ONLINE SHOPPING MARKET: AMAZON HEATING COMPETITION

JAKARTA -  Amazon's plan to enter the Indonesian market with an investment of Rp. 14 trillion makes online shopping competition in the country increasingly hot.

In Indonesia, Amazon will compete with capital from domestic and regional players supported by the Chinese technology giants and local conglomerates.

At present, there are already electronic trading companies or local e-commerce companies with unicorn status (valuing above US $ 1 billion), namely Tokopedia and Bukalapak. Indonesia is also the main market for two companies based in Singapore, namely Lazada and Shopee. (See infographic)

Finance Minister Sri Mulyani Indrawati said the arrival of Amazon officials to complete several licensing processes to smooth the investment plan of the US technology company.

"They conveyed that the investment will be Rp. 14 trillion in the next 10 years. We have already done several issues regarding taxation. It looks like it's almost finished everything, "he said, after meeting with Amazon's Chief Technology Officer (CTO) Werner Vogels with President Joko Widodo and Head of the Investment Coordinating Board Thomas Lembong at the State Palace on Friday (9/21).

Quoting the Minister of Finance Regulation Number 35 / PMK.010 / 2018 concerning the Granting of Corporate Income Tax Reduction Facilities, there are five categories of pioneer companies that are entitled to utilize the tax holiday facility from the government.

The five categories include new investments of IDR 500 million - IDR 1 trillion for 5 years, new investments of IDR 1 trillion-IDR 5 trillion over 7 years, new investments IDR 5 trillion-IDR 10 trillion over 10 years, new investments up to IDR 15 trillion over 15 years, and new investments up to 30 trillion for 20 years.

Vogels recognizes the digital ecosystem in Indonesia has the potential to continue to grow. "But for now I have been able to comment on the growing speculation," he said yesterday.

General Chairman of the Indonesian E-Commerce Association (IDEA) Ignatius Fortunately the estimate that the company will build its own brand, rather than acquiring or investing in local players. That trend has been proven in all countries where Amazon operates.

"Amazon certainly has a capital advantage and experience. However, their ability to understand the Indonesian market may not be as good as the existing e-commerce players in Indonesia," he told Bisnis on Friday (9/21).

Amazon's investment commitment will certainly be done gradually. Fortunately, the company first developed Amazon Web Services cloud computing services before entering e-commerce competition. The move was also carried out by Amazon to deepen understanding of market behavior in Indonesia.

Meanwhile, Chairman of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani hoped the government would immediately arrange payment gateways for e-commerce and encourage the National Payment Gate (GPN) to be implemented immediately.

Meanwhile, Kadin Deputy Chairperson for International Relations Shinta Widjaja Kamdani hopes Amazon's investment in Indonesia can partner with local companies.