Jack Ma can’t solve Indonesia’s ecommerce dilemma

Jack Ma is the founder and chairman of Alibaba. Photo credit: Asia Society.

Alibaba chairman Jack Ma took on a role as advisor to the Indonesian government – specifically, an ecommerce committee consisting of 10 ministers.

The range of reactions it triggered is noteworthy.

Analysts in Indonesia warned of a “potential conflict of interest” – because Alibaba owns a controlling stake of Lazada, which also operates in Indonesia – and that local startups could “fall under Jack Ma’s control.”

The Jakarta Post, on the other hand, is ecstatic and forsees “great things to come.”

I think they all miss the target. Ma’s appointment isn’t really a big deal.

It’s of symbolic significance, sure – but it doesn’t mean he’ll dictate Indonesia’s future ecommerce laws.

Photo credit: Dietrich Ayala.

What Ma has been asked to do is recommend ways to strengthen Indonesian small businesses and help them access markets like China. His role is similar to one he held with the former British Prime Minister.

Indonesia’s ecommerce association (IDEA) also takes a relaxed stance.

Not just Ma, other international and local ecommerce luminaries will be asked to advise the panel too, said Aulia Marinto, the head of the group, in an interview with Tech in Asia.

And besides, the government won’t just follow blindly what Ma suggests, Aulia assured media yesterday. IDEA, he signaled, would be there to help the government review any suggestions.

Show me the roadmap

For better or worse, it’s up to Indonesia’s ecommerce committee to come up with its own rules to govern the country’s digital economy.

The ecommerce roadmap is long overdue.

But with 10 ministries at the table, this process is dragging on.

Negotiations for an “ecommerce roadmap” between the government and ecommerce companies officially kicked off in April 2015, on the initiative of IDEA. The roadmap was supposed to define which ministry is responsible for what, and lay out rules for things like foreign investment, taxation, and cybersecurity.

At a mall in jakarta, Indonesia’s capital. Photo credit: Seika.

A draft of the roadmap was due out last August, but by the end of that year nothing concrete had materialized. Now, in the third quarter of 2016, it still hasn’t.

Communication between the commission and the industry group seems to be spotty.

Aulia told Tech in Asia IDEA wasn’t aware of the plan to bring in Jack Ma as an advisor. “We found out about this from our friends in the media,” he said.

“Our hope is that the Indonesian government can quickly release this ecommerce roadmap, because the industry is in the middle of a huge growth phase.”

Protectionist versus open

Problem is, Indonesia hasn’t found its position on the spectrum of protectionist versus open policies.

Made in Indonesia isn’t enough of a differentiator.

There’s no precedent – should it sample from China’s playbook, from the US, or even Europe?

Regulators face a tangled mess of interests.

For example, the firm Aulia leads – Blanja – is an ecommerce joint venture between state-owned telco Telkom and US-based Ebay. Alibaba has set foot in the archipelago through the Lazada deal. Amazon’s shadow is looming over the region.

Some voices in the industry ask for more protection for Indonesian businesses. Andi Boediman, managing partner at local VC firm Ideosource, is one of them. Ideosource invests in homegrown ecommerce site Bhinneka.

Image credit: Pixabay.

“If we just let this go on, local players in the ecommerce industry will disappear,” he told Tech in Asia. “We can see how Amazon arrived in India and then ‘finished off’ the local players there.”

Andi concedes Indonesia needs foreign investment as well as a transfer of know-how across borders. But he says he hopes the government will create a business climate that’s fair, similar to some European countries which are now trying to crack down on internet behemoths like Facebook and Google and claim outstanding taxes.

Impossible balancing act

However, Indonesian consumers don’t seem to care where a product or service is from.

It needs to meet their standards and expectations. ‘Made in Indonesia’ alone isn’t enough of a differentiator – this was proven, in one case, by the scathing reviews the Indonesian-made messenger app Imes received. It never took off.

So regulators find themselves in a near-impossible balancing act.

The goal is to help local companies flourish – especially small and medium sized ones – but regulations are subject to the lobbying power of existing big businesses. Big ticket investments are welcome to flow in – but the amount of control foreign entities have needs to be throttled, and they’ll need to pay ample taxes. And if protectionist policies are taken too far, Indonesia risks becoming less attractive to foreign companies, for which the government will likely face a public backlash.

Even Jack Ma can’t solve this. But if the committee remains paralyzed, this buys global players time to plan their next move.

This is an opinion piece.

This post Jack Ma can’t solve Indonesia’s ecommerce dilemma appeared first on Tech in Asia.

from Tech in Asia https://www.techinasia.com/jack-ma-advisory-role-indonesia-doesnt-matter
via IFTTT