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 Trading 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 under the implementing regulation of Law No. 11 year 2008, Government Regulation No. 82/2012 regarding Operation of Electronic System and Transaction, electronic system operator for public under Government Regulation No. 82/2012 has obligations among others:
a. to conduct registration with the Minister based on Minister Communication & Information Regulation No. 36/2014 on
Registration of Electronic System Operation Procedures;
b. to take into account security, reliability and efficiency aspects of its electronic system;
c. to keep transaction data in Indonesia;
d. to use Indonesia’s electronic system networking; and
e. to place data center in Indonesia’s territory
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.
Disclaimer: This article is intended as general information only and it does not constitute a legal advice. We accept no responsibility for any loss that may arise from reliance on this information. Please contact us if you need full legal advice.
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 Trading 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:
- “Electronic System” means the arrangement of electronic tools/devices and electronic procedures which have functions to prepare/generate, pool, process, analysis, store, display/present, publicize, send, and/or distribute/transmit Electronic Information;
- “Electronic System Operator” means any persons, state’s institutions, business entities, and people who either individually or jointly provide, manage and/or operate Electronic System to users of Electronic System for the purpose of themselves and/or another parties.
However under the implementing regulation of Law No. 11 year 2008, Government Regulation No. 82/2012 regarding Operation of Electronic System and Transaction, electronic system operator for public under Government Regulation No. 82/2012 has obligations among others:
a. to conduct registration with the Minister based on Minister Communication & Information Regulation No. 36/2014 on
Registration of Electronic System Operation Procedures;
b. to take into account security, reliability and efficiency aspects of its electronic system;
c. to keep transaction data in Indonesia;
d. to use Indonesia’s electronic system networking; and
e. to place data center in Indonesia’s territory
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:
- “Platform” is defined as an application, internet site, and/or content service internet basis used for transaction and/or facilitate trading via electronic system;
- “ UGC Platform” is defined as a Platform which enables Merchants to upload contents independently; and
- “Merchant” is defined as individual, group, business entity, legal entities who is utilizing facility of selling provided by the Platform Provider on account basis (registered) or unregistered.
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.
Disclaimer: This article is intended as general information only and it does not constitute a legal advice. We accept no responsibility for any loss that may arise from reliance on this information. Please contact us if you need full legal advice.