Government Confirms E-Commerce Regulation Does Not Dictate Marketplace Algorithms

The Government Communication Agency (Bakom) has confirmed that Trade Ministerial Regulation (Permendag) Number 19 of 2026 on the Organisation of Trade Through Electronic Systems (PMSE) does not regulate the algorithms or technology used by marketplaces. Bakom Deputy III Kurnia Ramadhana stated that the regulation only governs the obligation of platforms to prioritise the visibility of domestic products in their search, recommendation, and product ranking systems. “Permendag 19/2026 does not regulate the algorithm or technology used by PMSE platforms, but rather the obligations that must be fulfilled, namely ensuring that the search, recommendation, and product ranking systems prioritise the display of domestic products at the top of the main page,” Kurnia said during a press conference on the Best Fast Results Programme (PHTC) at the Bakom Office in Jakarta on Wednesday. He conveyed that every PMSE operator retains the flexibility to determine the technical implementation mechanism according to the characteristics of their respective systems. According to him, this flexibility is granted so that each platform can adjust policy implementation without disrupting their existing systems, as long as they fulfil the obligations stipulated in the Permendag. To ensure compliance, the Ministry of Trade (Kemendag), through the Directorate General of Consumer Protection and Trade Order (PKTN), will supervise the implementation of the rule. Supervision will be carried out through requests for clarification, information gathering, and following up on public complaints if alleged violations are found. Kurnia explained that the regulation on local product visibility is part of the government’s effort to strengthen the competitiveness of MSMEs amidst the rapid growth of digital trade. Based on data from the Central Statistics Agency (BPS), the number of digital traders in 2024 reached 4.4 million businesses, an increase of 15.3 percent compared to 2023. A total of 42.02 percent of national businesses have conducted online sales, with 97.38 percent of business actors being micro and small enterprises. Meanwhile, online single submission (OSS) data as of 25 February 2026 recorded that 15.4 million business registration numbers (NIB) had been issued, with around 14.9 million, or more than 96 percent, being micro-enterprises. According to Kurnia, this condition is one of the bases for the issuance of Permendag 19/2026 to create a more orderly, healthy, and equitable digital trade ecosystem, while strengthening consumer protection, the legality of business actors, and providing broader growth space for MSMEs and domestic products.