E-COMMERCE (FEBRUARY 2017)

1.         INVESTMENT

Under the President Regulation No. 44/2016 on Investment Negative List (”INL”) some “e-commerce” business activities are open and some are closed for foreign investment as follows:

a. “Retail sale via mail order or via internet” (perdagangan eceran melalui pemesanan pos dan internet) under several Indonesian Business Classification(KBLI) Nos. 47911, 47912,  47913  is listed  in the Attachment II of INL under trading business  sector  and it is open for 100%  foreign owned capital investment subject to certain restriction that it will be based on the cooperation/kemitraan with UMKM/Micro, Small, Medium Enterprises  including  Cooperative (“MSME”). These business sectors under KBLI 47911, 47912, 47913 are retail trading through mail order of group of products which covering  various kinds of food, beverages, tobacco, pharmacy, cosmetics and lab equipment, textile, clothing, home and kitchen appliances.

b.   “Retail sale via electronic system for other type of goods” (perdagangan eceran melalui sistem elektronik untuk berbagai barang lainnya) under KBLI No. 47919  is listed in the Attachment III of INL under trading business sector which is  reserved for domestic investment/ 100% Indonesian owned capital. 

KBLI 47919 is the business classification on retail trading through media  for other type of goods (perdagangan eceran melalui media untuk berbagai macam barang lainnya) which covers retail sale activities of other goods by order and the goods will be delivered to the buyer in accordance with the intended goods based on catalogues, models, phone, television, internet, mass media and the like, including trading via electronic system operation which provides electronic communication facilities used for trading transaction(marketplace with platform basis, price-grabber, daily deals, online ads, etc).

c.   “Operator of trading transaction via electronic system (marketplace with platform basis, price-grabber, daily deals, online ads)” [penyelenggara transaksi perdagangan melalui sistem elektronik (market place berbasis platform, daily deals, price grabber, iklan baris online)] with KBLI 00000 is listed  in the Attachment II of INL under communication and Information or IT business sector and it is open for foreign investment with certain restrictions that foreign  capital ownership is restricted  up to a maximum of 49% if the amount of investment is less than Rp 100.000.000.000 (a hundred billion Rupiah).

2.         REGULATION ON E-COMMERCE

2.1  No detail regulation on e-commerce has yet been stipulated in the law, except as follows:

(a)  e-commerce under Law No. 7/2014 on Trading dated 11 March 2014 defines “Trading via electronic system” (perdagangan melalui sistem elektronik) as a trading which transaction is made via electronic equipment and procedures. However, it does not make any detail provisions on trading via electronic system other than Article 65 which briefly stipulates that the merchant who is engaged in trading via electronic system is obligated to provide a complete and correct data and/or information regarding description and qualification of the products, price and method of payment including method of  delivery. Its Article 66 stipulates that the implementing regulation shall be stipulated in the form of a Government Regulation.

(b)  Articles 1(5) and Article 1 (6)(a) of Law No. 11/2008 as amended by Law No.19/2016 on Electronic Information and Transaction (“IT Law”) provide some definitions as follows:

However no detail provisions on trading via electronic system have been stipulated in this IT Law as well as under the implementing regulation of Law No. 11 year 2008, Government Regulation No. 82/2012 regarding Operation of Electronic System and Transaction.  

2.2        Circular Letter from Minister of Communication and Informatics No. 5/2016 dated 30 December 2016 regarding Restrictions and Responsibilities of Platform Provider and Merchant through Electronic System ( Electronic Commerce) in the Form of User Generated Content (“UCG”) –(“Circular Letter”).

Despite of implementing regulation to IT Law, a circular letter has been issued by the Minister of Communication and Informatics. This Circular Letter provides guidance on duties and responsibilities of the UGC Platform Providers and Merchant as well as guidance on scope of illegal contents which are prohibited to be uploaded by the user of platform.

The term of Marketplace with Platform basis which is stated in the INL mentioned above, as being open for foreign investment with foreign share ownership restriction  is described under certain definitions made in this Circular Letter as follows:

The Circular Letter provides guidance to the UGS Platform Providers that it must operate the Electronic System in reliable way, secure and accountable, unless errors occur due to mistakes or negligence of the merchants or user of platform; and guidance to the Merchant that it must ensure that all the uploaded contents  including products  do not violates the laws and regulations.

 

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