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Set Up an E-Commerce Business in Indonesia

Set Up an E-Commerce Business in Indonesia

There are several types of businesses which can be opened in Indonesia. Among these, e-commerce companies have become quite popular here in the last few years. Their development has also brought the enhancement of the legislation related to selling goods online from Indonesia to local and foreign clients.

Because of the manufacturing industry which is the main engine of the Indonesian economy, many international companies have established headquarters here and most of the products sold online are produced here. Opening an e-commerce company in Indonesia comes with many advantages for foreign entrepreneurs who can benefit from the low production costs.

Below, our company incorporation consultants in Indonesia provide valuable information on the requirements related setting up an e-commerce business.

Steps in registering an e-commerce business in Indonesia

In order to start an e-commerce company, a local or a foreign investor must first follow the traditional company registration procedure through the Trade Registry in Indonesia.

The following procedure must be followed in order to register an e-commerce company in Indonesia:

  •           choosing the right business structure (a sole proprietorship or limited liability company);
  •           registering the company with the Companies Register and tax authorities in Indonesia;
  •           registering a domain name and having a website created for the e-commerce platform;
  •           obtaining the necessary license for selling goods at a distance with the competent authorities.

Our Indonesia company incorporation specialists can help with the registration of a business form for creating an online store.

E-commerce companies need to observe the same rules for submitting their annual financial statements, paying their taxes, and meeting the deadlines for tax filing as any other business, according to its business form. Our accountants in Indonesia assist companies of all sizes and with any number of employees, with services ranging from annual financial statement preparation, to bookkeeping, cashflow management, and more.

Types of e-commerce companies in Indonesia

E-commerce is highly regulated in Indonesia, which is why starting such type of business here is very safe. The government has even categorized e-commerce companies and those who want to start such a company can choose between the following forms:

  •           business to customer (B2C) e-commerce companies;
  •           business to business (B2B) e-commerce companies;
  •           business to government (B2G) e-commerce companies.

The first type of e-commerce company is the most popular in Indonesia and has registered a spectacular growth in the last few years. The second type of company is also popular as local e-commerce platforms act as distribution channels for foreign companies all over the world.

When it comes to foreign investors interested in starting e-commerce companies here, they should know that they can operate in most industries with a few exceptions.

Foreigners opening e-commerce companies in Indonesia

Foreign entrepreneurs relocating to Indonesia can open various types of e-commerce companies which they can also fully own. These are web portals through which they can sell user rights to those who want to publish content, marketplaces which can sell goods or can allow other buyers and sellers to meet and reservation websites.

With respect to the restrictions applied to foreigners, these can own 49% in e-commerce companies in the publishing sector, marketplaces created for advertising purposes and distribution e-commerce platforms.

Our local agents can provide full information on the rights and obligations of foreign investors setting up any type of company in Indonesia, including e-commerce companies.

The legislation imposed on e-commerce companies in Indonesia

Considering most e-commerce companies are established as online stores in Indonesia, they must respect a few laws which relate to:

  •           electronic transactions which fall under the provisions of the Electronic Information and Transactions Act, last amended in 2016;
  •           the use of authorized electronic services providers which is regulated by the Procedures for the Registration of Electronic System Providers;
  •           the protection of personal information on the customers which is regulated by the Protection of Private Data in Electronic Systems Act;
  •           the use of accredited registrars when creating websites which are regulated by the Management of Domain Names Law;
  •           the E-Commerce Roadmap which provides for the facilities offered to e-commerce companies registered in Indonesia – this law was introduced in 2017;
  •           e-commerce companies must also observe the Anti-Money Laundering Regulations.

All e-commerce companies in Indonesia must respect the Requirements for Licensing Services of E-Commerce Trading and Digital Signatures and the Contract Law imposed by the Ministry for Trade in Indonesia.

Understanding the Indonesian business landscape is a key element for any entrepreneur. Our lawyers in Indonesia offer the needed support so that you can be aware of the latest legislative changes. We offer legal solutions in areas such as business and corporate law, employment law, intellectual property rights, data protection, and more. Please reach out to our team for more details.

Obtaining a stay permit, followed by a permanent stay permit will be essential for those foreign nationals who wish to remain in the country for medium to long-term purposes, such as employment, starting and running a business, or joining a family member who is already a lawful Indonesian resident. Our team can answer questions related to immigration to Indonesia.

The legislation imposed on e-commerce companies is quite extensive and foreign and local investors looking to set up such businesses are invited for full information and assistance with the registration procedure to contact our advisors in Indonesia.