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Indonesia Updates Online Trade Regulations

Indonesia’s Ministry of Trade has modified online trading regulations in response to the larger and broader development of online trading businesses in the country. Minister Zulkifli Hasan noted the updated Regulation of the Minister of Trade (Permendag) Number 50 of 2020 concerning Provisions for Business Licensing, Advertising, Guidance, and Supervision of Business Actors in Trading Through Electronic Systems emphasised the enhancement to maintain and optimise domestic online trade.

“The government ensures that the PMSE becomes a fair and beneficial business space, particularly for micro, small, and medium enterprises (MSMEs), by refining this Permendag. This Permendag is also protecting the domestic market from unethical trading practices,” he clarified.

On December 19, 2022, the Ministry of Trade held a public test of Permendag Number 50 of 2020 improvements to solicit public input. This activity is a step in the policymaking process. Various public inputs and suggestions have become essential to improving Permendag Number 50 of 2020. Some ideas include social media trade regulations, cross-border transactions, and a ban on selling certain goods on marketplaces.

According to Minister Hasan, the President’s mandate to the Ministers of Trade and Cooperatives and SMEs to revise Permendag No. 50 of 2020 is to increase protection for MSMEs, consumers, and domestic PMSE business actors. This Permendag is a subset of Government Regulation (PP) Number 80 of 2019 on Trading via Electronic Systems (PMSE).

Director General of Domestic Trade, Kasan, elaborated that the goal of improving the Permendag is to increase the competitiveness of MSME products while preventing unethical trading practices in the e-commerce market. The unfair competition practices harm the MSME structure and distort Indonesia’s trade structure.

“Improving this policy should result in more equitable treatment of domestic and foreign business actors and formal and informal business actors. Improvements can protect national interests while also strengthening business actors, local products, and consumer protection; and encouraging the growth of e-commerce in Indonesia to provide equitable benefits to parties involved in the electronic commerce ecosystem,” Director Kasan elaborated.

According to Director Kasan, the Ministry of Trade has discussed with various stakeholders to improve Permendag No. 50 of 2020. Collaboration among stakeholders is required because PMSE concerns electronics, trade, and consumer protection. As a result, efforts to develop e-commerce in Indonesia require a comprehensive ecosystem-based approach rather than a piecemeal approach (sectoral-based).

He admits the process will prolong the policy formulation process, but the Ministry hopes that the revision of this Permendag will be issued soon. Kasan is confident that the new rules will clarify the management and suitable online trading business opportunities and encourage local players to be more confident in competing to gain trading benefits from Indonesia’s growing trend of digital trade.

Since it has become a means for Southeast Asian MSMEs to survive the pandemic, the Indonesian government is accelerating the e-commerce sector and digital financial services. As a result, the Ministry is eager to maintain domestic consumption while encouraging national economic growth by expanding its digital economy. Indonesia’s economic growth is primarily driven by household consumption.

The Ministry of Trade’s role is to keep the wheels of production turning by stabilising prices, strengthening the domestic market, and increasing exports. As a result, the trade sector’s role in the economy is to keep consumption growing while maintaining a trade balance surplus.

The ministry also encourages collaboration among various parties to address several e-commerce issues such as a lack of regulations, coaching, cyber security issues, logistics, payments, and strengthening workers, businesses, and local products competencies.

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