 0.223). Finally, using ISO two-letter abbreviation codes. In addition,
in the American market, Indonesia performed well but the countries above the 45-degree line are considered
could aim to improve and reach Malaysia’s admirable worse performers {i.e. ln(share of rejections) is greater
performance (RRR = -1.552). In conclusion, Indonesia than ln(share of imports)} than those below the line,
could improve its compliance rate in the Australian as their ln(share of rejections) is less than ln(share of
market as its performance was close to the median imports).
performance of other countries, albeit slightly better.
32
FIGURE 18: RELATIONSHIP BETWEEN THE NATURAL LOGARITHM OF SHARE OF REJECTIONS TO THE NATURAL
LOGARITHM OF SHARE OF IMPORTS FOR HS 1-23 FOOD AND FEED EXPORTS IN 2020
CHINESE MARKET
4.000
3.000
EC VN
2.000 JP
IN
M Y FR
1.000 AU
DE
ln(% S har e of r eject ions )
BY IT ID
KZ NZ
0.000 AF ES BR
KR
GB AR
B E HK MM PE
LK TR
GL CA
-1.000 MX
CH
SE UY
CR ZA
IR SD UA
-2.000 LV AT
NG LT PH DK
IL IS TZ CL
-3.000
CY MG HU CZ PL KH NO IE
-4.000
-5.000
-5.500 -5.000 -4.500 -4.000 -3.500 -3.000 -2.500 -2.000 -1.500 -1.000 -0.500 0.000 0.500 1.000 1.500 2.000 2.500 3.000 3.500
ln (% S har e of impor t s )
JAPANESE MARKET
4.000
3.000
CN
US
2.000 VN
TH
IT KR
IN
1.000
ES
ln(% S har e of r eject ions )
MX CA
BR
0.000 IR EC ID FR AU
VE GB
PK LK BE PE DE MY
-1.000 CU LT CL
HU PL TR DK NO NZ
-2.000 M U NP RO MW BG PT M M ZA AR S G
-3.000
-4.000
-5.000
-5.500 -5.000 -4.500 -4.000 -3.500 -3.000 -2.500 -2.000 -1.500 -1.000 -0.500 0.000 0.500 1.000 1.500 2.000 2.500 3.000 3.500
ln (% S har e of impor t s )
Figure 18 demonstrates that Indonesia performed better Malaysia performed better than Indonesia. Finally, in
on average than the other two countries in the Japanese the Chinese market, Indonesia can be commended
market and poorly in the Australian market, as it is for its good performance. Once again, the country
positioned above the 45-degree line. This performance outperformed Vietnam and Malaysia, both of which
contrasts with that of Vietnam, as the country performed were situated above the 45-degree line as their ln(share
poorly in the Japanese and American markets. In the of rejections) was greater than ln(share of imports) in
EU market, all three countries performed well, with 2020.
Indonesia performing the best. In the US market,
33
Reasons for rejection - comparative analysis:
TABLE 8: FREQUENCY OF REASONS FOR REJECTION (NUMBER & %) OF INDONESIAN FOOD & FEED (HS 1-23) EXPORTS

Indonesia
Additive 2 0% 169 30% 6 2% 15 7% 175 6% 367 8%
Adulteration 6%
/ missing 31 8% 58 10% 12 5% 1 0% 169 6%
document 271
Bacterial 29%
82 20% 125 22% 32 13% 108 52% 935 31%
contamination 1,282
Heavy metal 0 % 16 3% 51 21% 2 1% 1 0% 70 2%
Hygienic 33%
condition / 0 0% 49 9% 21 9% 31 15% 1,369 45%
controls 1,470
Labeling 191 48% 59 11% 2 1% 0 0% 124 4% 376 8%
Mycotoxin 30 7% 1 0% 68 28% 21 10% 24 1% 144 3%
Other 5%
59 15% 3 1% 20 8% 17 8% 128 4%
contaminants 227
Other 1%
contaminants 35
Others 0 0% 36 6% 15 6% 2 1% 4 0% 57 1%
Packaging 0 0% 19 3% 2 1% 0 0% 0 0% 21 0%
Pesticide 0%
0 0% 2 0% 2 0% 11 5% 1 0%
residues 16
Veterinary 3%
7 2% 2 1% 1 0% 1 1% 106 3%
drugs residues 117
Total 402 100% 560 100% 246 100% 209 100% 3036 100% 4,453 100%
34
TABLE 9: FREQUENCY OF REASONS FOR REJECTION (NUMBER & %) OF VIETNAMESE FOOD & FEED (HS 1-23) EXPORTS

