New Provisions under MoT Regulation Number 31 of 2023 on Business Licensing, Advertising, Development and Supervision of Business Practitioners in Trading via Electronic Systems: Impact on Commerce via Electronic Systems in Indonesia

Author: Dina Amini, S.H.

On 25 September 2023, the Minister of Trade (MoT) of the Republic of Indonesia stipulated MoT Regulation Number 31 of 2023 on Business Licensing, Advertising, Development and Supervision of Business Practitioners in Trading via Electronic Systems (“MoT Regulation Number 31/2023”) which revoked MoT Regulation Number 50 of 2020 on the Provisions for Business Licensing, Advertising, Development and Supervision of Business Practitioners in Trading via Electronic Systems (“MoT Regulation Number 50/2020”). As stated in the consideration section, MoT Regulation Number 31/2023 was issued to support the empowerment of micro, small, and medium enterprises, as well as business actors trading through domestic electronic systems, to protect consumers, and to encourage the development of trade through electronic systems given the increasingly dynamic pace of technological development. MoT Regulation Number 31/2023 as a replacement for MoT Regulation Number 50/2020 also stipulates new provisions which were not previously provided in MoT Regulation Number 50/2020, hence it must be significantly considered for business actors who carry out business activities in the field of Trade through electronic systems. (“Business Practitioner“). Business Practitioner itself in MoT Regulation Number 31/2023 are divided into several categories, namely as follows:

1. Trading Operator via Electronic System/ Penyelenggara Perdagangan Melalui Sistem Elektronik (“PPMSE“) is a Business Practitioner that provides electronic communication facilities used for trading transactions.
2. Seller (Merchant) is a Business Practitioner who conducts trade through an electronic system using facilities that are created and managed directly by the Seller itself or through facilities owned by PPMSE, or other Electronic Systems that provide trading facilities through an electronic system; and
3. Intermediary Service Provider/ Penyelenggara Sarana Perantara (“PSP“), is a domestic business practitioner or foreign business practitioner that provides electronic communication facilities other than telecommunication operators that only function as intermediaries in electronic communications between senders and recipients.

In this article the author will review the new provisions that need to be paid attention to by Business Practitioners, especially PPMSE and Seller/merchant. 

1. Business Models For PPMSE

In MoT Regulation Noumber 50/2020, there is no category division for each trading type via electronic systems. All trading transactions carried out through a series of electronic devices and procedures are referred to as Trading via Electronic Systems. In the other hand, in MoT Regulation Number 31/2023, PPMSE may provide trading facilities through several business models that are specifically determined, including;   

1. Online Retail, where trading is conducted in the form of a website or commercial application that is created, managed and/or owned by the Business Practitioner itself. 
2. Marketplace, namely a provider of facilities in which part or all of the trade transaction process occurs in an electronic system in the form of a website or commercial application as a forum for sellers/merchants to place offers of goods and/or services.
3. Online Classified Ads, namely an electronic system in the form of a website or application that brings together sellers and buyers whose the entire transaction process of which occurs outside the website or application.
4. Price Comparative Platform, namely an Electronic System in the form of a website or application with commercial purposes which displays price comparisons for goods and/or services sold on websites or other applications.
5. Daily Deals, namely an Electronic System in the form of a website or application with commercial purposes in the form of selling discount coupons and/or other convenient facilities that can be used as a facility of payment by consumers to purchase goods and/or services from other Business Practitioners.
6. Social Commerce, namely social media organisers that provide certain features, menus and/or facilities that enable sellers/merchants to carry out promotions by placing offers of goods and/or services.

With the category division for each trade through the electronic system, the provisions for regulating trade through the electronic system are no longer generalised, but are adjusted to each business model of trade through the electronic system. 

2. Obligation To Display Compliance With Information Standards For Traded Goods/Services 

In conducting trade via electronic systems, Business Practitioners are obliged to fulfill the provisions of laws and regulations in respect of legality or business licensing, obligations to fulfill standards or technical requirements for goods and/or services, goods and/or services whose trade is prohibited and/or restricted, distribution, and taxation. Under Article 11 of MoT Regulation Number 31/2023, every trader is required to display information regarding proof of compliance with the standards of goods and/or services being traded, including: 

1. goods registration number or Indonesian National Standard/ Standar Nasional Indonesia (SNI) certificate or other technical requirements for goods and/or services to which the Indonesian National Standard has been applied or mandatory technical requirements in accordance with the laws and regulations;
2. halal certificate number for goods and/or services that must be halal certified in accordance with the laws and regulations;
3. product registration number for goods related to security, safety, health and the environment, which is required to be in accordance with the laws and regulations; and
4. licence number, registration number, or certificate number for cosmetic, medicinal and food products in accordance with the laws and regulations.

