Wed, 21 Oct 2015

The Indonesian government plans to scrap e-commerce business from its negative investment list, a move that will allow foreign investors to enter this industry, a government official says. The new rule could come into effect in early 2016.

Indonesia’s Negative Investment List issued in May 2014 bars or limits foreign investments in certain industries, including, e-commerce. The government expects the new rule to provide wider access to funding for Indonesia’s startups as well as established e-commerce business in the country.

The rule imposes ownership limits with caps ranging from zero per cent to 95 per cent ownership. The government usually reviews the negative list every two years.

Triawan Munaf, the Head of Indonesian Creative Economy Agency, said the government treats the three elements of e-commerce differently, namely startups, small and medium size e-commerce and established e-commerce. “We are in the process of opening the established e-commerce to be partially opened for foreign investment,” Triawan said.

“Currently, e-commerce is 100 percent close for foreign investment. We will open it in stages, but how far it will be opened, let’s just wait,” he noted.

Triawan said based on the government’s roadmap, Indonesia’s e-commerce business could reach $130 billion in 2020.

Echoing Triawan’s statement, Chairman of the National Investment Coordinating Board (BKPM) Franky Sibarani told reporters last Friday (Oct. 16) that said the government considers opening the e-commerce business for foreign investors.

“E-commerce is one of he sectors that are being considered to be opened for foreign investment,” he said.

Currently, foreign venture capital firms enter local e-commerce businesses by providing loans, instead of equity, such as the case of e-commerce giant Tokopedia which has received capital injection, not as equity, worth $100 million from foreign investor SoftBank Corp of Japan and US-based venture capital firm Sequoia Capita.