Minister for Communication and Informatics Rudiantara (Image Credit : Rudiantara's Personal Twitter account)

JAKARTA (TheInsiderStories) – Indonesia has witnessed the rise of ‘sharing economy’ business model over the past five years or so, in particular in areas of transportation, tourism, finance, and retail sector. The business model has also been adopted in other business sectors.

The term sharing economy refers to an economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet. The term sharing economy, shared economy, peer economy, collaborative economy, on-demand economy and collaborative consumption are often being used interchangeably.

On global scale, sharing economy is projected to continue to grow. According to Price WaterHouse Coopers, global revenues of five key sharing sectors —travel, car sharing, finance, staffing, and music and video streaming — have the potential to increase  from roughly $15 billion in 2016 to around $335 billion by 2025.

In Indonesia, sharing economy began to gain popularity from 2013, marked by the entry of ride-sharing applications such as UberGrab and home-grown brand Go-Jek. Since then, the ride-sharing app business has grown exponentially, creating millions of jobs and (to a certain extent) helping boost the country’s business activities.

In order to get government’s view on sharing economy, The Insider Stories interviewed Minister for Communication and Informatics Rudiantara. He said sharing economy has helped resolve inefficiencies in business sector. He also elaborates other issues including regulatory frameworks and other issues. Following is excerpt of the interview:

Q: What is your view on the rise of Sharing Economy. What are the benefits for the country?

I think sharing economy will grow in areas where there are inefficiencies. People will utilize sharing economy business model to resolve the inefficiencies. As a case in point is AirBnB – [which we seek to match people who are looking for accommodation with those people looking to rent out their place]. In Indonesia, we have homegrown similar platforms, such as Airyroom, etc. These platforms offer solutions.

Q: How is the E-Commerce Outlook for 2018?

Actually, there are a number of policies that are not completed yet, such as talent issues, funding, taxes and others. Infrastructure development is still going on, while the logistic issue, the transformation of PT Pos Indonesia is yet to be completed.

Given these homeworks, I think the growth of E-commere industry this year could reach a double growth than last year, judging from the result of Harbolnas (National Online Shopping Day, held late last year), which recorded sales increase of 100 per cent compared to previous year. That is just online sales, we are not talking about overall retail sector.

Q: How big is the actual value of Indonesia’s digitial economy in 2017?

The value of digital economy could have reached US$40-50 billion [in 2017]. If everything goes as plan, Indonesia could become the second biggest digital economy by 2019 in ASEAN.

As a case in point is Garuda Airline. If you see, most of ticket sales of Garuda Airlines now are purchased through online platforms, such as Traveloka, and others. People are no longer purchasing tickets through travel agents. Garuda’s sales alone reached around US$2-3 billion every year. If we add the ticket sales value of Sriwijaya Air, Lion Air, the contribution of airlines to the E-commerce business reaches US$6-7 billion. We are yet to talk about hotel room transactions, which could be higher than that.

Q: Are there any new policies to be issued by your ministry?

From our perspective, we (the ministry) focus on developing the information and communication infrastructure as we have been left behind compared to our neighbors. In term of regulations, we cooperate with other related ministries or departments. On the issue of AirBnB, we discuss with Minister of Tourism, how do we set tariff system; what is the Ministry of Tourism role and how do we contribute. The guidance is already in place, however, we cannot disclose the detailed policy as yet.

Q: The E-Commerce Steering Committee Structure has been changed. Why it is changed?

It is not changed. The government is just strengthening the Committee. Previously, there was only one steering committee. The Steering Committee  (SC) is now divided into three – SC on Infrastructure, SC on Talent and Human Resources and SC for Finance and Logistic.

I my self is responsible for infrastructure sector. Each SC has its own programs and targets to be attained. As for (IT) infrastructure, it is still in line with target, in particular with the development of Palapa Ring program, which is targeted to be completed in 2019. The West Indonesia package is scheduled to be completed in February, and followed by commercial operation in March. The Cetral and Eastern Indonesian Packages are scheduled to be completed in 2019. So, the Palapa Ring project will be fully completed in 2019.

Q: How is the progress of E-Commerce Tax?

That is the domain of the Finance Ministry. Let’s just wait.

Q: How is the progress of the Ministerial Decree on Over the Top (OTT) media services?

The regulation on OTT is being drafted. It is now under the ‘public consultation’ phase. We initially targeted to issue the ruling by the end of December 2017, however, it looks like it to be delayed for around two months. We have extended the public consultion period so that the ruling will not surprise the public, including foreign players. This covers the issue of OTT media services legal entity, should they set up a domestic legal business entity (BUT) or just a re-seller. Under the existing regulation, the OTT media providers are not allowed to only get re-seller permit, they have to obtained

Q: What are other steps to be undertaken?

We will be focusing on infrastructure and security issues. Online Shopping Day should continue, if necessary, carry out the program twice a year, so that more and more people feel comfortable and familiarized with the e-commerce business.

Written by Linda Silaen, email: linda.silaen@theinsiderstories.com

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