The New E-Commerce Regulation in Indonesia is now in Effect

Published on
October 20, 2023

The Minister of Trade of Indonesia (“MOT”) recently issued the MOT Regulation Number 31 Year 2023 on the Business Licensing, Advertisement, Guidance, and Supervision of Business Actors in Electronic Systems Trading (“MOT 31”) which revoked the MOT Regulation Number 50 on the same matter. This regulation was enacted on 25 September 2023 and came into effect a day after. The general overview of this regulation is as follows:

E-commerce operators can only accept foreign merchants which have complied with requirements under the Indonesian laws

Foreign merchants must comply with the requirements under the Indonesian laws, such as using Bahasa Indonesia to describe the merchandise and disclosing the country of origin of the products. The foreign merchant also must submit required documents to the e-commerce operator which will facilitate its transaction, among others the identity of the foreign merchant and business licensed issued by the authorized body in the country of origin.

E-commerce operators must actively monitor the non-competitive practices by merchants

MOT 31 requires E-commerce operators to undertake active measure to provide equal opportunities to all merchants and to avoid price manipulation. To ensure compliance with non-competitive measures, e-commerce operators must ensure that there is no interconnection between the electronic system used for e-commerce and those not used for-ecommerce. There is also a requirement to precent data abuse by the e-commerce operators and its affiliates. If there is any allegation of non-competitive practice and/or price manipulation, the e-commerce operators must report it to the Indonesian Competition Commission (“KPPU”).

New criterion for foreign e-commerce operators to be subject to local registration

MOT 50 required foreign e-commerce which satisfied the following criteria to appoint a representative in Indonesia:

  1. Has carried out transaction with at least 1,000 consumers within 1 year; and/or
  2. Has delivered at least 1,000 packages to consumer within 1 year.

MOT 31 added 1 new criterion, i.e. the traffic of such foreign e-commerce must be at least 1% of all local domestic internet user in 1 year. This new criterion seems trying to capture social media websites/platforms which do not facilitate transaction with Indonesian consumers and therefore not delivering products to Indonesia.

E-commerce operators must apply minimum price for offshore merchants selling its products to Indonesia

MOT 31 applies minimum price for offshore products sold by merchant to Indonesian customers, i.e. USD 100 (free on board) per unit. Exemption for this requirement and further regulation on this matter will be set out in a separate regulation.

E-commerce with business model of social-commerce is prohibited to facilitate payment transaction in its electronic system

MOT 31 specifically prohibits social-commerce (i.e. social media platform which offers features, menus and/or specific facilities that allows merchants to offer its merchandise) from facilitating payment transaction which we understand can broadly refer to billing, collection and other payment related matters. With this prohibition and also emphasized by the prohibition of interconnection between electronic system for e-commerce and for other purpose, it is implied that social-commerce can only be used for advertisement and promotion of products, whereas the actual sale and purchase needs to be carried out separately. The implementation of this provision requires further clarification from the MOT.

We will closely monitor this matter.

If you have any questions, please do reach out to us.

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