Indonesia to Liberalize FDI Rules for E-Commerce

May 31, 2016

Indonesia to Liberalize FDI Rules for E-Commerce The Indonesian government this week indicated it will make regulatory changes it hopes will supercharge growth in an e-commerce market that is already growing quickly. Mirroring some recent moves made by India, Indonesia’s Investment Coordinating Board (BKPM) is finalizing guidelines that will permit 100 percent foreign direct investment in some e-commerce businesses. The BKPM will allow total foreign ownership of e-commerce businesses with a minimum investment of Rp 100 billion (around $8 million). For investments below that figure, the foreign ownership will be capped at 49 percent, according to a report in the Jakarta Post.

Pratito Soeharyo, Indonesia’s director for business empowerment, said the proposed rules are designed to encourage major players from abroad to invest while protecting smaller e-commerce businesses in a rapidly growing space. Soeharyo predicted the new rules will be completed “next month.”

The new FDI rules are part of a government roadmap for Indonesian e-commerce that also includes improving communication and logistics infrastructure, public financing and tax breaks for e-commerce startups and an overhaul of business licensing requirements.