Indonesia to Launch E-Commerce Legal Framework This Year

In an effort to create a more conducive climate for the e-commerce industry, the government plans to issue a set of regulations called the “e-commerce roadmap” in the next three to six months.

The roadmap will provide clear guidelines regarding logistics services, payment gateways and tax —among others — for the e-commerce industry, Coordinating Economic Minister Sofyan Djalil said on Friday.

“Our e-commerce industry has been rapidly growing but we have not installed a proper regulatory framework yet,” he said after a closed door meeting with the Trade Minister and the Communications and Information Minister.

Communications and Information Minister Rudiantara said on the same occasion that despite growing exponentially, Indonesia’s e-commerce transaction volume was still much lower than that of China.

“Last year alone, the total value of e-commerce transactions in China was three times our state budget. Meanwhile, we recorded only US$12 billion in e-commerce transactions last year,” he said.

Indonesia’s revised state budget this year hit around Rp 2 quadrillion ($152 billion).

Rudiantara told reporters that while still lagging behind that of China, Indonesia’s e-commerce was forecast to grow to around $20 billion this year, requiring guidelines to make sure that the industry would keep growing.

“We will, for example, discuss how online merchants should sign up in a marketplace — whether they can directly sign up or if they need to obtain certain certificates from us,” he went on.

Other issues, including the inclusion of e-commerce on the country’s negative investment list, payment methods and tax, would also be discussed, Rudiantara said.

Under Presidential Decree No. 39/2014, the government includes e-commerce among the industries closed to foreign investment, requiring e-commerce businesses to be wholly owned by local players.

The regulation initially aimed to boost the growth of local e-commerce players and prevent foreign players from taking advantage.

Acquisitions of key Indonesian e-commerce players have occurred over the last few years, such as that of dealkeren.com by US-based LivingSocial Inc. and Disdus by US-based Groupon.

The regulation, however, is deemed counterproductive by a number of e-commerce associations, who claim it hinders people from developing start-up businesses because of a lack of funds.

Sofyan said that his and the two other ministries would discuss all issues related to e-commerce business, including the inclusion of e-commerce on the negative investment list. 

“We will list all lingering issues in the industry to find out what are the most pressing issues that we need to address immediately,” he said.

With around 297 mobile phone subscriptions and 83.6 million Internet users, Indonesia is currently a hotbed for the e-commerce industry.

A surge of local e-commerce players have been trying to find ways to cash in on the country’s growing market.

Diversified conglomerate Lippo Group recently announced that it would invest $500 million to develop mataharimall.com, a website that will help sell products from the group’s fashion retail chain PT Matahari Department Store.

Source: Khoirul Amin/The Jakarta Post, Monday, 16 March 2015