July 28, 2020 | Regulatory Updates

Currently, commercial activities have been growing rapidly by virtue of E-Commerce (electronic commerce) systems, which allow each party to conduct their trading activities and transactions through the Electronic Communication systems. Considering this, on 25 November 2019, the Government of the Republic of Indonesia promulgated Government Regulation No. 80 of 2019 concerning Trade Through Electronic Systems (Perdagangan Melalui Sistem Elektronik - ”PMSE”) (“GR 80/2019”). When compared to Government Regulation No. 71 of 2019 concerning the Implementation of Electronic System and Transaction (“GR 71/2019”), GR 80/2019 has been specified to regulate the commercial legal aspects in the arrangement and utilization of the electronic systems which are intended specifically for trade and commerce.

PSME Parties

GR 80/2019 addresses four types of parties that may engage in PSME activities, particularly: business practitioners, consumers, non-business individuals, and government agencies. As per GR 80/2019, PSME business practitioner is to be divided into two categories:

1. Merchants (seller) -Merchantsrefers to individuals or business entities that make offers electronically via their own electronic systems or via facilities which are provided by E-Commerce providers;

2. Trade-through-Electronic-Systems Providers (Penyelenggara Perdagangan Melalui Sistem Elektronik - “PPSME”)- A PPSME is an individual, a business entity or a government agency which provides electronic communication facilities in order to facilitate E-Commerce transactions in relation to a number of different business models, including: (a) Online retailing; (b) Marketplaces; (c) Online classified advertisements; (d) Price comparison platforms; and (e) Daily deals. PPSME is required to utilize electronic systems that have first obtained electronic system feasibility certificates (sertifikat kelaikan).

3. Intermediary service organizer - Intermediary service organizers comprise of any individuals or business entities that provide search engine services, permanent information storage space (hosting) services and temporary information storage space (caching) services.

The regulation stated in GR 80/2019 covers both domestic and foreign PPSME business practitioners by which it serves equal business opportunities (equal playing field) and non-discrimination between domestic and foreign PPSME business practitioners. However, foreign PPSME business practitioners shall abide by any applicable prevailing law in the export and import sector as well as in the information and electronic sector.

Requirements and Licenses regarding PSME Business Practitioners

Every PSME business practitioners shall meet the requirements under the following terms:

1. Business license via the Online Single Submission (OSS) system;

2. Technical license;

3. Company Registration Certificate;

4. Taxpayer Identification Number;

5. Business conduct;

6. Code of practices; and

7. Standardization of goods/services.

The Business license set forth in the GR 80/2019 is to be the referred to business license in the field of Trade-through-Electronic-Systems since the objective of this GR is to integrate the PSME practitioners’ business licenses. This matter can be observed by the existence of various business licenses regarding E-Commerce activities which are currently using different Standard Indonesian Business Field Classifications (Klasifikasi Baku Lapangan Usaha di Indonesia – “KBLI”). For instance, Industrial Business Permit (Izin Usaha Industri – “IUI”) related to KBLI 63122 concerning Web Platform with Commercial Purposes, and Trade Business License (Izin Usaha Perdagangan – “IUP”) related to KBLI 47911 – 47919 concerning Retail Trade Via Postal or Internet Orders. In the future, PSME business practitioners shall only be required to obtain one type of business license namely the business license in the field of Trade-through-Electronic-Systems which,at this moment is still in the composition stage by the Ministry of Trade of the Republic of Indonesia.

However, organizers of any intermediary services are to be exempted from the aforementioned business license requirement in the event that: (i) They are not the direct beneficiaries of the E-Commerce transactions in question; or (ii) They are not directly involved in any contractual relationships between parties to the relevant E-Commerce activities.

In addition, PSME business practitioners will also be obligated in assisting with the government programs through the following measures: (i) Prioritizing the trading of domestically produced goods/services; (ii) Increasing the competitiveness of domestic goods/services; and (iii) Providing promotional spaces for domestically produced goods/services (for PPMSE only).

In complying with those said standards, it shall be mandatory for PSME business practitioners to submit and provide valid, clear, and honest information which addresses the following areas: (i) Identities of any legal subjects involved; (ii) Conditions and guarantees relating to traded goods/services; and (iii) The use of electronic systems.