GOVERNMENT LAUNCHES NEW REGULATION ON E-COMMERCE
For the purpose of the implementation of Article 66 of Law Number 7 of 2014 on Trade, the President of the Republic of Indonesia, Joko “Jokowi” Widodo has signed Government Regulation Number 80 of 2019 on E-Commerce (“GR 80/2019”) on 20 November 2019 which immediately came into effect on 25 November 2019. GR 80/2019 was enacted for the purpose of organizing a fair and reliable trading system as well as protecting national interests. This regulation will serve as an umbrella regulation to promote ease of doing business while emphasizing stricter consumer protection as well. GR 80/2019 is expected to create a level playing field between e-commerce companies and brick-and-mortar businesses. Unlike the provisions under Government Regulation Number 71 of 2019 on Electronic System and Transaction, the provisions under GR 80/2019 aim to govern the legal aspect of trading in the administration and utilization of an electronic system which is specifically for trading purposes.
The advancement of technology has made it possible for any party to conduct trading activities through electronic communication system. In principle, any policy and regulation regarding trading, both those of conventional trading as well as electronic trading, aims to realize a legal, honest, fair-competition-based trading which honor and protect the consumer’s rights. Pursuant to GR 80/2019, any e-commerce activity and transaction shall provide clear particulars regarding the legality of an electronic transaction, prior to the transaction, during the transaction, and after the transaction. The cooperation between the relevant parties in an e-commerce shall be built on the basis of mutually beneficial cooperation and joint responsibility and/or proportional liability to each user of the system pursuant to their respective function and role.
Content and Implications
GR 80/2019 regulates any trading activities conducted by using various kind and type of electronic communication system, both online as well as offline. This encompass any legal relationship between Business Practitioners as well as between Business Practitioners and consumers.
Article 1 of GR 80/2019 defines e-commerce as trading which transactions are carried out through a series of electronic devices and procedures (“E-Commerce”).
GR 80/2019 emphasize the importance of due attention to the principle of goodwill, caution, transparency, reliability, accountability, balance and health and fairness in the implementation of E-Commerce. E-Commerce constitutes as a private relationship (business to business) which may be conducted between Business Practitioners, Business Practitioners and consumers, individuals, as well as government agency and Business Practitioners, in accordance with the prevailing laws and regulations. The main points regulated under GR 80/2019 are:
- The parties conducting E-Commerce;
- Requirement in an E-Commerce;
- Implementation of E-Commerce;
- Obligation of E-Commerce Business Practitioners;
- E-Commerce transaction receipt;
- Electronic advertisement;
- Electronic Offering, Acceptance and Confirmation;
- Electronic Contract;
- Personal data protection;
- Payment in an E-Commerce;
- Shipment of goods and services in an E-Commerce;
- Exchange of goods and services in an E-Commerce;
- Dispute resolution in an E-Commerce; and
- Guidance and supervision.
GR 80/2019 shall be fully implemented and adhered to by all e-commerce Business Practitioners within maximum of two (2) years from the enactment of GR 80/2019.
- The Parties Conducting E-Commerce
Any individual and company, legal entities and non-legal entities alike, both offshore as well as local, conducting E-Commerce business, are define as E-Commerce Business Practitioners under GR 80/2019 (“Business Practitioners”) and therefore are subjected to the requirement set out in GR 80/2019. GR 80/2019 categorized Business Practitioners to:
- Merchants. Merchants are Business Practitioners conducting E-Commerce business by utilizing a self-made and self-managed facilities or by utilizing facilities owned by Intermediary Services Providers, or any other electronic system providing e-commerce facilities. Merchants may be individuals or business entities;
- E-Commerce Business Administrator (Penyelenggara Perdagangan Melalui Sistem Elektronik/ “PPMSE”). PPMSE are Business Practitioners who provide electronic communication facilities used in commercial transactions. PPMSE may be individuals, business entities, general public and government agency;
- Intermediary Services Providers. Intermediary Services Providers are Business Practitioners who provide electronic communication facilities in the form of search engine services, as well as hosting and caching services. Intermediary Services Providers may be individuals or business entities.
