Indonesia Update: New Minister Of Trade Regulation Clarifies Licensing And Supervision Of Domestic And Foreign E-commerce Businesses In Indonesia.

GR 80 provides that any domestic or foreign individual or business entity, whether or not a legal entity, intending to carry out E-Commerce Trading¹ (E-Commerce Business Player) must have appropriate business licences issued through the Online Single Submission (OSS) system (E-Commerce Business Licences). E-Commerce Business Players include:
 

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E-Commerce Platform Operators, which provide electronic communication facilities used for trading activities;
 

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E-Commerce Merchants, which carry out E-Commerce Trading using (i) facilities they themselves create and operate, (ii) facilities owned by e-commerce platform operators, or (iii) other electronic systems that include facilities for E-Commerce Trading; and
 

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Intermediary Service Providers, being providers of electronic communication platforms (other than telecommunication operators) which act only as intermediaries in electronic communication between senders and receivers.
 

The requirement to obtain an E-Commerce Business Licence does not apply to Intermediary Service Providers that (a) do not directly benefit from the transactions, and (b) are not directly involved in the contractual relationship between e-commerce traders (Exempted Intermediary Service Providers).

Unfortunately, MOT Regulation 50 does not clarify what constitutes direct benefit or direct involvement.
 

MOT Regulation 50 explains which E-Commerce Business Licences are required by each of the following categories of E-commerce Business Players:
 

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Domestic² E-Commerce Merchants: A domestic merchant that only conducts online retail trading must obtain a Trading Business Licence Certificate (Surat Izin Usaha Perdagangan or SIUP) with the following line of business: “Retail Trading Through Postal or Internet Orders”, under Standard Indonesian Business Classification (KBLI) code 4791.
 

The emphasis on the word “only” remains to be clarified in practice as the wording may be interpreted as exempting certain groups from the requirement to obtain a SIUP with KBLI code 4791. On one reading, it could be interpreted as exempting domestic merchants that carry out trading activities both offline and online (i.e. not only online retail trading) from the requirement to obtain a SIUP with KBLI code 4791 because they may rely on their customary SIUP for general trading activities to conduct online selling. On another reading, it could be read as exempting domestic merchants that also operate their own E-Commerce Trading platforms in addition to conducting online retail trading because they may rely on their SIUPMSE licence (see below) to engage in online retail trading. Further clarification is needed from the MOT on this point.
 

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Domestic E-Commerce Platform Operators: Any domestic E-Commerce Platform Operator (including a domestic E-Commerce Merchant operating an E-Commerce Trading platform) or non-exempt Intermediary Service Provider must obtain a Business Licence for Trading through Electronic Systems (Surat Izin Usaha Perdagangan Melalui Sistem Elektronik or SIUPMSE). As mentioned above, it is unclear whether a domestic merchant that (i) conducts online retail trading and (ii) also operates its own E-Commerce Trading platform is still required to obtain a SIUP with KBLI code 4791 in addition to the SIUPMSE. Again, this will need to be clarified by the MOT.
 

A SIUPMSE will be effective after the domestic E-Commerce Platform Operator has satisfied its commitments, which include procuring or having in place:
 

(a)

an Electronic System Provider Registration Certificate (Surat Tanda Terdaftar Penyelenggara Sistem Elektronik or TDPSE) issued by the Ministry of Communications and Informatics within 14 business days after issuance of the SIUPMSE;
 

(b)

a website address and/or application name;
 

(c)

consumer complaint services in the form of a contact number and/or email address; and
 

(d)

consumer complaint services containing information on who consumers can contact at the Directorate General of Consumer Protection and Trade Compliance (Direktorat Jenderal Perlindungan Konsumen dan Tertib Niaga) of the MOT to make complaints.
 

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Foreign E-Commerce Platform Operators: Any foreign E-Commerce Platform Operator that meets certain criteria (described below) is required to appoint a representative domiciled in Indonesia to act on its behalf. This representative must be appointed (or established) in accordance with the provisions on Foreign Trading Company Representative Offices (Kantor Perwakilan Perusahaan Perdagangan Asing or KP3A) for E-Commerce Trading under MOT Regulation 50 (E-Commerce KP3A).
 

A foreign E-Commerce Platform Operator must appoint (or establish) an E-Commerce KP3A if it:
 

(i)

has completed more than 1,000 transactions with consumers (in Indonesia) in a year; and/or
 

(ii)

has delivered more than 1,000 packages to consumers (in Indonesia) in a year.

An assessment as to whether these criteria are satisfied will be conducted by a team formed by the MOT and involving other related ministries or agencies.
 

An E-Commerce KP3A:
 

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may only represent one foreign E-Commerce Platform Operator;
 

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must obtain a representative office trade business licence (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing or SIUP3A);
 

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is only permitted to act for the foreign E-Commerce Platform Operator in relation to: (i) fulfilment of obligations relating to consumer protection; (ii) developments to increase the competitiveness of domestic products; and (iii) dispute settlement; and
 

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must provide the TDPSE of the foreign E-Commerce Platform Operator that it represents within 14 business days after issuance of the SIUP3A.