T

he government expects that online trading could account for 8 percent of the country'€™s retail business over the next 10 years as more citizens get connected to the Internet.

'€œOur vision is for e-commerce to account for 8 percent of the country'€™s total retail business in the next 10 years,'€ Communications and Information Minister Rudiantara said after presenting the ministry'€™s strategic plan recently.

The government plans to launch the e-commerce road map some time in July or August this year. It expected that the road map would pave the way for the industry to reach a stage of maturity in the next decade, he said.

The road map, which is being discussed with a number of concerned ministries, will provide clear guidelines on logistics services, payment gateways and taxes for the e-commerce industry.

The government will also hold a discussion on whether the inclusion of e-commerce on the country'€™s negative investment list will bring more harm than benefit to the country.

Under Presidential Decree No. 39/2014, the government lists e-commerce among other industries closed to foreign investment, requiring e-commerce businesses to be wholly owned by local players in a bid to boost the growth of local e-commerce players.

The regulation, however, is deemed counterproductive by a number of e-commerce industry groups, saying that it hinders businesses from developing start-up businesses due to a lack of funds.

Although the e-commerce sector in Southeast Asia'€™s largest economy is among the fastest growing in the world, it is currently still in its infancy, contributing less than one percent to the country'€™s retail business, Rudiantara told reporters.

The total value of Indonesia'€™s grocery retail alone is predicted to hit US$147 billion in 2017, according to PT Bain Indonesia, a local arm of global management consulting firm Bain & Company.

E-commerce contributions to the retail business are lower in Indonesia than in China; in China, e-commerce makes a 10 percent contribution to the retail business, Rudiantara said.

He also said the government was discussing a number of issues related to e-commerce, including online taxes and fiscal incentives.

'€œHow exactly fiscal incentives for online sales will be implemented is still being reviewed by the Fiscal Policy Office,'€ Rudiantara said.

The debate on taxes for online businesses is unsettled. In March last year, the Trade Ministry said that it would impose taxes on online transactions, similar to those on transactions in brick-and-mortar businesses.

After this initial statement, the ministry said in August last year that it was considering the possibility of scrapping value-added taxes for online transactions carried out by local vendors, since many transactions through overseas vendors were already exempt from similar taxes.

Supported by the country'€™s drive to provide an affordable, quality broadband network, Indonesia'€™s e-commerce sector is forecast to grow exponentially.

The Communications and Information Ministry estimated that the country'€™s e-commerce transaction value would hit $24 billion by 2016, twice that of last year'€™s $12 billion.

With a populations of 250 million, Indonesia has seen a rapidly emerging middle class in recent years thanks to stable economic growth that has upped people'€™s purchasing power.