Foreign E-commerce Activities in Indonesia

In 2020, the Minister of Trade of the Republic of Indonesia (“MOT”) issued the implementing regulation of Government Regulation No. 80 of 2019 on E-commerce that had been issued a year before.

This implementing regulation is called MOT Regulation No. 50 of 2020 concerning the Provisions on Business Licensing, Advertisement, Development, and Supervision of Business Players in Trading through Electronic System (“MOT Regulation No. 50/2020”), and it came into force on November 19, 2020.

MOT Regulation No. 50/2020 changes the requirements for foreign e-commerce companies’ practices in doing business in Indonesia as it obliges foreign e-commerce platform providers, intermediary online service providers, and foreign online merchants to comply with certain requirements, including licensing and registration requirements, as discussed below:

Foreign E-Commerce Platform Provider^[1]

Pursuant to MOT Regulation No. 50/2020, any Foreign E-Commerce Platform Provider that meets the following criteria must establish or appoint a local representative office in Indonesia and obtain a Foreign Trading Company Representative Business License (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing):

• Sales to more than 1,000 consumers in Indonesia within a period of one year; or
• Shipped more than 1,000 packages to consumers in Indonesia within a period of one year.

In addition to the above, both foreign and domestic e-commerce platform providers must register their electronic systems with the Minister of Communications and Informatics.

Foreign Online Merchants^[2]

Under MOT Regulation No. 50/2020 the licensing or registration requirements for Foreign Online Merchants may vary depending on the type of e-commerce platform(s) used to facilitate their e-commerce activities. The regulation currently requires only foreign online merchants who conduct trading via third-party domestic e-commerce platform providers to file their business licenses (issued by the authorities in their originating country) with their associated Indonesian e-commerce platform providers.

There is no explicit licensing or registration requirement for Foreign Online Merchants that conduct e-commerce activities via self-managed/operated e-commerce platform or third-party foreign e-commerce platform providers. This is subject to further discussion among officials at the MOT.

Intermediary Service Providers^[3]

Pursuant to MOT Regulation No. 50/2020, any non-exempted^[4] Foreign Intermediary Services Providers are required to obtain a Trading Business License through an Electronic System (Surat Izin Usaha Perdagangan Melalui Sistem Elektronik).

In addition, MOT Regulation No. 50/2020 provides better consumer protection by, among other things, introducing stricter licensing requirements for e-commerce businesses and stricter rules on online advertising, and requiring both foreign and domestic e-commerce platform providers to offer services in response to customer complaints.

For further information on the above, please contact this form.

Click here for Japanese translation article.

---

[1] E-commerce Platform Provider means E-commerce players which provide a platform to facilitate the electronic communication/transaction used in E-Commerce.

[2] A party that carries out E-Commerce using (i) its own facilities they themselves create and operate, (ii) facilities owned by an e-commerce platform operator, or (iii) other electronic systems that facilitates E-Commerce.

[3] Intermediary Service Provider means those who facilitate electronic communication (except for telecommunication operator). This party merely serves as an intermediary, which includes search engine, hosting or caching provider.

[4] Intermediary services providers (both domestic and foreign) that meet the following criteria are exempted from the requirement to obtain a Trading Business License through Electronic System:
- do not receive any direct benefit from the transactions; or
- are not directly involved in the contractual relationship between the e-commerce transacting parties.

---

The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.