In November 2019, the Government Regulation No. 80 of 2019 on Trading through Electronic System (“E-Commerce GR”) was enacted, setting out distinct requirements for e-commerce business players, classified into: online merchants, e-commerce platform providers, and intermediary services providers. Just recently, the technical implementing regulation was issued through the Minister of Trade (“MOT”) Regulation No. 50 of 2020 concerning the Provisions on Business Licensing, Advertisement, Development, and Supervision of Business Players in Trading through Electronic System (“MOTR 50/2020”), which will only take effect starting 19 November 2020.
This newsletter highlights some key provisions of MOTR 50/2020 to be carefully observed by e-commerce business players, including offshore players that are active in the Indonesian market:
- Licensing Requirements – through Online Single Submission System Portal
- Domestic E-Commerce Business Players
- MOTR 50/2020 divides the licensing requirements into:
- the conventional Trading Business License (Surat Izin Usaha Perdagangan or SIUP) for domestic online merchants;
- the so-called Trading Business License through Electronic System (Surat Izin Usaha Perdagangan Melalui Sistem Elektronik or “SIUPMSE”) for domestic e-commerce platform providers, domestic intermediary services providers (with exception to those in point (C) below), and domestic online merchants who utilizes its own e-commerce platform.
- Offshore E-Commerce Players
Offshore e-commerce platform provider. The requirements under MOTR 50/2020 only apply to a particular offshore e-commerce platform provider that has either (a) concluded or been engaged in transactions with more than 1,000 consumers in Indonesia within a year; or (b) shipped more than 1,000 packages to consumers in Indonesia within a year. Such qualifying offshore e-commerce platform provider must establish/appoint a local representative office in Indonesia, which must obtain an Offshore Trading Company Representative Business License (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing or “SIUP3A”) and only represent 1 (one) offshore e-commerce platform provider at a time.
Offshore online merchants. There are 3 possible scenarios depending on the type of e-commerce platform(s) they use to trade their goods and/or services:
- If they trade via e-commerce platform(s) operated by domestic e-commerce platform providers: they simply need to register their licenses (issued by originating country’s authority) with their associated Indonesian e-commerce platform providers;
- If they trade via self-managed/operated e-commerce platform: the regulation is silent on the licensing requirements but there is a possibility that the MOT will regard them as offshore e-commerce platform providers and require them to establish/appoint an Indonesian representative office, which will need to hold a SIUP3A; or
- If they trade via e-commerce platforms operated by third-party offshore e-commerce platform providers: no explicit requirement under MOTR 50/2020 but we would advise our clients to closely discuss this with MOT officials from time to time due to possibility of certain “unwritten policies” in practice.
Offshore intermediary services providers. Strictly from the text of MOTR 50/2020, offshore intermediary services providers (other than the exempted providers – please see point (C) below) are required to obtain the SIUPMSE. However, as there is no requirement for the offshore domestic intermediary services providers to have legal presence or representative office in Indonesia, it is unclear on how the MOT will be able to impose the licensing requirement.
- Exemptions from the Licensing Requirements
Intermediary services providers (both domestic and offshore) that meet the following criteria are exempted from the requirement to obtain the SIUPMSE:
- do not receive any direct benefit from the transactions; or
- are not directly involved in the contractual relationship between the e-commerce transacting parties.
- Electronic Advertisement
MOTR 50/2020 introduces new electronic marketing and promotion activities provisions by way of requiring e-commerce business players to be responsible and to comply with various aspects of advertisement content and materials.
There are a myriad of regulations with respect to the legality of contents displayed or disseminated through the “electronic system”, inter alia, the E-Commerce GR, MOTR 50/2020, Law No. 11 of 2008 (as amended) on Electronic Information and Transactions, Law No. 8 of 1999 on Consumer Protection, and Minister of Trade Regulation No. 19 of 2014 on the Handling of Websites Containing Negative Contents.
The clients must carefully observe each of these regulations when creating and/or disseminating the electronic advertisement.
- Registration of Electronic Systems with the Minister of Communications and Informatics
MOTR 50/2020 requires e-commerce platform providers (both domestic and offshore) to register their respective electronic systems with the Minister of Communications and Informatics.
- Consumer Protection Measures
MOTR 50/2020 promotes the consumer protection measures by requiring domestic and offshore e-commerce platform providers to provide customer complaints services.
- Develop Business Partnerships with Local Micro and Small Enterprise
MOTR 50/2020 sets general obligations for e-commerce business to support the Indonesian government program, among others, to prioritize domestic products/services trading (through the development of business partnership with local micro and small enterprise and/or marketing access for local micro and small enterprise) and to improve the domestic products/services’ competitiveness level (through any knowledge sharing session, workshop, seminar, etc.).
Failure to comply with the requirements under MOTR 50/2020 may be subject to various administrative sanctions, ranging from written warning, recordation in the special supervision list and blacklist, electronic system access blocking, and revocation of licenses.