E-Commerce Players’ Responses toward the Elimination of Negative Investment Fund

Despite the fact that foreign investors start flooding Indonesia, the local e-commerce industry is still considerably infant, in the sense that it still needs tons of supports to move forward. One of them is to protect it from taxes. Furthermore, the local e-commerce players also suggest the government to eliminate the NIF (Negative Investment Fund) regulation which restricts foreign investors to enter Indonesian e-commerce to allow further growth.

Along with the talks about NIF revision, the government is also on the course of preparing the e-commerce roadmap and regulation. The plan involves not solely the Ministry of Communication and Information,  but also other Ministries like the Ministry of Finance, Ministry of Trade, Ministry of Transportation, and the Creative Economy Board.

The plan, which was coined by the Ministry of Communication and Inofrmation Rudiantara, draws various responses.

Hadi Wenas, MatahariMall’s CEO, commented, “In the big picture, the revision would be positive, since we (e-commerce players) still need foreign investors due to the lack of fund from local investors.”

E-commerce industry indeed needs huge money to start up with, not to mention proper supporting infrastructure. It’s not only internet we’re talking about, but also logistic, storage, payment methods, and market education.

And the foreign investors cover all those necessities all the time.

Hadi claimed that there are at least three points  that local investors lack of. First, they tend to provide low budget as they perceive it would be ‘too great of a risk’ to give big money. Second, it takes time for this infant industry to be mature. Thus, it doesn’t fit local investors who tend to ask for short-term return. Third, local investors are lacking the knowledge required in this industry.

“But nowadays I see local investors have started covering the first two points up. They start to understand,” Wenas said.

Bilna’s CEO Ferry Tenka perceived foreign investment as nothing problematic. He stated, “There are many players who’ve sealed foreign investment in the meantime. It may even, in my opinion, increase the competitiveness and accelerate the e-commerce growth in Indonesia.”

The foreign investment often comes in a pack with the knowledge. A data by Veritrans predicted that this year, the total online transaction in Indonesia will reach $3,56 billion of valuation, and $4,89 billion by next year, even though there has yet been any confirmation about the amount of new money being invested on e-commerce in a year.

HijUp’s Founder and CEO Diajeng Lestari talked about the competition and she didn’t see any bad about it. She was of the opinion that the competition will be more competitive should foreign investment enters, since it stimulates local players to be more creative and find new strategies to survive.

BerryBenka’s Founder and CEO Jason Lamuda claimed that there would be more features that the players will get from the elimination of NIF, “It would be nice for Indonesian startups, since more e-commerce players can now secure money from outside of Indonesia. Founders don’t also have to deal with the problematic restructuration to Singapoire and stuffs,” he said.

Lamuda also expected the new regulation to be more transparent in regard to things related to e-commerce, including the taxation issues.

They all wish for the government to be as objective as possible in perceiving the industry. It’s important, in their opinion, to shift the paradigm from “short-term national revenue” to “long-term national revenue.”