Indonesia only provide 33% of eCommerce market for foreign players

Ilustrasi (dok)

Jakarta (IndoTelko) - Indonesian Investment Coordinating Board (BKPM) has begun to discuss investment guide for foreign investors who have been proposed by the relevant authorities, on Wednesday (25/11).

There are three sectors discussed in the first meeting yesterday, namely the communication and information technology, tourism, and health.

There are 95 proposal submitted from the three sectors, consisting of 35 health sector proposals, 32 from the tourism sector and 28 proposals from the communications and informatics sector.

"For eCommerce businesses, the Ministry of Communications and Information agreed that the business type which was initially closed to foreigners is then opened. However, the market share for foreign players is only 33%. Besides, there are also restrictions on the investment value of the global investors, "said Head of BKPM Franky Sibarani, yesterday.

The Communication and Information Technology Ministry stated that the maximum foreign investment for such business is limited to 15 million US dollar to create
opportunity for local startups to grow.

Meanwhile, proposals on other sectors the ministry has not changed anything from the previous provisions. For example, the field of business communications and providers, the manager (operation and leasing) and construction service provider for telecommunication towers remain closed to foreigners.

Foreign player portion in the radio and television broadcasting organizations community (LPK) (reserved for SMEs) as well as telecommunication network that integrates with a maximum of 65% of telecommunications services.

Blanja.com CEO Aulia E Marianto, explained that there are five important element in eCommerce that must be understood.

The first element is the platform of eCommerce. The form of the site, the system used the method of use, the system of buying and selling, and various other features that are the only element controlled by the eCommerce entrepreneurs.

One of the biggest inhibitors for platform developments is limited capital. The next elements may not be separated from the seller and buyer that is the payment system. Currently the available payment system has become its own obstacles. The last element is logistic because eCommerce is also very concerned with the existing logistics business.

Previously, the United States (US) through its Ambassador to Indonesia Robert O Blake, proposed that the 11 attractive sectors to US investors can be more open for foreigners.

The proposed sectors to be more open, including eCommerce sector, insurance, energy, renewable energy, film making and cinema, telecommunications, manufacturing, pharmaceutical, distributorship, cold storage and electronic retail and footwear.

According to Presidential Decree No. 39 Year 2014 regarding the investment guidelines, the sectors proposed to be open by the US is largely closed to foreigners, such as eCommerce, filmmaking and cinema as well as retail to electronics and footwear. Meanwhile foreign ownership in other sectors such as distributorship and cold storage are also limited to 33%.

Indonesian eCommerce is considered to be one of the sexiest in Southeast Asia. Aggressiveness also shoed by the businesses players where advertising spending for this sector until the third quarter of 2015 showed the strongest growth of 50% year on year to 2.3 trillion.(es)