Offshore Business Practitioners who actively made offers and/or engage in an E-Commerce with Indonesian consumers and satisfy criteria regarding (i) transaction amount; (ii) transaction value; (iii) volume of packages being shipped; (iv) amount of traffic/ accessing people, is considered to have fulfilled the physical presence in Indonesia and is conducting permanent business within the territory of the Republic of Indonesia and therefore is required to appoint a representative domiciled in Indonesia to act for and on behalf of such offshore Business Practitioners.
Any Business Practitioners engaging in E-Commerce business activities shall possess a business license. Application for such business license is submitted through Online Single Submission Licensing system in accordance with the prevailing laws and regulations. Intermediary Services Providers are excluded from this obligation provided that they are (i) not the direct beneficiary of the transactions; or (ii) not directly involved in the contractual relationship between the parties conducting such E-Commerce business.
- The Obligations of Business Practitioners
Every parties in an E-Commerce is required to obtain and provide clear identities as legal subject clear GR 850/2019 imposes numerous obligations on Business Practitioners, which can be summarized as follows:
|Intermediary Services Providers
|Support government’s program regarding the promotion of local products and/or services
|Provide correct, clear and honest information regarding the identity of such legal subject which are supported with valid data or documents.
|Submit correct, clear and honest information with regard to the condition and guaranty over the traded goods and/or services including the electronic system being utilized in accordance with the characteristics of its function and role in such transaction.
|Fulfill the regulation regarding advertising ethic in accordance with the prevailing laws and regulations.
|Protect consumer’s rights in accordance with the prevailing laws and regulations in the field of consumer protection.
|Provide customer service for consumer.
|Utilize electronic system which has obtained feasibility certificate.
|Prioritize the usage of Indonesian high-level domain (dot id) for any electronic system in the form of website.
|Prioritize the usage of Internet Protocol (IP) address in accordance with the prevailing laws and regulations.
|Utilize server devices which are located in the data center in accordance with the prevailing laws and regulations.
|Conduct registration of the electronic system in accordance with the prevailing laws and regulations.
|Fulfill the provisions regarding technical requirements stipulated by the relevant institution and obtain reliability certificate in accordance with the prevailing laws and regulations.
|Periodically submit data and/or information to government institution authorized in managing statistics.
|Observe the prevailing laws and regulations under another sector which are related to the E-Commerce business.
|Undertake precautionary or responsive measures against illegal electronic information context.
|Maintain safe, reliable, and responsible electronic system and build trustworthiness against such system for public.
|Provide electronic system protection.
|Store any data and information regarding E-Commerce business for ten (10) years for financial transaction-related data and five (5) years for non-financial transaction-related data.
|Provide and store valid receipt of E-Commerce transaction.
|Provide terms of usage or licenses agreement and provide technology control facilities and/or report admission or consumers complaint facilities for any existence of illegal information as well as any misuse of space within its electronic system, for the purpose of avoiding and responding the existence of illegal electronic information.
- Provisions regarding the Implementation of E-Commerce business
Merchants may utilize self-owned facilities as well as facilities provided by local and/or offshore PPMSE in undertaking E-Commerce business. Local as well as offshore PPMSE are restricted to provide services for Merchants who fail to fulfill the provisions stipulated under Indonesian laws and regulations. Likewise, Merchants shall ensure that they are utilizing facilities provided by a PPMSE who fulfills the terms and conditions for PPMSE in accordance with the agreed standard quality of service and the prevailing laws and regulations.
In addition, GR 80/2019 also imposes certain requirement which shall be fulfilled in undertaking certain E-Commerce activity, namely:
- Any trans-boundary E-Commerce shall be subjected to the laws and regulations regarding import or export as well as laws and regulations in the field of electronic information and transaction;
- Anyone conducting E-Commerce over goods and/or services which pose threat to the national security shall obtain security clearance from the authorized institution.
Any E-Commerce business activity shall comply with the taxation mechanism and requirement in accordance with the prevailing laws and regulations.
