Govt Mulls Arranging HPP for Goods Sold in Online Marketplaces, Says Minister

TEMPO.CO, Bandung - Indonesian Minister of Cooperatives and SMEs Teten Masduki responded to demands voiced by traders of Tanah Abang Market to close down all e-commerce marketplaces serving online transactions.

“We acknowledge their anger because SME products and domestic products sold offline, one of which is in Tanah Abang, are now unable to compete with the large number of goods coming in from abroad,” Teten said in Bandung on Wednesday, October 11.

He explained that the current situation is not a matter of offline versus online sales. “Tanah Abang traders have long turned to online platforms, selling products through all e-commerce channels, including doing live shopping. But in live shopping, if you don't use figures or influencers who have a lot of followers, no one will watch. There are also 22 million MSMEs selling online. So, it’s not about [online sales],” he said.

According to him, SMEs could not even compete in online sales. Therefore, the government is preparing a series of regulations. “First, we will set up the digital platform. We’ve just separated e-commerce and social commerce. We’ve seen that many countries have regulations on technology and that there should be no monopoly practices. This will be followed up. I think the President has ordered several ministries in the cabinet meeting to do this,” Teten said.

The second regulation will focus on imported goods. “We want to regulate the flow of imported goods, especially consumer goods, to prevent them from clashing with domestic products,” he added.

The third regulation will be related to the cash-burning strategy. “We no longer want platforms to engage in cash burning to increase their market share and business valuation. That is not a sustainable business model. [With this strategy,] only platforms with large capital can control the platform. That should not be allowed,” he said.

Teten stressed that this cash-burning strategy would hurt domestic products. “So we will regulate this; digital platforms will not be allowed to sell below the domestic HPP (cost of goods sold). In addition, they have to follow the standards, the domestic standards,” Teten reiterated.

The SMEs Minister went on to say that the HPP for goods sold online should be arranged per item. “China already has the regulation,” he said.

Although it will not be as detailed as what China practices, the HPP list can be generalized. “That's why we are going to regulate the trade. It is still normative, not yet like China’s regulations. In China, online platforms are not allowed to sell imported goods below the domestic HPP. Indonesia doesn’t have that yet, so we will arrange it,” Teten concluded.

AHMAD FIKRI (CONTRIBUTOR)

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