Indonesia bans e-commerce sales on social media platforms
On 26 September 2023, the Indonesia Ministry of Trade passed Regulation No. 31 of 2023 on Business Licensing, Advertising, Guidance, and Supervision of Businesses in Trade through Electronic Systems (“Regulation 31”). Regulation 31 revoked and replaced the Ministry of Trade Regulation No. 50 of 2020 on the same subject (“previous Regulation”).
Regulation 31 sets out the regulatory definition of a provider of e-commerce platform (locally known as Penyelenggara Perdagangan Melalui Sistem Elektronik or “PPMSE”). Under Regulation 31, the provision of retail online, marketplaces, classified ads online, price comparison platforms, daily deals and social commerce business models requires a PPMSE licence from the Ministry of Trade.
In conducting its activities, a PPMSE with the business model of a marketplace or social commerce is prohibited from acting as a producer of goods in respect of the trading activities that occur on its platform. Social commerce operators are also not permitted to facilitate payment transactions on their platforms.
Regulation 31 also sets out the requirements that need to be fulfilled by foreign merchants in conducting trade activities through a PPMSE. For example, Regulation 31 stipulates that only goods with a minimum price of US$100 (freight on board) per unit can be traded directly from abroad through a PPMSE. Goods that are priced below the US$100 threshold may be transacted from abroad if they are included in the list of permitted goods that will be issued by the Ministry of Trade at a later date.