Electronic offering shall be based upon goodwill principle and at the minimum shall contain information regarding:
- specification of goods;
- price of offered goods and/or services;
- terms of agreement;
- mechanism and system of payment as well as terms payment;
- shipment of goods and/or services system and mechanism;
- risk and unexpected conditions; and
- limitation of liability in the event of unexpected risk.
Electronic offering may be undertaken for general public and/or for private. An electronic offering is deemed to be valid and legally binding if (i) a clear and specific declaration of intention; (ii) the terms and conditions with offering method which are honest, impartial, and fair; and (iii) certain time limitation, exist. The parties conducting electronic offering shall explain the technical mechanism and the substance of terms and conditions of granting an electronic approval. Business Practitioners are responsible for any electronic offering (including those that are invalid and non-legally binding) in its electronic system.
Electronic offering may be conducted through (i) registered mail; (ii) email; (iii) online site; (iv) electronic media; or (v) other means of electronic communication.
Electronic offering is deemed to have been accepted if the receiving party has given electronic acceptance over the terms and conditions of such electronic offering. Any electronic offering cannot be rescinded thereafter.
A valid and binding agreement occurs if the electronic acceptance is in accordance with the technical mechanism and the substance of the terms and conditions of an electronic offering.
Electronic acceptance shall be responded by the Business Practitioners in the form of electronic confirmation and/or non-electronic confirmation within certain timeframe. Electronic confirmation may be conducted by identifying, correcting or modifying data or buy order, or providing declaration of having received sufficient information and/or clearly conveying the intention of purchasing. The information contain in an electronic confirmation shall be identical to those in the electronic offering.
Payment in an E-Commerce transaction may be undertaken through electronic system which utilizes banking system facilities or other electronic payment facilities provided that any of such payment shall obtain permit from the authorize agency in accordance with the prevailing laws and regulations in the field of payment system and/or banking. In the event that PPMSE entered into a cooperation agreement with a payment system service provider, such agreement shall be reported to the Minister of Trade. In addition, Business Practitioners providing payment system service must be subjected to the standard level of security of electronic system determined in the laws and regulations.
Following the abovementioned process, Merchants are required to ship the goods and/or services to the buyer. In the event that a PPMSE enters into a cooperation agreement with other Business Player for shipment of goods and/or services, such agreement shall be reported to the Minister of Trade.
Exchange of Goods and/or Services or Purchase Annulment
Merchants and PPMSE are required to enable exchange of goods and/or services or purchase annulment for minimum two (2) days from the date on which such goods and/or services are received by the consumers and also shall be in possession of or provide payment mechanism which would enable payment refund in the event of purchase annulment.
- Protection for Consumers in an E-Commerce Transaction
Consumers who suffer losses in an E-Commerce transaction may report such losses to the Minister of Trade. The reported Business Practitioners shall settle such complaint to avoid being listed in the supervision priority list by the Minister of Trade, which are accessible by the public. The removal from such list may be undertaken if (i) there are consumers’ satisfaction reports, (ii) there are evidence of proper implementation of consumer protection, or (iii) terms and requirement stipulated under the prevailing laws and regulations have been fulfilled.
- Electronic Advertisement
Business Practitioners may create and/or distribute electronic advertisements for the purpose of marketing or promotion. Electronic advertisement are writing, sound, picture or videos created and distributed to public through various electronic media facilities and/or electronic communications channels.
Any parties creating, providing facilities for, and/or distributing electronic advertisement are liable for and must ensure that the substance or material of such electronic advertisement is not contradictive to the prevailing laws and regulations, among others are:
- shall fulfill requirement sets out in the prevailing laws and regulations in the field of broadcasting, protection of privacy and personal data, consumer protection, and shall not be contradictive to the principle of fair business competition; and
- the substance and material of an electronic advertisement must not violate the consumers’ rights and/or fair business competition principle.