Vietnam
Additive 0 0% 148 14% 62 7% 67 8% 215 6% 492 7%
Adulteration 5%
/ missing 9 1% 84 8% 19 2% 27 3% 201 5%
document 340
Bacterial 22%
contamina- 133 23% 275 27% 175 21% 259 29% 744 19%
tion 1,586
Heavy metal 1 0% 29 3% 134 16% 0 0% 6 0% 170 2%
Hygienic 18%
condition / 0 0% 64 6% 32 4% 55 6% 1,177 30%
controls 1,328
Labeling 220 38% 167 16% 4 0% 0 0% 592 15% 983 14%
Mycotoxin 3 0% 9 1% 13 1% 9 1% 10 1% 44 1%
Other conta- 4%
16 3% 27 3% 40 5% 12 1% 184 5%
minants 279
Other micro- 2%
biological 0 0% 128 13% 39 5% 0 0% 0 0%
contaminants 167
Others 5 1% 55 5% 90 11% 12 2% 8 0% 170 2%
Packaging 0 0% 15 1% 5 1% 0 0% 0 0% 20 0%
Pesticide 10%
80 14% 16 2% 92 11% 97 11% 422 11%
residues 707
Veterinary 14%
drugs resi- 177 20% 13 1% 130 16% 345 39% 329 8%
dues 994
Total 644 100% 1,030 100% 835 100% 883 100% 3,888 100% 7,280 100%
35
TABLE 10: FREQUENCY OF REASONS FOR REJECTION (NUMBER & %) OF MALAYSIAN FOOD & FEED (HS 1-23) EXPORTS

Malaysia
Additive 0 0% 341 27% 16 20% 20 32% 57 4% 434 13%
Adulteration 11%
/ missing 18 4% w179 14% 4 5% 0 0% 166 11%
document 367
Bacterial 17%
26 6% 324 26% 8 1% 29 47% 171 11%
contamination 558
Heavy metal 2 0% 25 2% 7 9% 0 0% 0 0% 34 1%
Hygienic 4%
condition / 0 0% 48 4% 1 1% 1 2% 99 6%
controls 149
Labeling 360 82% 174 14% 0 0% 0 0% 360 24% 894 27%
Mycotoxin 20 5% 15 1% 2 2% 3 5% 0 0% 45 1%
Other 1%
3 1% 11 1% 4 5% 4 6% 5 0%
contaminants 22
Other 2%
contaminants 52
Others 0 0% 78 6% 14 17% 1 2% 14 1% 107 3%
Packaging 0 0% 18 1% 0 0% 0 0% 0 0% 18 1%
Pesticide 1%
10 2% 0 0% 21 26% 4 6% 4 1%
residues 39
Veterinary 19%
0 0% 3 0% 1 1% 0 0% 647 42%
drugs residues 651
Total 439 100% 1,265 100% 80 100% 62 100% 1,523 100% 3,369 100%
36
FIGURE 19: FREQUENCY OF REASONS FOR REJECTION OF FOOD AND FEED (HS 1-23) EXPORTS FOR INDONESIA,
VIETNAM, AND MALAYSIA IN 2020
Indones ia M alays ia

Addit ive Labeling Packaging
Adult er at ion/mis s ing document M ycot oxins Pes t icide r es idues
B act er ial cont aminat ion Ot her cont aminant s Vet er inar y dr ugs r es idues
Heavy met al Ot her s
Hygienic condit ion/cont r ols Ot her s micr obiological cont aminant s
According to Tables 8-10 and Figure 19, the percentage rejections due to bacterial contamination and hygienic
of rejections due to bacterial contamination is quite condition/controls. Whereas, Vietnam should focus on
high for all three countries (from 17% to 29% of the reducing rejections due to bacterial contamination,
total rejections). Indonesia has the highest rate at hygienic condition/controls, and veterinary drugs
29%, while Vietnam and Malaysia have 22% and 17% residues. Vietnam and Indonesia could both learn
respectively. These high figures can also be observed from Malaysia on how to reduce rejections due to
in the US, Chinese and Japanese markets. Similarly, the hygienic condition/controls as it accounts for only 4%
number of rejections due to hygienic condition/controls of all rejections for Malaysian exports in 2020. As for
is elevated for Indonesia (33%) and for Vietnam (18%). Malaysia, its most prominent issue is due to labeling
Indonesia needs to focus on lowering the number of followed by veterinary drugs residues.
37
RECOMMENDATIONS
38
In the light of the global pandemic and the severe effects
of climate change that have been observed in the last
few years, the relevance of quality and safety standards
has become increasingly evident, highlighting the
need for adequate infrastructure and internationally
recognized conformity assessment services. It has
become imperative for Indonesia to continue to improve
its quality infrastructure at a national level in order to
ensure that international market requirements are met
and that producers can prove that their products comply
with international standards and technical regulations
through the entire value chain from production to
packaging, conservation, transport, export procedures,
etc. Based on the analysis of the border rejection
data for Indonesian food and feed exports as well as
consultation with national stakeholders, public and
private institutions, and development agencies, several
recommendations can be made:
Strengthen the Quality Infrastructure

