On July 28, 2023, Indonesian Trade Minister Zulkifli Hasan told reporters in Jakarta that Indonesia plans to impose restrictions on the online sale of imported goods priced below US$100. 1 This measure is expected to have a direct impact on companies planning to enter the Indonesian online market through cross-border e-commerce (CBEC). On the other side, it presents an opportunity for local Indonesian companies to gain a larger market share.
President Joko Widodo of Indonesia has expressed concerns about the future prospects of the country's local manufacturing industry on multiple occasions. Minister of Indonesian Cooperatives and Small and Medium Enterprises, Teten Masduki, also highlighted that the influx of imported products into the Indonesian market may diminish the market share of local Indonesian products. 2 In response, the Indonesian government plans to establish a digital economy working group to handle relevant regulatory matters. Indonesia is currently revising regulations to safeguard the interests of medium, small, and micro enterprises in Indonesia.
Reportedly, the Indonesian government is considering the following revisions to the regulations:
Restricting the online sale of imported products priced below US$100 in Indonesia. This restriction applies to e-commerce platforms as well as social media platforms;
Prohibiting the direct sales of imported products to consumers through online channels. Imported products must first enter Indonesia through the regular import process and complete the same compliance obligations as local Indonesian products, such as product notification and halal certification, before being sold online;
Prohibiting e-commerce platforms from selling products produced by the platform itself or its affiliated companies, aiming to prevent unfair competition resulting from product recommendation algorithms.
Industry Comments
It is important to note that the above information represents the intended direction of Indonesian regulatory revisions, which have not been officially implemented. The actual requirements should be subject to the finalized regulations.
If the proposed restrictions come into effect, foreign merchants entering the Indonesian market and CBEC platforms such as Shopee and Lazada will face new challenges. The merchants may need to reevaluate and adjust their strategies, enhance their understanding of the Indonesian market and regulations, and consider strengthening their localization layout, including establishing local teams, localizing products, and optimizing warehousing capabilities.
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