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Policy reform needed to exploit ASEAN e-commerce deal
Now that ASEAN has signed a deal on cross-border e-commerce, the government needs to reevaluate its policies so both consumers and producers, as well as the economy, can benefit.
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Contactless spree: People use their gadgets to shop online on April 27, 2021 in Jakarta. The Cooperatives and Small and Middle Enterprises (SMEs) Ministry recorded a 26 percent rise in online transactions last year to 3.1 million for SMEs, primarily driven by consumers’ shift to digital during the COVID-19 pandemic. (JP/Yulianto Catur Nugroho)
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n a bid to benefit fully from the e-commerce boom in Southeast Asia, ASEAN member states have signed the ASEAN Agreement on Electronic Commerce to facilitate cross-border digital trade within the region.
For Indonesia to comply with and benefit from the agreement, it needs to adjust national laws and regulations to strengthen the position of both domestic consumers and producers.
E-commerce has been the main driving force of Indonesia’s digital economy. With growth in technology start-ups and tech-savvy citizens as well as improved nationwide internet access, the government’s ambition to contribute 80 percent of Southeast Asia’s e-commerce transaction value by 2025 is within reach. However, regulatory reforms to reduce barriers to entry and improve data governance are necessary.
First and foremost, comprehensive regulations on personal data protection must be established to set a framework for accountable digital data management and safeguard not only Indonesians’ personal data, but also data from other ASEAN member states.
This is because digital transactions between ASEAN countries require transferring data beyond national jurisdictions. A Singaporean buyer who makes a purchase from an Indonesian seller, for example, requires transborder exchanges of basic information between the two parties as well as the e-commerce platform to verify the buyer’s basic personal information, such as their name, shipping address and payment details.
It is therefore crucial for Indonesia to have a reliable legal mechanism on personal data protection, especially in the e-commerce sector where personal data misuse happens frequently. According to the Communications and Information Ministry, most of the personal data breaches in 2021 occurred in the e-commerce sector (29.8 percent), followed by the public sector (25.5 percent).
The Personal Data Protection Bill is expected to tackle some of these challenges by providing a clear accountability framework and encouraging data minimization. However, the protracted deliberation at the House of Representatives puts Indonesia at risk of being excluded from cross-border transactions. This is because some ASEAN states permit cross-border data transfers only to those countries that have sufficient data protection mechanisms in place.
