How Offshore Merchants and Providers can Start an Online Business in Indonesia

The online business industry is rapidly growing in Indonesia. Especially in times of global pandemic and economic crisis, a high percentage of businesses around the world have already gone online and the trend keeps on heightening exponentially.

Now is the best time to start an online business in Indonesia due to the thriving web population and digital penetration. It can be possibly the best decision you have ever made.

Let Cekindo guide you through on how you can do that.

Types of Online Businesses in Indonesia

There are few types of online businesses in Indonesia, and they are normally coined as “e-commerce business”, meaning businesses conducted by individuals or organisations that participate in e-commerce or digital business activities.

To be more exact, online businesses or e-commerce businesses can be further categorised into the following:

• Local and foreign e-commerce merchants
• Local and foreign e-commerce service providers (PPMSE)
• Local and foreign e-commerce intermediary service providers (PSP)

Requirements for E-commerce Offshore Merchants and Providers Doing Online Business in Indonesia

The Ministry of Trade of Indonesia (MOT) announced a new regulation MOT Reg. 50/2020 on May 19, 2020, which will be effective in November 2020, in regard to requirements for e-commerce offshore merchants and providers doing e-commerce or online businesses in Indonesia.

According to this new regulation, both domestic and foreign e-commerce companies dealing with online business transactions such as selling goods or services online in Indonesia must adhere to the new set conditions.

We will discuss the main requirements in MOT Reg. 50/2020 below according to the different e-commerce business types:

1. Local and Foreign Ecommerce Merchants

• Domestic e-commerce merchants in Indonesia are required to obtain an accurate business license for their e-commerce trading activities
• If domestic e-commerce merchants have their e-commerce facilities or platforms, they must acquire an Ecommerce Trade Business License (SIUPMSE)
• For foreign e-commerce merchants, they have to register their overseas business licenses of their respective countries with a local PPMSE in Indonesia

2. Local and Foreign Ecommerce Service Providers (PPMSE)

• Both local and foreign e-commerce service providers must get a SIUPMSE
• A foreign e-commerce service provider shall designate a foreign trade representative office

3. Local and Foreign Intermediary Services Providers (PSP)

• Both local and foreign intermediary services providers are obliged to obtain a SIUPMSE
• Circumstances when a PSP do not have to get a SIUPMSE: the PSP is not a direct beneficiary of an e-commerce transaction; the PSP is not a direct intermediate party of an e-commerce transaction

Obligations and Penalties

You must fulfill legal obligations and know the violation penalties when conducting online business in Indonesia. The Indonesian designed them to protect both the customers and your business.

Legal obligations that both domestic and offshore online businesses have to meet is to submit business operation information and data to the Statistics Bureau of Indonesia or Badan Pusat Statistik.

Sanctions for not complying with the mentioned obligations include written warnings, services suspension, or even business blocking/termination.

How Cekindo can Assist

Cekindo is a one-stop business solution provider for setting up an online business in Indonesia. We help individuals and companies to realise their business goals and dreams in this rapidly growing online business industry.

Our team of experts focuses on providing you with a custom and effective online business setup service – helping your business grow and flourish. We take care of every step of establishing your online business in Indonesia, from selecting the best-suited business type and legal entity, registering for a business license and necessary operational permits, to applying for visas and opening bank accounts.

Talk to Cekindo today if you are looking for simple, tailored business setup services in Indonesia. Fill in the form below now.