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description Research paper public Center for Indonesian Policy Studies

Regulatory Reforms to Increase Women Micro-Entrepreneurs Participation in E-Commerce

Siti Alifah Dina, Thomas Dewaranu
Published 20 February 2022

Abstract

The Indonesian entrepreneurial landscape is dominated by micro-enterprises (MIEs), most of which operate informally with a high proportion of women as owners and/or workers. The majority of women micro-entrepreneurs are likely to be driven into entrepreneurship out of economic necessity. Their choice to be in the high-risk informal market stems in part from the perceived minimum benefits from licensing compliance versus its lengthy and costly process.

Traditional norms, gender roles, limited access to assets and formal education all disproportionately affect women micro-entrepreneurs. The Covid-19 pandemic exacerbated these vulnerabilities by both reducing female entrepreneur income and forcing them to disproportionately take up extra hours of domestic and care work as a result of lockdown and physical distancing measures.

The digital economy boom has the potential to benefit women entrepreneurs by reducing market entry barriers and streamlining supply chains. However, low educational attainment, low computer and IT literacy, and traditional gender norms work together to form structural barriers for female entrepreneurs to improve their businesses through e-commerce.

Unnecessary red tape in the digital economy also creates entry barriers for women-owned MIEs. In addition to regular business licenses, the Ministry of Trade (MOT) requires online sellers with their own website to obtain licenses through its Regulation No. 50/2020 (MOTR 50/2020) with administrative sanctions such as written warnings, blacklist, and service blocking for non- compliance. However, the majority of micro-businesses are unaware of the licensing obligation. Since micro-entrepreneurs perceive license compliance as a lengthy and costly process, this requirement may discourage them from joining the digital market or even push them onto less secure platforms, which works against government efforts to achieve 30 million digital MSMEs by 2023.

This paper proposes three reforms to foster and make sustainable female-owned MIEs through the digital boom:

MOCSME and Statistics Indonesia need to establish a gender-disaggregated MSME data as a basis for coordinated efforts among government ministries and agencies to design gender-sensitive interventions. Reliable data allows policymakers to channel resources to where they are needed the most and help design women empowerment programs that can generate the highest social returns.

There needs to be coordinated gender-sensitive digitalization efforts from government ministries and agencies that are formalized in the national-level strategies such as the Digital Economy Transformation Roadmap 2021–2024 and Digital Economy National Strategy—both being drafted by the government.

MOT should amend the MOTR 50/2020 to drop administrative sanctions for informal online businesses and exempt MIEs with their own website from the SIUPMSE obligation that may prevent them from going online. Alternatively, SIUPMSE for MIEs can still be put in place but only as a non-mandatory license. MOT can, for example, provide incentive in the form of giving a registered or certified ‘label’ for MIEs that are willing to obtain SIUPMSE to help their digital branding.

These reforms would lead to more MIEs, particularly those that are women-owned, that are empowered to benefit from the digital economy.

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