In the dynamic realm of electronic trading, Indonesia recently introduced significant regulatory changes that are reshaping how providers operate in the sector. These updates aim to enhance transparency, accountability, and security in electronic trading practices. Adapting to these regulatory shifts is crucial for providers navigating Indonesia’s evolving electronic trading industry. In this Q&A, we speak with MetaLaw to explore of these updates and their implications for electronic trading providers in Indonesia.
Conventus Law: How does Minister of Trade Regulation No. 31 of 2023 (Reg 31) strive to foster fair competition among e-commerce players and safeguard small, micro, and medium enterprises, consumers, and local businesses in Indonesia?
Metalaw: The regulation adds some new regulations that are applicable for foreign merchants, among others the requirement to provide evidence on the fulfilment of standard certification. Thus, the same requirement would be applicable for both foreign and local merchants. In addition, the regulation also adds a regulation concerning minimum price of foreign products that can be sold in the local e-commerce platform.
Conventus Law: Could you outline the distinctions between MoT Regulation No. 31 of 2023 (Reg 31) and its forerunner, MoT Regulation No. 50 of 2020 (Reg 50), specifically concerning the categorisation of activities under Undertakings in Trading Through Electronic System (PPMSE)?
MetaLaw: While Reg 50 only provides explanation of PPMSE, Reg 31 provides examples of activities that will be categorized as PPMSE. The activities of PPMSE according to Reg 31 are retail online, marketplace, online classified advertising, price comparison platform, daily deals, and social commerce.
“Merchants are also required to publish the evidence on fulfilment of standard certification, e.g., Indonesian National Standard (Standar Nasional Indonesia), halal certificate, and FDA registration number. “
Conventus Law: What are the additional responsibilities placed on merchants as outlined in Minister of Trade Regulation No. 31 of 2023 (Reg 31)? This pertains specifically to the requirements around foreign merchants submitting supporting documents and the disclosure of evidence linked to standard certification.
MetaLaw: Reg 31 requires foreign merchants to submit certain supporting documents to the PPMSE (identity, license, evidence on fulfilment of standard certification, and bank account for the transactions) before they can trade their goods in the local e-commerce. In addition, Merchants are also required to publish the evidence on fulfilment of standard certification, e.g., Indonesian National Standard (Standar Nasional Indonesia), halal certificate, and FDA registration number.
Conventus Law: How does Regulation 31 stipulate the obligations of Providers of Trading Through Electronic Systems (PPMSE), encompassing fair opportunities for merchants, prevention of price manipulation, and safeguarding customer data?
MetaLaw: Reg 31 requires PPMSE to supervise and prevent any kind of unfair business competition or price manipulation, including ensuring that there is no misuse of the customer’s data benefiting the affiliated party of the PPMSE. If the PPMSE finds any indication of unfair business practices or price manipulation, it must report it to the relevant authority within three days of finding such indication.
” (…) the regulation states that the MoT will determine the goods below the minimum price that can be sold on the platform. Thus, it can be assumed that there will be an additional list issued by the MoT determining the goods that can be sold on the platform below the regulated minimum price.”
Conventus Law: How does Trade Minister Regulation No. 31 of 2023 (Reg 31) tackle the matter of minimum pricing for foreign products on domestic electronic platforms? This includes the designated minimum price per unit and the authority of the Ministry of Trade to decide which goods can be marketed on the platform below the set minimum price.
MetaLaw: Reg 31 sets minimum price requirements for foreign products to be sold in the local e-commerce. The minimum price is USD 100 per unit. However, the regulation states that the MoT will determine the goods below the minimum price that can be sold on the platform. Thus, it can be assumed that there will be an additional list issued by the MoT determining the goods that can be sold on the platform below the regulated minimum price.
Conventus Law: How does Regulation 31 enhance the obligations for Providers of Trading Through Electronic Systems (PPMSE), specifically regarding internet traffic, and how does this compare to the preceding Regulation 50?
MetaLaw: Reg 31 adds a new criterion for PPMSE to appoint a representative office in Indonesia. While Reg 50 only regulates minimum transactions and deliveries as the criteria, Reg 31 adds one more criterion, i.e., internet traffic. Reg 31 regulates that a foreign PPMSE that has traffic of 1% of local internet traffic within one year must also appoint a representative office in Indonesia.
“Due to the rapid development of technology and business models, there is no doubt that the regulations concerning e-commerce must keep being updated so that the regulations are always on par with the factual circumstances.”
Conventus Law: How does Minister of Trade Regulation No. 31 of 2023 (Reg 31) address challenges stemming from the rapid evolution of technology and business models within the e-commerce sector? More specifically, how does it enhance protections for local merchants, especially micro, small, and medium enterprises?
MetaLaw: Due to the rapid development of technology and business models, there is no doubt that the regulations concerning e-commerce must keep being updated so that the regulations are always on par with the factual circumstances. It is clear that Reg 31 provides more protection for local merchants (especially the micro, small and medium enterprises). The protection can be seen by among others the stipulation of the minimum price of foreign goods/services that can be traded through the platform.
Conventus Law: How does Regulation 31 support equal and fair treatment for all e-commerce market participants, as highlighted by the Ministry of Trade (MoT)? This includes aspects such as setting minimum prices for foreign goods/services, specifying requirements for foreign merchants, and ensuring adherence to Indonesian standards for product sales.
MetaLaw: The provisions relating to foreign goods/services minimum prices, foreign merchant requirements, and compliance with Indonesian standards for foreign merchants clearly provides more protection for the local players because nowadays a lot of foreign products can be sold through the electronic platform even without obtaining such standards/certifications (e.g., food and cosmetic products that must first be approved by the Food and Drugs Association). With the new regulation, it will be harder for foreign merchants to enter local e-commerce since they must apply the same standard as the local merchants. The minimum price regulation also contributes in saving the local merchants from the foreign merchants who sell their products with a very low price.
For Further Information, Please Contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
general@metalaw.id
