Trade Ministry secretary general Karyanto Suprih said the government hoped to issue the long-awaited draft government regulation focusing on electronic commerce (e-commerce) by the end of this year.

The goal is in accordance with President Joko “Jokowi” Widodo’s ambition to make Indonesia Southeast Asia’s largest digital economy by 2020, said Karyanto.

“The first and foremost aspect for us in drafting [the regulation] is to maintain discipline for traders selling goods digitally as well as to protect their customers,” he said in a digital economy conference hosted by the ministry on Wednesday.

He added that details of the draft were still being discussed.

Karyanto said the ministry was currently gathering perspectives from relevant ministries and stakeholders that had been involved in the drafting of the regulation, including the Communications and Information Ministry, which would be in charge of technology-related articles in the regulation, and the Indonesian E-commerce Association (IdEA) as a representative of digital businesses.

Quoting data from the ministry, he said a total of US$10.4 billion in e-commerce transactions was recorded in 2017, a 21 percent increase from the 2016 figure of $8.6 billion. The ministry, meanwhile, forecasts this figure will reach $12.3 billion this year and is expected to grow by more than 50 percent by 2020, said Karyanto.

The regulation is also aimed at addressing the lack of participation of Indonesia’s small-and-medium enterprises (SMEs) as many digital sellers prefer to sell imported products that have greater demand.

“Given the striking importance of the digital economy to Indonesia, it is surprising that only 5 to 7 percent of the sales are of local products, and even fewer of them are made by SMEs,” he said.

Earlier in August, Finance Ministry Customs and Excise Director General Heru Pambudi said his office would tighten its measures against unscrupulous importers who were suspected of selling goods mainly through online platforms.

Many of the importers were found to have split their orders into smaller quantities in separate shipments so as to avoid paying taxes imposed on imported goods worth over $100, he said.

“These people buy from the same producers and send the goods to the same addresses but the orders are placed under different names,” Heru told reporters at the customs office in Soekarno-Hatta International Airport in Banten. “We will work with the Directorate General of Taxation to identify the perpetrators.”

Responding to the plan, IdEA cofounder and head of supervisory board William Tanuwijaya said digital businesspeople welcomed the initiative, pointing out that the progress of the regulation drafting had been swift.

“Certainly this draft regulation could provide a legal umbrella for the industry and push it to achieve its real potential,” William, who is also the CEO of Indonesian unicorn start-up Tokopedia, said on the sidelines of the event. “There have always been updates [on the drafting] every week and we appreciate the government’s efforts to carefully look into each aspect of the draft.”

He claimed the association had no particular concerns about the draft, adding that the government should nevertheless be careful about the definition of e-commerce in the draft given the number of different e-commerce platform categories.

Peter Lovelock, director and founder of Asia-Pacific-based consulting firm Technology Research Project Corporate (TRPC), commented on Indonesia’s rampant e-commerce practices outside of the regulated platforms, such as those taking place on social media.

He said such practices were rampant not only in Indonesia but also other Asia-Pacific countries like Vietnam, the Philippines, China and even in more developed markets like Singapore, with all of their governments trying to contain the negative consequences.

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