The Indonesian Government has issued the Regulation 80/2019 on Trade through Electronic Systems which came into effect on November 25, 2019. The purpose of this regulation is to enhance the governance of the Internet and electronic-based trading or e-commerce, as well as to provide higher certainty in Indonesia.
Regulation 80/2019 includes provisions addressing Indonesian e-commerce practices in these areas: who are involved in e-commerce activities, compliance imposed on businesses in e-commerce and the obligations to protect consumers.
The above-mentioned points are further discussed in the next sections.
Who are Involved in E-commerce Activities
Four categories of parties that are allowed to be involved in e-commerce activities are:
- Business practitioners (pelaku usaha)
- Non-business individuals (pribadi)
- Government agencies
There are several sub-categories for business practitioners under Regulation 80/2019:
- Merchants or sellers
- E-commerce organisers (Penyelenggara Perdagangan melalui Sistem Elektronik, or PPMSE)
- Intermediary service organiser
All business practitioners mentioned can be either overseas business or domestic businesses.
However, if overseas business practitioners are actively participating in e-commerce transactions with customers in Indonesia and fulfill certain requirements, their classification is considered as permanent business establishments (bentuk usaha tetap).
In order to be a permanent business establishment, an overseas business practitioner must meet the following criteria:
- Values and volumes of transaction
- Shipment of packages and their volumes
- Number of people who have access to business practitioners abroad
A representative residing in Indonesia is required to act on the overseas business practitioner’s behalf once the overseas business practitioner satisfies the requirements.
Furthermore, all parties involved in the e-commerce activities must conform to the below requirements:
- All e-commerce activities must comply with taxation regulations
- All parties shall comply with regulations of export and import, transactions, and electronic information
- All parties must give clear identities
- All parties have to acquire security clearance from authorities
Compliance Imposed on Businesses in E-commerce
Businesses in e-commerce are also subject to additional requirements stated below:
- Secure business licenses through Online Single Submission (OSS) system
- Comply with general business requirements, including technical license, taxpayer identification number, company registration certificate, code of practices, business conduct, and standardisation of goods and services
- Assist government programs
- Provide clear, honest and valid information such as legal subjects’ identities, goods and services’ conditions and guarantees, and the use of electronic system
Furthermore, for PPMSE, they must meet the following conditions:
- The e-commerce activities must be in compliance with Indonesian laws
- Reject sellers or merchants that do not meet the Indonesian regulations
- Keep e-commerce activities’ data and information for 5 to 10 years
Obligations to Protect Consumers
Under this regulation, obligations of e-commerce business practitioners with regard to consumer protection are addressed, particularly in customer complaint service.
The said service must at least cover the following details:
- Phone number and address
- Procedure for customer who makes the complaint
- Complaint’s follow-up mechanism
- Competent personnel to handle the complaint
- Time needed to settle the complaint
Starting an E-commerce Business in Indonesia
The very first thing that you should take into account is product registration. If you wish to sell local products, then you would not have to register your products. However, if you wish to sell imported products, you are required to go through the product registration process first. Then, you are able to sell them online.
It is also important to know that there are three types of e-commerce business in Indonesia, namely e-commerce business for customers, e-commerce business for other businesses and e-commerce business for the government, with the largest portion of the e-commerce business focusing on the customers.
With regard to ownership, a foreign investor is allowed to enjoy 100% ownership, provided that the minimum investment capital is IDR 100 billion. In other words, when a foreign company invests less than IDR 100 billion, the maximum foreign ownership is at 49%. Furthermore, for e-commerce companies with investment amount of less than IDR 100 billion, they can further be categorised into different types of enterprises, namely micro enterprise, small enterprise and medium enterprise.
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