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Govt prepares foreign ownership limits in e-commerce

(Illustration: Kompas

The Jakarta Post
Jakarta
Mon, November 23, 2015

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Govt prepares foreign ownership limits in e-commerce (Illustration: Kompas.com) (Illustration: Kompas.com)

(Illustration: Kompas.com)

If you are a global investor and poised to jump into an e-commerce business in Indonesia '€“ Southeast Asia'€™s biggest market '€“ you should hasten your plans before a new measure to constrain foreign ownership is launched.

The Trade Ministry'€™s director general for domestic trade, Srie Agustina, said that the government has been working on the new policy by revising the negative investment list (DNI).

The new measures would be applied to online shopping businesses, as well as to online service platforms, and will aim to strengthen local online businesses.

"In the initial phase, foreign entities would be allowed to have a minority ownership in the e-commerce and marketplace [businesses]," she said as quoted by Kontan.co.id in Jakarta on Monday.

According to the latest report of Insideretail, Indonesia'€™s online businesses will generate Rp 49 trillion (US$ 3.56 billion) in revenues in 2015. Next year, the amount is predicted to rise 26 percent to $4.49 billion.

To anticipate this, Srie said, plans have been prepared regarding the maximum proportion of shares foreign entities will be allowed to own in a business. For example, they may be allowed to have 30 to 40 percent of the shares and local entities will own the rest.

However, Srie added, the implementation of the new regulation would not be retroactive, meaning those who already controlled a majority of shares in an e-commerce business would be unaffected.

The director general of informatics application at the Communications and Information Ministry, Bambang Heru Tjahjono, said foreign investors would only be allowed to enter established e-commerce businesses or marketplaces, not startups, shares of which can usually be bought at a low price.

On the other hand, foreign investors must create an Indonesia-based company or establish a limited company (PT) in a bid to protect the consumer.

According to PT Global Digital Niaga'€™s marketing communications manager, Lany Rahayu, the new measures are positive for the industry. Global Niaga is the developer of well-known online platform Blibli.com.

Meanwhile, PT Global Tiket Network'€™s managing director, Gaery Undarsa, said he expected the new regulation would not only benefit global investors--but the local investors as well, as online businesses make a significant contribution to economic growth. (ags)

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