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Foreign investment in Indonesia’s e-commerce sector

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:

  1. Reservation websites for services such as hotel or restaurants;
  2. Web portals that publish contents such as articles, audios, and videos using the content provided or made by the users; and
  3. 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

  1. Content publishing websites made by the company itself;
  2. Marketplace websites with opportunities for the sellers to advertise their products or services.
  3. 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 mey@fmbpartner.com

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