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INDONESIA: Overseas E-Commerce Businesses Obliged to Establish In-Country Presence

Any overseas businesses that sell products or services to customers in Indonesia via electronic channels are now obliged to establish a permanent physical presence in the country or to appoint designated representatives provided they meet certain specified criteria. These new requirements form part of Government Regulation No.80 of 2019 on Trade through Electronic Systems (PMSE) and were formally announced on 4 December.

In addition to the regulations relating to overseas companies, all domestic online businesses are to be now required to obtain the relevant business permit prior to commencing electronic trading. All such business activity will also be subject to the same laws as conventional businesses, including those related to tax and consumer protection. Additionally, they will be obliged to support various government programmes, including those related to the promotion of trade and improving the competitiveness of locally produced goods and services, while also being required to promote domestic products and services via their respective platforms.

Furthermore, all operators, whether local or overseas-based, will be expected to prioritise the use of Indonesian high-level domain names (dot id) as well as using IP addresses and servers that conform to domestic laws and regulations, while also be obliged to secure all relevant certification and to submit data to government agencies as and when required.  Accordingly, all domestic and overseas e-commerce businesses are obliged to store data for at least 10 years (five years in the case of non-financial information).

The latest regulation, which is in line with Article 66 of Law No. 7 of 2014 on Trade, is also intended to facilitate upcoming legislation that will extend the country’s tax regime to overseas digital-service providers.

Content provided by Picture: HKTDC Research
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