Urgent Regulations Needed to Support Indonesia's E-commerce and Ensure Sustainable Digital Investment

Jakarta, INTI – Indonesia's e-commerce sector continues to show rapid growth, driven by increasing internet penetration and changing consumer behavior that is becoming more accustomed to online shopping. However, behind this growth lies an urgent need for regulations that can sustainably support the digital ecosystem. Without appropriate regulations, the sustainability and competitiveness of this sector could be at risk, including in terms of attracting and retaining investments.

According to a report from Statista, the value of Indonesia's e-commerce market is projected to reach USD 56.6 billion by 2024, a significant increase from USD 21 billion in 2020. This makes Indonesia one of the largest e-commerce markets in Southeast Asia. In line with this, data from the Indonesian Internet Service Providers Association (APJII) reveals that by 2023, the number of internet users in Indonesia had reached 210 million people, with 81% of them using the internet for online shopping.

Although these numbers highlight the tremendous market potential, there are still many challenges that the government and industry players must address. One of the main challenges is the need for regulations that support the growth of this sector, protect consumers, and ensure that Indonesia remains an attractive investment destination.

Consumer Protection in the Digital Era

In an increasingly complex digital environment, consumer protection becomes a crucial issue that requires special attention. Consumers often face risks such as fraud, purchasing counterfeit products, or unclear services. With the increasing number of online transactions, it is important for the government to strengthen regulations that protect consumer rights.

Many believe that the transparency and accountability of e-commerce platforms still need to be improved. Consumers often do not have easy access to report complaints or obtain quick resolutions when problems arise. Therefore, regulations requiring e-commerce platforms to provide more flexible return policies and transparency in the refund process are seen as essential steps.

"Consumer trust in e-commerce must be maintained. Regulations governing return and refund rights need to be strengthened so that consumers feel safe and protected when transacting online," said Deni Kurniawan, a digital economy analyst from the University of Indonesia.

Data Security Amid Cyber Threats

Data security is also a major concern in the development of the e-commerce sector. With the increasing volume of online transactions, the risk of data breaches is higher. Indonesia itself still faces challenges in enforcing stringent personal data security regulations.

Many e-commerce platforms still do not fully comply with global security standards, which can jeopardize consumers' personal data. Stricter regulations and heavier penalties for data security breaches are expected to raise security standards in Indonesia. This will also provide a sense of security to investors looking to enter Indonesia's e-commerce market.

"E-commerce companies must ensure that consumers' personal data is well protected. Firm regulations will encourage companies to enhance their security systems," said Yusuf Hidayat, a cybersecurity expert from the Indonesian Digital Research Institute.

E-commerce Tax: Creating a Level Playing Field

Another issue of concern is the taxation of the e-commerce sector. Fair taxation is considered important to create a level playing field between online and offline businesses. However, the challenge of implementing this policy is not easy.

Many MSMEs involved in e-commerce face difficulties in fulfilling their tax obligations due to complex bureaucracy. Moreover, oversight of foreign platforms operating in Indonesia also requires special attention. A simple and inclusive tax system is expected to increase tax compliance without hindering the growth of this sector.

"The government needs to create a fair and non-burdensome tax policy, especially for MSMEs that are just starting out in e-commerce. This is important so they can grow without being burdened by complex regulations," said Anisa Putri, Chairwoman of the Indonesian Digital MSME Association.

Logistics Infrastructure: The Key to E-commerce Smoothness

Aside from regulatory aspects, logistics infrastructure also plays a key role in supporting the growth of e-commerce in Indonesia. Efficient infrastructure is essential to ensure that products can be delivered quickly and safely across Indonesia. However, as an archipelagic country, Indonesia faces significant geographical challenges in developing its logistics infrastructure.

High shipping costs and limited access to remote areas are major obstacles for e-commerce players. Regulations encouraging investment in logistics infrastructure, such as providing incentives for companies developing distribution networks in remote areas, are expected to help overcome these challenges.

"The development of equitable logistics infrastructure will open up access for e-commerce players to markets in remote areas. This will reduce the gap between major cities and remote areas in terms of access to products and services," said Agus Santoso, Director of Logistics Indonesia.

Healthy Competition: Preventing Monopolies in E-commerce

Creating healthy business competition is also a priority in regulating the e-commerce sector. Existing regulations are still considered inadequate to address business practices that use market dominance to stifle competition. This is particularly evident in large platforms that dominate the market and hinder the growth of small businesses.

Strengthened anti-monopoly regulations and transparency in business practices are expected to create a conducive environment for the growth of small and medium-sized enterprises. This will allow small businesses not only to survive but also to thrive amidst intense competition.

"The government must ensure that anti-monopoly regulations in the e-commerce sector are effectively enforced. This is important to protect small and medium-sized businesses, which are the backbone of Indonesia's digital economy," said Rizky Aulia, Executive Director of the Institute for Digital Economy.

Challenges and Opportunities for Investment in the E-commerce Sector

Meanwhile, Indonesia's e-commerce sector also faces various challenges that need to be addressed to attract more investment. One of the main challenges is the digital divide between urban and rural areas. Although internet penetration in Indonesia continues to increase, many areas are still not covered by adequate digital infrastructure.

In addition, regulatory uncertainty often becomes a barrier for investors. Sudden regulatory changes or inconsistent policies can disrupt long-term business planning. Therefore, policy stability and predictability are important factors in attracting investment to the e-commerce sector.

However, behind these challenges lie great opportunities for investors. With a large population and increasing internet penetration, Indonesia has a very large e-commerce market potential. Government support for this sector, both in the form of supportive regulations and investment incentives, also adds to its attractiveness.

"The opportunities in Indonesia's e-commerce sector are immense, especially with the increasing government support. Investors who can overcome the existing challenges will surely reap significant benefits," said Tony Gunawan, a market analyst from PT. Mandiri Sekuritas.

Proper regulations are key to ensuring that the growth of e-commerce in Indonesia is not only sustainable but also fair and inclusive. With strong consumer protection, guaranteed data security, fair tax policies, and efficient logistics infrastructure, Indonesia can create an e-commerce ecosystem that is attractive to investors while protecting public interests.

Indonesia's success in regulating this sector will not only have a positive impact on the national economy but will also enhance Indonesia's competitiveness in the global market. Challenges exist, but with the right regulations and strong partnerships between the government, private sector, and the public, the opportunities offered by the e-commerce sector can be maximized.