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Jakarta Post

Better e-commerce regulations needed for industry development, consumer protection

  • Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Thu, October 1, 2020   /   05:04 pm
Better e-commerce regulations needed for industry development, consumer protection The COVID-19 pandemic has propelled e-commerce growth in Indonesia as customers turn to online platforms to shop amid movement restrictions, pushing more and more businesses to sell their products online. (Shutterstock/Stanisic Vladimir)

Indonesia needs to improve its e-commerce regulations to better accommodate the industry’s needs and strengthen consumer protection, experts have said.

Currently, the country’s e-commerce industry only has government regulation No. 80/2019 and Trade Ministerial Regulation No. 50/2020, which will come into effect in November as a regulatory umbrella. Both oversee business licensing, consumer protection and the national data center for the digital economy, among other things.

Centre for Strategic and International Studies (CSIS) economic department head Yose Rizal Damuri suggested that future e-commerce regulation be flexible enough to allow for innovations and adaptive to changes as the digital economy progressed rapidly.

“The regulations should also differentiate e-commerce models because services in a marketplace are different than those of a classified ad platform, for instance, and the differences need to be addressed,” he said during a webinar hosted by the think tank on Wednesday.

Read also: Seven things you need to know about the new e-commerce regulation

The COVID-19 pandemic has propelled e-commerce growth in Indonesia as customers turn to online platforms to shop amid movement restrictions, pushing more and more businesses to sell their products online.

Management consulting company Redseer noted that Indonesia saw online shoppers grow to 85 million people during the pandemic, from 75 million pre-COVID-19. It projected the country’s 2020 e-commerce gross merchandise value (GMV) to reach US$40 billion this year, the third-highest in the world.

The  2019 e-Conomy SEAreport by Google, Temasek and Bain & Company projects that e-commerce transactions in Indonesia are expected to quadruple in the next six years with GMV projected at $82 billion in 2025 from $21 billion in 2019.

Meanwhile, government regulation No. 80/2019 stipulates that e-commerce companies and merchants must regularly submit their data to Statistics Indonesia (BPS). However, it also requires e-commerce companies and merchants to bear the responsibility of protecting consumers’ personal data.

The regulation has sparked confusion among digital small and medium enterprises (SMEs) and e-commerce players alike because of its unclear interpretation.

“We want to make sure that once e-commerce platforms have to submit their data to the data center, they will not be considered to have breached the upcoming personal data protection law,” Indonesia E-commerce Association (IdEA) chairman Bima Laga said during the webinar.

Indonesia has no specific law that comprehensively regulates personal data protection as yet. Rules on data protection is scattered across at least 33 different laws, according to the Institute for Policy Research and Advocacy (ELSAM).

The government is aware that the country’s e-commerce regulation needs to be constantly updated. However, it first needs to gather e-commerce platforms and establish a user database on the industry so that it can craft evidence-based policy, said the Trade Ministry’s domestic trade directorate general secretary, Johni Martha, in the webinar.

“When we formulate the trade ministerial regulation, our intention was to first protect consumers and local products as we compete with imported goods. I will say the focus of the regulation is quite consumer-heavy,” he said.

In a separate discussion, bureaucracy and regulation reform expert staff member at the Tourism and Creative Economy Ministry, Ari Juliano Gema, said the country needed to regulate how digital corporations collected and used consumer data.

“Consumers are actually paying these seemingly free online platforms with their data,” he said on Tuesday. “These companies then collect the data and they may use it for targeted marketing that can potentially limit consumer choices.”

Companies’ data ownership should be considered an asset in mergers and acquisitions to avoid market domination by a few big players and unfair business practices, he added.

Read also: Indonesia set to surpass India in online retail