Yes, if they actively conduct business with Indonesian users, they must appoint a local representative and register.
Indonesia is one of Southeast Asia’s largest digital economies, driven by a young, tech-savvy population and a surge in mobile internet penetration. With more than 270 million people and increasing online purchasing habits, the Indonesian e-commerce market is forecast to reach over USD 80 billion by 2025. Platforms like Tokopedia and Shopee dominate online retail, while digital wallets like GoPay, OVO, and DANA facilitate seamless transactions.
But behind the convenience lies a growing web of legal obligations. Every business involved in digital transactions must navigate Indonesian laws on electronic information, personal data, online trade, and consumer protection. This article explores the legal aspects of e-commerce and digital transactions in Indonesia and how businesses can remain compliant.
The main legal framework for digital transactions in Indonesia is Law No. 1 of 2024 on Electronic Information and Transactions (commonly referred to as UU ITE). This updated law replaces and amends the previous UU ITE Law No. 11 of 2008 and its amendments. UU ITE regulates electronic contracts, digital communications, defamation, content moderation, and digital evidence.
Key Provisions:
UU ITE is the cornerstone for regulating the behavior of individuals and businesses in the digital ecosystem.
Law No. 8 of 1999 on Consumer Protection applies to both offline and online transactions. It mandates fair business practices, product guarantees, and transparency. E-commerce businesses must provide:
Violations may lead to administrative sanctions or civil lawsuits.
These rules mandate the registration of online business actors and impose content, pricing, and advertising obligations.
Under the Online Single Submission (OSS) system, all businesses—including e-commerce operators—must obtain:
Foreign e-commerce players must comply with local representation requirements.
E-commerce operators are subject to:
The Indonesian Directorate General of Taxes (DGT) monitors compliance and may require tax registration for foreign digital companies.
UU ITE recognizes electronic contracts as legally binding as long as they meet:
Digital signatures certified by a trusted Certification Authority (CA) have legal force and are increasingly used in B2B and B2C transactions.
Law No. 27 of 2022 on Personal Data Protection (PDP Law) is Indonesia’s first comprehensive data privacy regulation. It:
E-commerce platforms must adopt strong privacy policies, encrypt user data, and secure cloud infrastructure.
Indonesia does not yet have a standalone cybersecurity law. However, cybersecurity provisions are embedded in:
Businesses are advised to implement strong firewalls, conduct periodic IT audits, and train staff on data handling.
Digital Payment Systems and Financial Technology (FinTech)
Bank Indonesia and the Financial Services Authority (OJK) regulate payment services. Businesses must:
E-wallet operators must comply with customer fund protection rules and anti-money laundering (AML) obligations.
OJK oversees lending-based FinTech (e.g., peer-to-peer lending), while Bank Indonesia supervises payment systems. Both regulators:
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Online sellers importing products into Indonesia face:
Platforms like Amazon and Alibaba must appoint local representatives for compliance.
Foreign websites selling to Indonesian customers must comply with Indonesian laws. However, jurisdictional enforcement remains challenging without:
Copyright, Trademark, and Trade Secrets
Digital businesses must:
Platforms are liable if they fail to remove infringing listings upon notice.
Arbitration, Mediation, and Court Litigation
Disputes in online transactions may be resolved through:
E-contracts may include dispute resolution clauses specifying forum and governing law.
Violations of e-commerce laws may result in:
Directors and company management may be held personally liable in serious violations.
At Kusuma & Partners Law Firm, we have advised numerous startups, digital platforms, and multinational corporations entering the Indonesian market. From obtaining OSS licenses and structuring compliance frameworks, to drafting online terms & conditions and privacy policies, we ensure your business runs legally and smoothly. Never copy-paste templates. Ensure all legal documentation reflects your actual business model and complies with Indonesian law.
The legal aspects of e-commerce and digital transactions in Indonesia are evolving rapidly. Businesses must navigate complex requirements related to electronic contracts, data privacy, licensing, and taxation. The enforcement of Law No. 1 of 2024 (UU ITE), the PDP Law, and sector-specific rules requires businesses to adopt a proactive legal strategy.
Need help navigating e-commerce laws in Indonesia? Reach out to Kusuma & Partners Law Firm. Our expert legal team is ready to support your compliance journey. Fill in the form below to get legal expert guidance from Kusuma & Partners Law Firm.
“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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