System:
» Establishing the National Quality Policy: The
National Quality Policy, known as JAKNAS, should be
promptly established and implemented to ensure
the harmonization and robust implementation of
quality infrastructure (QI) in Indonesia. JAKNAS is
currently undergoing finalization by BSN and is
expected to be officially issued by the Indonesian
authorities in the near future.
» Improving the services of the National Agency of
Drug and Food Control: Enhancing some of the
services provided by the National Agency of Drug
and Food Control (NADFC/BPOM) of Indonesia is
crucial. Based on a customer satisfaction survey
conducted in 2018, which garnered responses from
480 companies, the following three key service
indicators could be improved: complaint handling,
registration requirements, and service settlement
time. To address the issues raised, NADFC must
prioritize prompt and effective complaint resolution
by implementing an online customer service
platform featuring live chat support. Additionally,
streamlining the registration process is essential
to eliminate unnecessary steps and requirements,
with clear promotion through print media,
social media, and online channels. Proactive
communication with companies regarding missing
documents will expedite registration completion.
Lastly, shortening the service settlement time,
while maintaining the integrity of the inspection
process, is vital.49 Alongside NADFC, Indonesia
also needs to strengthen its NQI led by BSN and
establish competent authorities within technical
ministries to provide inspection and certification
services at the ministerial level.
49
Pitaloka, E., & Tannady, H. (2020). Analysis of Citizen Satisfaction
on National Agency of Drug and Food Control of Republic Indonesia
(NADFC). Department of Management, Universitas Pembangunan
Jaya, 62. https://www.researchgate.net/publication/341165324_
Analysis_of_Citizen_Satisfaction_on_National_Agency_of_
Drug_and_Food_Control_of_Republic_Indonesia_NADFC/
link/5eb1dc5ea6fdcc7050ad55fc/download
39
» Food Control Index: Developing a Food Control sustainability, have the potential to evolve into
Index using a conceptual framework that aligns future regulations. For instance, lawmakers in the
with applicable regulations and guidelines set European Parliament and the European Council
forth by the FAO/WHO. This index will encompass recently reached an agreement on regulations
four essential dimensions: (1) input and resources, supporting deforestation-free supply chains. The
(2) interactions with stakeholders, (3) science/ objective is to ensure that products imported to or
knowledge base and continuous improvements, exported from EU markets no longer contribute to
and (4) control functions. The primary objective global deforestation and forest degradation. The
behind this endeavor is to establish a strong European Union Deforestation-Free Regulation
foundation for future policy interventions, (EUDR) took effect on 29 June 2023, after formal
specifically aimed at enhancing food security. adoption by the EU Council, granting operators
Ultimately, this comprehensive model has the and traders an 18-month period to implement
potential to greatly bolster food security and elevate the new rules, with smaller enterprises receiving
the competitiveness of food products both in local a longer implementation period.52 The regulation
and global markets.50 sets mandatory due diligence rules for all traders
exporting commodities, such as palm oil, cattle,
» Enhancing traceability for fishery products: Given
wood, coffee, cocoa, rubber, soy and certain derived
the ongoing development of public and private
products like chocolate and specific palm oil based
regulations and frameworks for seafood traceability
derivatives, from the EU market.53 Additionally, on
in the US, Japan, and China, it is imperative for
31 July 2023, the European Commission adopted
Indonesia to diligently address the implementation
the European Sustainability Reporting Standards
of traceability requirements across its seafood
(ESRS) for use by all companies subject to the
value chains. This holds particular significance in
Corporate Sustainability Reporting Directive (CSRD).
relation to tuna exports from Indonesia. In 2020,
As the ESRS consist of mandatory requirements and
the rejection of tuna by major importing countries,
principles for companies to comply with and report
including the US, the EU, and Japan, amounted
on sustainability matters, covering a wide range
to the substantial value of USD 3.15 million per
of environmental, social, and governance (ESG)
year, accounting for 4.26% of the total value of
issues, it is vital for countries to start aligning their
tuna exported from the country. This high figure
processes with these sustainability regulations.
underscores the importance for Indonesia to
Even though the ESRS currently primarily apply to
enhance its traceability processes and minimize
large EU-based companies, this may change in the
losses resulting from the rejection of seafood by
future and directly impact agri-SMEs in Indonesia
importing nations.51
seeking to export their products to the EU market.
» Addressing regulatory changes and future
» Assessing standards harmonization: Using the SCA
standards: Apart from hygiene factors, a significant
tool to ascertain the main export product groups
number of rejections came from regulatory changes.
in Indonesia that have encountered a high rate of
This does not indicate a lack of compliance as an
rejection can prove beneficial. This analysis aims to
issue but rather serves as evidence of the ever-
evaluate the degree of harmonization between the
evolving nature of trade relations. To better equip
current national standards with the corresponding
exporting countries in complying with potential new
international standards for those product groups.
standards and regulations, UNIDO could incorporate
a projection of forthcoming standard changes » Inter-ministerial coordination: To increase
by harnessing the power and knowledge found export value and mitigate rejections by importing
