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Digital Trading Dynamics: How Trading Through Electronic Systems Implicates E-Commerce Businesses

The Ministry of Trade ("MoT") has implemented a revision of MoT Regulation No.50 of 2020 to enhance the protection of domestic business actors, specifically in the e-commerce sector. MoT Regulation No.31 of 2023 ("MoTR No.31 of 2023") came into effect on 26 September 2023, regulating Business Licensing, Advertising, Development, and Supervision of Business Activities in Trading Through Electronic Systems (Perdagangan Melalui Sistem Elektronik or "PMSE"). According to the Minister of Trade, Zulkifli Hasan, revisions have been made to create an equal and healthy ecosystem, taking into consideration the development of technology.

Social Commerce
PMSE is defined as an act of trading where transactions are carried out through a series of electronic devices and procedures, as stipulated in Article 1, paragraph 2 of MoTR No.31 of 2023. One of the main revisions includes adding various business models of PMSE, including retail online, marketplace, classified advertisement, price comparison platform, daily deals, and social-commerce (Article 2, paragraph 3 of MoTR No.31 of 2023). This addition can further help identify, guide, and supervise each business model, especially with the existing growth of social commerce. Defining social commerce has allowed putting a stop to controversy and multiple interpretations of the situation, for example, by prohibiting social commerce from becoming manufacturers and facilitating payment transactions on its electronic system.

Foreign PPSMEs
Secondly, there are several revisions regarding overseas e-commerce operators (Penyelenggara Perdagangan Melalui Sistem Elektronik or “PPSME”). They are obliged to provide proof of compliance with Goods and/or Services standards in Indonesia and to apply a minimum price of 100 USD per unit for goods in their electronic system. These changes enhance protection measures among traders who sell finished goods directly from overseas to Indonesia, with the hope of creating healthy competition among local merchants.

Other Protective Measures
In light of protection, PMSE electronic systems are also obliged to have no connection or interconnection with electronic systems outside of the PMSE and no abuse of control over user data (Article 13 of MoTR No.31 of 2023). Online advertising has also been ensured to follow protocols in creating, providing facilities, and/or sharing advertising materials. Therefore, it is crucial to hold other relevant regulations such as the broadcasting sector, protection of privacy and personal data, consumer protection, and competition law in high regard. Implementations of these regulations will be overseen by The Cyber Surveillance Team, consisting of various related ministries/institutions, such as the Ministry of Trade, Ministry of Finance, Ministry of Communication and Information, Ministry of Cooperatives and SMEs, Ministry of Industry, Food and Drug Supervisory Agency, and other related agencies.

Indonesia's legal development should be adaptable to the increasingly dynamic technology sector. The new revisions aim to cement the roles of PMSE and PPSME to supervise, prevent, and overcome all forms of unfair business competition practices and/or price manipulation practices.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of the many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Dewi Susanti