Government?s 14th Economic Policy Package Tackles E-Commerce Roadmap

           
 
Marcell Sihombing, Fathan Qorib
 

ojk

Secretary of the Cabinet, Pramono Anung. Source: Secretariate of the Cabinet's official site.

 


The government recently launched its 14th Economic Policy Package in order to set out a roadmap for national electronic-based trading activities. According to the Secretary of the Cabinet, Pramono Anung, the newly introduced E-Commerce Roadmap is ultimately expected to result in the emergence of around 1000 so-called “technopreneurs” and approximately USD 10 billion worth of business value.
 
“The hope is that if the roadmap is initiated properly, then by 2020 the main [business] value of the e-commerce sector should amount to around USD 130 billion,” Mr. Anung stated, as cited on the Secretariat of the Cabinet’s official site on Friday, 11 November 2016.
 
The government is hoping to turn Indonesia into Southeast Asia’s largest digital economy by 2020. This plan is being predicated on the fact that Indonesia currently enjoys an extremely large Internet user base (approximately 93.4 million users) in comparison with other countries around the world and can also boast approximately 71 million smartphone users. By harnessing this huge potential, it is believed that the targeted amount of technopreneurs and total business value can be successfully achieved.
 
The roadmap has also been issued in order to thoroughly regulate the e-commerce sector. This sector has to date not enjoyed a codified legal framework which can serve as a guideline for its various relevant stakeholders. Indeed, there are several already existing regulatory frameworks in Indonesia which it is believed may ultimately hamper the development of the e-commerce sector here.
 
The new roadmap is expected to lead to the effective and globally connected expansion of the sector, as well as to improvements in the country’s overall level of economic activity. It is also hoped that the new roadmap will encourage creativity, innovation and the invention of novel forms of economic activity by the country’s youth. Moreover, the roadmap also is aiming to offer greater business certainty, as well as facilities for e-commerce utilization through the establishment of a set of strategic guidelines and directives aimed at accelerating the implementation of the Electronic-Based National Trading System for the 2016-2019 period.
 
Aside from these goals, it is also hoped that the roadmap will be able to protect and prioritize the interests of the country’s many micro-, small- and medium-scale enterprises (UMKM), as well as its various start-up businesses. An improvement in the skill sets of Indonesia's e-commerce practitioners is also on the government’s radar. The roadmap should additionally serve as a guideline for the government and other related stakeholders as regards the establishment of, or the making of adjustments to, various policies which address the development of the e-commerce sector.
 
Established under a presidential regulation, the roadmap covers matters which relate to funding, taxation, consumer protection, communications, education and human resources, logistics, communications infrastructure, cyber security and the establishment of operational management.
 
In terms of funding, the roadmap will simplify and expand access to public business loans (kredit usaha rakyat) for platform-development tenants, as well as offer grants to business incubators who nurture start-up businesses. Funding for digital universal service obligations (USO), UMKMs and start-up e-commerce platforms is also on the table. Funding may take the form of so-called “angel capital”, which is a type of capital deemed essential for start-ups which are still in a “valley of death” (i.e. non-profitable) situations, even after their commercialization. Additionally, such capital may also take the form of so-called “seed-capital” supplied by a “foster father” or take the form of crowd-funding, an alternative source of funding which is generated by certain communities or by the general public.
 
As regards taxation, a taxation incentive will be put in place in the form of tax reductions for any local investors who are intending to fund start-up companies. The roadmap also simplifies licensing/taxation procedures for any e-commerce start-ups which have an annual income of less than IDR 4.8 billion per year, specifically through the implementation of Government Regulation No. 46 of 2013 on Income Tax Imposed Upon Income Received or Generated by Taxpayers Who Have a Certain Gross Circulation Level. This simplification is expected to result in a final income-tax levy amounting only to 1% for any relevant taxpayer.
 
Additionally, the roadmap also sets out an equivalent tax treatment for both foreign and domestic e-commerce companies. This means that any foreign companies that offer their services and/or contents in Indonesia are obliged to fully comply with the prevailing regulatory framework for taxation.
 
Meanwhile in terms of consumer protection, the roadmap will try to harmonize all of the relevant regulatory frameworks which cover electronic certification, the accreditation process, payment-scheme policies, protection for e-commerce businesses and consumers, as well as dispute settlement schemes. This harmonization should also lead to the gradual development of a national-payment gateway.
 
In terms of education and human resources, the roadmap is hoping to expand the current e-commerce awareness campaign, lead to the formulation of a national-incubation program, as well as to the formulation and improvement of e-commerce education and of a specific curriculum which can be utilized by consumers, businesses and law-enforcement officers.
 
As for logistics, the roadmap is aiming to improve e-commerce logistics mechanisms through the establishment of the National Logistics System (SISLOGNAS), which, it is hoped, will be able to accelerate the shipment timeframe and reduce shipment costs. The roadmap is also hoping to revitalize, restructure and modernize the national postal-service provider, PT Pos Indonesia, while improving e-commerce logistics-facility outsourcing, developing a village-to-city logistics system, and also creating synergies between markets, terminals, commodities, central markets, regional-distribution centers, and the management of urban and rural transportation.
 
In terms of communications infrastructure, the roadmap regulates for the acceleration of the construction of a high-speed broadband network, so that e-commerce systems can be utilized all across the country. Where cyber security is concerned, the roadmap mandates for the formulation of a national oversight system model for e-commerce transactions, for boosting public awareness of cyber crime, as well as for the formulation of standard operating procedures (SOP) covering the storage of consumer data and the certification of security guarantees relating to consumer data.
 
And last but not least, the roadmap also addresses the establishment of operational management and introduces a systematic and coordinated mechanism for its implementation, while simultaneously describing mechanisms for the monitoring and evaluation of any such implementation.
 
