The outsourcing industry in the Philippines, which has dethroned India as the country with the most call centers in the world, is worried that the rise of artificial intelligence (AI) will eat into the $23 billion sector. (Antara Photo/Audy Alwi)

Indonesia to Regulate E-Commerce


MARCH 01, 2015

Jakarta. The Indonesian government has begun laying the groundwork to regulate e-commerce activities in the country amid breakneck growth in online transactions, particularly among the country’s young and affluent middle class.

Chief economics minister Sofyan Djalil last week called for a series of discussions between officials from the trade, finance and communications ministries, among others, to discuss a new government regulation on electronic-based commerce, according to Rudiantara, the communications minister.

He said the various ministries had their own issues to address in terms of regulating e-commerce.

“Logistics is a matter of the Transportation Ministry. Then in terms of finance, it will be Bank Indonesia’s responsibility to determine the payment systems that will be used,” Rudiantara told reporters in Jakarta on Friday.

“Each government body has to converge to address this issue because this isn’t just the responsibility of a single ministry.”

Srie Agustin, the director general for domestic trade at the Trade Ministry, said her office would work on at least four aspects of e-commerce regulation: business identity, products, payment methods, and delivery methods.

“The first is the business’s legal identity. There are those who sell the products – or merchants – and there are also the e-commerce sites, known as the marketplace. We’ll discuss all this,” Srie said on Friday.

Indonesia’s e-commerce scene has flourished in recent years with the flux of players ranging from giants like Rakuten of Japan to local players such as Tokopedia, all of which are banking on the rapid growth of Internet access and smartphone penetration in the archipelago.

Researcher IDC recently estimated the value of online transactions in Indonesia would top $3 billion this year.

Despite its rapid growth, the industry remains largely unregulated right now due to a lack of coordinated efforts from the relevant government bodies. This has left consumers and sellers, as well as the marketplace, vulnerable to risks without any safety net.

The Trade Ministry, for instance, currently regulates e-commerce through a combination of a 2014 law on trade, which is aimed largely at consumer protection. But given the rise of e-commerce, businesses have called for the government to quickly establish a clear set of regulations for the industry.

Daniel Tumiwa, the chairman of the Indonesia E-Commerce Association (idEA), said the new regulations should attempt to protect the growth of legitimate e-commerce businesses, particularly in terms of taxation.

“Most established e-commerce firms are already paying some form of tax. Those who aren’t are generally informal sellers who use social media sites like Facebook or Instagram, which is akin to selling goods on the sidewalk,” Daniel told the Jakarta Globe.

“The government must make a distinction between e-commerce startups and sellers who use the Internet. They are two different things.”