The government is strengthening the protection of micro, small and medium enterprises (MSMEs) by revising a regulation on e-commerce.
Albertus Hendriyo Widi Ismanto
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JAKARTA, KOMPAS - The government is strengthening the protection of micro, small and medium enterprises (MSMEs) by revising a regulation on e-commerce. The revision is also intended to create trade that is dignified, fair and beneficial.
However, the revision of the regulation is not enough. To strengthen the competitiveness and supervision of MSMEs, law enforcement and consumer protection are also needed.
This insight was raised during a hybrid discussion forum titled "Protecting MSMEs in the E-commerce Channel", which was held by Kompas and the Trade Ministry in Jakarta on Tuesday (25/5/2021). Trade Minister Muhammad Lufti took part in the discussion as a key speaker. Also present were representatives from e-commerce platforms, MSMEs and other ministries and government institutions.
The discussion was held to gather input related to the revision of Trade Ministry Regulation No. 50/2020 concerning provisions on business licensing, advertising, development and the supervision of business players in e-commerce. The revision was made after President Joko “Jokowi” Widodo asked related ministries to address e-commerce practices that harmed MSMEs and national industry.
Unhealthy trading practices can be seen from the increase in the number of traders from outside the country who sell goods at very cheap prices in local markets.
The President\'s order emerged after a crowd of netizens discussed the figure of "Mr. Hu", who gave birth to the hashtag #SellerAsingBunuhMKM last February. This figure went viral on social media after consumers uploaded photos of products purchased at an online marketplace, with the sender named “Mr. Hu" from Guangdong, China. "Mr. Hu" became a symbol of how easy it was for imported products to enter Indonesia and be sold in the country for cheap.
"Unhealthy trading practices can be seen from the increase in the number of traders from outside the country who sell goods at very cheap prices in local markets. This is a form of predatory pricing that not only harms but also has the potential to destroy domestic business and industry," said Lutfi.
He cited hijabs that were sold online for just Rp 1,900 (US$0.14) each. Taxes paid by traders abroad totaled only $40,000 a year. Local small-scale hijab makers pay a total of $640,000 in taxes a year.
"It will not only harm competition but also destroy national business and industry. So a clear-cut policy and a strict supervisory team are needed to manage and control the trade system," he said.
Ari Anindya Hartika, assistant deputy director for regional development and supply chains at the Cooperatives and Small and Medium Enterprise (SME) Ministry, said there were a number of other problems in Indonesian e-commerce, such as the sale of unlicensed products that did not meet standards. He added that there were traders who did not have business licenses and whose shops were not located in Indonesia.
Lutfi said the revision of the regulations did not mean that Indonesia was being protectionist. Through regulation, the government wanted to create dignified, fair and beneficial trade, he said, including equality between online and offline traders. If online merchants wanted to import, they had to meet the same requirements as offline traders, including obtaining a business license and paying taxes.
The government will also clarify the identity of foreign traders who sell their products on local online marketplaces. Foreign traders must have and include documents on the country of origin of the seller, meaning they are required to register a valid number, name and issuing agency of the country of origin.
Piter Abdullah, an economist at the Center of Reform on Economics in Indonesia, said e-commerce opened up cross-border trade as well as price competition. Both needed to be the focus of regulatory revisions.
E-commerce plays an important role in the development of the nation’s MSMEs. Bank Indonesia recorded that the value of e-commerce transactions in 2020 was Rp 253 trillion. This year, the amount is projected to increase by 33.2 percent to Rp 330.7 trillion.
The chair of the Indonesian Association of MSMEs, Ikhsan Ingratubun, supports the government’s initiative to revise the Trade Ministry Regulation No. 50/2020 to protect MSMEs.
Tokopedia corporate communications vice president Nuraine Razak said merchants at the company had met the government\'s requirements. They had business licenses, paid taxes and processed imports through customs, she contended.
Legal and government relations manager of JD.id, the local division of JD.com, the largest online and offline Chinese retailer, Osdi Alam Pratama, said MSME players in Indonesia were not given enough space to trade online and find markets. They need to be assisted in order to "upgrade", both in terms of product quality and quantity, as well as business scale.
This article was translated by Hendarsyah Tarmizi.