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Written by: Oscar Damarjati | Victor Juan Tanojo | Kenny Regina

Introduction

In the midst of the rapidly growing trade through electronic systems / perdagangan melalui sistem elektronik (“PMSE”), the Minister of Trade of the Republic of Indonesia (“MOT”) has issued MOT Regulation No. 50 of 2020 regarding Provisions on Business Licensing, Advertising, Guidance and Supervision on Business Actors in Trading through Electronic Systems (“MOTR 50/2020”).

MOTR 50/2020, which was issued on 19^th of May 2020, will be in force on 19^th of November 2020.

Main Provisions

MOTR 50/2020 was issued in furtherance of Article 15 (1) Government Regulation No. 80 of 2019 regarding Trading Through Electronic Systems (“GR 80/2019”) which states: “Business Actors must secure a business license in conducting PMSE business activities”. A new license for Business Actors who conduct PMSE business activities is introduced in MOTR 50/2020, namely Surat Izin Usaha Perdagangan melalui Sistem Elektronik (“SIUPMSE”).

Categories of Business Actors

Under MORTR 50/2020, Business Actors are classified into several categories, each includes both domestic and foreign Business Actors, as follows:

1.     Merchants

Any party who sells products or offers services through electronic systems,[1] either using facilities that is self-owned and self-managed, or through facilities owned and managed by other PPMSE (as defined under category No. 2 below) would fall into the definition of Merchants. Examples of Merchants would be, inter alia, online store owners and online retail business owners. Several key points in relation to domestic and foreign Merchants are as follows:

Domestic Merchants:

- Domestic Merchants who conducts business in the general trading sector shall obtain Trading Business License / Surat Izin Usaha Perdagangan (SIUP) and/or other relevant business license applicable in each sector.

- Domestic Merchants who conducts online retail through electronic systems only, shall subject to a SIUP business license under KBLI Number 4791 (Retail Trade through Postal / Internet Order).

Foreign Merchants: In order to be able to conduct PMSE business activity, Foreign Merchants shall register valid business license details from their country of origin (which includes the number, name, and institution who issued such license from their country of origin) to the domestic PPMSE they are associated with. The domestic PPMSE then shall save the data of the foreign Merchants that are registered in its system.

2.     E-Commerce Platform Providers / Penyelenggara Perdagangan Melalui Sistem Elektronik (PPMSE)

PPMSE are business actors who provide electronic communication facility (e.g. platform) for trade/commercial transactions. Examples of PPMSE would be, inter alia, marketplaces. However, it should be noted that under MOTR 50/2020, domestic Merchants who own their own e-commerce facility are considered as PPMSE.

Specifically, for foreign PPMSE who have (i) completed more than 1,000 transactions with customers within the period of 1 year; and/or (ii) delivered more than 1,000 package deliveries to customers within the period of 1 year, shall appoint a Foreign Trade Company Representative Office in PMSE sector / Kantor Perwakilan Perusahaan Perdagangan Asing bidang PMSE (KP3A in PMSE sector) in Indonesia.

 3.    Intermediary Services Providers / Penyelenggara Sarana Perantara (PSP)

PSP are business actors who provide electronic communication facility other than telecommunication providers, whose function are as intermediary of electronic communication between senders and receivers. Examples of PSP would be search engines, hosting, and caching.

Who is Subject to SIUPMSE?

Not all Business Actors mentioned under MOTR 50/2020 are subject to the new SIUPMSE. In summary, the following are domestic Business Actors that are subject to the requirement of obtaining SIUPMSE:

* = Merchants who own both offline store and their own e-commerce facility shall obtain SIUPMSE in addition to SIUP.

** = PSP who is a NOT (i) a direct beneficiary of the transaction; or (ii) involved in the contractual relationship between the parties conducting PMSE, need not obtain SIUPMSE.

In addition to the above, under MOTR 50/2020, the representative office (KP3A in PMSE sector) of foreign PPMSE is required to obtain Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing bidang PMSE (SIUP3A in PMSE sector).

Other Important Points

     - Prioritization of Local Product

Business Actors shall prioritize trading of local products/services, increase the competitiveness of local products/services, and facilitate the promotion of local products/services. However, there is no clear guidance under MOTR 50/2020 on the implementation of such prioritization of local product.

     - Transitional Provisions

MOTR 50/2020 stipulates that the business license that have been obtained by domestic PPMSE, domestic Merchants, and domestic PSP before the MOTR 50/2020 is in force remains valid as long as such business license has not yet expired or been revoked, and it has been registered in the Online Single Submission (OSS) system.

Conclusion & Comments

SIUPMSE, as the new license introduced by MOTR 50/2020, would in time have a major impact towards domestic Business Actors, in particular towards domestic Merchants who owns their own e-commerce facility (which are considered as PPMSE under this new regulation), as they will then be required to obtain a SIUPMSE. Future PPMSE (such as marketplace) and some PSP also need to pay attention to this MOTR 50/2020 as the required license for PPMSE would not be IUI license anymore, but instead they would need to obtain SIUPMSE.

Although GR 80/2019 stipulates that any Business Actors shall adjust to the GR 80/2019 within a maximum period of 2 years since the GR 80/2019 came into force (i.e. by 25 November 2021), it is not yet clear whether that includes the provision regarding the adjustment towards the business licenses as stipulated under MOTR 50/2020 (e.g., whether the existing holder of IUI who is now subject to this MOTR 50/2020 shall change its IUI into SIUPMSE?). The transition procedure/mechanism from the currently applicable license into SIUPMSE is also unclear, as the government is now still coordinating with the relevant institution with regards to the procedure/mechanism of applying for SIUPMSE and the possible treatment or adjustment towards the currently applicable license, such as IUI license.

[1] Electronic system is a series of electronic devices and procedures whose function is to prepare, collect, process, analyze, store, display, announce, transmit and/or distribute electronic information.

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The foregoing material is the property of Hendra Soenardi and may not be used or relied upon by any other party without our prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.