Jack Ma Advises Indonesia on E-Commerce, Conflict of Interest?
Chinese e-commerce giant Alibaba founder Jack Ma having been appointed as special advisor to the Indonesian government for the development of Indonesia's e-commerce sector has led to some concern whether it puts China's richest man in a position of conflict of interest. Ma's Alibaba Group owns big stakes in Singapore-based e-commerce giant Lazada (which operates across Southeast Asia) and Indonesian online shopping facilitator Tokopedia.
Ma will advise a steering committee consisting of ten Indonesian ministers tasked with promoting and developing Indonesia's e-commerce sector. One of Ma's first remarks was that Indonesia will need to focus on improving infrastructure (including ICT infrastructure and payment systems) and its logistics networks as connectivity is key, especially in a massive country like Indonesia that consists of thousands of islands and is home to about 260 million people.
Ma also plans to invite Indonesian officials to Alibaba's headquarters for training programs in which developments in the e-commerce industry are explained. The Indonesian committee aims to create a roadmap for the development of Indonesia's technological future, tackling matters such as logistics, startup funding, communications infrastructure, education, cyber-security, and taxation of tech companies.
Indonesian authorities are currently trying to find the correct strategy to streamline the rapidly developing domestic e-commerce industry and generate more tax revenue from this industry, while at the same time not allowing this relatively new industry to kill off existing (offline) industries. Therefore, it is also important for traditional retail companies to embrace the potential of e-commerce activities. This also involves improving Indonesia's human resources and prepare the young generations of Indonesians to participate in online businesses.
Last week Ma agreed to become a special advisor to the Indonesian government for the speeding up of the development of Indonesia's e-commerce sector. Ma received the request from Indonesian Coordinating Economic Affairs Minister Darmin Nasution and Indonesian Communications and Information Technology Minister Rudiantara who were both in Beijing last week. Last year, Indonesian President Joko Widodo had already ventilated the proposal to Ma when he visited Alibaba's headquarters during the G20 summit in Hangzhou (China).
Considering rapid growth of Indonesia's Internet and smartphone penetration, the e-commerce industry of Indonesia is expected to develop strongly in the years ahead. Based on projections of Google and Temasek, Indonesia's e-commerce market may to surge to USD $46 billion by 2025, from only USD $1.7 billion a decade ago. Based on government data, Indonesia's online market place was valued at USD $5.3 billion in 2016. However, such rapid growth also poses challenges for Indonesian authorities that need to create the right legal and fiscal environment. Meanwhile, the 56 million small and medium-sized enterprises in Indonesia should be encouraged to enter the global market (thus require a fair degree of competitiveness and a better standard of human resources).
However, some are concerned that Ma's position as special advisor to the Indonesian government puts him in a position of conflict of interest as Ma's Alibaba Group owns USD $1 billion stakes in Lazada and Tokopedia, each. Both are online market platforms that control a large part of the Indonesian e-commerce market. Several House of Representative (DPR) members say it would be better to appoint someone who can have a more objective view on Indonesia's e-commerce industry and does not have as big business interests. Earlier, the Alibaba Group repeatedly emphasized it wants to expand in Southeast Asia as growth has somewhat stagnated at home. Indonesia is Southeast Asia's biggest e-commerce (with plenty room for further growth) and therefore forms the main target for the Alibaba Group.
Tesar Sandikapura, Chairman of the Association of Indonesian Digital Entrepreneurs (ADEI), is concerned that foreign investors will become the main actors in digital startups, while Indonesian entrepreneurs remain on the sidelines.
The Indonesian E-commerce Association (idEA), on the other hand, says there is plenty to learn from Ma, while his role as special advisor does not mean the Indonesian government has to support and implement all of his views.
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