As for PPMSE that conducts trade of goods and/or services from abroad, it is obliged to facilitate and display information on its electronic system regarding the country of origin of the seller/merchant, the country of origin of the goods sender, and proof of compliance with the standards for goods and/or services as stated in points a to d.

3. Specific Prohibition Against PPMSE with Marketplace and Social-Commerce Business Model

Pursuant to Article 21 paragraph (2) of MoT Regulation Number 31/2023, PPMSE with a Marketplace and/or Social-Commerce business model is prohibited from acting as a producer, in accordance with the provisions of laws and regulations in respect of goods distribution. Furthermore, PPMSE with a Social-Commerce business model is also prohibited from facilitating payment transactions on its electronic system, and can only carry out promotional activities for goods and/or services. An example of the implementation of this provision, is the removal of the Tiktok Shop feature on the social media platform of Tiktok on 4 October 2023. Tiktok, which is categorised as a PPMSE with a Social-Commerce business model, is prohibited from directly facilitating transactions or buying and selling goods and/or services on its system, and only allowed to carry out promotions or offers.

4. Rules Regarding The Prevention Of Unfair Business Competition

MoT Regulation Number 31/2023 specifically stipulates the obligation to carry out acts to prevent unfair business competition, as regulated in Article 13 of MoT Regulation Number 31/2023, which mandates PPMSE to:

1. play an active role in providing equal business opportunities for all traders;
2. maintain prices of goods and/or services so that they are free from price manipulation practices, either directly or indirectly;
3. make efforts to monitor, prevent and overcome all forms of unfair business competition practices and/or price manipulation practices, both directly and indirectly, which are actualized as outlined in standard operating procedures;
4. be obliged to ensure that there is no connection or interconnection between the electronic system used as a trading facility and the electronic system used outside the trading facility;
5. ensure that there is no misuse of control of electronic system user data for use by PPMSE and/or affiliated companies in its electronic system;
6. be obliged to coordinate with the Indonesian Competition Commission within 3 (three) working days from the discovery of allegations and/or reports received by PPMSE, in the event of allegations of unfair business competition among traders and/or price manipulation practices either directly or indirectly. 

5. Determination Of Minimum Prices For Sales Of Imported Goods

PPMSE that conducts trading activities through a cross-border electronic system, is obliged to apply minimum goods prices in its electronic system to traders/merchants that directly sell finished goods originating from overseas to Indonesia. The minimum goods price is Freight on Board (FOB) USD100 (one hundred United States Dollars) per unit. In the event that the price of goods is informed on the electronic system in a different currency, the conversion is carried out using the exchange rate determined by the Minister of Finance of the Republic of Indonesia. As for the goods with prices below the minimum price permitted to be traded by PPMSE through a cross-border electronic system, this will be determined by the Minister of Trade based on the results of coordination meetings at the ministerial level/heads of the relevant non-ministerial government agencies.

Sanctions 

As regulated in Article 50 of MoT Regulation Number 31/2023, Business Practitioners that violate the provisions as referred to above will be subject to administrative penalties by the Minister of Trade, which may take the following form:

1. a written warning;
2. being included in the list of monitoring priority;
3. being blacklisted;
4. temporary suspension of domestic PPMSE and/or foreign PPMSE services by the relevant authorised agency; and/or
5. revocation of business licence.

Reference

• Article 2 paragraph 3 of MoT Regulation No.31/2023
• Article 1 number 12 of MoT Regulation No.31/2023
• Article 1 number 13 of MoT Regulation No.31/2023
• Article 1 number 14 of MoT Regulation No.31/2023
• Article 1 number 15 of MoT Regulation No.31/2023
• Article 1 number 16 of MoT Regulation No.31/2023
• Article 1 number 17 of MoT Regulation No.31/2023
• Article 21 paragraph (1) of MoT Regulation No.31/2023
• Article 11 paragraph (2) of MoT Regulation No.31/2023
• Article 21 paragraph (3) of MoT Regulation No.31/2023
• Article 19 paragraph (1) of MoT Regulation No.31/2023
• Article 19 paragraph (2) of MoT Regulation No.31/2023
• Article 19 paragraph (3) of MoT Regulation No.31/2023