The booming e-commerce sector in Indonesia was previously closed to foreign investors, but now the government has decided to ease its stance.
According to the Jakarta Post the move comes as Indonesians are already shopping online from foreign e-commerce players, even if they do not have a physical presence in the country.
– Rather than letting all the profits go abroad, we will allow them to operate here with 100% ownership, says Information and Communication Minister Rudiantara.
By allowing foreigners to own 100% stakes in local e-commerce players Indonesia is taking a step that India are still struggling to take.
Investments With Limitations
India is one of the fastest growing e-commerce markets but does not allow international retailers to sell products online. The country also has strict regulations regarding foreign direct investment (FDI). Indian rules only allow FDI in e-commerce companies that manufacture their own products in India to sell online.
The Indonesian government will however limit foreign investment to large sized e-commerce businesses. Small and medium-sized enterprises (SME) are not allowed to receive foreign investment.
– The minimum investment requirement is intended to protect the Indonesian small and medium-sized enterprises. If the investment is worth Rp10 billion ($722 300) or less, it will be classified as an SME investment, which is prohibited for foreign investors, says Investment Coordinating Board chairman Franky Sibarani.