New requirements for E-commerce companies

19 May 2020

On 19 May 2020, the Indonesian Ministry of Trade (“MOT”) has issued a new regulation, MOT Regulation No. 50 of 2020 regarding Provisions on Business Licensing, Advertising, Guidance and Supervision of Businesses Trade through Electronic Systems. This regulations will take effect on 19 November 2020. Some of the key points include among others: - The regulation divides e-commerce business actors into the following categories: 1. E-Commerce Organizers (Penyelenggara Perdagangan melalui Sistem Elektronik or “PPMSE”), both domestic and foreign; 2. Merchants, both domestic and foreign; and 3. Intermediary Services Organizers (Penyelenggara Sarana Perantara or “PSP”), both domestic and foreign.

• Parties in each category must satisfy certain prerequisites before engaging in the relevant e-commerce activities, as follows:

  1. Domestic PPMSE’s must obtain an E-Commerce Trade Business License (Surat Izin Usaha Perdagangan melalui Sistem Elektronik or “SIUPMSE”).
  2. Foreign PPMSE’s are required to appoint a Foreign Trade Company Representative Office in the field of Trade through Electronic System (Kantor Perwakilan Perusahaan Perdagangan Asing di bidang Perdagangan melalui Sistem Elektronik or “Representative Office”) upon the fulfillment of certain criteria.
  3. Domestic e-commerce merchants must obtain the appropriate Trade Business License for their activities. If a domestic merchant has its own e-commerce facility, such as a website or online platform, it must procure a SIUPMSE.
  4. Foreign merchants must register their valid business license from their country of origin with a domestic PPMSE with electronic communication facilities for foreign merchants, which, in turn, will store the submitted registration data.
  5. PSPs generally are required to obtain a SIUPMSE. However, a PSP may be excluded from this requirement if (i) it is not a direct beneficiary of the e-commerce transactions or (ii) is not directly involved in the contractual relationship between the parties conducting e-commerce transactions.

• The regulation requires e-commerce business actors to support government programs by prioritizing locally produced goods and services, increasing the competitiveness of local goods and services, and, specifically for domestic PPMSEs, providing space to promote locally produced goods and services.

• Foreign PPMSEs that meet certain criteria are required to appoint a Representative Office. This requirement applies to foreign PPMSEs that have completed more than one thousand transactions with consumers within a year and/or have delivered more than one thousand packages to consumers within a year. One Representative Office may only represent one foreign PPMSE. A Representative Office can act on behalf of the foreign PPMSE only with respect to consumer protection matters, the provision of guidance to increase the competitiveness of locally made products and dispute resolution matters.

Nature of measure:

• Entry restriction

Type:

• Entry and establishment (Approval and admission - other)
• Treatment and operation (Operational conditions)

Industry:

• Services (Other service activities)

Sources:

• Akset, A New Regulatory Framework for Indonesia’s E-Commerce Sector: Licensing Requirement and Threshold of Foreign E-commerce Business, https://aksetlaw.com/news-event/newsflash/a-new-regulatory-framework-for-indonesias-e-commerce-sector-licensing-requirement-and-threshold-of-foreign-e-commerce-business/, 29 Jun 2020
• Lexology, Indonesia Introduces New Requirements for E-Commerce Companies, https://www.lexology.com/library/detail.aspx?g=e30b84d2-d67c-458e-b839-b19c3a9a0984, 18 Jun 2020