Although we’ve heard the terms “export” and “import” quite often, we may still need an explanation of the differences between them—especially for those of you looking to expand your business overseas.
Before we continue to explain the differences between export and import trade, let’s briefly recap the definitions of export and import. Export is a cross-border trade activity in which an exporting country sells its products abroad.
Meanwhile, import is a trade activity in which goods from abroad enter the country. Import is the opposite of export.
The difference between exports and imports depends on their purpose
The directions of exports and imports have clear and understandable differences. The main objectives of exports are to expand market reach, maintain stable product selling prices, maintain foreign exchange stability, and promote the development of domestic industries.
Imports, on the other hand, are intended to meet domestic product needs by sourcing products from abroad. Additionally, imports serve as a means of exchanging knowledge, ideas, and technology between countries, as well as reducing the production costs of certain products.
The differences between exports and imports depend on their benefits
Exports and imports can be distinguished by their advantages. The benefits of exports for the exporting country include increasing the country’s foreign exchange reserves, fostering good relations with other nations, participating in international market competition, creating new job opportunities, and so on. Meanwhile, the business advantages of exports include higher selling prices and profits from sales, as well as expanding the customer base beyond the local population.
Imports offer the opposite advantages; they make it easier to meet domestic product demand. For merchants, importing is typically beneficial for obtaining raw materials for their businesses at more affordable prices, or for accessing a wider variety of raw materials in terms of quality and type to create better, more innovative products.
The Process of Shipping Goods
The most fundamental difference between exports and imports lies in the shipping process. The shipping process for export goods involves sending goods from the domestic market to foreign markets. Conversely, the import process involves shipping goods from foreign markets to the domestic market.
Goods shipped abroad for sale are called export goods. Meanwhile, imported goods are those shipped from foreign markets to be sold domestically.
An example of the export shipping process: Sahabat Pengirim, a producer of Indonesian foods such as tempeh chips, sells these products to Malaysia, Singapore, Japan, and other countries.
Names of Export and Import Businesses
Another difference between exports and imports is the name of the business entity. Exporters can be local entrepreneurs, small and medium-sized enterprises (SMEs), or large companies that supply products overseas for sale.
Importers can be individuals, product manufacturers, distributors, companies, or countries that sell their products domestically. Countries that import goods typically do so through specific agencies or institutions authorized to represent that country.
Differences in Documentation Between Exports and Imports
Another distinction between exports and imports lies in the process flow. Export and import activities involve procedures and regulations that apply in both the country of origin and the destination country. One of these requirements is the preparation of essential documents.
As an importer, it is important to prepare documents such as invoices, letters of credit, insurance policies, customs documents, and others. Meanwhile, exporters need to prepare documents such as packing lists, shipping orders, air waybills, customs documents, and others.
Duties Imposed
Customs duties pertain to the movement of goods entering or leaving a country. The difference between imports and exports lies in the duties imposed. There are import duties and export duties. The customs territory encompasses the entire territory of Indonesia; however, the customs area is limited to seaports, airports, or other facilities under the authority of the Directorate General of Customs and Excise.
Import duties are payments levied on goods imported into Indonesia; they are regulated by the government in accordance with applicable customs laws and regulations.
The amount of import duties can be found in the BTKI, or the Indonesian Customs Tariff Book. Goods subject to import duties are typically luxury goods, while goods with an import value of less than US$75 FOB are exempt from import duties.
In this context, export duties are levies imposed on exported goods. Export duties are typically imposed on raw materials, semi-finished products, and other goods.