E-Commerce in Indonesia for Foreign Investors: What You Need to Know
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Published on October 29, 2025 · 5 min read · by Imam

E-commerce in Indonesia for foreign investors. Photograph: Shutter Speed via Unsplash

Indonesia’s e-commerce market has become one of Southeast Asia’s most attractive opportunities for foreign investors.

With a huge population, growing internet and smartphone penetration, and evolving regulation, there’s potential — but also pitfalls.

Below is a guide on the current landscape, regulatory requirements, and key considerations for foreign players wanting in.

Market Snapshot: Size, Growth & Trends

Indonesia’s e-commerce industry continues accelerating: in 2024 market transactions (GMV / net merchandise value) reached Rp 487 trillion (~US$ 30-40+ billion depending on exchange rate).

GlobalData forecasts the market will surpass US$ 46+ billion in 2025, driven by rising internet penetration, mobile wallet adoption, and demand from tier-2 and tier-3 cities.

According to Mordor Intelligence, the market size in 2024 is estimated around US$ 81.80 billion, with a compound annual growth rate (CAGR) approx ~15.5% through 2029.

Key trends:

Mobile-first and social commerce are increasingly popular.
Payment innovation (wallets, alternative payments) is important.
Consumers are gradually demanding more regulated & safer online buying (product standards, origin, authenticity).

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Regulatory Framework: What Foreign Investors Must Handle

Recent regulation has aimed to balance openness (to attract investment) with consumer protection and promotion of domestic players. Key legal/regulatory facts:

MOT Regulation #31 / 2023 (“MoTR 31/2023”)

This replaced MoTR 50/2020, effective September 25-26, 2023. It’s central for foreign merchants and e-commerce operators.

Some of the most relevant provisions:

Foreign Merchants Minimum Unit Value

Finished goods sold from abroad via e-commerce platforms must have a minimum Freight on Board (FOB) price of US$ 100 per unit. This affects pricing for cross-border sellers.

Standards & Compliance

Products must meet Indonesian standards (SNI), where applicable, plus halal certification if required; also product descriptions must include country of origin, and use Bahasa Indonesia in descriptions.

Representative Office (KP3A / FTRO PMSE)

If foreign e-commerce operators meet certain activity thresholds (e.g. >1,000 transactions/year, >1,000 package deliveries/year, or traffic equal to ≥1% of internet users in Indonesia), they are required to appoint a local representative office. The office must have a specific license (SIUP3A) via OSS.

Restrictions on Social Commerce Platforms

Social media platforms that provide “social e-commerce” features (merchant offerings, sales, etc.) have restrictions: for example, they are prohibited from facilitating payments (i.e. acting as payment collectors) via their platform’s system. Also, marketplaces/social commerce platforms are not allowed to manufacture or sell their own branded goods in certain roles.

Licensing, Business Entity & Local Obligations

Foreign investors often will use PT PMA (Perseroan Terbatas Penanaman Modal Asing) if they want to set up operations in Indonesia. Foreign ownership is allowed in many sectors, though some are restricted or require local partnership under the investment negative list.
The Online Single Submission (OSS) system is used for obtaining business licenses, business identification number (NIB), sectoral licenses etc. All e-commerce operators (domestic or foreign) must use OSS as part of licensing compliance.

Tax, Consumer Protection, and Other Considerations

Foreign e-commerce sellers must also ensure compliance with tax rules (VAT, income tax) as well as customs/import regulations. Cross-border imports will be scrutinized, especially with the FOB min-price regulation.
Consumer protection laws, data privacy / electronic systems laws, and product safety / labeling requirements are relevant.

Opportunities & Risks

E-commerce in Indonesia for investors. Photograph: ROMAN ODINTSOV via Pexels

Opportunities

Large and growing consumer base, especially in under-served areas (not only Jakarta / big islands).
Increasing digital payment adoption and infrastructure improvements (logistics, internet connectivity).
Government support for MSMEs and digital economy under programs like Vision Indonesia 2045.

Risks / Challenges

Regulatory change is active; what is allowed now may be refined. For example, the minimum unit price rule, local representation, content regulation.
Import and logistics costs, shipping delays, customs clearance can be complex.
Competition is intense from large local players who are well-established (Tokopedia, Shopee, Bukalapak, etc.).
Local consumer behavior and trust issues (product authenticity, returns, customer service) require strong local adaptation.

Suggested Strategy for Foreign Investors

Here are practical steps / best practices if you are considering entering the Indonesian e-commerce space:

Due Diligence on Regulatory Classification

Check whether your product category is allowed, whether standards apply (e.g. SNI / halal), and whether minimum-price rules will make your product viable.

Choose the Right Legal Entity / Partner

If you expect significant operations (warehousing, marketing, fulfillment), consider forming a PT PMA or partnering with local players.

Local Representation & Licensing Compliance

If your business crosses the thresholds (transactions, volume, traffic), get a representative office in Indonesia (KP3A) and ensure licensing / registration via OSS.

Localization of Content and Presentation

Use Bahasa Indonesia descriptions, show product origin, and conform packaging and labeling standards.

Supply Chain & Logistic Planning

Factor in import taxes, customs, shipping times, local delivery infrastructure. Possibly use local warehousing to reduce lead-times.

Risk Management & Constant Monitoring

Keep an eye on regulatory developments (laws, trade rules, changes in the minimum price regulation, etc.). Also monitor consumer safety, returns, and reputational risk.

Indonesia offers one of the most promising e-commerce markets for foreign investors in Southeast Asia, with large scale, strong growth, and increasing digital readiness.

However, success depends not just on having a product, but on navigating legal / regulatory requirements (especially since recent regulation has increased oversight of foreign merchants), localizing well, and managing operations carefully.

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