ELECTRONIC TRADING

Electronic trading ("e-commerce")

As mandated by Article 66 of the Trade Law No. 7/2014, the Government issues Government Regulation No. 80/2019 dated 25 November 2019 which stipulates electronic trading.

This Government Regulation provides 2 years transitional period for e-commerce business actors to adjust their operation with the requirements under this regulation.

This Government Regulation is applicable to the individuals and legal entities business actors both local and foreign which are: (i) e-commerce operators, (ii) e-merchants and (iii) intermediary providers (which among others are internet service providers/ISP, internet search engine and portals, data processing and web hosting providers, online payment providers).

A. Foreign e-commerce business actor

This Government Regulation stipulates that foreign e-commerce business actors who actively carry out e-commerce with consumers in Indonesia are deemed as physically present in Indonesia and are deemed as carrying out permanent business activities in Indonesia if its activity in Indonesia meets certain criteria, which description will be stipulated by Minister of Trade. Those criterion are among others: number of transactions, value of transaction, number of shipped package and/or volume of traffic or number of users who access the service.

If a foreign e-commerce business meets the above criterion, then it must appoint an Indonesian domiciled representative.

B. Licenses

All e-commerce business actors must have business licenses, such as trading business license, and Tax Identity Number (NPWP). Exception given to intermediary providers that are not directly beneficiaries from the e-commerce transaction, or not directly involved in contractual relationship with the parties engaged in e-commerce.

C. The electronic system for e-commerce

E-commerce operator must register its electronic system (platform/e-market place) with the Ministry of Communication and Information and obtain a certificate of competence (sertifikat keandalan) of its e-commerce platform

E-commerce operators must use Indonesian domain name for its e-commerce platform, employ a technological control in its e-commerce platform to monitor, delete, receive reports of illegal/negative content and it must maintain the security and competence of the electronic system and communication channels from the threat and attack which may cause disruption, failure and loss.

D. Products sold through e-commerce

Goods which are sensitive to national security must have a security clearance from the authority; all goods must be supported with a correct information regarding the condition and guaranty of the goods/services.
Delivery of the digital goods or digital service shall be regarded valid if such goods have been received completely and installed and/or working properly.

E. Consumer protection

E-commerce business actors must protect the consumers rights based on laws and regulations and shall comply with fair business competition regulations and make available for consumers’ complain mechanism which at least include (i) address and contact number for receiving the complaint, (ii) complaint procedures, (iii) follow up mechanism, (iv) competent officers who will process the complaint; and (v) certain period to settle the complaint.
E-commerce business actors must settle every consumer’s complain. If the consumer’s complaint is not settled properly then the consumer can report it to Minister of Trade and such e-commerce business actors can be listed on the watchful list by the Minister of Trade.
E-commerce operators and e-merchants that provide online advertisement through the e-commerce platform must comply with the broadcasting, privacy and personal data protection, consumer protection, fair competition principles and advertising ethical code regulations and it must apply a proper security system to avoid from leaking or misused of personal data. Personal data protection regulations and standards (by taking into account European Data Protection standards and APEC Privacy Framework) shall at least include: that personal data is obtained in legitimate ways from the data subject and is collected and processed according to the specific purpose/objective.
E-commerce business actors must not transfer personal data offshore, unless the State of the recipient has the same level of protection as Indonesia.
E-commerce business actors shall delete all personal data from its electronic system if requested by the data subject cause it is no longer used or it has unsubscribed from its system.

F. Trading operation

Interaction with the consumers must be started in good faith with electronic offer of the goods / services from the e-merchant to consumers; e-merchant must be responsive towards the electronic acceptance made by consumer within certain time by sending electronic confirmation as proof of mutual consent.
Payment can be done through electronic system using banking electronic system or other type of online payment system. The providers of the online payment system must be a licensed providers
E-merchant is responsible to deliver the goods and it must provide the information of the goods’ delivery to consumers.
E-commerce operator is also responsible to provide accurate information of the goods’ delivery status regularly to consumers.
E-commerce operator and e-merchant must ensure the security, condition, confidentiality of the goods and time accuracy of the delivery if delivery of the goods is using courier service.
E-commerce operator and e-merchant must allow and give at least 2 (two) working days to consumers to change the goods or to cancel the purchase.
E-commerce operator that receive payment from the consumers must provide refund mechanism and it must ensure the refund will be taken place accordingly if consumer cancel the purchase.

G. Evidence of e-commerce transaction

E-commerce operators must provide and keep/store e-commerce transaction evidence, it can be a valid digital evidence that binding the parties.
In the event that certain regulation requires the evidence to be available in writing on paper media, then such e-commerce transaction evidence must be able to be stored, accessible and visible /readable/displayable to show certain valid legal events.
E-commerce transaction evidence can be regarded as an authentic written evidence if it is signed using a certified electronic signature.

H. Data storing

E-commerce operators must store data/information related to financial transaction and keep it for at least 10 years and for at least 5 years for other data/information that are not related to financial transaction.

Data/information that are not related to financial transaction shall at least include name of customers, electronic settlement, electronic contract and type of goods/services

I. Illegal content and liability exemption

The e-commerce operators and intermediary providers are required to provide terms of condition or license agreement to their customers. They are responsible towards the legal consequences of illegal/negative content found in their electronic system/platform.

E-commerce operators can be exempted from the legal liability of an illegal/negative content posted/shared by their users if it reacts quickly to delete/remove/disable the link and/or such content after becoming aware of illegal/negative content either based on report from other party or knowing by itself.
When an intermediary providers is transmitting, catching and hosting of content/electronic information (or commonly referred to as “safe harbour” provisions under US Digital Millennium Copyright Act 1988 and EU E-Commerce Directive 2000) it can be exempted from the legal liability of an illegal/negative content posted/shared by their users, on conditions as follows:
a) when transmitting activities(mere conduit), it does not initiate the transmission, does not select the receiver, and does not modify the information

b) when catching activities, it does not modify the information, it complies with conditions of access, it complies with any rules regarding the updating of the information in a manner widely recognized and used by industry, it does not interfere with the lawful use of technology in a manner widely recognized and used by industry and it reacts quickly to remove or disable access to the information after obtaining actual knowledge.

c) when conducting as web hosting activities, it does not have actual knowledge of the illegal activity or information, or once it is aware that the information is illegal, it reacts quickly to remove or to disable access to the information

d) intermediary providers that provides interactive internet- based application/service (such as social media platform) cannot be held accountable if restricting or deleting/removing illegal content when such action is carried out in good faith based on its own analysis or a report by other party.

J. Other requirements

E-commerce transactions will be subject to among others tax regulations and export import regulations
E-commerce operators must provide data and information to the statistic bureau regularly, make the report to the Minister of Trade for any agreement it enters into with the online payment system providers and for any agreement it enters into with logistic delivery company

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.