Differentiating E-Commerce, Market Place, and Social Commerce in the Proliferation of the Digital Space in Indonesia
The government has revised Regulation of the Minister of Trade Number 50 of 2020 concerning Provisions regarding Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading through Electronic Systems (Peraturan Menteri Perdagangan Nomor 50 Tahun 2020 tentang Ketentuan Perizinan Usaha, Periklanan, Pembinaan, dan Pengawasan Pelaku Usaha dalam Perdagangan melalui Sistem Elektronik, “MoTR Reg No. 50/2020”) by issuing Regulation of the Minister of Trade Number 31 of 2023 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading through Electronic Systems (Peraturan Menteri Perdagangan Republik Indonesia Nomor 31 Tahun 2023 tentang Perizinan Berusaha, Periklanan, Pembinaan, dan Pengawasan Pelaku Usaha dalam Perdagangan melalui Sistem Elektronik, “MoTR Reg No. 31/2023”) in which MoTR Reg No. 31/2023 provides classifications and further regulations towards the operation of e-commerce, market place and social commerce.
Trading through electronic systems (“PMSE”) is trade wherein transactions are conducted through a sequence of electronic equipment and procedures. PMSE activities are not much difference with trade in the general, although PMSE activities are regulated more specifically as they are conducted digitally rather than physically. As the trade in general, PMSE also conducts trade activities which involve merchants and consumers.
The concern before issuance of MoTR Reg No. 31/2023 is that PMSE Operators (“PPMSE”) in form of social commerce were not prohibited from acting as a social media which facilitates payment transactions in their PPMSE. This is because in fact MoTR Reg No. 50/2020 did not prescribe any classifications and specific provisions towards e-commerce, market place and social commerce.
MoTR Reg No. 50/2020 only recognized the term PPMSE, defining it as a business actor which provides electronic communication facilities utilized for trade transactions. While in MoTR Reg No. 31/2023 the definitions of e-commerce, market place and social commerce have been further regulated, as follows:
1. E-commerce
MoTR Reg No. 31/2023 defines e-commerce as an online retail in which merchants conduct PMSE activities by means of commercial web site or application that is created, operated, and/or owned by themselves.
This is in line with the general definition of e-commerce, being online trade that only hosts a single seller by focusing on a certain product or brand owned by such single seller.
2. Market place
A market place is a facilitator wherein part or entire transaction process takes place in an electronic system in the form of a commercial website or application as a platform for merchants to offer their goods and/or services.
In general, a market place is online market in which many merchants are hosted and it focuses on various products or brands owned by a large number of merchants.
3. Social commerce
Social commerce is a social media operator which provides features, menu, and/or certain facilities which enable merchants to offer their goods and/or services.
Social media itself is defined as a page or application which enables its users to create and share content or be involved in a social network.
The main point of MoTR Reg No. 31/2023 is that currently prohibition for social commerce to facilitate payment transactions in its electronic system has been expressly regulated.
Furthermore, MoTR Reg No. 31/2023 also contains further regulations concerning e-commerce, market place and social ecommerce in connection with PMSE:
1. Prevention of misuse of personal data
As it is understood that personal data constitutes one of human rights being part of self-protection, a legal basis must be established to ensure personal data security pursuant to the 1945 Constitution of the Republic of Indonesia. In affirmation of that, Article 13 paragraph (3) letter b MoTR Reg No. 31/2023 obliges PPMSEs to ensure that there shall not be any misuse of the users’ personal data in its possession to be utilized by a PPMSE and/or companies affiliated within its electronic system.
2. Mandatory certification of imported goods
Previously, MoTR Reg No. 50/2020 did not oblige foreign merchants conducting PMSE activities in a PPMSE to obtain product standardization for their imported goods. However, with the issuance of MoTR Reg No. 31/2023, foreign merchants conducting PMSE activities in a PPMSE are now required to obtain standardization for their products as stipulated in Article 5 paragraph (4) of MoTR Reg No. 31/2023, with the following product standardizations:
- fulfilment of the Indonesian National Standard (“SNI”) or other technical requirements for goods and/or services towards which SNI or other technical requirements are mandatorily applied pursuant to the applicable laws and regulations;
- fulfilment of standards or technical requirements in the origin country for goods and/or services which have not been certified with SNI or mandatory technical requirements; and
- halal certificate for goods and/or services wherein a halal certificate is required based on the applicable laws and regulations.
3. Prohibition for market place and/or social commerce platforms to act as a manufacturer
As previously elaborated, in principle, a market place is a facilitator providing platform for merchants to offer their goods and/or services, while social commerce in principle is a social media operator that enables merchants to offer their goods and/or services. Based on that definition, market place and/or social commerce in essence shall only act as an intermediary between sellers and buyers, and not as a manufacturer of the goods being sold.
4. Minimum price of goods for cross-border PMSE by PPMSEs
Minimum price of goods must be determined for merchants who directly sell finished goods from overseas to Indonesia. Pursuant to Article 19 paragraph (2) of MoTR Reg No. 31/2023, the minimum price of goods is in the amount of USD100 (one hundred United States Dollars) Freight on Board (FOB) per unit.
If the price of such goods is quoted in a different currency, a conversion shall be conducted using exchange rate determined by the Indonesian Ministry of Finance. For types of goods with price below the minimum price as referred to above which may directly enter through PPMSEs conducting cross-border PMSE activities, it shall be determined by the Indonesian Ministry of Trade based on the results of a coordination meeting of relevant institution at minister/non-ministry government level.
The government also seeks to ensure that the new regulation is properly enforced, among others by imposing administrative sanctions for business actors that breach the above provisions. The administrative sanctions may be imposed in form of a written warning, inclusion in the priority supervision list, inclusion in the black list, temporary blocking of domestic and/or overseas PPMSE service by the relevant authorities, and/or revocation of business license.
With the issuance of MoTR Reg No.31/2023, it is expected to enable micro, small, and medium enterprises to achieve a stronger level in market competition. Notwithstanding the such new provisions, MoTR Reg No. 31/2023 nevertheless mandates business actors to prioritize trade of goods and/or services within a domestic sphere.
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Authors:
- Robert Hasan, S.H.
- Rangga Aufar Rizan, S.H.
- Emanuel Ganes Cantaka, S.H.
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