- Electronic Contract
As the materialization of agreement between the parties, an E-Commerce transaction may implement electronic contract mechanism as well as other contractual mechanism. Electronic contract. GR 80/2019 defines electronic contract as an agreement between the parties made through an electronic system (“Electronic Contract”).
Electronic may be in the form of (i) contract; (ii) sale and purchase agreement; or (iii) license contract/agreement. Licensing contract/agreement encompass among others:
- end-user license agreement/contract;
- alteration, development or modification license contract/agreement;
- public license contract/agreement;
- creative common license contract/agreement;
- relicensing contract/agreement.
Electronic Contract shall not contain any standard clause which are inflicting losses to the consumer. Information contained in an Electronic Contract shall be identical with the offering and at minimum shall contain:
- identity of the parties;
- specification of the agreed goods and/or services;
- the legality of such goods and/or services;
- transaction value of the trading;
- payment terms and period;
- operational procedure regarding the shipment of goods and/or services;
- procedure for returning the goods and/or services in the event that the goods and/or services received were inconsistent with the agreed ones;
- procedure for annulment by one of the parties;
- choice of law in dispute settlement.
Electronic contract is valid and binding to the parties if:
- it is in accordance with the terms and conditions in the electronic offering;
- information contained in the electronic contract is identical with the information contained in the electronic offering;
- there was an agreement between the parties, i.e., the offering terms and conditions sent by the offering party are received and agreed by the party receiving such offer;
- made by a competent legal subject or his rightful proxy in accordance with the laws and regulations;
- there was an object; and
- the object of the transaction shall not be contradictory to the prevailing laws, propriety and public order.
In addition, Business Practitioners are required to provide downloadable and/or retainable electronic contract for the consumer. Further, in line with the prevailing regulations regarding the usage of Indonesian language, likewise GR 80/2019 also requires any electronic contract addressed to Indonesian citizen to be in Bahasa Indonesia.
Electronic Contract would be deemed null and void should a technical errors occurs due to unsecure, unreliable and irresponsible Electronic System, in which case the receiving party would not be obliged to return the goods they have received and the losses suffered shall be borne entirely by the Business Practitioners. The parties in an electronic contract would not be able to refute the validity of an Electronic Contract, unless it can be proven that an automatic system used in producing such electronic contract had suffered malfunction, in which all damages arising within are liable to the Business Practitioners.
GR 80/2019 provides assurance with regard to the usage of certified electronic signature by a PPMSE, provided that (i) such e-signature shall be certified as proven by the possession of electronic certificate; (ii) such electronic certificate is issued by hosted electronic certification organizer by using root certification authority e-signature issued by the government. Any transaction receipt with e-signature which are certified by electronic certificate issued by certified or hosted electronic certification organizer shall be considered as authentic written evidence.
- Liability in Relation with Illegal Content
PPMSE and Intermediary Services Providers are liable for any outcomes or legal consequences arising due to illegal content which may occur in an E-Commerce transaction, unless an immediate removal of such illegal content has been undertaken upon the discovery of the existence of such Illegal content by the PPMSE.
Intermediary Services Providers would be exempted from such liability if such Intermediary Services Providers are:
- an information forwarder (mere conduit), who (i) does not initiate any transmission, (ii) does not conduct any selection towards received information, and (iii) does not conduct any modification towards the transmitted information;
- retaining information for temporary time for the sole purpose of efficient communication (caching) who (i) does not conduct any modification towards such information, (ii) observes the terms and condition in accessing such information, (iii) observes the rules regarding information updates pursuant to the terms which are widely accepted and adhered to by the industry, (iv) does not interfere with illegal utilization of technology, which are widely accepted and adhered to by the industry for the purpose of obtaining the data of such utilization of information, and (v) takes immediate action to delete or non-activate the access to the retained information following the actual discovery that the information has been deleted, non-activated from the main origin of such transmission or that the court or an authorized party has commanded such deletion or non-activation;
- providing space for placing, loading or retaining information (hosting) who (i) has no actual knowledge pertaining an action or illegal information in the event of a lawsuit over damages or losses occurred, such provider has no knowledge that such action or information are of unlawful nature, or (ii) undertake immediate removal or non-activation of access towards such information following the discovery that such action or information are of unlawful nature;
- a machine for providing, searching and tracking networks and information (search engine).
