Classifications of Raw Materials, Consumer Goods, and Auxiliary Materials

PERTANYAAN

What are the definitions and classifications of consumer goods, non-consumer goods, and industrial auxiliary materials according to Government Regulation Number 41 of 2021?

INTISARI JAWABAN

Consumer goods, raw materials, and auxiliary materials each have different definitions, examples, and the legal basis. These three matters are basically regulated under several government regulations and regulations of the Minister of Industry. What are the explanations and legal basis of these three goods?

Please read the review below for a further explanation.

 

ULASAN LENGKAP

This article is an English translation of Klasifiksi Bahan Baku, Barang Konsumsi, dan Bahan Penolong which was written by Renata Christha Auli and was published on Thursday, 23 June 2022.

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What are Consumer Goods?

Consumer goods are regulated under Article 1 Section (10) Government Regulation 41/2021, which is:

Consumption Goods are goods used for the consumption purposes of the population.

Criteria for consumer goods are regulated under Article 33 Section (1) Government Regulation 41/2021, as follows:

1. goods for the purpose of fulfilling the consumption needs of the population;
2. are not intended as industrial raw materials or auxiliary materials; and
3. consumed within the Free Trade Zone and Free Ports.

In line with the definition in Government Regulation 41/2021, according to Migie Handayani, in Animal Husbandry Company Economics (Marketing, Marketing Organization, and Risk) (pp. 6-7), consumer goods are goods that are used by final consumers individually without undergoing any further commercial process. Consumer goods can be divided into three types of consumer goods, namely:

1. Conventional goods are goods that are relatively easy to use and easy to obtain. For example, cigarettes, matches, soap, newspapers;
2. Shopping goods, namely goods that must be first sought by the buyer if he wants to buy them. Usually, before buying, prospective buyers consider several things such as price, quality, and color. For example, household utensils, clothing;
3. Special goods, namely goods that have characteristics or a special brand that is only found in certain places. For example, cars and antiques.

Meanwhile, according to Article 88 Government Regulation 29/2021, samples of consumer goods can be found in:

1. minimarkets, supermarkets, and hypermarkets that sell various types of consumer goods in retail, especially food products and/or other household products which may be in the form of building materials, types of furniture, electronics, and other forms of special products;
2. department stores that sell various types of consumer goods in retail, especially clothing products and their equipment with the arrangement based on the gender and/or age level of consumers; and
3. wholesalers/grocery stores in the form of self-service shops, that sell various types of consumer goods in bulk/non-retail.

The Definition of Raw Materials

According to your question, we assume that non-consumer goods are other than consumer goods and auxiliary materials, therefore, based on Government Regulation 41/2021, there are goods known as raw materials.

The definition of raw materials is further regulated in Article 1 Section (2) Regulation of the Minister of Industry 21/2021, namely:

Raw materials are unprocessed materials, semi-finished goods, or finished goods which may be processed into semi-finished goods or finished goods which have higher economic value.

According to Muslich Anshori, raw materials are materials used as the basis for a product. Examples of raw materials are wood, iron, minerals, and other materials that will be used or processed in the production process. These materials may be obtained from natural resources or purchased directly from suppliers.[1]

What are Auxiliary Materials?

Industrial Auxiliary Materials, or other titles for auxiliary materials, are goods that are required in the production process, however, they are not included as part of the finished product. Examples of auxiliary materials are lubricating oils, fuels, and so forth.[2]

According to Article 1 Section (3) Regulation of the Minister of Industry 21/2021, auxiliary materials are materials used as a complement in the production process in order to produce products whose functions are perfect in accordance with the expected product parameters.

In order to provide convenience to obtain raw materials and/or auxiliary materials, industrial companies must prioritize the use of domestically sourced raw materials and/or auxiliary materials.[3] Furthermore, if raw materials and/or auxiliary materials are unavailable domestically, or are insufficient in terms of quantity, volume, or quality standards, then imports of raw materials and/or auxiliary materials may be undertaken.[4]

Furthermore, the Explanation to Article 3 Section (2) letter (c) Government Regulation 28/2021 also stipulates several examples of auxiliary materials and/or raw materials, such as:

1. Raw materials and/or auxiliary materials from by-products such as fly ash, bottom ash, slag, nickel slag, molasses, bentonite, gypsum, bleaching earth;
2. Recycled raw materials and/or auxiliary materials, such as plastic bottles, broken glass, pieces of cloth/thread, steel scraps, paper, and tires.

In conclusion, consumer goods, raw materials, and auxiliary materials each have a different explanation and legal basis. Consumer goods are goods that are finished and ready to be used by people. Raw materials are unprocessed materials or primary materials which are needed for achieving final results in the form of consumer goods, that can be used by people. Meanwhile, auxiliary materials are materials needed and used in the production process.

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These are the answers we can provide, we hope you will find them useful.

Legal Basis:

1. Government Regulation Number 28 of 2021 on the Implementation of the Industrial Sector;
2. Government Regulation Number 29 of 2021 on the Implementation of the Trading Sector;
3. Government Regulation Number 41 of 2021 on the Implementation of the Free Trade Zone and Free Ports Sector;
4. Regulation of the Minister of Industry Number 21 of 2021 on Supplying Center of Raw Material and/or Imported Auxiliary Materials for Small and Medium Industries.

Reference:

1. Imroatul Mufida (et.al). Pengaruh Faktor Bahan Baku dan Bahan Penolong Terhadap Produksi. Jurnal Jiagabi, Vol. 8, No. 1, 2019;
2. Migie Handayani. Ilmu Ekonomi Perusahaan Peternakan (Pemasaran, Organisasi Pemasaran dan Risiko). Semarang: Universitas Diponegoro, 2004.

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[1] Imroatul Mufida (et.al). Pengaruh Faktor Bahan Baku dan Bahan Penolong Terhadap Produksi. Jurnal Jiagabi, Vol. 8, No. 1, 2019, p. 53.

[2] Imroatul Mufida (et.al). Pengaruh Faktor Bahan Baku dan Bahan Penolong Terhadap Produksi. Jurnal Jiagabi, Vol. 8, No. 1, 2019, p. 53.

[3] Article 3 Section (1) Regulation of the Minister of Industry Number 21 of 2021 on Supplying Center of Raw Material and/or Imported Auxiliary Materials for Small and Medium Industries (“Regulation of the Minister of Industry 21/2021”).

[4] Article 3 Section (2) Regulation of the Minister of Industry 21/2021.