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Regulatory Alert: Indonesia’s New E-Commerce Regulations
BACKGROUND
Indonesia’s Ministry of Trade has enacted Regulation No. 31 of 2023 (MoTR 31/2023), superseding Regulation No. 50 of 2020. Effective 26 September 2023, this new regulation addresses business licensing, advertisement development, and supervision of business actors[2] in electronic systems trading. MoTR 31/2023 significantly revises the landscape for social-commerce platforms. It introduces stringent restrictions for foreign merchants and e-commerce operators, focusing on enhancing the competitiveness of local merchants and manufacturers against imported products.
KEY REQUIREMENTS
- Restrictions on Social-Commerce Platforms: Social-commerce platforms incorporate social media functionalities and are now limited to showcasing goods or services without facilitating direct payment transactions. This move aims to prevent direct dealings between sellers and buyers on these platforms.[3]
- Compliance Burdens: E-commerce operators face additional compliance burdens, including monitoring foreign merchants’ adherence to Indonesian standards and regulations. Non-compliance could lead to severe administrative actions such as blocking access to websites/platforms or revocation of business licenses.[4]
- Competition Law Compliance: E-commerce operators must ensure equal business opportunities for all merchants, guard against price manipulation, and prevent unfair competition. They are also tasked with separating e-commerce and non-e-commerce electronic systems to prevent data misuse.[5]
- Registration Requirements for Foreign Operators: Expanded criteria now include e-commerce operators contributing to at least 1% of local internet traffic in Indonesia, alongside existing transaction and delivery thresholds.[6]
- Minimum Price Limit: A new minimum price of USD 100 per unit is set for offshore purchases of finished goods, with specific exemptions to be detailed by the Minister of Trade.[7]
IMPLICATIONS
The regulation impacts local and foreign e-commerce operators, particularly on social-commerce platforms. MoTR 31/2023 aims to create a more level playing field for local merchants by restricting payment facilitation and imposing strict compliance and monitoring requirements. The regulation also seeks to control foreign e-commerce operators’ influence and curb direct competition from imported products.
CONSIDER
- Adaptation to New Rules: E-commerce operators and merchants must swiftly adapt their practices to comply with MoTR 31/2023’s requirements.
- Potential Uncertainties: Some aspects of the regulation, such as the distinction between e-commerce and non-e-commerce systems, may lead to varied interpretations and require further clarification.
- Monitoring and Compliance Mechanisms: Establishing robust systems to monitor and ensure compliance with the new regulation is essential.
CONCLUSION
MoTR 31/2023 marks a significant shift in Indonesia’s approach to e-commerce, particularly affecting social-commerce platforms and foreign e-commerce operators. While aiming to bolster local businesses, the regulation imposes stringent requirements and compliance burdens on e-commerce operators. It is crucial for all parties involved to understand and align with these new regulations to navigate the transformed e-commerce landscape effectively.
[1] Setyawati Fitrianggraeni holds the position of Managing Partner at Anggraeni and Partners in Indonesia. She also serves as an Assistant Professor at the Faculty of Law, University of Indonesia, and is currently pursuing a PhD at the World Maritime University in Malmo, Sweden. Sri Purnama, Junior Legal Research, and Jericho Xafier Ralf, Trainee Associate Analyst at Anggraeni and Partners co-author this article.
[2] The regulation defines local business actors as local merchants, trading organizers through electronic systems (Penyelenggara Perdagangan Millau Sistem Elektronik/PPMSE), and Intermediary Services (Penyelenggara Sarana Perantara) and foreign business actors as foreign merchant, foreign trading organizers through electronic systems, and foreign Intermediary Services.
[3] Article 4 of of MoTR 31/2023.
[4] Article 12 (1) and (2) of MoTR 31/2023.
[5] Article 13 of MoTR 31/2023.
[6] Article 18 of MoTR 31/2023.
[7] Article 19 of MoTR 31/2023.
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Anggraeni and Partners, an Indonesian law practice with a worldwide vision, provides comprehensive legal solutions using forward-thinking strategies. We help clients manage legal risk and resolve disputes on admiralty and maritime law, complicated energy and commercial issues, arbitration and litigation, tortious claims handling, and cyber tech law.
S.F. Anggraeni
Managing Partner
Sri Purnama
Junior Legal Research Analyst
Jericho Xafier Ralf
Junior Associate
