Finally, trade sector in Indonesia has a new legal framework after 80 years. All this time, the law product that is equivalent to the Law (Undang-Undang) is legal Dutch colonial Bedrijfsreglementerings Ordonnantie of 1934 which regulates business licensing. This Trade Law contains 19 Chapters and 122 Articles. The Law also mandates some Government Regulation (PP), Presidential Decree (Decree), and the Minister Regulation.

The definition of trade in this Law is the activities associated with the transaction of goods and/or services within the country and beyond the borders of the country with the purpose of transferring rights of the goods and/or services to obtain a reward or compensation.

DOMESTIC TRADE

The Government regulates domestic trade activity through policy and control.

Domestic trade policy regulates at least:

  1. harmonizing regulations, standards, and procedures for trade activities between the central and regional and/or inter-regional;
  2. structuring the licensing procedures for the continuity flow of goods;
  3. availability and affordability of goods fulfillment of society’s basic needs;
  4. development and reinforcement of business in the field of domestic trade, including cooperatives and micro, small, and medium enterprises;
  5. facilitation of the development of trade facilities;
  6. increased use of domestic product;
  7. inter-island trade, and
  8. consumer protection.

Meanwhile, domestic trade controls regulates licensing, standards and prohibition and restriction.

Distribution of Goods

Distribution of goods are traded to consumers indirectly or directly. It can be performed by the distribution business enterpreneurs.

Distribution of goods is performed indirectly by using general distribution chain as follows:

  1. distributors and its network,
  2. agencies and its network, or
  3. franchise.

While distributing goods is performed directly, it uses a special distribution system through the following direct selling;

  1. single-level: sales of particular goods that are not through multilevel marketing network; or
  2. multilevel:sales of particular goods through multilevel marketing network developed by business partners who work on commission and / or bonuses based on the sales of goods to consumers.

Trade Facilities

Government, local government, and/or business enterpreneur shall develop the market facility individually or jointly in traditional market, shopping malls, department stores, warehouse, grocery, commodity auction markets, commodity futures markets, or other trade facility.

Trade in Services

Service provider engaged in trade in services shall be supported technically by competent personnel under the legislation. Meanwhile, the service provider who does not have a competent technical personnel may be subject to administrative sanctions in the form of: a written warning, temporary suspension of business activities, and/or revocation of business licenses. The government may grant recognition to the competent technical personnel from other countries under mutual recognition bilateral or regional agreements.

The Increased Use of Domestic Products

The increased domestic products is performed by the promotion, dissemination, or marketing and implementing the obligation using domestic products under the legislation.

Inter-Island Trade

Governments regulates trade between the island to integrate the domestic market. The regulation is directed to:

  1. maintain a balance of inter-regional which have surplus and minus area;
  2. reduce the price gap between regions;
  3. secure distribution of goods restricted its trade;
  4. developing a superior product marketing each area;
  5. provides facilities for inter-island trade;
  6. prevent the entry and circulation of contraband goods in the country;
  7. prevent smuggling goods out of the country, and
  8. eliminate trade barriers between islands.

Licensing

Business entrepreneur conducting trade activity shall have licenses granted by the Ministry of Trade. Minister may delegate or assign permissions to local government administration or a technical institutions. The Minister may also provide an exception to the requirement to hold a license in the field of trade.

Control of Necessity Goods and/or Important Items

Government and local government control the availability of basic needs goods and / or essential goods throughout the territory of the Republic of Indonesia in a sufficient, good quality, and reasonable price. The government and local government are also obligated to protect and encourage increased production of goods and basic needs essential items in the country to meet national needs.

Prohibition and Restrictions on Trade in Goods and / or Services

Any business entrepreneur is prohibited or restricted in trading goods and/or services that are defined as prohibited or restricted goods and/or services for trading. Goods and/or services that is prohibited will be further stipulated in Government Regulation.

FOREIGN TRADE

The government regulates foreign trade activity through policy and control.

