Indonesia changes foreign ownership regulations for e-commerce

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Indonesia Changes Foreign Ownership Regulations for e-Commerce –

In a statement issued in February, Indonesia said it will allow foreign ownership of e-commerce sites to be 100 per cent – but the government has taken a 180 on that statement and taken it back to the original 49 per cent as mentioned previously.

This week, the Indonesian government revised the announcement by legalizing the “Presidential Regulation No. 44, Year 2016.”

That particular regulation also includes the Negative Investment List of Indonesia – a list of business sectors that are to be exempted from foreign ownership.

According to the regulation adjustment, instead of the business ownership being 100 per cent, foreign investors would only be allowed up to 49 per cent control of an e-commerce company.

Indonesia defines e-commerce companies as the following:

  1. Daily deals websites
  2. Price-grabber sites
  3. Online ad listing platforms
  4. And those with investment values less than $7 million (USD)
  5. Logistics companies
  6. On-demand transportation services

The only exception to the new rule will be for venture capital firms which are allowed up to 85 per cent foreign ownership.

Those companies with a larger percentage foreign ownership must sell their stake to a local investor – or they can trade it on the local stock exchange, or turn it into treasury stock.

A report posted by Indotelko, the Indonesian e-Commerce Association said: “We understand though we don’t agree with it. We understand and accept the reasoning behind the limitation of foreign ownership in the DNI (Daftar Negatif Investasi, or Negative Investment List in english).”

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