In late May this year, Indonesia issued an updated list
of business activities that are subject to foreign investment
restrictions. This list, sometimes called the negative list,
includes a catalogue of businesses that are either closed or
conditionally open to foreign investment. This version of the
list replaces the previous list, issued in 2014.
The current revision is issued by way of a presidential
regulation, which is consistent with past practices.
Under the new negative list, e-commerce activities that were
formerly closed to foreign investment have now been liberalised
or subject to fewer restrictions.
E-commerce designates the retail sale of products on
electronic platforms via the internet.
Foreign investment in e-commerce business is now permitted
up to 49%, if the total investment in the business is IDR 100
billion or less (approximately $7.5 million). If the total
investment is more than IDR 100 billion, foreign investors are
allowed to own up to 100% of shares in the business.
This represents a significant liberalisation: before this
revision there was a total ban on foreign investment in
e-commerce business in Indonesia.
The new list specifically includes four business categories
of e-commerce activities that are being liberalised: (i)
platform-based marketplaces; (ii) daily deals sites; (iii)
price grabbers (presumably, sites that display price-comparison
of products sold elsewhere); and, (iv) online classifieds.
Currently online sales still represent a relatively small
portion of overall retail transactions in Indonesia. However,
it is expected to grow significantly over the next few years.
This growth is expected to be fueled by the rising number of
internet users due to the increased internet penetration in
Indonesia (including smartphone users). Opening up foreign
investment in the e-commerce arena is expected to bring
much-needed capital into the sector to help growth.
Oene Marseille and Emir Nurmansyah