Indonesian Government advocates "light touch" in regulating online businesses as it opens up E-commerce sector to foreign investors

In a legal framework which is prone to unnecessary or over-regulation, it came as a welcome relief when the Indonesian Minister for Trade advocated a "light touch" when it comes to regulating online businesses. 

According to the Ministry for Trade, Thomas Lembong, burdensome and complicated regulations will hamper small business players and restrict their ability to compete with larger businesses with the financial wherewithal particularly when the government intends to open its door to foreign investment in the E-commerce sector. In addition, the government recognizes the need to protect innovators particularly SMEs.  He believes that a "light touch" approach will encourage businesses to experiment with innovation without the hindrance of "regulatory burden".

This might explain the holding back of planned regulations under the authority of Electronic Information and Transaction Law, the drafts have been in circulation during the past year.   These drafts include:

  1. Regulation of Minister of Communication and Information regarding Information Protection Management System
  2. Regulation of Minister of Communication and Information regarding Electronic System Software
  3. Regulation of Minister of Communication and Information regarding Protection of Personal Data in Electronic Systems
  4. Regulation of Minister of Communication and Information regarding Technical Guidelines on Data Centre

These draft regulations have caused concern because of a rather prescriptive approach such as the requirement for website operators to be certified according to specific industry standards and locating of data centres within Indonesia.

The trade minister, a Harvard University graduate, said that the United States provides a useful example where the the government seem to take a minimalist approach in terms of regulatory compliance.

This sensible approach is to be applauded as it demonstrates a genuine desire to be attuned to the needs of businesses particularly fledgling local startups with world-beating ambition. We are cautiously optimistic of this new direction if the administration of the day can implement this attitude into its policies and reconsider the above draft regulations.