using innovative digital solutions and gathering countries, it is key for the government to strengthen
insights stemming from mining large trade data cooperation and synergies across relevant
sets. For Indonesia, UNIDO could facilitate the ministries, namely MMAF, MoT, and the Ministry
implementation of GRP to support government of Foreign Affairs. Additionally, fostering strong
institutions often overwhelmed by ongoing collaboration between the government, the private
changes to food safety regulations. Consequently, sector, and research and development institutes is
as these institutions are responsible for issuing imperative.
the regulations that agri-SMEs must comply with,
» Strengthening international agreements: It is
this would result in better coordination between
critical to strengthen international agreements
the central government and local authorities
pertaining to the exchange of information concerning
regarding food and safety regulations. It is
food safety standards, as they play a crucial role in
important to note that the current analysis of the
mitigating the risks associated with food rejection
SCA tool does not encompass voluntary standards,
by importing countries. This significance was
such as sustainability and traceability standards.
highlighted during the 18th Session of the COFI Sub-
However, it is essential to recognize that these
standards, particularly in terms of traceability and 52
European Parliament. (2022). Deal on new law to ensure products
50
Barinda, S., & Ayuningtyas, D. Assessing the food control system causing deforestation are not sold in the EU. https://www.europarl.
in Indonesia: A conceptual framework. ScienceDirect. https://doi. europa.eu/news/en/press-room/20221205IPR60607/deal-on-new-
org/10.1016/j.foodcont.2021.108687 law-to-ensure-products-causing-deforestation-are-not-sold-in-the-eu
51
Doddema, M., Spaargaren, G., Wiryawan, B., & R. Bush, S. 53
European Council. (2023). Council adopts new rules to cut
(2016). Responses of Indonesian tuna processing companies to deforestation worldwide. https://www.consilium.europa.eu/en/
enhanced public and private traceability. ScienceDirect. https:// press/press-releases/2023/05/16/council-adopts-new-rules-to-cut-
doi.org/10.1016/j.marpol.2020.104100 deforestation-worldwide/
40
Committee on Fish Trade in Bali, which took place 2014 to 2016, during which China implemented
in June 2022. During the session, Indonesia lodged more stringent food regulations. Moreover, careful
a complaint regarding the lack of transparency in consideration should be given to rejections from
import requirements observed in several countries, the Australian market, as Indonesia’s geographical
including the EU’s process of issuing registration proximity presents significant export opportunities.
numbers (approval numbers). Consequently, the Based on the current RRR value for that market,
Sub-Committee proposed that the FAO compiles Indonesia’s adherence to Australian food safety
a comprehensive list of import requirements for regulations could be improved.
fishery products across all countries. Furthermore,
» Mitigating product rejections: It is necessary to
it was emphasized that the impact of the COVID-19
provide assistance to farmers, producers and agri-
pandemic should not serve as a justification for the
SMEs who have experienced product rejections
introduction of new regulations that may potentially
in the past. This support involves conducting
act as additional barriers to trade and exports.
inspections to assess their improved procedures,
» Logistics Competitiveness Index: Indonesia’s tests, and other relevant factors to mitigate the
logistics competitiveness continues to lag behind risk of future rejections. To effectively address
its neighboring countries. According to the this issue, assistance should encompass offering
Logistics Competitiveness Index (LPI) data from expertise, conducting root cause analysis, providing
the World Bank, Indonesia is ranked 61st, while capacity building trainings, and allocating funds to
Malaysia holds the 26th position, Thailand the 34th, facilitate the procurement of equipment and the
and Vietnam the 43rd. Therefore, the Indonesian enhancement of facilities, among other measures.
government should prioritize the improvement of For instance, support could be directed towards
the National Logistics Ecosystem (NLE) to attain a conformity assessment bodies to ameliorate their
higher level of competitiveness relative to other ability to detect pesticide residues. By doing so, the
nations. To achieve this, collaborative efforts number of rejections of Indonesian coffee exports
with relevant stakeholders are essential to fulfill to Japan can be reduced, as the Japanese authority
financial obligations to the state, including the enforces 100% inspection on coffee shipments from
timely payment of state revenues and logistics Indonesia to detect pesticide residues, specifically
costs as stipulated and enforced in the NLE portal. isoprocarb, as indicated by MoT. Indonesia can
Moreover, adequate financing for infrastructure and continue to be supported in implementing capacity
facilities should be provided. Streamlining licensing building initiatives for coffee farmers to adhere
procedures, improving cost and time efficiency and to Good Agriculture Practices (GAP) and Good
investing in human resources would increase global Manufacturing Practices (GMP).
competitiveness.
» Digital tools: Disseminating existing trade-
related digital tools and developing new ones
that provide accurate information on preferential
tariffs, non-tariff measures (NTMs), rules of origins,
Enhance industry compliance, compe- and other trade-related factors is essential. For
titiveness and sustainability: instance, Vietnam has successfully developed
the Vietnam National Trade Repository, which
» Reasons for rejection: Regarding the reasons serves as a valuable resource for stakeholders
for rejection, Indonesia needs to focus its seeking knowledge on food safety, NTMs,
effort on reducing rejections resulting from conformity assessment processes and bodies,
