Fri, 03 Jul 2015

A group of e-commerce business players have raised concerns over a draft regulation prepared by the Trade Ministry, saying that the legislation had the potential to prevent small e-commerce business from growing.

Indonesian E-commerce Association (idEA) chairman Daniel Tumiwa said the draft regulation would favor big e-commerce players that had a strong presence while most e-commerce players in the country were small retailers.

“E-commerce in the country is still in its infancy and still requires support to grow even bigger,” Daniel said at a press conference on Wednesday.

Home to about 250 million people, Indonesia is forecast to be the largest e-commerce market in Southeast Asia in terms of value as Internet penetration and smartphone users are forecast to hit 55 percent and 41 percent, respectively, in the next two years.

E-commerce is expected to contribute about 1 percent to the country’s total retail sales by 2018 from only 0.1 percent at present, according to a e-commerce researcher UBS’s estimate.

William Tanuwijaya, the CEO of marketplace Tokopedia, said the potential could not be realized if e-commerce players were not assisted to grow but rather limited by a number of counterproductive measures.

He said the association welcomed in principle the government’s initiative to issue an e-commerce regulation, but it should be aimed at boosting the industry.

Last month, idEA received a document containing a list of major points from the draft e-commerce regulation.

According to idEA, there are a number of points in the draft regulation that could potentially hinder the growth of e-commerce. One of the issues is the complicated registration requirements for online sellers.

The association said the draft required e-commerce players — including small players in the marketplace — to present identity cards, operating licenses and proof of validation of legal entities for registration.

“The point might be made over concerns about customer protection. However, most e-commerce players have certain know-your-customer and dispute settlement procedures to protect their customers,” said idEA public policy officer Sari Kacaribu.

Most e-commerce platform providers, for example, require sellers to supply their cellular phone numbers and bank details, through which the platform providers can trace their personal identities, she said.

Contacted separately, the Trade Ministry’s director for enterprise development, Fetnayeti, reinstated that the registration requirements were basically aimed at making sure that the Trade Law was upheld.

“This kind of obligation is stated in the Trade Law, aimed at giving customers protection should there be any dispute. So, basically there is nothing new about it,” she told The Jakarta Post.

Fetnayeti said her ministry was currently assessing input from idEA and would continue working with idEA in formalizing the draft.

Meanwhile, idEA vice chairman Budi Gandasoebrata said the association expected the Trade Ministry to be more transparent about the draft. The ministry did not communicate progress of the draft to the association or e-commerce players even though it opened a room for discussion, he continued.