To focus on the development of e-commerce potential of the country, the Indonesian government recently opened up the sector for foreign investment. In 2016, through the Presidential Decree No. 44/2016, Indonesia announced changes to its Negative List by removing the e-commerce industry from the list of prohibited sectors.
The updated list permits 100 percent foreign ownership of e-commerce businesses and companies approved by the country’s Investment Coordinating Board (BKPM). The caveat, however, is that the foreign e-commerce business must invest at least 100 billion IDR (US$6.67 million) in the business; or, create at least a 1,000 new employment positions for local workers through the foreign investment.
Investors that do not meet the threshold of US$6.67 million can opt for a joint venture with a local partner; investment below the IDR 100 billion levels is limited to a maximum 49 percent stake.
E-commerce businesses that can be fully (100 percent) owned by foreigners include the following:
- Reservation websites for services such as hotel or restaurants;
- Web portals that publish contents such as articles, audios, and videos using the content provided or made by the users; and
- Marketplace websites that enable the sellers to meet the buyers.
E-commerce businesses that cannot be fully owned by foreigners, and have a maximum permissible limit of 49 percent partnership include the following
- Content publishing websites made by the company itself;
- Marketplace websites with opportunities for the sellers to advertise their products or services.
- Distribution services websites that allow the company to deliver services.
The ease in regulatory environment sets out a strong foundation for the e-commerce industry in the country. It gives foreign companies with a low budget a chance to explore Indonesia’s local market and simultaneously helps domestic companies get access to foreign know-how in the sector.
The presence of liberal government legislation along with Indonesia’s evolving digital landscape offers businesses a unique opportunity to tap its growing e-commerce potential.
If you’re an investor or just starting to establish such business, you will need more to digital industry guidelines, business licensing and advising. Contact us for e-commerce and technology industry legal practice at +62 21 5082 0033 or mail to firstname.lastname@example.org
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