Starting An Online Business In Indonesia

Indonesia is a country which is full of business opportunities. As a country with an increasingly strong business scene and a corporate environment which has been becoming more business-friendly, starting a business in Indonesia is a viable option for many. This fact is especially true for those who plan to start an online business in Indonesia.

Importance of Online Businesses

The Internet has had an increase in its global usage over recent years. As of 2016, 40% of the total population of Indonesia was able to access the Internet, and this number has continued to increase until this day. Some of the reasons why online businesses have become more important than ever before include the following:

• Ease of setting up the business

Conducting an e-commerce business is comparatively cheaper since costs such as rental of office spaces are reduced and sometimes necessary except in the cases of managers. The start-up capital is, therefore, relatively lower. Setting up an online affiliate market is also affordable. There are fewer requirements and obligations when compared to those required for the setting up of a physical company which will be subjected to several rules and regulations.

• Ability to reach many clients

The Internet is a globally used resource. Therefore, conducting business activities online will allow the customer base to drastically increase. Reaching many clients will only improve the number of sales and subsequently the profits earned. It will also ensure that the brand is well marketed. The owner will only have to spend on advertising to ensure that as many people and potential buyers are reached as possible.

• Future business prospects

With the increase in computer literacy globally and the urge to explore increasing in most people, many people around the world spend many hours of their time online. Shopping online has not only become time-saving but also enjoyable; one can view all available commodities without having to leave the home. Therefore, all businesses at some point in the future will require an online platform to reach many people, whether locally or internationally. Hence, taking a business online will be an advantage for its future operations.

Starting an Online Business in Indonesia

Anyone who is interested in operating a large, medium-sized, or small business in Indonesia ought to know that the registration process must be legally initiated. Business owners in Indonesia should take legal steps to ensure that the operation is successfully incorporated. The following procedures should be strictly followed:

• Registration of the company

The first step is to get the form of a company deed before consulting with the notary on which steps are to be taken next. The notary will also permit one to check whether the company is available through the accessing of the data which is stored by Ministry of Law and Human Rights. Further processing of the company then continues once the notary issues relevant documents needed for the next steps on the path to completion of incorporation of the company.

• Receiving of a domicile letter

The local government to which the company to be established will answer is responsible for the issuing of the domicile letter. The domicile letter is necessary for the incorporation of the company.

• Tax ID

The third step is the obtaining of a tax ID. Once the domicile letter has been received, the processing of the tax card may then begin. It is during this stage that the business owner will be able to obtain both the tax number (NPWP) and a tax card usually issued from the local tax office. Even after this step is completed, you may have some unresolved questions or problems about your tax requirements in Indonesia, whether corporate or personal tax.

• Submission of Application

Once the application is made online, the submission to the Ministry of Law and Human Rights will also have to be made. This submission is to be made online. The application should be submitted alongside the documents already mentioned. Additional documents which are then attached in this step include a bank statement as well as a transaction statement.

• Obtaining of SIUP and TDP

Both the permanent business trading license and the registration certificate of the company, known as SIUP and TDP respectively, are then received. These statements serve as full proof that the company has been legally registered by the Ministry. Both of these will automatically be obtained at a local office upon successful submission of all the requirements and documents.

• Registration with the Ministry of Manpower

Registration with the Ministry of Manpower will only commence if the company has a minimum of 10 workers who obtain a minimum average wage of one million rupiah. Registering the company with the Ministry will require the company owner to have fulfilled certain obligations such as the workers’ rights to insurances such as work and health.

• Setting up the business legally

The last step is the actual setting up of the e-commerce business. After completing all the legal requirements and submitting all the necessary documents, a business owner can officially launch the business legally.

Maintaining an Online Business in Indonesia

The management of an online store might seem simple, but it is actually very complicated. The first step into management is planning, which must be done properly and carefully. This includes planning of what to sell, to whom products will be sold, and how to make international sales. Proper planning will increase opportunities while reducing expenses. The business owner is then expected to analyze the market. Business owners analyze the market to identify their competitors and expectations of the clients and potential buyers. Knowing where the buyers are as well as their lifestyles, and beliefs will also permit the owners to channel their advertisements in the right ways. Accepting feedback from customers is equally vital and enables the business to operate towards its goals. Owners should also develop their overall impact; they should be frequently seen in the online marketplaces and web stores and also conduct extensive market research. Owners who do so will enable the company to focus on profit maximization.

Laws in Indonesia Related to Online Businesses

There are certain restrictions that e-businesses in Indonesia have. Foreigners are allowed to completely own certain companies. With regard to online businesses, these companies include reservation websites. These are websites which permit the users or viewers to book a service. Users can reserve a space in hotels or restaurants or purchase air, rail, or bus tickets, among other services. Web portals can also be fully owned by foreigners. These websites or portals are tasked with a responsibility to publish content, including articles, audio clips, or even videos which have been created by the users.

All e-commerce activities carried out in Indonesia must adhere to laws which govern the electronic transactions which fall under the provision for the Electronic and Information Transactions Act 2016. This is because businesses which carry out such activities conduct their business operations online. Companies should use authorized service providers to minimize cases of fraud, especially when doing online money transactions. The providers are to be regulated by the Registration of Electronic System Providers. E-commerce companies are required to take into account the anti-money laundering regulations. Companies should also use accredited registrars during the period in which the website is being built, especially those which are regulated by the Domain Names Law.

Conclusion

The number of online businesses in Indonesia has been increasing at a remarkable rate. One of the key reasons behind this increase is the ease of setting up an online business. The profitability of an online business relative to an offline business is much higher. Furthermore, some small micro-enterprises do not require any physical store to run, especially if they offer certain services. The Indonesian government supports the starting and operation of online businesses as they add to the country’s GDP. They also engage foreign investors who can operate from anywhere. As the country with the 16th largest economy in the world, Indonesia can boast of having many successful online businesses and a large number of entrepreneurs. More importantly, Indonesia has the largest e-commerce scene in Southeast Asia. Therefore, it can be reasonably expected that online businesses in Indonesia will continue to grow at a rapid rate and further establish themselves in the global e-commerce market.