Indonesia announces e-commerce roadmap as part of Jokowi’s newest economic reform package

• The roadmap is to give formal recognition to the e-commerce sector
• Eight aspects of regulations were announced with 32 initiatives to be completed by mid-2018

HAVING launched 13 policy packages in a bid to stimulate the country’s economy since September last year, Indonesian President Joko ‘Jokowi’ Widodo has now put forward the 14th economic reform package, a presidential decree on the long-awaited e-commerce roadmap.

The announcement was made by the Coordinating Minister of Economic Affairs Darmin Nasution on Nov 10.

In April this year, Jokowi had urged his ministries to accelerate the progress of the e-commerce roadmap, as the country needed e-commerce to empower the underprivileged. The roadmap itself had initially been set to be launched late last year.

Eight ministries and institutions are included in the formulation of the e-commerce roadmap, including the Ministry of Communication and Information Technology (MOCIT), Central Bank, Coordinating Ministry of Economic Affairs and Ministry of Finance.

According to MOCIT, the value of Indonesia’s e-commerce transactions is forecast to hit US$130 billion in 2020. Indonesia is also pushing its digital entrepreneurship agenda and targets to nurture 1,000 technopreneurs with a total business valuation of US$10 billion by the same year.

The dream is a big one and Darmin said in a statement that the country now has to put in place a roadmap to help it get there.

“The problem is, we do not have a proper roadmap for e-commerce development that will act as a reference for stakeholders who want to explore the sector,” he said.

Darmin explained that the main objective of the roadmap is to boost the growth of the e-commerce sector in the hopes that it would help stimulate the country’s overall economy.

According to the Central Statistics Bureau, Indonesia’s economic growth is slowing down. The economy grew only 5.02% year-on-year in the third quarter of the year, compared to 5.19% in the previous quarter.

The original growth forecast for 2016 had been 5.2% but Indonesia might well miss this target. The search for a new growth engine has now turned to the digital arena with its huge market and opportunities in the e-commerce and digital sectors.

Darmin said that the e-commerce roadmap will also help to put in place the foundation to support and accelerate the implementation of the electronic-based National Trading System 2016-2019.

Here are eight of the provisions in the roadmap:

1. Funding. The government will allow micro credit programmes to cover platform and app developers, grants for business incubators and startup mentorship programmes. It will also include universal service obligation (USO) funds for digital small and medium enterprises (SMEs) and e-commerce startups, angel investment, seed capital from venture capital as well as crowd-funding.
2. Taxation. The government will lower the tax rate for local investors investing in startups and ease the taxation procedures for e-commerce ventures with a total turnover of Rp4.8 billion (US$357,191) and below per year, thereby levelling the playing field in taxation for all e-commerce players.
3. Consumer protection. The government will regulate electronic transactions in order to allow for transactions and government spending through e-commerce and develop a national payment gateway.
4. Education and human resources. The government will start a national e-commerce awareness campaign along with a national incubation programme, and e-commerce education programme for all stakeholders.
5. Logistics. E-commerce players will be allowed to leverage on the national logistics system (Sislognas). Local and national courier companies are to be strengthened and logistics routes from rural areas to cities developed.
6. Strengthen communications infrastructure through national broadband development.
7. Cyber security. The government will set up a national surveillance and e-commerce monitoring system, offer education on e-commerce cyber threats, and standardise data collection.
8. Form an operating management structure to manage, monitor, and evaluate the implementation of the e-commerce roadmap.

In the e-commerce roadmap documents that DNA received, the government has mapped out 18 initiatives that have to be completed in the next three to six months as a first priority with another 13 initiatives that are to be completed within six to 12 months later as a second priority. The final leg will be the development of logistics routes from rural areas to cities in the 12 to 24 months thereafter.

The government is targeting to complete the first and second list by mid-2018 in order to achieve the forecast e-commerce transaction value of US$130 billion by 2020.

While the announcement of the e-commerce roadmap and the presidential decree on the State Secretariat's website do not go into all the details, the ministry’s head of public relations Farah Heliantina told DNA that what the government wants is to at least give formal recognition to the sector with a general set of regulations.

“There are eight aspects of regulations that have been formally announced. However the finer details of each of these regulations are still being formulated and we hope to see them as soon as possible,” she told DNA in a phone interview.

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