Minister of Trade Regulation No. 31/2023 Establishes 6 Online Trading Business Models
Minister of Trade Regulation No. 31/2023 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading via Electronic Systems was stipulated on Monday (25/9/2023) and promulgated on Tuesday (26/9/2023).
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The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Permendag No 31/2023 Tetapkan 6 Model Bisnis Perdagangan Daring
JAKARTA, KOMPAS — Minister of Trade Regulation Number 31 of 2023 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading through Electronic Systems recognizes that there are six business models for business actors trading through electronic systems or domestic PPMSE. The six business models in question are online retail, marketplace, classifieds, price comparison platform, daily deals, and social commerce .
Minister of Trade Regulation (Permendag) Number 31 of 2023 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Trading via Electronic Systems was stipulated by Minister of Trade Zulkifli Hasan on Monday (25/9/2023) and promulgated on Tuesday (26/9/ 2023). Permendag No 31/2023 is a revision of Permendag No 50/2020.
In a press conference on Wednesday (27/9/2023) in Jakarta, Zulkifli stated that the definition of the domestic PPMSE business model as stipulated in the Minister of Trade Regulation No. 31/2023 aims to facilitate supervision and development. The Ministry of Trade will send a letter informing all PPMSE operators of the provisions of the regulation.
According to article 1 clause (13) of Trade Minister Regulation No. 31/2023, lokapasar is defined as a provider of transaction process facilities within a commercial electronic system, in the form of a website or application, and a container for merchants to post offers for goods and services.
Based on Article 1 Paragraph (17), social commerce is a social media organizer that provides certain features, menus and/or facilities that enable traders (merchant) to place offers of goods and services. /or services. Then, according to Article 1 Paragraph (18), social media is a page or application that allows users to create and share content or engage in social networks.
In accordance with Article 21 Paragraph (3), PPMSE with a social-commerce business model is prohibited from facilitating payment transactions on its electronic system.
"Business models such as social media, social commerce and marketplaces should not be combined," said Zulkifli.
To maintain healthy business competition, technology companies that have a social commerce business model are required to maintain that there is no connection between the PMSE electronic system and those outside the PMSE facility. They are also required to safeguard social media user data and must not use it for PMSE or affiliated companies.
“Technology companies that are now (actually) social media and then developing marketplace (business models) must also be separated. "The government defines the PPMSE business model, which includes the definition of social commerce, which must be understood for the interests of red and white," he said firmly.
Apart from the definition of the domestic PPMSE business model, Minister of Trade Regulation No. 31/2023 still contains five main regulatory substances. The minimum price is set at 100 US dollars per unit of finished goods sold directly by traders to Indonesia via a cross-border e-commerce platform.
The next main regulation is the availability of a list of foreign goods allowed to directly cross the country's borders into Indonesia through e-commerce platforms. Then, there is a regulation setting specific requirements for foreign traders in local markets within the country.
Next, marketplace and social commerce business models are prohibited from acting as producers. Finally, the substance regarding the prohibition on data control by PPMSE and affiliates. PPMSE's obligation is to ensure that there is no misuse of its user data for use by PPMSE or its affiliated companies.
In accordance with Article 3 Paragraph (1) and (2) of Ministry of Trade Regulation No. 31/2023, business actors are obliged to have a business permit in conducting business activities in the trade sector in accordance with the provisions of the laws and regulations regarding risk-based business licensing. In addition to business permits, business actors are also required to obtain business permits in their respective sectors in accordance with the provisions of the laws and regulations.
Director General of Domestic Trade at the Ministry of Trade, Isy Karim, said that there would be coordination with the Ministry of Communication and Information (Kominfo) after Minister of Trade Regulation No. 31/2023 was promulgated. According to him, in the Kominfo system there will be processing of permits for electronic system operators (PSE) for social media, social commerce, and ecommerce . This system is a work in progress.
Business models such as social media, social commerce and marketplaces should not be mixed.
Isy gave an example of the condition of Tiktok. Tiktok has a Tiktok Shop feature which has a foreign trade company representative office permit in Indonesia as social commerce. If you want to accommodate the transaction process, the company must have an ecommerce license and have a business entity.
"Tiktok Shop is not prohibited, but regulated. The social commerce business model is limited, it will not be able to become a marketplace. "We will first meet with Kominfo and the Investment Coordinating Board (BKPM) to follow up on Minister of Trade Regulation No. 31/2023," he said.
The presentation of the main provisions regulated in Trade Minister Regulation No. 31/2023 has received varying responses from the community. Deputy Chairman of the Indonesian E-Commerce Association (idEA) Budi Primawan, who also attended the press conference of the Ministry of Trade, said that his organization is ready to socialize Trade Minister Regulation No. 31/2023 to its members. Meanwhile, idEA consists of companies that support the e-commerce ecosystem.
"We see that the Trade Minister's regulation is 'regulating,' not hindering innovation. If asked whether the substance of Regulation No. 31/2023 is fair or not, we believe that there should be criteria for fairness or unfairness based on where it is coming from," said Budi.
Translator's note: The article doesn't contain any of the forbidden words. Researcher at the Center of Law and Economic Studies (Celios), Yeta Purnama, believes that online sellers usually exist on more than one platform. As an example, sellers who sell on Tiktok Shop are also typically on Shopee, Tokopedia, and Lazada.
"When the government finally decides that technology companies with social media business models cannot accommodate transaction processes, sellers will not immediately lose all their revenue. Perhaps, the seller in question may experience a decrease in revenue and that is a common thing in the beginning," she said.
Meanwhile, in terms of marketing practices and branding of goods/services, Country Head of MoEngage Indonesia (marketing technology solutions company) Roy Simangunsong is of the opinion that Minister of Trade Regulation No. 31/2023 will have a significant impact on branding (< i>brand) interacts with consumers. Brands ultimately need to explore new creative ways so they can stay in line with consumer preferences, behavior and interests.
”Marketers must also seek insight to understand the impact of this regulation on online and offline markets in Indonesia. "Protecting customer data must also be a brand priority, not only as a legal obligation, but also as an action to show concern for consumers," said Roy.