(cd/sp)
           
 
Marcell Sihombing, Fathan Qorib
 

ojk

Secretary of the Cabinet, Pramono Anung. Source: Secretariate of the Cabinet's official site.

 


The government recently launched its 14th Economic Policy Package in order to set out a roadmap for national electronic-based trading activities. According to the Secretary of the Cabinet, Pramono Anung, the newly introduced E-Commerce Roadmap is ultimately expected to result in the emergence of around 1000 so-called “technopreneurs” and approximately USD 10 billion worth of business value.
 
“The hope is that if the roadmap is initiated properly, then by 2020 the main [business] value of the e-commerce sector should amount to around USD 130 billion,” Mr. Anung stated, as cited on the Secretariat of the Cabinet’s official site on Friday, 11 November 2016.
 
The government is hoping to turn Indonesia into Southeast Asia’s largest digital economy by 2020. This plan is being predicated on the fact that Indonesia currently enjoys an extremely large Internet user base (approximately 93.4 million users) in comparison with other countries around the world and can also boast approximately 71 million smartphone users. By harnessing this huge potential, it is believed that the targeted amount of technopreneurs and total business value can be successfully achieved.
 
The roadmap has also been issued in order to thoroughly regulate the e-commerce sector. This sector has to date not enjoyed a codified legal framework which can serve as a guideline for its various relevant stakeholders. Indeed, there are several already existing regulatory frameworks in Indonesia which it is believed may ultimately hamper the development of the e-commerce sector here.
 
The new roadmap is expected to lead to the effective and globally connected expansion of the sector, as well as to improvements in the country’s overall level of economic activity. It is also hoped that the new roadmap will encourage creativity, innovation and the invention of novel forms of economic activity by the country’s youth. Moreover, the roadmap also is aiming to offer greater business certainty, as well as facilities for e-commerce utilization through the establishment of a set of strategic guidelines and directives aimed at accelerating the implementation of the Electronic-Based National Trading System for the 2016-2019 period.
 
Aside from these goals, it is also hoped that the roadmap will be able to protect and prioritize the interests of the country’s many micro-, small- and medium-scale enterprises (UMKM), as well as its various start-up businesses. An improvement in the skill sets of Indonesia's e-commerce practitioners is also on the government’s radar. The roadmap should additionally serve as a guideline for the government and other related stakeholders as regards the establishment of, or the making of adjustments to, various policies which address the development of the e-commerce sector.
 
Established under a presidential regulation, the roadmap covers matters which relate to funding, taxation, consumer protection, communications, education and human resources, logistics, communications infrastructure, cyber security and the establishment of operational management.
 
In terms of funding, the roadmap will simplify and expand access to public business loans (kredit usaha rakyat) for platform-development tenants, as well as offer grants to business incubators who nurture start-up businesses. Funding for digital universal service obligations (USO), UMKMs and start-up e-commerce platforms is also on the table. Funding may take the form of so-called “angel capital”, which is a type of capital deemed essential for start-ups which are still in a “valley of death” (i.e. non-profitable) situations, even after their commercialization. Additionally, such capital may also take the form of so-called “seed-capital” supplied by a “foster father” or take the form of crowd-funding, an alternative source of funding which is generated by certain communities or by the general public.
 
As regards taxation, a taxation incentive will be put in place in the form of tax reductions for any local investors who are intending to fund start-up companies. The roadmap also simplifies licensing/taxation procedures for any e-commerce start-ups which have an annual income of less than IDR 4.8 billion per year, specifically through the implementation of Government Regulation No. 46 of 2013 on Income Tax Imposed Upon Income Received or Generated by Taxpayers Who Have a Certain Gross Circulation Level. This simplification is expected to result in a final income-tax levy amounting only to 1% for any relevant taxpayer.
 
Additionally, the roadmap also sets out an equivalent tax treatment for both foreign and domestic e-commerce companies. This means that any foreign companies that offer their services and/or contents in Indonesia are obliged to fully comply with the prevailing regulatory framework for taxation.
 
Meanwhile in terms of consumer protection, the roadmap will try to harmonize all of the relevant regulatory frameworks which cover electronic certification, the accreditation process, payment-scheme policies, protection for e-commerce businesses and consumers, as well as dispute settlement schemes. This harmonization should also lead to the gradual development of a national-payment gateway.
 
In terms of education and human resources, the roadmap is hoping to expand the current e-commerce awareness campaign, lead to the formulation of a national-incubation program, as well as to the formulation and improvement of e-commerce education and of a specific curriculum which can be utilized by consumers, businesses and law-enforcement officers.
 
As for logistics, the roadmap is aiming to improve e-commerce logistics mechanisms through the establishment of the National Logistics System (SISLOGNAS), which, it is hoped, will be able to accelerate the shipment timeframe and reduce shipment costs. The roadmap is also hoping to revitalize, restructure and modernize the national postal-service provider, PT Pos Indonesia, while improving e-commerce logistics-facility outsourcing, developing a village-to-city logistics system, and also creating synergies between markets, terminals, commodities, central markets, regional-distribution centers, and the management of urban and rural transportation.
 
In terms of communications infrastructure, the roadmap regulates for the acceleration of the construction of a high-speed broadband network, so that e-commerce systems can be utilized all across the country. Where cyber security is concerned, the roadmap mandates for the formulation of a national oversight system model for e-commerce transactions, for boosting public awareness of cyber crime, as well as for the formulation of standard operating procedures (SOP) covering the storage of consumer data and the certification of security guarantees relating to consumer data.
 
And last but not least, the roadmap also addresses the establishment of operational management and introduces a systematic and coordinated mechanism for its implementation, while simultaneously describing mechanisms for the monitoring and evaluation of any such implementation.
 
(cd/sp)
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