Electronic Trade License at a Glance

Electronic Trade License at a Glance

 

Government Regulation Number 80 of 2019 on Electronic Trade ("GR 80/2019") has been a great addition to the e-commerce sector ever since it was adopted in Indonesia in 1999. E-commerce or Electronic Trade (Perdagangan Melalui Sistem Elektronik or "PMSE") according to Article 1 Number 2 of GR 80/2019 is trade whose transactions are carried out through a series of electronic devices and procedures.

The legal basis for regulating PMSE prior to the issuance of GR 80/2019 was based on Law Number 11 of 2008 on Electronic Information and Transactions as amended by Law Number 19 of 2016 (“ITE Law”). Therefore, aligned with the development of trade in the era of globalization and the industrial revolution where people and business actors entered the digital economic era, the Government enacted Law Number 7 of 2014 on Trade as amended by Law Number 11 of 2020 on Job Creation (“Job Creation Law”) ("Trade Law"). However, the implementing regulation for PMSE was only issued in 2019.

Along with the issuance of a new law regime post the Job Creation Law, GR 80/2019 is an important instrument considering that PMSE is growing rapidly. To keep the growth and development of PMSE on track, stakeholders should maintain, ensure and monitor that PMSE regulation is in line with the main spirit of the Job Creation Law. The aim of this law is to provide convenience, protection, and empowerment for cooperative and micro, small, and medium scale enterprises and to ensure that they remain in competition in an environment of economic globalization.

The growth of PMSE is influenced by several factors, such as easy access to information and technology and the emergence of multiple platforms like marketplaces and social media that facilitate business. As highlighted by the current COVID-19 situation, which has exhausted and frustrated most entrepreneurs, PMSE has shown to be a productive alternative. During the pandemic people both chose and were forced to do most of their activities at home. Consequently, as much as possible, many people now do everything online. This includes buying and selling basic necessities. PMSE transaction rates have been increasing as observed by the transaction value of PMSE or e-commerce. Based on a statement from the Secretary of the Coordinating Ministry for Economic Affairs, Mr. Susiwijono Moegiarso at Webinar on Digitization as a Medium of Corruption Prevention, the value of e-commerce transaction both domestically and globally during the first quarter of 2022, has reached IDR 108.54 trillion or increase by 23% (twenty three percent) compared to the same period last year (see the post on bisnis.tempo.co dated 4 August 2022).

GR 80/2019 regulates several matters regarding the implementation of PMSE such as: (i) PMSE’s parties; (ii) PMSE’s requirements; (iii) PMSE implementation; (iv) obligations of business actors; (v) transaction proof of PMSE; (vi) electronic advertisement; (vii) offer, acceptance, and electronic confirmation; (viii) electronic contracts; (ix) data protection; (x) payment; (xi) delivery of goods and services; (xii) exchange of goods or services and cancelations; (xiii) dispute settlement; (xiv) guidance and supervision; and (xv) administrative sanctions. Nonetheless, this article will only focus on PMSE licensing as an important and critical matter in the implementation of PMSE activities.

PMSE’s Parties

Based on Article 5 of GR 80/2019, the players in PMSE include domestic and foreign business actors consisting of:

  • domestic and foreign merchants;
  • domestic and foreign PMSE organizers; and
  • domestic and foreign intermediary service organizers.

Article 6 of GR 80/2019 further regulates the said domestic business actors shall be in form of: (i) domestic merchants in form of individuals or business entities; (ii) PMSE organizers in the form of individuals, business entities, communities, or state administrative agencies; and (iii) domestic intermediary service organizers in the form of individuals or business entities.

In performing PMSE activities, domestic and foreign merchants can use PMSE facilities owned by themselves or through PMSE organizers (e.g., marketplace) both domestically and overseas.

PMSE Licensing

One of the essential provisions regulated in GR 80/2019 is the obligation for PMSE business actors to have a Trade Business License through the Electronic System (Surat Izin Usaha Perdagangan Melalui Sistem Elektronik or “SIUPMSE”). The obligation to have SIUPMSE is exempted for the intermediary service organizers if they fulfil the following conditions:

  • they are not direct beneficiaries of the transactions; or
  • they are not directly involved in the contractual relationships between the parties in conducting PMSE transactions.

Referring to Article 8 of Minister of Trade Regulation Number 50 of 2020 on Provisions on Business Licensing, Advertising, Guidance, and Supervision of Business Actors in Electronic Trade (“MOT 50/2020”) as an implementing regulation of GR 80/2019, domestic PMSE organizers, non-exempt intermediary service organizers, and domestic merchants who have PMSE facilities (included as the PMSE organizer category) are required to have a SIUPMSE.