hygienic condition/controls (33%) and bacterial regulations, standards, and more. Findings from
contamination (29%). Other causes include additive a comprehensive business survey conducted by
(8%) and labeling (8%). In the US market, the main the International Trade Centre among Indonesian
causes of rejection are hygienic condition/controls exporters indicate that 66% of the respondents
(45%) followed by bacterial contamination (31%). encountered burdensome regulations imposed by
Conversely, in the Chinese market, rejections are importing countries, acting as non-tariff barriers to
primarily attributed to additives (30%), bacterial trade. Notably, technical requirements, including
contamination (22%), and labeling (11%). product specifications, accounted for over 55%
» Targeting key markets: Special attention should of the identified barriers, with fumigation issues
be directed towards the US market, considering it being the most frequently mentioned concern.
accounts for 52% of rejections. The US stands as Furthermore, conformity assessment procedures,
Indonesia’s largest export market for food and feed encompassing certification, constituted 24% of the
products in 2022. It is also necessary to focus on reported burdensome NTMs. The impact of these
the Chinese market, characterized by its substantial barriers has been observed across various export
export potential and increasing compliance products including seafood, coffee and coffee
requirements. Over the 2010–2020 period, this substitutes, cocoa, wood, and footwear.54
market contributed to 20% of all rejections of » Supporting agri-trade SMEs: According to data from
Indonesia food and feed exports, witnessing an the Ministry for Cooperatives and Small Business,
increase from 30 rejections in 2010 to 41 in 2020, International Trade Centre (2021). Indonesia: Tackling the invisible
54
with a notable peak of 182 rejections in 2016. This barriers to trade - NTM Business Survey. https://www.consilium.
europa.eu/en/press/press-releases/2023/05/16/council-adopts-
peak corresponds to the period spanning from new-rules-to-cut-deforestation-worldwide/
41
there were approximately 65 million small and certification, and educating them on the judicious
medium-sized enterprises (SMEs) in Indonesia in use of chemicals. Emphasizing risk management
2019, half of which were involved in the agri-trade education over crisis management is critical.
industry. It can, therefore, be estimated that there This comprehensive training program requires
are about 30 million food businesses in Indonesia. effective coordination and clear delineation of
Based on research, compliance failures in agri- responsibilities among relevant ministries and
food SMEs were attributed to a lack of regulatory stakeholders, including NGOs and UN agencies.
knowledge, as well as a desire to maximize profits Furthermore, fostering stronger connections and
while minimizing costs. It has been noted that there cooperative efforts among all actors involved in
is a lack of government resources for food safety agricultural production, packaging, and distribution
control, as well as an absence of a registration is essential for enhancing the competitiveness of
system for street vendors. Therefore, it is imperative the agricultural sector. This entails identifying
for increased government support to be provided clusters, developing tools to optimize commercial
to SMEs in order to strengthen their compliance operations, facilitating joint verification and
with food safety regulations. This can be achieved transport processes, launching coordinated
by enhancing their knowledge and understanding domestic and international marketing campaigns,
of food sanitation, hygiene practices, and relevant and prioritizing the branding of Indonesian
regulations.55 products, among other strategies.
» Help desks: Establishing a clearinghouse of » Addressing bacterial contamination challenges: In
information that details NTMs-related procedures 2017, the US Food and Drug Administration (FDA)
and food safety regulations, as well as providing released new draft guidelines outlining measures
help desk services to support SMEs attempting to for the food industry to combat contamination
export specific products to global markets, would of Ready-to-Eat (RTE) foodstuffs with Listeria
be highly beneficial. This initiative would assist monocytogenes. While these measures are non-
SMEs in complying with continuously evolving binding, it is advisable for Indonesia to take heed
regulations. Since several information centers of them as RTE food are a prime source of listeria
already exist, disseminating knowledge about contamination. These guidelines incorporate
trade processes with foreign countries, thanks to industry best practices with Food Safety and
the support of MoI, it is essential to ensure that the Inspection Service protocols.56 It is important
establishment of new centers would not overlap with for Indonesia to review its definition of RTE
the existing ones. It is worth noting that MoA has foodstuffs, as it may differ from that of the US. This
established close collaborations with quarantine examination is essential to ensure that Indonesian
agencies in China and Australia to ensure that the food manufacturers conduct thorough testing for
agricultural product regulations are effectively products that the US considers RTE.
communicated to producers. Similar collaborations
» Compliance with labeling requirements: Labeling
could be arranged with other importing countries.
plays a pivotal role in conveying product information
» Financial incentives for farmers: Offering increased to consumers. Government-mandated labels
fiscal and financial incentives to farmers, enabling include basic information about a product, such
them to make essential investments in order as the list of ingredients, net quantity, country of
to comply with international standards. This is origin, name of manufacturer/importer, expiry date,
particularly key as a significant portion of farmers and more. In addition, labels may also incorporate
