#Asia Indonesia revises foreign ownership regulation for e-commerce. Here’s what you need to know

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Foreigners will be entitled to 49 per cent of ownership, instead of 100 per cent as mentioned in February

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In February, the Indonesian government announced that it would allow 100 per cent of foreign ownership of e-commerce companies as part of its e-commerce roadmap agenda.

However, this week, the government revised the announcement by legalising the ‘Presidential Regulation No. 44 Year 2016′ which also includes the Negative Investment List (DNI), a list of business sectors that are to be exempted from foreign ownership.

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

E-commerce companies falling into the categories includes online marketplaces, daily deals websites, price-grabber sites, and online ad listing platforms with investment value of less than IDR100 billion (US$7 million).

E-commerce enabler services such as logistics companies and on-demand transportation services are also included in the category.

Also Read: Take note: Indonesia wants e-commerce startups to get accredited

The exception was only for venture capital firms which are allowed to have up to 85 per cent foreign ownership.

Companies in which foreign ownership have exceeded the allowed percentage must either sell their stake to a local investor, trade it in local stock exchange, or turn it into treasury stock.

According to a report by Indotelko, The Indonesian e-Commerce Association (idEA) generally accepted the new regulation though they also expressed their objection.

“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),” said idEA Chairman Daniel Tumiwa.

Image Credit: Toa Heftiba on Unsplash

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