Indonesia released its 14th policy package that offers financing alternatives and tax incentives, mainly for companies working in digital and creative industries, as part of efforts to benefit from the growing popularity of e-commerce and promote entrepreneurship, a senior minister said on Thursday (10/11).
Coordinating Economic Affairs Minister Darmin Nasution said the size of Indonesia’s e-commerce market is expected to reach $130 billion by 2020, or about one-sixth of Indonesia’s gross domestic product last year, bolstered by a high number of internet users.
The package – which is also known as a roadmap for e-commerce – offers a guideline for ministries and other government agencies to create policies that support the creation of startups through ease of obtaining funding, availability of skilled manpower and reliable infrastructure.
“We never had a national blueprint on e-commerce that could become a reference for stakeholders,” Darmin said at the State Palace in Central Jakarta.
The roadmap covers several sectors, including funding, tax, consumer protection, education, logistics, communication infrastructure and cyber security.
From Funding to Cyber Security
In this package, the government seeks to make access to funding easier for small-medium enterprises in tech-related businesses, especially those that develop smartphone applications.
Startups and other creative companies typically have difficulties in securing loans, due to a lack of tangible assets when they start.
Government-subsidized bank loans, known as KUR, are expected to play a bigger role in funding startups or small and medium enterprises in the sector.
The government also plans to use the proceeds from the so-called Universal Service Obligation, or funds the government collects from telecommunication operators, to help fund SMEs involved in digital businesses or startups that develop e-commerce platforms.
This fund has been collected since 2005 with an initial target to broaden telecommunication access in the country, especially in rural areas where private investment is scarce.
The government also seeks to support the growth of crowdfunding that serves as alternative funding for startups, that is raised collectively from many people. In this scheme, each contributes a small amount of money that is usually for a venture that has social impact, normally called social entrepreneurship.
The government also seeks to introduce small tech ventures to so-called angel investors, or those willing to invest in the early stages of a startup.
The government further seeks to reduce corporate income tax on those doing tech-related business with turnovers of less than Rp 4.8 billion ($360,000) per year. At the same time, they will also find it easier to secure permits in their respective areas.
Other aspects of the policy package involve the government seeking to better protect consumers performing transactions in the e-commerce industry, which include the payment process up to dispute resolution.
Related to this, the government also drafted a national cyber security system to improve safety in e-commerce transactions, increase public awareness of potential cybercrime and create a procedural system that has to be implemented by e-commerce players related to customer data.
In logistics, the government seeks to help the e-commerce industry by empowering state-controlled postal service Pos Indonesia. It is expected to assist e-commerce players with the delivery of goods.
The government will also create a team to monitor and evaluate the implementation of the e-commerce roadmap.
“Starting from today, the strategy formulation for each of the initiatives has begun,” Lis Sutjiati, an adviser to Communication and Technology Minister Rudiantara, told the Jakarta Globe.