lack the necessary financial resources to upgrade health and safety information, such as instructions
their technology and enhance their facilities to for safe handling, storage conditions, and
meet these standards. Besides, providing financial nutritional value.57 To facilitate easy comprehension
incentives and capacity-building support to agri- of nutritional information, it is recommended to
SMEs in the processing industry can foster greater adopt a colored logo-based nutritional labeling
compliance with food safety regulations, promote system which allows consumers to swiftly assess
sustainable agricultural practices, and encourage the nutritional value of food items. Notably, the
the employment of marginalized groups, including European Action Plan for Food and Nutrition Policy
women and vulnerable people. encourages the development and implementation
of clear front-of-package labelling systems.
» Developing agri-based clusters: To address the
Labeling directly impacts food safety, as products
challenges faced by smallholders in meeting
with incomplete or incorrect labels risk rejection at
food safety standards and implementing good
border controls. Furthermore, challenges arise when
agricultural practices due to their economic
importing countries lack clearly defined labeling
circumstances, adopting a cluster approach through
requirements in their legislation, potentially
collaboration between small farmers can prove
practical and cost-effective. The key challenge lies 56
Maxwell, A. (2017, March 29). Listeria in Ready-to-Eat Foods: FDA
in effectively training a large number of farmers in Draft Guidance for Producers. Thermo Fisher Scientific. https://www.
thermofisher.com/blog/food/listeria-in-ready-to-eat-foods-fda-draft-
good agricultural practices, providing them with guidance-for-producers/
incentives (financial and otherwise) to pursue 57
United Nations Economic and Social Commission for Asia and the
55
Fajarwaty, T., & Jukes, D. (2022). Assessing food safety compliance Pacific. (2014). Facilitating Compliance to Food Safety and Quality for
for food SMEs in Indonesia. Department of Food and Nutritional Cross-Border Trade. ESCAP. https://www.unescap.org/sites/default/
Sciences. The University of Reading - United Kingdom. https://doi. files/Facilitating%20Compliance%20to%20Food%20safety%20
org/10.1088/1755-1315/1041/1/012074 and%20quality%20for%20cross-border%20trade%20guide.pdf
42
allowing products without specified expiry dates/ would facilitate access to new markets and enhance
best before dates to enter their markets. Meeting the reputation of Indonesian certified Halal brands.
diverse labeling regulations across national Promotion agencies can launch advertising
markets poses an additional hurdle for exporters, campaigns to promote Halal agro-food products
as it necessitates the production of varied labels worldwide. The budgetary cost of these incentives is
incurring additional costs. Such increased costs significantly offset by increased economic growth,
can prevent foreign producers from competing in job creation, and foreign currency inflows.
certain markets. The Indonesian Food and Beverage
» Consumer awareness of food safety and brand
Entrepreneurs Association (GAPMMI) confirmed
protection: Consumer awareness of food safety is
that Indonesian SMEs continue to face significant
a strong driving force that pushes the advancement
challenges in complying with labeling requirements.
of safety standards. Consumers rightfully expect
that every food item they purchase will adhere
to stringent safety and quality measures. Their
continued satisfaction and loyalty to a product is
Promote a conducive policy evident through repeat purchases. Consequently,
environment and culture for quality: food manufacturers and producers have a vested
interest in safeguarding their brand reputation
» Quality awareness campaigns: In order to address by consistently delivering products that meet
the prevailing lack of awareness regarding the consumers’ expectations of safety and quality.
importance of quality and food safety among most This necessitates the meticulous implementation
fruit and vegetable producers, it would be useful of appropriate controls that oversee the entire
to conduct informative campaigns focused on spectrum of food manufacturing and processing,
standards, regulations, and NQI. These awareness encompassing raw ingredient utilization through
campaigns should target both the general public to the production of finished goods.58
and government institutions. Indeed, government
institutions also need to fully comprehend the
benefits associated with fostering a culture for
58
The Food and Agriculture Organization (2020). Consumers and food
safety: A food industry perspective. FAO. https://www.fao.org/3/
quality and improving NQI, as this will contribute to v2890t/v2890t05.htm
the increased competitiveness of Indonesian food
and feed products. Furthermore, inspectors play a
vital role in disseminating regulatory requirements
to farmers and food businesses during their
inspection visits, as they serve as the primary
source of knowledge for ensuring compliance.
» Informational sessions for consumers and food
service institutions: In response to the growing
demand for high quality food products among local
consumers, one effective approach to farmers to
comply with global standards is to demand that
the agricultural products sold on the local markets
meet the same standards as those intended for
exports. Additionally, it is beneficial to organize
informational sessions and promotional activities
targeting consumers, as well as institutions involved
in food provision across various settings such
as catering companies, kindergartens, schools,
nursing homes, and others.
» Promoting Halal food: Indonesia’s Halal Law,
passed in 2014, mandates a certification process
and labeling requirements for numerous products
starting on October 2019 to ensure their compliance
with Islamic Law that would certify that they are
halal. The National Body of Halal Assurance
(BPJPH) leads the halal certification process, while
