“As a relatively recent business field in Indonesia, the operation of Web Portal has not been thoroughly or specifically regulated. However, considering the enormous scope of the business field, multiple laws and regulations apply to the business field of Web Portal by inference.”
In Indonesia, business fields are regulated in a standard classification. In an attempt to accommodate the growing market sectors, this classification is constantly updated. Currently, business fields are classified under the Regulation of Central Bureau of Statistics (Badan Pusat Statistik) No. 19 of 2017 on Standard Classification of Business Fields in Indonesia (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) (“KBLI 2017”).
Business Field Classification of Web Portal
Under the KBLI 2017, business activities related to Web Portal are listed as KBLI 63121 (Web Portal and/or Digital Platform for Non-commercial Purposes) and KBLI 63122 (Web Portal and/or Digital Platform for Commercial Purposes).
As the name suggests, KBLI 63121 includes multiple business activities which are implemented by the use of Web Portal and/or digital platform whose objective excludes any commercial purposes. KBLI 2017 describes KBLI 63121 to include:
- operation of the website for non-commercial purposes by utilization of search engine to generate results and maintain a database of addresses and contents of the internet in a user-friendly format;
- operation of the website which serves as a portal to the internet, such as media sites which provide regularly updated contents for, non-commercial purposes;
- operation of a digital platform and/or web portal or website which include electronic transactions in the forms of facilitation and/or mediation of transfer of ownership over goods and/or services and/or other services via the internet and/or electronic equipment and/or other means by utilization of the electronic system, for non-commercial purposes.
Similarly, KBLI 63122 allows for a business actor to implement business activities as mentioned under KBLI 63121. The main difference between the two business fields is that KBLI 63122 allows the business actors to implement business such activities for commercial purposes (profit-generating). Consequently, KBLI 2017 provides that the electronic transaction mentioned in the description may be one or more of the following:
- order or reservation;
- payment; and/or
- delivery of the related business activity.
Types of Business Activities under Web Portal
Under the description of KBLI 63122, it is stated that operation of Web Portal for commercial use could accommodate the business activities of the digital marketplace, digital advertising, financial technology (fintech), and on-demand online services. However, the regulation expressly stipulates that the operation of Web Portal is not limited only to such business activities.
While the business field classification of Web Portal allows for various business activities in different sectors, the business license needed for the operation of Web Portal is Industrial Business License (Izin Usaha Industri or “IUI”). Therefore, the licensing for the business field of Web Portal falls under the authority of the Ministry of Industry.
However, it must be regarded that the operation of Web Portal does not only require the business license or IUI. After obtaining the IUI, the relevant business actor must apply for a commercial/operational license, which is conducted by registration as an Electronic System Provider (Penyelenggara Sistem Elektronik or “PSE”).
Pursuant to the Government Regulation No. 71 of 2019 on Organization of Electronic Systems and Transactions (“PSE Regulation”), PSE is defined as anyone, a natural person or business entities alike, who provides, manages, and/or operates electronic system individually or jointly to users for his/her own purposes and/or for other parties’ purposes. Therefore, any business actor operating in the field of Web Portal qualifies to be PSE under such definition.
Prior to the PSE Regulation, not every PSE is required to register to the Ministry of Communication and Informatics (Kementerian Komunikasi dan Informatika or “Menkominfo”). However, the updated regulation stipulates that all PSE, regardless of the legal status or the scope of activity, must be registered to Menkominfo in order to operate legally in Indonesia.
In conclusion, a business actor operating in the field of Web Portal is obligated to obtain at least two licenses, namely:
- business license in the form of Industrial Business License (Izin Usaha Industri or IUI) from the Ministry of Industry; and
- commercial/operational license in the form of Electronic System Provider Registration (Pendaftaran Penyelenggara Sistem Elektronik) to Menkominfo.
Foreign Capital Investment Limitation
Generally, provisions on the foreign investment limitation of each business field classification are regulated by Presidential Regulation No. 44 of 2016, which is mostly known as the Negative Investment List (Daftar Negatif Investasi or “DNI”). However, the business field classification of Web Portal has only been added along with the update of KBLI 2017. Therefore, the DNI does not have any specific provision on foreign investment limitation for Web Portal.
However, the DNI provides foreign investment limitation to the business field classification of the marketplace. The DNI stipulates that for foreign capital investment companies operating in the field of the marketplace, the foreign capital investment must be 49% at the maximum.
In KBLI 2017, the marketplace is no longer classified as a business field of its own. As has been mentioned in this article, the marketplace has been updated to be included under the heading of KBLI 63122, which is Web Portal for commercial purposes.
Considering how the limitation is only imposed on the specific business activity of the marketplace, there has not been any official limitation as to the business field of Web Portal in general. However, the Investment Coordination Board (Badan Koordinasi Penanaman Modal or “BKPM”) has inferred the provision stipulated by the DNI to apply to the business field of Web Portal. This can be seen in the Online Single Submission System (OSS System), BKPM’s official online licensing platform. Therefore, it can be concluded that companies operating in the business field of Web Portal are imposed with the foreign capital investment limitation of 49% at the maximum.
Author: Yohana Veronica Tanjung
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas include capital market and Information & Technology Services.
For further queries and information, please contact us: