Indonesia: Govt to remove e-commerce firms from negative list

The government will revise its negative investment inventory, particularly by allowing foreign-established e-commerce companies to do business in the country, in a bid to draw funding for local e-commerce players.

The revision plan emerged following a conference between Communications and Data Minister Rudiantara, Trade Minister Thomas Lembong and Investment Coordinating Board (BKPM) chairman Franky Sibarani.

They agreed to propose the removal of established e-commerce companies from the country’s negative investment inventory.

Rudiantara said on Friday he had talked with Thomas and Franky about how to make funding additional accessible for local Internet-based companies.

“I, Pak Lembong and Pak Franky have discussed how to open the negative investment inventory for established e-commerce companies. But, not for start-ups and small-medium firms,” he said.

Start-ups and small-to medium-sized companies should be developed by local players initial, he said.

The inclusion of e-commerce businesses on the negative inventory has been so far questioned by a number of parties as it was deemed as blocking capital for local e-commerce players that often lack funds.

Under Presidential Regulation No. 39/2014, the government included e-commerce part the industries that are closed to foreign investment , requiring e-commerce businesses to be all owned by local players.

The negative investment inventory is subject to review each two years, meaning that the 2014 policy will be reviewed in April next year under the government of Joko “Jokowi” Widodo.

In an extra development, Rudiantara said his ministry had finished an e-commerce road map that was ready to be endorsed by the President.

“The road map will be a tool to support our vision to be the major digital economy within the Southeast Asian region,” he said.

Indonesia’s e-commerce transactions hit US$12 billion last year, a surge from only $8 billion in 2013.

The country’s e-commerce market is estimate to have a total price of Rp 295 trillion (US$21.5 billion) next year, a huge increase from Rp 94.5 trillion in 2014, according to the Indonesian E-Commerce Association (idEA).

The increase of e-commerce will be driven by the country’s increasing number of smartphone users, predicted to hit 103.6 million people in 2017 from around 61.2 million last year, according to market research firm eMarketer.

Rudiantara said Indonesia was presently positioning itself as the major digital economy in Southeast Asia, with the e-commerce road map set to be launched sometime any minute at this time.

“At the ministry level, the road map is presently 99 % complete. We’re just waiting for the endorsement from the President,” he told reporters.

Separately, the US-ASEAN Business Council, which represents over 150 American companies, signed a memorandum of considerate (MoU) with Indonesia’s Telecommunications and Data Society (Mastel) on Friday at the Communications and Data Ministry office, providing an initial step toward stronger cooperation in the data, communications and technology (ICT) sector.

US-ASEAN Business Council president and CEO Alexander C. Feldman said that the council would share knowledge and work together to create opportunities for both Indonesian and American companies.

US Ambassador to Indonesia Robert O. Blake said Indonesia was a strategic partner for the US and that a lot of American companies wanted to take part in helping to materialize Indonesia’s digital economy vision.