What is the impact on ecommerce and cross-border trade? 

On September 25, 2023, Indonesia introduced and implemented a significant change in its approach to ecommerce by signing the revised Minister of Trade Regulation (Permendag) Number 50 of 2020. This new regulation has far-reaching implications for ecommerce businesses and social media platforms. Keep reading to learn about the technical aspects of this regulation and what it means for those looking to sell goods to Indonesian consumers and for the consumers themselves.

Why the change? 

Indonesia's new rules are all about fairness. The government wants to make sure that the electronic commerce world is fair and leveled for everyone involved. This change is because many local sellers were losing a lot of money. After all, they couldn't compete with cheaper products from other countries sold online, namely through platforms like TikTok.

1. Social media for promotions, not transactions

The central change brought about by the revised regulation is that social media platforms in Indonesia can now only be used for facilitating promotions, not transactions. Trade Minister Zulkifli Hasan emphasized that "social commerce can only facilitate the promotion of goods or services, direct transactions are not allowed, direct payments are no longer allowed." This means that social media platforms are no longer platforms for buying and selling; they are primarily for advertising and promotional purposes.

Implications for ecommerce businesses

For ecommerce businesses, this means that they will need to reconsider their marketing and sales strategies in Indonesia. Direct sales through social media will no longer be allowed, so businesses must focus on other channels for transactional activities.

2. Regulations for imported goods

The Minister of Trade’s revised regulation also introduced changes in the trade of imported goods. Now, imported goods are subject to the same requirements as domestic goods. For example, food imports must have a halal certificate, and beauty products must have an Indonesian Food and Drug Administration (Badan Pengawas Obat dan Makanan/BPOM) certificate.

Implications for cross-border ecommerce

Cross-border ecommerce businesses must be aware of the new stringent regulations for imported goods. Ensuring that products meet the necessary standards and certifications will be crucial to continue trading with Indonesian consumers.

3. Minimum import transaction value

To further regulate cross-border trade, the government has set a minimum import transaction value of 100 USD. This means that transactions below this threshold will not be permitted.

Implications for cross-border ecommerce

Cross-border ecommerce businesses must alter their website to ensure they are not selling goods to Indonesian customers with a total value of less than 100 USD. This regulation may affect the pricing and sales strategies of businesses looking to enter the Indonesian market.

Noncompliance 

Any violations of the new laws and regulations will result in warnings and a potential ban from importing into Indonesia. How these new regulations will be implemented and enforced is unclear at this time, but we will keep you updated as we learn more.

Takeaways 

Indonesia's new regulations significantly impact cross-border ecommerce and the use of social media for business purposes. It is essential for businesses, especially those engaged in cross-border sales, to adapt their strategies and ensure compliance with the revised Minister of Trade Regulation. The regulations aim to protect product quality and provide a level playing field for Indonesian commerce; they also introduce challenges and opportunities for cross-border businesses operating in the Indonesian market. Staying informed and making the necessary adjustments will be key to success in this evolving regulatory environment.