“Under the proposed revision to Trade Ministry Regulation No. 50/2020, vendors on e-commerce platforms will need to disclose their country of origin,” Trade Ministry Domestic Trade Director General Oke Nurwan told The Jakarta Post in a text message on Wednesday.

Oke dismissed the notion that the move was protectionist, arguing that the new regulation would create a level playing field for foreign and domestic sellers. Both would need to comply with Indonesian standards and Indonesian trade laws. This would ensure that any “cheating foreign sellers” could not outcompete Indonesian small businesses on e-commerce platforms.

The ministry says it also plans to regulate discounts offered on the platforms with the aim of creating fair rules for online and offline sellers.

“It is quite possible that predatory pricing commonly occurs on e-commerce platforms, but it’s very hard to prove that such practices are happening,” Center of Reform on Economics (CORE) executive director Mohammad Faisal told the Post in a phone call on Wednesday.

Proving predatory pricing would require a comprehensive investigation into how sellers produced their goods and, more importantly, whether they cut prices until their competitors left the platform, only to hike the prices afterward, he added.

According to Mohammad, it is crucial for the government to have all the necessary data on sellers on the platforms, including their country of origin. However, he argued that the government needed to play a proactive role, since relying on reports alone was ineffective because many of the wronged parties would remain silent.

Read also: E-commerce boosts the logistics sector in Indonesia

In a webinar on May 31, Trade Minister Muhammad Lutfi said he was surprised to find imported hijabs sold at Rp 1,900 (US$0.13) apiece on an e-commerce platform, which he said caused havoc for Indonesian hijab producers. The Islamic headwear typically sells for Rp 30,000 or more per item.

“In online markets, [special offers] are often made to attract new buyers. This may cause prices to be very low, especially for imported products. Thus, the government must be careful in distinguishing which is which,” Nailul Huda, a researcher on innovation and the digital economy with the Institute for Development of Economics and Finance (INDEF), told the Post by text message on Wednesday.

Nailul added that the government needed to do several things to prevent genuine price manipulation. The production of goods by domestic micro, small and medium enterprises needed to be strengthened with government help. There should be a separation of platforms for imported and homemade products as well as a clear definition as to which products could be included in promotional programs.

Read also: High e-commerce fees squeeze small F&B firms’ margins

“The practice has been going on for six years. Many local producers have been used as vehicles for imported products,” Center of Economic and Law Studies director Bhima Yudhistira told the Post in a text message on Wednesday.

Bhima added that the Business Competition Supervisory Commission (KPPU) should “do its job” of identifying such practices. He contended that the ministry could immediately limit the share of imported products allowed on e-commerce platforms to 30 percent.

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