the Indonesian Ulema Council (MUI) establishes
the halal compliance standard and issues the
Halal fatwa. The BPJPH appoints Halal Inspection
Institution officials to conduct audits and the halal
status of products. Indonesia has the potential to
become a global exporter of halal food products.
Therefore, financial and logistical support to Halal
food producers could be provided, enabling their
participation in global agricultural fairs, which
43
ANNEX:
CONTEXTUALIZING TRADE-RELATED STANDARDS
Technical regulations and standards are increasingly Lastly, the SCA tool allows for the comparison of
prevalent and continuously evolving in the international countries’ trade compliance performances in different
trade of food and nonfood (industrial) products. markets and related to specific product groups.
Moreover, there is evidence that many developing
Finally, information on rejection can inform policy
countries face challenges in complying with the safety
and technical assistance to navigate and focus efforts
and quality requirements that these regulations and
in addressing compliance issues in a more effective
standards lay down. Since 2008, UNIDO has regularly
and targeted manner. Deeper understanding of
collected evidence about trade related challenges
trade compliance challenges contributes to better
and their evolution over time, particularly in the area
preparedness of exporting countries to comply with
of compliance with requirements, such as quality,
export market requirements and eventually less rejection
certification, and labeling, set by international markets.
in the long term. As a result, the economic losses due
In their efforts to improve compliance, the challenge to rejection would be avoided while reputational risks
for national governments and donors is to allocate due to large scale rejections can be averted.
scarce financial and technical resources amongst a
The SCA tool compiles data from several data sources
plethora of capacity building needs. There is, therefore,
to cover five major markets including:
a need to identify where the most acute compliance
challenges are faced—in a trade context this means » China: The Chinese rejection data records for
identifying the products and markets with the highest agri-food products are published by the General
rates of non-compliance—thus recording rejections. Administration of Customs (GAC). The data includes
In this context, the Standards Compliance Analytics records of rejected consignments under HS codes
(SCA) tool can be used to facilitate the use of rejection 1 to 24 that do not meet Chinese regulatory
data to identify the key compliance challenges faced by requirements.
exporting countries and thereby enhance targeting of
» United States: The US food and feed border
investments in building relevant compliance capacities.
rejection data is obtained from the US Food and
The SCA tool supports the assessment of the overall
Drug Administration’s (USFDA) Operational and
impact of rejection on export performance of countries
Administrative System for Import Support (OASIS),
of origin and estimates their compliance capacity by
an automated system for processing and making
interpreting rejection trends together with additional key
admissibility determinations for shipments of
development, production and trade-related indicators.
imported products that come under the jurisdiction
44
of the USFDA. The USFDA’s website also contains » Japan: The Japanese food and feed border rejection
a description of the variables in the rejection data data is obtained from the Japan’s Ministry of Health,
(Import Refusal Report). The data initially contains Labor and Welfare (MHLW). The MHLW tracks and
both food, feed, and non-food rejections. However, controls import consignments that violate the Food
the non-food rejections are excluded as the current Sanitation Law to secure the “safety of diet” of
focus is the analysis of food and feed rejections. Japanese people.
» Australia: The Australian food and feed border » European Union: The food and feed border
rejection data is obtained from the Australian rejection data is obtained directly from the officials
Department of Agriculture, Water and the responsible for the EU’s Rapid Alert System for Food
Environment. The data includes label and visual and Feed (RASFF). RASFF provides a platform for
rejections, among other rejections. Imported the exchange of information between EU Member
food is inspected through a program known as States on measures taken in response to food
the Imported Food Inspection Scheme (IFIS). The and feed products that pose an immediate risk to
scheme inspects imported food to check if it meets human health, both in the EU internal market and
Australian requirements for public health and with respect to imports from Third Countries. The
safety and if it is compliant with Australia’s food data initially contains both food, feed, and non-
standards. A risk-based approach is taken when food (food contact material) rejections. However,
regulating imported food. Specifically, when a the non-food rejections are excluded as the current
consignment of imported food has been referred for focus is the analysis of food and feed rejections.
inspection, the inspection will involve a visual and
label assessment and may also include sampling
the food for the application of analytical tests.
Under the IFIS, the Minister classifies food as either
risk food or surveillance food. Risk food is food that
has been assessed by the Food Standards Australia
New Zealand (FSANZ) as posing a medium to high
risk to public health, thereby requiring stricter
border controls. Surveillance food is considered
to pose a low risk to human health and safety.
45
46
47
United Nations Industrial Development
Organization (UNIDO)
Vienna International Centre
Wagramer Str. 5, P.O. Box 300,
A-1400 Vienna, Austria
+43 1 26026-0
www.unido.org
unido@unido.org
This work was supported by Switzerland through the State Secretariat for Economic Affairs
(SECO) under the Global Quality and Standards Programme (GQSP).

