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E-commerce and Trans Pacific Partnership
The intention to open up the economy is surely to attract more investment in e-commerce. However, it will come at a cost that is not low, as opening up the economy for competition surely will reduce the policy space of the government.
The government needs policy space to regulate for public interest. It remains to be seen how the TPP will influence future regulation in the field of e-commerce. It is not only the case of Amazon, Lazada, Grab, Uber and Facebook but also many other companies such as Twitter and Google.
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It remains to be seen how the TPP will influence future regulation in the field of e-commerce. (Shutterstock/-)
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mazon, Lazada, Grab, Uber and the Trans-Pacific Partnership (TPP) share a common interest in Indonesia. All favor openness and competition in the field of e-commerce.
The intention to open up the economy is surely to attract more investment in e-commerce. However, it will come at a cost that is not low, as opening up the economy for competition surely will reduce the policy space of the government.
The government needs policy space to regulate for public interest. It remains to be seen how the TPP will influence future regulation in the field of e-commerce. It is not only the case of Amazon, Lazada, Grab, Uber and Facebook but also many other companies such as Twitter and Google.
The TPP has set high standard obligations that favor openness and competition over the government’s policy space. In return for the expectation of foreign direct investment (FDI) inflows, the government is obliged to deregulate and regulate in a number of issues related to e-commerce. Deregulation entails market access commitments, such as easing requirements and restrictions for service providers to open their business.
The TPP will also oblige states to develop regulations pertaining to personal data protection. The communications and information minister issued a draft regulation recently that obliges techno giants such as Facebook, Google, Twitter and Netflix, to establish local representative offices or permanent establishments in Indonesia.
If we join the TPP, we are certainly prohibited from requiring such establishment in Indonesia. Another deregulation move may entail scrapping the obligation that computing facilities must be located in Indonesia to conduct e-commerce in the country. The local content obligation for smartphones will be difficult to maintain.
The TPP also prohibits the performance requirement provision, thereby preventing the government from introducing such policy. Moreover, such provision is subject to the investor-state dispute settlement, which enables foreign investors to bring a claim against sovereign states in international arbitration.
Furthermore, the TPP will also oblige its member states to treat digital products indiscriminately. The movies we download from Netflix or songs we download from Apple Music fall into this definition.
If we ban Netflix from operating in Indonesia, we also need to ban other similar service providers, both locally and internationally. The regulation for personal data protection is still being developed and we haven’t seen any regulation, apart from the Law No. 11/2008 on Information and Electronic Transaction that requires consent from the user to use their personal data. However, the law itself does not provide further protection of such personal data after the consent is given, such as how long the data could be stored by a service provider such as Facebook and Google. A ruling by the European Court of Justice has provided Europeans with a “right to be forgotten”. Such “right” enables Europeans to ask Google and Facebook to erase and delete their data permanently. The TPP will ask the same standard, including the availability of local legal remedies for disputes regarding personal data protection.
E-commerce is growing rapidly in Indonesia by looking at the number of Facebook users in Indonesia, which reach 69 million, and the potential for e-commerce.
The growing demand is accompanied by the emergence of start-up companies such as Go-Jek, Blibli, Tokopedia, Bukalapak and foreign companies such as Lazada, Amazon, Grab and Uber.
Fair competition between local and international companies is a prerequisite in joining the TPP. The TPP will also entail the obligation to develop a personal data protection framework. The public will see itself whether we are up to joining the TPP or not.
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The writer works in the legal office of the Foreign Ministry and is an e-commerce law observer. The views expressed are his own.
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