Seven Things You Need To Know About the New E-Commerce Regulation 

Source: Jakarta Post, December 12 2019 

Government Regulation No. 80/2019 on e-commerce came into effect immediately after being signed by President Joko “Jokowi” Widodo on Nov. 25 and applies to domestic and foreign e-commerce companies alike.

The regulation lays out a number of rules related to licensing, data, consumer protection, taxation and local products, among other things.

It will serve as an umbrella regulation to promote ease of doing business and protect consumers, Trade Minister Agus Suparmanto said on Monday.

Indonesia E-Commerce Association (idEA) chairman Ignatius Untung said the regulation was meant to create a level playing field between e-commerce companies and brick-and-mortar businesses.

“It is said that offline retail stores pushed the government to issue the regulation to create a level playing field. But I think we already have a level playing field. The knowledge gap between offline retailers and e-commerce companies has resulted in different perspectives between the two,” he added.

The regulation has drawn much attention from e-commerce players, prompting what Untung described as “wild interpretations”.

To help clarify some of the confusion, here are seven notable elements of the regulation.

1. Licensing

Under Article 15, the regulation requires e-commerce companies and merchants to obtain licenses by registering their businesses via the online single submission (OSS) platform.

Micro, small and medium enterprises can use their business permits (SIUP) to register, while individual sellers can use their identity cards (KTP), according to Trade Ministry Domestic Trade Director General Suhanto.

Registered merchants on e-commerce platforms do not need to register for a permit, as the platforms already have the their data, said Mohammad Rudy Salahuddin, the undersecretary of the creative economy, entrepreneurship, cooperatives and SME competitiveness coordination division at the Office of the Coordinating Economic Minister.

2. Data

Article 21 of the regulation stipulates that e-commerce companies and merchants must regularly submit their data to the government agency responsible for managing the country’s statistical data. The data include information related to customers, payments, deliveries, trade disputes and types of products.

The mechanism e-commerce companies will use to report their data will be regulated in a separate trade ministerial regulation, Rudy said. Data collection was necessary for evidence-based policy making to spur the development of Indonesia’s SMEs and online trade, he added.

Article 25 stipulates that e-commerce companies and merchants must retain their transaction data for 10 years.

Article 77 stipulates that the trade minister is responsible for providing data centers for domestic e-commerce companies and merchants.

E-commerce companies and merchants also bear the responsibility of protecting consumers’ personal data, as stipulated in articles 58 and 59.

3. Consumer protection

Articles 18 and 19 stipulate that consumers can make complaints about e-commerce companies to the Trade Ministry. If an e-commerce company fails to settle a dispute, the ministry will add it to a priority monitoring list, which will be publicly available.

However, Untung said consumer complaints could be addressed more efficiently if they were handled by e-commerce platform providers, adding that the Indonesian Consumers Foundation (YLKI) and the National Consumer Protection Agency (BPKN) could also help resolve complaints.

4. Taxation

According to Article 8, both domestic and foreign e-commerce companies and merchants are subject to Indonesian tax regulations.

Foreign e-commerce companies that operate in Indonesia are considered to have a physical presence in the country, and are thus subject to Indonesia’s prevailing taxation laws.

5. Local products

Article 12 rules that domestic and foreign e-commerce companies and merchants are obliged to “help the government” by prioritizing local products and services and by improving the competitiveness of local products and services.

Under Article 77, the trade minister may create a capacity building program to improve the competitiveness of domestic e-commerce companies and merchants’ products, as well as to promote local products.

Suhanto said that e-commerce companies, including registered ones, should promote made-in-Indonesia products on their platforms. However, he declined to elaborate further.

6. Sanctions

E-commerce companies and merchants that fail to comply with the regulation will be subject to administrative sanctions imposed by the trade minister, according to Article 8. The sanctions include a written warning, being added to the priority monitoring list or a blacklist, being blocked and the revocation of business permits.

7. Collaboration and Coordination

The trade minister has the authority to assist and supervise e-commerce companies and merchants and they can also work with other government institutions, Article 76 states.

According to Article 77, the assistance program is intended to help Indonesian e-commerce businesspeople to improve their competence, enhance the competitiveness of local products, facilitate the promotion of local products in the domestic and foreign markets and promote financial inclusion through e-commerce. (dfr)