Since the issuing of Presidential Decree No. 44 Year 2016, foreign investors can now open e-commerce business with 100 percent of full ownership for foreigners. This condition opens an opportunity for e-commerce business to fully expand in Indonesia.
In this article, we will show you in depth about establishing e-commerce business in Indonesia. Since there are a lot of things to comply, you need to pay attention to every detail to welcome this opportunity (read: how to establish a company in Indonesia).
All online companies, which focus on marketplaces, websites for daily deals, websites for price- grabber or price finder, online services, and websites for listing.
The awareness of how important internet for your life have increased year by year. Implication is also big. In 2016, 40% of Indonesian total population has internet access. The hype of smartphones and internet among Indonesian people also boost the sector of online shopping, which in 2016 alone is expected to double up than last year (up to US$20 billion). Moreover, for the online retail industry, it contributes up to 5% of the total economy, compared to only 0.7% in 2015. So, as per June 1, 2016, the e-commerce sector was no longer in its negative investment lists.
The Foreign e-commerce company could be owned by 100% foreigners if the company invests at least IDR 100 billion—about US$7.4 million. The companies that invest less than IDR 100 billion could only be owned by 49% of foreigners. If your company invest less than IDR 10 billion but it can open a job opportunities for at least 1,000 local people, it can also be owned 100% by foreign investors (read: the latest invesment negative list).
1. Below are types of e-commerce businesses that can be owned by 100% foreigners:
2. Below are types of e-commerce business that cannot be owned by 100% foreigners (maximum of 49% of foreign ownership):
If you sell the local products, it’s not necessary. But if you sell the import products, you have to register your products before selling them online.
There are generally 3 types of e-commerce business in Indonesia. They are:
Currently, the following business sectors are the most popular one in the e-commerce industry in Indonesia. Almost all of them are focusing on the e-commerce business for customers. They include the sectors in apparel or clothing, footwear or shoes, books, cosmetics, bags, watches, automobile accessories, airplane tickets, as well as mobile phones or smartphones.
There are also a growing trend in transportation services (like Uber or Grab), tourism and accommodation, as well as food and beverages.
[2020 Update] As a fast-growing economy in the world, Indonesia had a massive GDP worth of US$1.02 trillion in 2018. The rapid development of infrastructure and the internet penetration in Indonesia have grown almost 50% in just mere 4 years and contributed to 50% of the digital industry’s value in 2019. The e-commerce sector will continue to take the lead towards 2025, dominating 60% of the digital industry.
Businesses with the capital of less than IDR 100 billion can still open a business in Indonesia based on the rule on micro, small, and medium enterprises, which is stated in the Government Regulation No. 17 Year 2013. However, the ownership of foreigners should be maximum of 49%. The description is as follows:
Here are the legal steps of establishing e-commerce business in Indonesia, for both the big companies or the micro, small, and medium enterprises:
In this process, you need to get the form of a company deed and consult with a notary. Further, the notary will help you to check the availability of your company name by accessing the data in the Ministry of Law and Human Rights. Then, the notary will issue some documents needed for further process of company registration.
The letter of domicile can be obtained in the local government where your business is located.
The domicile letter is a requirement document to make a tax card. You will obtain a tax number (NPWP) and a tax card from the local tax office.
This application is done online and is used to register your company to the Minister of Law and Human Rights. You need to submit the application with all of the documents stated previously. Plus a bank statement and the statement of your transaction.
SIUP is a permanent business trading license whereas TDP is the company registration certificate which states that your business has been legally registered by the Ministry of Law and Human Rights. After you submit all of the requirements and documents, you can get both of them in the region’s one-stop-service office.
It is done only if your business has more than 10 staff or workers with the minimum salary of IRD 1 million. By registering your company to the Ministry of Manpower, you have certain obligations to include your workers to some working insurance and health insurance.
Having completed all of the legal requirements, you can now start to set up your e-commerce business legally.
Check for the summary about establishing a company and other business support services.
Entrepreneurs who are interested in opening an e-commerce company in Indonesia will have to satisfy the following requirements, which will be fully effective in November 2020.
1. Local and Foreign E-commerce Organizers (PPMSE)
2. Local and Foreign E-commerce Merchants
3. Local and Foreign Intermediary Services Organisers (PSP)
Cekindo can help your company for both 100% foreign ownership and partially ownership e-commerce businesses (Read: step-by-step guide establish a company). Most importantly, we also give services for micro, small, and medium enterprises to enter Indonesian e-commerce business easily with no hassle.
We guarantee that registering and starting your business with us is the best way to cut down all of your burdens concerning the many requirements and the confusing bureaucracy in Indonesia.