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Jakarta Post

Indonesia opens doors to big e-commerce firms

  • Anton Hermansyah

    The Jakarta Post

Jakarta | Fri, January 22 2016 | 02:33 pm An internet user browses the web on a laptop. The government is set to allow 100-percent foreign ownership in big e-commerce companies as Indonesians are already using such firms' services although they do not have a physical presence in the country, Communications and Information Minister Rudiantara said on Wednesday. (kompas.com)

An internet user browses the web on a laptop. The government is set to allow 100-percent foreign ownership in big e-commerce companies as Indonesians are already using such firms' services although they do not have a physical presence in the country, Communications and Information Minister Rudiantara said on Wednesday. ( kompas.com )

The government will allow 100 percent foreign ownership of big e-commerce companies as Indonesians are already using their services even when they do not have a physical presence in the country, a minister said.

Chinese e-commerce company AliExpress, a unit of the internet giant Alibaba.com and JD.com or Jingdong Mall, is even providing payment facilities using Indonesian banks working with local payment service provider PT Nusa Satu Inti Artha ( Doku ).

"Rather than letting all the profits go abroad, we will allow them to operate here with 100 percent ownership," said Information and Communication Minister Rudiantara on Wednesday.

Previously, Trade Minister Thomas Lembong said the government would invite large foreign e-commerce companies from the United States and China and it planned to align e-commerce rules with offline trading.

"The goods traded must be scrutinized, such as the food and beverages that should be checked by the Food and Drug Monitoring Agency ( BPOM ) and comply with Indonesian National Standards ( SNI )," said Lembong.

Separately, Investment Coordinating Board ( BKPM ) chairman Franky Sibarani said small and medium-sized enterprises ( SMEs ) were not allowed to receive foreign investment.

"The minimum investment requirement is intended to protect the Indonesian small and medium-sized enterprises. If the investment is worth Rp 10 billion [US$722,300] or less, it will be classified as an SME investment, which is prohibited for foreign investors," said Franky on Thursday.

A medium-sized enterprise is categorized as a business with a maximum net worth of Rp 500 million to Rp 10 billion, or an annual turnover of between Rp 2.5 billion and Rp 50 billion, according to Law No. 20/2008.

Under Presidential Regulation No. 39/2014, the government included e-commerce among the industries that are closed to foreign investment, requiring e-commerce businesses to be wholly owned by local players.

The negative investment list is subject to review every two years, meaning that the 2014 rule will be reviewed in April 2016 under the administration of Joko '€œJokowi'€ Widodo. ( ndy/kes )( + )

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