The development of e-commerce industries in Indonesia has been rapidly increasing, this is shown by nearly 1,700 start-up companies have been established in Indonesia and making Indonesia the fourth largest country in the world with the largest number of start-up companies. The rapid development of e-commerce industries in Indonesia has also successfully resulted the establishment of ‘unicorn’ companies in Indonesia, such as Go-Jek, Traveloka, Bukalapak and Tokopedia.
Almost all of the ‘unicorn’ companies in Indonesia are engaged in the Market Place business activities. Based on the Indonesian standard Business Classification (“KBLI”) regulation which is issued in 2017, Market Place is classified under the Web Portal business activities. Currently, Web Portal is divided into 2 (two) KBLI codes: (i) KBLI code 63121 (Web Portal and/or Digital Platform without Commercial Purposes); and (ii) KBLI code 63122 (Web Portal and/or Digital Platform with Commercial Purposes). Based on our recent consultation with a BKPM official, Market Place business activities fall under KBLI code 63122.
If foreign investors intend to undertake the business for 100% foreign ownership, then there is a significant difference on the investment value limitation between KBLI code 63121 and KBLI code 63122. KBLI code 63121 is 100% open for foreign investment with investment value of more than Rp10,000,000,000 (ten billion Rupiah), while KBLI code 63122 is 100% open for foreign investment with investment value of more than Rp100,000,000,000 (one hundred billion Rupiah) or 49% open for foreign investment with investment value of more than Rp10,000,000,000 (ten billion Rupiah).
In the previous KBLI regulation (in 2015), Web Portal business activities were only regulated under one KBLI code, which is KBLI code 63120, and it is only for Web Portal with non-commercial purposes. Web Portal activities with commercial purposes was only regulated under the Presidential Regulation no. 44 of 2016 regarding Lists of Business Fields that are Closed to and Business Fields that are Open with Conditions to Investment.
Pursuant to our recent verbal confirmation from a consultation officer at BKPM, for foreign investment companies that have obtained investment business license from BKPM in the field of Web Portal with KBLI code 63120, then those companies are subject to the implementation of the Grandfather Clause. Therefore, those companies are permitted to undertake business activities of Web Portal with commercial purposes as per KBLI code 63122 in the KBLI regulation in 2017.
We encourage the authorized government institution to make the verbal confirmation as mentioned above into a written discretion or regulation in order to further increase the rapid development of e-commerce industries in Indonesia.
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Published by: Fariz Ghassen
Published on: 27 Nov 2018
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