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Foreign E-commerce Players Must Have Office in Indonesia

Indonesian e-Commerce Profit Grew US$ 3.8B this Year
Foreign e-commerce players is now required to have a representative office in Indonesia, said the trade ministry in a new decree was issued on May 13 -Photo by Mandiri Insitute

JAKARTA (TheInsiderStories)Foreign e-commerce players is now required to have a representative office in Indonesia, said the trade ministry in a new decree was issued on May 13. It said, this regulation will be effective in six months period from the date of promulgation.

Based on the Minister of Trade Regulation Number 50 of 2020, the policy will be charges to the operator that have transactions with more than 1,000 consumers and/or have sent more than 1,000  packages to consumers in one year period.

Last year, President Joko Widodo has signed government regulation number 80 of 2019 concerning trade via electronic systems or e-commerce platforms. This is with consideration to implementing the provisions of law number 7 of 2014 concerning the trade.

According to this regulation, foreign business operators who actively bid and conduct electronic trading to consumers domiciled in Indonesian jurisdiction who meet certain criteria are considered to meet physical presence in Indonesia and conduct business activities regularly in Indonesian jurisdiction.

Certain criteria as referred includes the number of transactions, transaction value, number of shipping packages, and the number of traffic or accessors. Furthermore, business activities through the e-commerce platform apply tax provisions and mechanisms in accordance with statutory provisions.

In this regulation, the parties in the trade are required to have, include, or convey the identity of a clear legal subject. While every cross-border business actor is obliged to meet the provisions of the laws and regulations governing export or import and the laws and regulations in the field of information and electronic transactions.

The regulation also states that those who conduct electro-trade in goods and services that affect national security vulnerabilities must obtain security clearance from the competent authority in accordance with statutory provisions.

In addition, in conducting transactions, business actors are obliged to assist government programs, among others, prioritizing trade in goods and domestic products; increase the competitiveness of goods and services produced by domestic products; and domestic business actors must provide promotional space for goods and services produced by domestic products.

“Domestic and foreign businesses must use electronic systems that have electronic system eligibility certificates in accordance with statutory provisions,” reads Article 14 of the regulation.

The traders must have a business license in conducting transactions. However, intermediary facility operators are exempt from the obligation to have a business permit as intended if it is not the party that receives the benefits (beneficiary) directly from the transaction; or not directly involved in the contractual relationships of the parties conducting electronic transactions.

In order to make it easier for business actors to have a business license as intended, the application for a business permit is carried out through a license that seeks to be integrated electronically in accordance with statutory provisions.

This rule also emphasizes, domestic and foreign business actors that transact with consumers are required to meet the provisions of the legislation in Indonesia.

If the transaction is detrimental to the consumer, they can report the loss suffered to the minister, and the business actor reported by the aggrieved consumer must complete the reporting as intended.

The minister may seek the removal of business actors from the priority list of supervision if there is a consumer satisfaction report there is evidence of the application of consumer protection appropriately or has fulfilled the terms and conditions as stipulated in the legislation.

The rule also states that domestic and foreign traders who use electronic facilities must meet the terms and conditions in accordance with agreed service quality standards and statutory provisions.

The traders are required to use Indonesian high-level domain names (dot id) for Electronic Systems in the form of internet sites and use Internet Protocol addresses (IP Address) in accordance with statutory provisions.

In addition, the traders are also required to use server equipment placed in data centers in accordance with statutory provisions, register electronic systems, meet technical requirements, obtain reliability certificates, submit data periodically to statistical bodies and comply with statutory provisions other sectors related to licensing.

To avoid or respond to the existence of illegal electronic information content, they are required to present terms of use or licensing agreements to their users to make use of it in accordance with statutory provisions.

They are required to provide a means of technological control and a means of receiving public reports on the existence of illegal electronic information content or the misuse of space in the electronic system that it manages in accordance with statutory provisions.

According to this rule, the traders must store data and information related to financial transactions for a minimum period of 10 years from the date data and information are obtained. Also, the data are not related to financial transactions in a period of at least five years from the data and information obtained.

Written by Staff Editor, Email: theinsiderstories@gmail.com