Welcoming The New Trade Law
    Category: Column By : Eddy Leks Read : 1339 Date : Sunday, April 06, 2014 - 10:56:00

    After 80 years, Indonesia will finally have a new trade law. The House of Representatives ratified the draft bill in February. The official number of the law is yet to be published. The last trade law, the BerdrijfsreglementeringsOrdonnantie, was a Dutch colonial law enacted in 1934. 

    As trade activities are one of the main driving forces of national development, it is important that trade laws and regulations are harmonized on a national level and also to prepare Indonesia for more globalization.

    The draft bill has two categories: trade and services. Trade covers domestic trade, overseas trade, border trade, standardization, e-commerce, trade protection, empowerment of cooperatives and SMEs, export improvement, international trade cooperation, and trade information system. The service category covers business, distribution, communication, education, environment, financial, construction, healthcare, recreation and sport, tourism, transportation, and other types of services to accommodate future development.

    Many implementing regulations already cover the main provisions of the draft bill, so the intent is more to harmonize the existing laws and regulations. Three points of interest are standardization, e-commerce, and criminal sanctions.

    Under the draft bill, all goods traded domestically must fulfill either the National Standard of Indonesia (StandarNasional Indonesia) or a technical requirement. Goods that do not fulfill the SNI cannot be traded. So too for services, if they do not fulfill the SNI requirement, technical requirement, or obligatory qualifications, they cannot be domestically traded. Violations can bring heavy sanctions, with a maximum of five years imprisonment and/or a maximum fine of Rp 5 billion. The strong sanctions show that the government would like to enhance the quality of domestic goods and services.

    Other important provision is on e-commerce. E-commerce development in Indonesia is noteworthy. According to Internet researcher Statista, Internet users in Indonesia may reach 103 million by 2016. Under the draft bill, every entrepreneur that trades goods or services electronically has to provide complete information that contains the identity and legal status of the entrepreneur, the technical requirement of the goods or services, the price and terms of payment, and the means of delivery. Electronic trading must comply with the prevailing law on information and electronic transactions. For an e-commerce entrepreneur that fails to comply with these rules could face a maximum of 12 years imprisonment and/or a maximum fine of Rp 12 billion.

    Another significant element of the draft bill is its heavy criminal sanctions. If the entrepreneur does not have the correct business license they can face a maximum of four years imprisonment or a maximum fine of Rp 10 billion. Pyramid schemes are also prohibited, and those convicted of using them face a maximum of 10 years imprisonment and/or maximum fine of Rp 10 billion.

    Criminal sanctions are the substantial threats for entrepreneurs. Violations are not always because of the willful misconduct of the entrepreneurs, but can occur because of ignorance. In the draft bill, however, ignorance is no longer tolerated. It is therefore time for every entrepreneur to perform an internal audit of their companies and ensure they comply with the provisions on the draft bill that will soon become law. Requirement for compliance will only become more stringent in the years to come.