Foreign trade policy at least includes:

  1. increase in the number and types of products and value-added exports
  2. harmonizing standards and procedures for trade activities with trading partners;
  3. institutional strengthening in the sector of foreign trade;
  4. development of facilities and infrastructure of foreign trade , and
  5. protection and national security interests of the negative impact of foreign trade.

Meanwhile, foreign trade control regulates licensing, standards, and restrictions and limitations.

Export

Exports of goods is carried out by the business enterpreneur registered and established as exporter, unless otherwise specified by the Minister. Exporter is solely responsible for the goods exported which means exporters are responsible for any consequences arising from the goods exported. If the exporter is not responsible for the exported goods, it shall subject to administrative sanctions in revocation of license, approval, recognition, and/or decree in the field of trade.

Import

Import of goods can only be performed by importers who have identification as importer according to the Minister Decree. Meanwhile, in certain cases, import of goods can be performed by importers who do not have identification as importer. Importer is solely responsible for the imported goods which means importers are responsible for any consequences arising from the goods imported. If the importer is not responsible for the imported goods, it shall be subject to administrative sanctions in revocation of license, approval, recognition, and/or decree in the field of trade.

Export and Import Licensing

In relation to export and import activities, the Minister requires exporters and importers to have licenses that may be approval, registration, decree, and/or recognition. Minister also requires exporters and importers to have the licenses to perform the temporary export and import. The Minister may delegate or assign permissions to local government administration or a technical institutions.

To increase the national competitiveness, Minister may propose additional relief or imposing customs duties on temporary imported goods.

Prohibition and Restriction of Export and Import

All goods can be exported or imported, unless prohibited, restricted, or otherwise specified by law. Exporter is prohibited to export the goods defined as prohibited exported goods and importer is prohibited to import the goods defined as prohibited imported goods.

BORDER TRADE

Indonesian citizen who resides in the territory of the Republic of Indonesia directly adjacent to another country can perform border trade with residents of other countries who reside in the border region. The border trade can only be performed at borders land and sea borders stipulated in Government Regulation. It is performed under the bilateral agreement under the laws and regulations.

STANDARDIZATION

Standardization of Goods

Trade of goods in the country shall comply with Indonesian National Standard (SNI) or technical requirements enforced as mandatory. Business enterpreneur are prohibited to trade domestic goods that do not comply with the SNI or technical requirements enforced as mandatory. SNI or the atechnical requirements shall be specified by the Minister or the Minister under the duty of government affairs and responsibilities.

SNI or technical requirements shall be performed by considering :

  1. security, safety, health, and the environment;
  2. competitiveness of national producers and fair competition;
  3. ability and preparation of national business, and / or
  4. infrastructure preparation of conformity assessment bodies.

Standardization Services

Service providers are prohibited to trade domestic services that do not comply with the SNI, technical requirements, or qualifications enforced as mandatory. Enforcement of SNI, technical requirements, or qualifications as specified by the Minister or Ministers that comply with the duty of government affairs and responsibilities.

Prevailing SNI, technical requirements, or qualifications shall be performed by considering :

  1. security, safety, health, and the environment;
  2. competitiveness of national producers and fair competition;
  3. ability and preparation of national business;
  4. infrastructure preparation of conformity assessment bodies, and / or
  5. culture, customs, or traditions based on local knowledge.

ELECTRONIC TRADING SYSTEM

Any business enterpreneur who trades goods and/or services by using the electronic system shall provide data and/or completed and corrected information. Any business entrepreneur is prohibited to trade goods and/or services by using an electronic system incompatible with the corrected data and/or information. using electronic systems shall comply with the provisions stipulated in the Law on Information and Electronic Transactions. Data and/or information at least contains:

  1. identity and legality of Business Entrepreneur as producer or distribution business enterpreneur;
  2. technical requirements of offered goods;
  3. technical requirements or qualification of offered services;
  4. price and mode of payment of goods and/or services, and
  5. method of goods delivery.