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STANDARDS COMPLIANCE

This document has been produced without formal United Nations

Country The Republic of Indonesia

FIGURE 1: STRUCTURE OF EU AGRI-FOOD TRADE WITH INDONESIA, 2012–2022

C. INTERNATIONAL (MP3EI), the government vowed to streamline the

Indonesia has done well in the following areas:

Weaknesses Dimension Rank Value Unit

Participation in IEC technical Standards 48 78 Number

Prosperity Rank: 15/16

Figure 2: Evolution of the global number of rejections for Indonesia

FIGURE 3: FIGURE 3: SHARE OF REJECTIONS BY MARKET, 2010-2020

Figure 3: Share of rejections by market, 2010 - 2020

020 Australia China EU-28 Japan United States

FIGURE 4: EVOLUTION OF ARR BY MARKET, 2010-2020

FIGURE 5: GLOBAL NUMBER OF REJECTIONS FOR ALL MARKETS, 2010-2020

Australia China EU-28 Japan United States

Upper middle income

Unit r eject ion r at e

Unit r eject ion r at e

Upper middle income

1.0 0.324 1.00

0.05 Upper middle income 0.050

Unit r eject ion r at eUnit r eject io

0.05 0.072 0.021 0.050

0.02 0.017 0.020

Unit r eject ion r at e

0.5 Upper middle income 0.500

0.014 0.017 0.019 0.020 0.021 0.028 0.013

Unit r eject ion r at

0.017 0.019 Upper middle income

Unit ed S t at es 0.014 0.017 0.019 0.020 0.021 0.028 0.013

Unit r eject ion r at e

0.2 0.155 0.200

0.8 2009 2010 2011 2012 2013

2009 2010 2011 2012

Aust r alia China EU-28 J apan Unit ed St at es

Australia China EU-28 Japan United States

Frequency of reasons for

General reasons for rejection:

Australia China EU-28 Japan US Total

Aus t r alia China E U-28

R eas ons f or R eject ions

100 46.29 48.21

Indonesia Australia China EU-28 Japan US Total

Aus t r alia China E U-28

R eas ons f or R eject ions

Indonesia Vietnam Malaysia

Australia China EU-28 Japan United States

Australia China EU-28 Japan United States

Upper middle income

Unit r eject ion r at e

Lower middle income

W B income gr oup 2020

0.060 0.061 0.068 0.120 0.072 0.099 0.112

Aus t r alia China E U-28 J apan Unit ed S t at es

Aus t r alia China E U-28 J apan Unit ed S t at es

Aus t r alia China E U-28 J apan Unit ed S t at es

Aus t r alia China E U-28 J apan Unit ed S t at es

Aus t r alia China E U-28 J apan Unit ed S t at es