Specifically for domestic merchants who carry out business activities in the general trading sector, they are required to have a business license (Trade Business License/SIUP). However, for business activities other than the general trading sector, the merchants shall possess the business license in each relevant sector. The merchants that only conducting retail trading shall refer to the business license under KBLI 4791 (retail trade via postal order or internet).

The provisions to obtain a SIUPMSE under MOT 50/2020 are set out hereunder.

  • SIUPMSE application is submitted to the Minister of Trade through the Online Single Submission (“OSS”) accompanied by requirements stipulated in laws and regulations;
  • OSS will issue a SIUPMSE for and on behalf of the Minister of Trade;
  • The SIUPMSE as referred to in letter b will become effective after the applicant satisfies the following commitments:
  • Registration Certificate as an Electronic System Provider issued by the competent authority within a period of no later than 14 (fourteen) working days after the SIUPMSE is issued;
  • website address and/or applicants name;
  • consumer complaint service in the form of contact numbers and/or an e-mail address; and
  • consumer complaint service containing contact information for consumer complaints of the Directorate General of Consumer Protection and Trade Order.

Particular Provisions for Foreign Business Actors

Aside from foreign business actors who are physically present in Indonesia,
GR 80/2019 also regulates the provisions that apply to foreign business actors who are not physically present in Indonesia but are actively making offers and/or conducting PMSE and engage with consumers in Indonesian jurisdiction.

According to Article 7 GR 80/2019 jo. Article 15 MOT 50/2020, foreign business actors are deemed to have a physical presence in Indonesia and carry out activities permanently in Indonesian territory if they have satisfied the following criteria:

  • made transactions with more than 1,000 (one thousand) consumers within a one-year period;
  • transaction value;
  • delivered more than 1,000 (one thousand) packages to consumers within a one-year period; and/or
  • traffic number or users.

If a foreign PMSE organizers fulfil one of the above criteria according to an assessment team of the Ministry of Trade and related institutions, the foreign PMSE organizers are obliged to appoint a representative in the form of a Representative Office of a Foreign Trade Company (Kantor Perwakilan Perusahaan Perdagangan Asing or “KP3A”) in PMSE field to act for and on behalf of the business actors.

In addition to domestic business actors who are required to have a SIUPMSE, foreign PMSE organizers represented by a KP3A are required to have a Trade Company Representative Business License in PMSE field (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing di bidang PMSE or “SIUP3A”) as regulated in MOT 50/2020. SIUP3A is also valid as a business license for branch offices.

SIUP3A application is submitted to the OSS which is equipped with the following requirements:

  • proof of KP3A appointment by foreign PMSE organizers that have been legalised by a public notary and have ascertained a certificate from the Trade Attaché of the Republic of Indonesia or an official of the representative office of the Republic of Indonesia in their local country which has been translated into Indonesian by a sworn translator;
  • a copy of the articles of association of the PMSE organizer which has been translated into Indonesian by a sworn translator;
  • Identity of KP3A management (ID card or passport);
  • A statement on the number of employed workers, accompanied by a record of identity and a certificate of employment;
  • website address and/or application name from an overseas PMSE organizer;
  • contact number and/or email address for consumer complaint services from an overseas PMSE organizer.

On top of the above requirements, KP3A should submit the Registration Certificate as an Electronic System Provider issued by the competent authority within a period of no later than 14 (fourteen) working days after the SIUPMSE is issued.

SIUPMSE and SIUP3A as mentioned above are valid as long as the business actors carry out PMSE business activities in Indonesian territory. If a business actors or KP3A conduct their business activities and do not have a SIUPMSE or SIUP3A, they will be subject to administrative sanctions as stipulated in GR 80/2019 jo. MOT 50/2020.

Thus, to avoid possible risks in the implementation of PMSE, business actors must have a license and its implementation is subject to laws and regulations. Ultimately, considering that PMSE is an essential element for economic growth, it should be supported by sufficient legal infrastructure and supervision to achieve enormous results.

This article is a general overview based on statutory regulation for informational purposes and is not constitute legal advice or legal opinion for specific cases. 


Nurjadin Sumono Mulyadi & Partners

Contact information:

Ernama Santi

Associate

ernama.santi@nurjadinet.com

© 2020 Nurjadin Sumono Mulyadi & Partners . All Rights Reserved.