PROTECTION AND SECURITY OF TRADE

Government stipulates the policy of trade protection and security and carried out by the Minister of Trade. Trade protection and security policies include:

  1. defense against dumping and/or subsidizing charges on the national exported goods;
  2. defense of the exporter if its exported goods, as assessed by its trading partner countries, has incurred a surge of imports in that country;
  3. defense of national exported goods that is damaged as a result of the implementation of policies and/or regulations of other countries;
  4. imposition of anti-dumping measures or actions to address remuneration unfair trade practices;
  5. imposition of trade protective measures to cope with a surge in imports, and
  6. defense of national policies related to trade are opposed by other countries.

COOPERATIVE EMPOWERMENT AND MICRO, SMALL AND MEDIUM ENTERPRENEUR

Government and/or local government empower the cooperatives and micro, small, and medium enterprises in the trade sector. The empowerment comprises facilities, incentives, technical guidance, access and/or capital support  promotional support, and marketing.

EXPORT DEVELOPMENT

Export Development

Government shall develop business enterpreneur to develop export to expand access to goods and services produced domestically. The guidance can be incentives, facilities, information market opportunities, technical assistance guidance, and promotion and marketing assistance to develop exports.

Trade promotion

To expand market access for goods and/or services in domestic production, the government and/or local government must introduce the goods and / or services by:

  1. trade promotion held in the country and/or abroad and/or
  2. participate in the trade promotion in the country and/or abroad.

Trade promotion can be formed by trade exhibition, and trade missions. Trade promotion includes international trade exhibitions, trade national shows or local trade shows.

INTERNATIONAL TRADE COOPERATION

To improve market access and protecting as well as safeguarding the national interest, the Government may establish trade cooperation with other countries and/or institutions / international organizations. Trade cooperation can be carried out through international trade agreements.

TRADE INFORMATION SYSTEM

Trade information system includes the collection, processing, delivery, management, and dissemination of trade data and/or trade information. Data and/or information shall contain at least the trade data and/or information of domestic trade and foreign trade and are presented accurately, quickly, and appropriately and accessible to the public.

DUTIES AND POWERS OF GOVERNMENT IN THE FIELD OF TRADE

  1. formulating and determining the trade policy;
  2. formulating national standards;
  3. formulating and establishing norms, standards, procedures, and criteria in the field of trade;
  4. establishing a licensing system in the field of trade;
  5. controlling the availability, price stabilization, and distribution of basic needs of goods and/or essential goods;
  6. implementing the cooperation of international trade;
  7. managing information in the field of trade;
  8. providing  guidance and supervising of the trade activities;
  9. encouraging developing national exports;
  10. creating a conducive business climate;
  11. developing regional logistics, and
  12. another task in the field of trade under the laws and regulations.

NATIONAL COMMITTEE ON TRADE

To support the acceleration of the achievement of the objectives of commerce, President can form the national trade committee to:

  1. provide input in determining trade policy and regulation;
  2. provide consideration in trade financing policy;
  3. give consideration to the recommendations of national interest in antidumping measures, countervailing measures, and safeguard measures;
  4. provide input and consideration in the settlement of domestic trade and foreign trade;
  5. assisting the government in monitoring trade policies and practices of the country's trading partners;
  6. providing input in setting up the negotiator position in international trade cooperation;
  7. assisting the government in the trade policies and regulations socialization, and
  8. other duties as deemed necessary.

SANCTION

There are some criminal sanctions to be noted by entrepreneur. Any business enterpreneur who is conducting trade business activity without license can be imposed by imprisonment at the maximum of 4 (four) years and/or the maximum fine of Rp 10.000.000.000,- (ten billion rupiah). Further, for an enterpreneur who is trading domestic goods that do not comply with the SNI or technical requirements enforced as mandatory determined under this Law can be imposed by imprisonment at the maximum of 5 (five) years and/or the maximum fine of Rp 5.000.000.000,- (five billion rupiah). It applies the same for the service providers.