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Could over-regulation kill ecommerce in Indonesia?


June.19.2015 0 Comments

It looks like the ministry of trade is about to introduce regulations that would make it more difficult to participate in ecommerce – especially for small players.

In the past months, the Indonesian ecommerce association iDEA has put big effort into facilitating dialogue between government stakeholders and the industry. I visited one of the events and was impressed to find (rival) industry players and government representatives in an effective discussion. The goal of these talks is to come up with a set of regulations that take into account the complexities of ecommerce, and that support the industry as a whole as well as provide protection for the customer.

But now it seems the ministry of trade is jeopardizing the process. Budi Gandasoebrata, vice chairman of iDEA, told us the ministry of trade is withholding the draft concerning electronic trade. The draft is now due for public review, but has not been made available to the stakeholders, including iDEA. Invites to a public review of the draft were sent out with only one day’s advance notice. At that meeting, which took place yesterday, the draft itself was only shown briefly on screen, Budi told me. Ministry representatives promised to send “material” (not the draft itself) to stakeholders for review, but it’s unclear what options there are to take influence.

It sounds like the ministry of trade is simply checking off the boxes of what’s necessary to simulate transparent processes and participation. Inviting stakeholders with one day advance notice, on the day before the begin of Ramadan month, sounds like a strategic decision to keep attendance low.

From what Budi saw during the event, the ministry’s current draft may contain some seriously problematic regulations, which are bad for the industry, especially small players. Budi said the general direction was towards consumer protection, but with a lack of understanding of the intricacies of business models in ecommerce. As example:

the draft discusses mandatory registrations for all online vendors (which would including those selling on marketplaces)
online sellers (vendors), and facilitators (platforms) are directly responsible for the delivery of the products
facilitators (platforms) are directly responsible for the content on their platforms
Of course, we don’t know yet what the draft really looks like. But it’s disappointing to hear, that, after months of talks and attempts at mutual understanding, the ministry of trade is defaulting into this intransparent, uncooperative behavior.

What do you think? If you are an ecommerce platform owner, or online vendor, how would these regulations affect you?