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Part 3: Digital Market Trading in Indonesia: A Proposedharmonization Plan

By : Riza Buditomo

07-Aug-2023

PART 3: DIGITAL MARKET TRADING ININDONESIA: A PROPOSEDHARMONIZATION PLAN

I. Brief
In an effort to keep up with the rapidly changingglobal digital landscape, the Ministry of Trade("MOT") is making strides to improve the digitalmarket trading environment. Their latest proposalaims to achieve harmony by updating the currentMOT Regulation No. 50 of 2020, which governsBusiness Licensing, Advertising, Supervision, andOversight of Electronic Commerce Entities ("MOTReg 50").

According to various public news platforms, Zulkifli Hasan, the Minister of Trade of Indonesia,highlighted three main goals for this harmonizationplan in the digital trading marketplace of Indonesia:

1. Licensing and Taxation Unification: The plan aims to standardize licensing and taxation treatment of the sale of products in marketplaces and digital or social commerce.
2. Restriction on In-House Product Production: The proposal aims to address concerns by imposing restrictions on digital marketplace platforms to produce or marketed their own products, ensuring a fair environment for all participants; and
3. Minimum Import Price for Foreign Merchants: To protect local businesses and regulate cross- border trade, the plan proposes a minimum import price for goods sold by foreign merchants in the digital marketplace.

 II. Key Issue

 These proposed revisions bring significant changes to the digital market trading landscape. However, discussions are ongoing about how to put them into action. Here are the key takeaways from the proposed plans:

1. Licensing Unification: The idea of standardizing licenses in line with the Job Creation Law is intriguing, but the specifics remain How will the Ministry of Trade (MOT) align MOT Reg 50 with the larger framework of the Job Creation Law? Moreover, since taxation falls outside the direct authority of MOT, integrating taxation aspects into the revisions raises practical questions.
2. In-House Product Restriction: The proposal aims to limit digital marketplace platforms from selling their own The key question is to what extent this restriction will be implemented. Will it only apply to the platforms as entities, or will it extend to their intellectual properties associated with specific products?
3. Minimum Import Price: The proposed minimum import price for foreign merchants is set at USD100. The concern here is how this minimum price will be put into Will it apply to each item individually, requiring all products to meet the minimum threshold? Or will it be based on bulk transactions, allowing merchants to sell multiple items that collectively meet the minimum import price requirement?

Additionally, it is crucial to make sure that foreign e-commerce transactions follow the proposed minimum import price. The Ministry of Trade's supervisory role becomes essential in monitoring compliance. How will the MOT ensure that foreign merchants adhere to the minimum price threshold when selling products in the digital marketplace?

III. Current Development

Currently, the MOT has not released specific details on how they will put the proposed harmonization objectives into practice. As we await the new regulation, it's vital for stakeholders, including foreign merchants, local businesses, and consumers, to stay informed and ready for any potential impacts on their operations.

You can count on us to keep you informed about the developments regarding the implementation of the proposed minimum import price. We'll provide you with insights and analysis to help you make informed decisions in this ever-changing business environment

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