The government’s new regulation on e-commerce has left small business players confused, with every party that sells online now required to get a license. For e-commerce players, the regulation has led to “wild interpretation”, according to the industry’s representative.

Disfiyant Glienmourinsie, a merchant who sells homemade food primarily through Instagram, said the government should clearly define the kind of online merchants that should apply for a permit. Otherwise, the regulation could potentially discourage digital entrepreneurship.

“For new online merchants that are only a week or a month into their business, I think [the permit] is not worth it. They are likely to think: ‘I want to focus on my business but instead am hampered [by the government]’,” said the 31-year-old, who started her online business in mid-2018.

E-commerce transactions in Indonesia are expected to quadruple in the next six years with gross merchandise value (GMV) projected to increase to US$82 billion in 2025 from $21 billion this year, according to the e-Conomy SEA 2019 report by Google, Temasek and Bain & Company.

In hopes of improving the business climate for e-commerce players, President Joko “Jokowi” Widodo signed Government Regulation No. 80/2019 on e-commerce on Nov. 25, requiring domestic and foreign e-commerce players from platform providers to merchants to secure a business license. The regulation was effective immediately.

“We regret the [policymaking] process. [The regulation] was issued without its final draft being shared with us. Now it can be interpreted wildly. Merchants are chaotic. Investors that want to invest in marketplaces think twice. It creates headaches for platform owners as well,” said Indonesia E-commerce Association (idEA) chairman Ignatius Untung.

Ignatius is hopeful that industry representatives will be involved in drafting the implementing regulations, especially those related to business registration or licensing and handling of consumer complaints.

The implementing regulations needed to group business owners who need to register and those who do not, he added.

“An example of not needing to register would be if I received a cell phone from my office as a present and I wanted to sell it because I wouldn’t use it — why would I need to register?” Ignatius said. “For what? The data will disrupt government data. I am not a business player. If [I’m registered] and the next day I don’t sell, it would be considered a drop in sales.”

The regulation also stipulates that online businesses will have to regularly submit their data to the government’s statistics agency, which is a major sticking point for platforms, which usually guard their data from authorities.

“Merchants that are already registered in the e-commerce platforms will not have to register [for a permit] because [e-commerce] platforms already have the data,” said Mohammad Rudy Salahuddin, undersecretary of creative economy, entrepreneurship, cooperatives and small and medium enterprises competitiveness coordination at the Office of the Coordinating Economic Minister.

Trade Ministry director general for domestic trade Suhanto said the ministry would form a small working committee to drill down on implementing regulations that would give clearer guidelines on online trade. The team will consist of the Trade Ministry, the Communications and Information Ministry and the Office of the Coordinating Economic
Minister, as well as business players including idEA.

“We don’t want to create a regulation that’s not applicable, so the PP 80 only serves as a legal umbrella,” said Suhanto, stressing the goal of the regulation to make business easier in Indonesia.

“Micro [players] won’t need a legal entity. Marketplaces such as Bukalapak will need to re-register because their KLBI [business classification] is still cluttered in different types. We will integrate,” added Suhanto, citing the ability of microentrepreneurs to apply individually using their national identity cards. (dfr)

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