- Personal Data Protection
Business Practitioners are obliged to act as a trustee in storing and retaining personal data in accordance with the general data protection standard or common business practice and to treat such personal data as if it was their own. The general data protection and common business practice at the minimum shall satisfy the following minimum protection principle:
- Personal data must be obtained rightfully from the relevant data owner by providing options and guarantee that the data owner is given reasonable effort in security and damages prevention;
- Personal data must be retained only for one or more purposes which are specifically described and rightful and may not be further processed in a manner contradictory with such purposes;
- the obtained data must be proper, relevant and limited in relation with the processing purposes as previously been informed to the data owner;
- personal data shall be accurate and up-to-date by giving chances to the data owners to update their data;
- personal data must be process in accordance with the obtainment and utilization purposes and must not be possessed for any time longer than necessary;
- personal data shall be process in accordance with the rights of data owner as provided in the laws and regulations;
- the party storing personal data shall possess proper security system to prevent leak or to prevent any kind of processing or utilization of personal data in a manner contradictory to the law as well as shall be liable for any unexpected losses or damage suffered by such personal data; and
- personal data shall not be transmitted to other country or jurisdiction outside of Indonesia unless such country or jurisdiction has been declared by the Minister of Trade as having equal standard and protection level with Indonesia.
GR No. 80/2019 also requires Business Practitioners to delete any and all personal data based on request from the data owner if the owner of such data is quitting, cancelling subscription, or cease to utilize the service and facility of such Business Practitioners.
- Dispute Resolution
In the event of dispute, the parties in an E-Commerce may seek dispute settlement by way of court litigation as well as other dispute resolution method including online dispute resolution. A consumer also may submit a lawsuit against local Business Practitioners to consumer dispute settlement body.
Similar to any other contract/private legal relationship, the parties in an E-Commerce may arbitrarily determine the law and forum of their choice. In the event that the parties fail to determine it, the choice of law and choice of forum in a trans-boundary E-Commerce would be based on international civil law. If the choice of forum in a trans-boundary E-Commerce is within the jurisdiction of Indonesia, the authorized body to settle such dispute would be Central Jakarta District Court or any other arbitration body or other alternative dispute resolution body.
In the event that an offshore business player conducting business with an Indonesian consumer did not determine the choice of law and choice of forum, dispute settlement shall be carried out through a body whose function is to settle dispute between consumer and Business Practitioners or a court of general courts in accordance with the prevailing law in the field of consumer protection.
Evidentiary Power of E-Commerce Transaction Receipt
GR 80/2019 solidifies the validness and the binding power of an e-commerce receipt transaction. Article 29 of GR 80/2019 stipulates that an E-Commerce transaction receipt, which are deemed to be valid only if it utilizes an electronic system which is in accordance with the requirement sets out in the prevailing laws and regulations in the field of electronic transaction and information, can be submitted as other evidence in the Indonesian procedural law and may not be rejected as an evidence in a trial on the basis that such receipt is in an electronic form, except for:
- E-Commerce transaction receipts which by law are required to be in written; and
- E-Commerce transaction receipts which by law are required to be made in notarial deed or other deed made by official.
E-Commerce transaction receipt also may be submitted as authentic written evidence if it uses electronic signature which is supported by a reliable electronic certificate in accordance with the prevailing laws and regulations. Further, GR 80/2019 also confirms the validity of the usage of an E-Commerce transaction receipt in facilitating trans-boundary electronic transaction provided that it utilizes competent system and relevant authorized agency in accordance with the prevailing laws and regulations.
- Administrative Sanctions
Business Practitioners who violate the requirement and terms stipulated under GR 80/2019 would be imposed with administrative sanctions in the form of:
- written warning;
- inclusion in the supervision priority list;
- inclusion in the blacklist;
- temporary blocking over PPMSE services by the authorized agency; and/or
- revocation of business license.