Amidst the rise of electronic-based trading activities/e-commerce in Indonesia, the Government is currently preparing further plans for amendments to Regulation of The Minister of Trade Number 50 of 2020 on Provisions on Business Licensing, Advertising, Guidance, and Supervision of Businesses in Trade Through Electronic System.

The amendments aim to foster fair competition in the digital ecosystem in the country, especially in cross-border e-commerce practices which are considered to have not been adequately regulated. The government is taking measures to protect small and medium enterprises (SMEs) from unfair competition from e-commerce merchants. One of the proposed measures is to set a floor price of USD 100 on imported goods to be sold on online marketplaces. This proposed measure will deny the entry of items with prices lower than USD 100 to Indonesian e-commerce platforms. 

In addition to the floor price, Indonesian e-commerce merchants will be prohibited from facilitating cross-border trade. The amendment plan also includes the provision that in order to sell imported goods in Indonesia, Indonesian SMEs, including online merchants, are required to obtain a distribution permit and other licenses e.g., Indonesian National Standard (SNI) and halal certification. The imported goods that are distributed in Indonesia must be imported properly in accordance with the existing trade regulations. 

E-commerce operators will also be prohibited from acting as sellers of products of their affiliates. This measure is intended to prevent e-commerce platforms from prioritizing their own products or those of their affiliated sellers, thereby creating unfairness in the marketplace. 

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A Glance at Regulation of The Minister of Trade Number 50 of 2020 

Regulation of the Minister of Trade Number 50 of 2020 (Regulation 50/2020), which came into force on 19 November 2020, provides guidelines for both domestic and foreign E-commerce business activities carried out within the Indonesian jurisdiction. E-commerce business players covered by the regulation are merchants, e-commerce operators (Penyelenggara Perdagangan Melalui Sistem Elektronik/PPMSE), and intermediary service operators (Penyelenggara Sarana Perantara/PSP) both for domestic and foreign business players.  

Depending on the type, business players in the e-commerce sector are subject to a number of requirements whenever they operate within the Indonesian jurisdiction. For example, domestic merchants must secure a Trading Business License and must secure other Business Licenses applicable to domestic merchants operating within relevant sectors other than general trade. Meanwhile, domestic PPMSEs are required to obtain a Business License for Trade through an Electronic System (Surat Izin Usaha Perdagangan melalui Sistem Elektronik/SIUPMSE), to submit required data and/or information to Statistics Indonesia (Badan Pusat Statistik/BPS), to provide facilities informing about and/or connecting to the OSS Agency’s website. 

Apart from the above-mentioned guidelines, Regulation 50/2020 also regulates the appointment of Representative Offices by foreign PPMSEs. Foreign PPMSEs are required to appoint or establish representative offices with certain criteria in the capital of provinces or regencies/cities. Each representative office may only represent one foreign PPMSE. Representative offices are obligated to possess a Business License for the Representatives of Foreign Trade Companies (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing/SUP3A).

Moreover, Regulation 50/2020 also states that E-commerce business players are allowed to create and/or disseminate electronic advertisements, as long as the advertisements comply with the code of ethics and applicable laws and regulations. E-commerce business players who create and/or disseminate electronic advertisements are responsible for their advertisements.