Authors: Selvana Stella Oviona, Randy Hendrika

Now recognized as one of the backbones of the national economy, the e-commerce sector has finally obtained concerted support from the Government of the Republic of Indonesia through the enactment of Presidential Regulation No. 74 of 2017 concerning Road Map for National Electronic Commerce System for the Term of 2017 – 2019 (“E-commerce Road Map”) on 3 August 2017.  Under the E-Commerce Road Map, various ministries and governmental authorities are mandated to collaborate and develop sectoral policies and programs that aim to give guidance and procedures on the preparation and conduct for commerce which transaction is based on a series of electronic devices and procedures.

In order to achieve such purposes, the E-commerce Road Map will be implemented in two main steps. The first step is the establishment of a coordinating governmental body which oversees the development of the E-Commerce Road Map’s sectoral policies and programs. Such task has been trusted to the E-Commerce Steering Committee, which is chaired by the Coordinating Minister of Economic Sector, with nineteen (19) relevant ministers and heads of governmental authorities as its members.

The second step is the setting out of guidelines for the development of specific sectoral policies and programs. Aside from establishing Executor Management consisting of several ministries to assist the Steering Committee, the E-commerce Road Map entrusts the above ministers and heads of governmental institutions to lead the development of seven (7) focus areas, which are further divided into twenty-five (25) implementing programs. In essence, the development of focus areas is highlighted below:

1. Financing

For the financing of the e-commerce sector, the government is aiming for further ease of access to financing, for micro, small-and-medium businesses, which includes the development of specific aids for credit facilities, and programs to optimize the banking industry for provision of such programs.

On the other hand, foreign investment in e-commerce related business activities shall expect the enforcement of certain limitations. The Negative Investment List (Daftar Negatif Investasi) will be revised to include the limitation of 49% maximum foreign ownership for electronic platform providers, including application and Over-The-Top (OTT) businesses, for investment values less than IDR 100,000,000,000 (approximately USD 7.5 million).

These programs are targeted for completion between October-November 2017.

2. Taxation

In view of the tax regime, the government aims to streamline the tax obligation of e-commerce businesses, set out key procedures for registration of e-commerce businesses, and promote equal taxation treatment and standards for foreign e-commerce businesses. These programs are targeted for completion by February 2018.

3. Consumer Protection

The government intends to issue the Government Regulation concerning Commercial Transaction through Electronic System by October 2017.

Consumer trust towards participating businesses in the industry has long been a delicate issue in the e-commerce sector. In addressing this, regulatory frameworks to further accommodate the development of certification and accreditation of necessary systems for e-commerce, reliable payment mechanism, and consumer protection policies will be specifically tailored for commercial transactions conducted through electronic systems.

The government also puts forth its intention to complete the National Payment Gateway program, contributing to the gradual increase of electronic payment support for retail.

These programs are targeted for completion gradually from October 2017 to April 2019.

4. Education and Human Resources

The government intends to heighten the awareness and utilization of the e-commerce platform, with programs ranging from conducting nationwide campaigns and training programs for the utilization of electronic systems for trade, provision of national incubator programs to equip startup businesses with management of online business knowledge and skills, to the establishment of a National Online Shopping Day (Hari Belanja Online Nasional).

These programs will be implemented systematically through the term of 2017 – 2019.

5. Telecommunication Infrastructure

As a natural step forward, the government also encourages the development of national communication infrastructures as one of the main pillars of e-commerce. Targeted development for this focus area includes the production of technical analysis and infrastructure market studies in view of e-commerce activities, free domain programs and further widespread development of broadband infrastructure. These programs are targeted for completion by July 2019.

6. Logistics

Logistics as the main distribution channel of e-commerce is seeing widespread and systematic governmental support on a national level, from aid and developing main regional distribution hubs to ease of financing of micro, small-and-medium businesses for logistical service providers and standardization of policies, regulations, and support related to transportation and logistical infrastructures. These programs are targeted for completion by April 2019.

7. Cyber Security

The cybersecurity aspects of e-commerce are also expected to be the focus of further regulations. Standard operational procedures in relation to storage of consumer data, certification for the security of consumer data and regulation of cybercrime will be the highlights in the proposed regulations. These programs are targeted for completion by January 2018.

Many regulatory changes are expected in a relatively near future for the e-commerce sector. Be as it may that adjustments to the timeline and to the realization of planned regulations may be expected upon implementation, the E-commerce Road Map has served a key purpose, which is to provide the direction of growth for the stakeholders of the Indonesian e-commerce sector.

“The authors would like to acknowledge the contribution of our Junior Associate Andika Satyakusuma in preparing this Legal Alert.”