Government of the Republic of Indonesia has amended Government Regulation No. 29 of 2021 on the Implementation of the Trade Sector (“GR 29/2021”) through the issuance of Government Regulation No. 3 of 2026 (“GR 3/2026”). In particular, GR 3/2026 was issued and came into force on 15 January 2026.

Prior to GR 29/2021, Indonesia’s trade framework was not consolidated under a single comprehensive regulation. The sector was primarily governed by Law No. 7 of 2014 on Trade, and Government Regulation No. 5 of 2021 on the Implementation of Risk-Based Business Licensing (“GR 5/2021”).

GR 29/2021 was specifically introduced as the implementing regulation for the trade sector, setting out, among others, rules on trade licensing, distribution, exports and imports, trade standardization, and sanctions. Following the broader update to Indonesia’s risk-based business licensing framework, particularly the revocation of GR 5/2021 by Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Business Licensing, GR 3/2026 amends GR 29/2021 by adjusting several provisions to align with the current licensing framework and developments in the regulation and practice.

As your reference, we point out below, the highlights of several key amendments of GR 29/2021 integrated into GR 3/2026.

 

1. Indirect Distribution Activities: GR 3/2026 provides more specific evidentiary requirements for indirect distribution arrangements. Under the amended Article 34, indirect distribution of goods through distributors, agents, and franchise arrangements must be evidenced by an agreement. For wholesalers and retailers, the relevant arrangement may be evidenced by an agreement, appointment, and/or written proof of transaction.

This amendment provides greater flexibility for business actors, as certain indirect distribution arrangements may, practically, be documented through commercial documents such as written transaction records, rather than formal distribution agreements.

 

2. Term of Sole Distributor Appointment: GR 3/2026 removes the previous requirement under Article 35 (4) of GR 29/2021 that the appointment of a sole distributor must be valid for at least five years and extendable for at least once. Following this amendment, the parties have greater flexibility to determine the term of a sole distributor appointment by agreement.

 

3. Exclusive Distribution Rights: GR 3/2026 clarifies the basis for exclusive distribution rights in the context of direct selling. Under the amended Article 44, such rights may be obtained through a direct or chain of agreements with the trademark owner, or through ownership of the trademark.

Where the rights are obtained through an agreement, the agreement must be prepared in Bahasa Indonesia and include key information, including, the parties, purpose of the agreement, goods, brand or trademark, type of goods, and term of the agreement. Where the agreement is not entered into directly with the trademark owner, the business must be able to demonstrate the chain of agreements linking it to the trademark owner.

GR 3/2026 also allows the trademark basis to be evidenced by a trademark certificate or proof of trademark registration application, provided  it is filed in the name of the trademark owner and corresponds to the relevant class of goods. Under the newly inserted Article 45A, exclusive distribution rights will cease upon expiration of the underlying agreement, the trademark protection period, or the trademark registration.

 

4. Prohibited Activities: GR 3/2026 introduces notable changes to the list of prohibited activities for direct selling companies, which are:

  • Prohibition on distributing goods with invalid exclusive distribution rights: Direct selling companies are now expressly prohibited from selling and/or marketing goods under exclusive distribution rights that have been declared no longer applicable. This reinforces the need to maintain valid, underlying, exclusive distribution rights.
  • Prohibition on using non-permanent business premises: Direct selling companies are prohibited from using a virtual office or co-working space that does not have a permanent physical workspace as their address or place of business. This reflects a stronger regulatory emphasis on a more established physical business presence.
  • Express prohibition on the sale of services: GR 3/2026 also clarifies the prohibition on the sale of services in the context of direct selling. Under the amended Article 51, direct selling companies are prohibited from selling services. Separately, the amended Article 54 also provides that services shall not be marketed through the direct selling system.

 

5. Pyramid Scheme Criteria: GR 3/2026 inserts Article 51A, which clarifies the criteria for prohibited pyramid schemes. A pyramid scheme may be deemed to exist if:

  • it derives or obtains profits from membership fees or registration, including recruitment as a direct seller, in an unreasonable manner;
  • it allows more than one direct seller membership registration under the same name and identity;
  • it provides commissions and/or bonuses from membership fees or recruitment of direct sellers; and/or
  • it provides commissions and/or bonuses under its marketing program that are not derived from the sale of goods.

 

6. Sanctions: GR 3/2026 revises the sanctions framework under GR 29/2021, including for enforcement measures and certain import-related violations, as follows:

  • Orders on non-compliant goods: The newly inserted Article 159A authorises the Minister of Trade (“MoT”) to issue orders based on supervisory findings where goods are found to violate GR 29/2021. MoT may order business actors to: (i) temporarily cease the distribution of the goods; (ii) return imported goods outside the customs area or re-export them; and/or (iii) destroy the goods. For certain non-compliant goods identified through supervision, MoT may also determine further follow-up measures, including auction or grant.
  • Adjustment of sanctions for import-related violations: GR 3/2026 adjusts the sanctions framework for certain import-related violations under Articles 161 and 162 of GR 29/2021. Articles 161 (1) and 162 (1) now provide that importers are subject to administrative sanctions for, respectively, non-compliance on import licensing data and/or import requirements, and importation of goods exceeding the volume or quantity stated in the relevant business licensing. GR 3/2026 also inserts Article 163A, which allows MoT, where an importer is subject to administrative sanctions, to request the Minister of Finance to prohibit the relevant importer from conducting import activities.
  • Expanded administrative sanctions framework: Under the amended Article 166, the administrative sanctions cover written warnings, temporary suspension of business activities, government coercion, administrative fines, freezing of business licenses and/or supporting business licenses, and revocation of business licenses and/or supporting business licenses. Government coercion may include measures such as securing goods, withdrawing goods from distribution, closing business premises or warehouses, blocking electronic systems or other internet media used for online trade, and other measures to stop the violation (Article 166 (2) and (3)).
  • The amended framework also sets out a more structured sanctions procedure. Written warnings may be issued up to three times, each for a maximum period of fourteen business days. If the warning period expires, further sanctions may be imposed, including temporary suspension of business activities, government coercion, freezing of business licenses and/or supporting business licenses, and/or revocation of business licenses and/or supporting business licenses. Administrative fines may be imposed if the business actor does not remedy the violation after the period for temporary suspension of business activities or government coercion. If the business actor still fails to remedy the violation and/or pay the administrative fine, the relevant business license may be revoked, and the business actor may only reapply after five years from the revocation decision (Articles 168 to 172).

 

Concluding Remarks

GR 3/2026 represents a targeted but consequential update to Indonesia’s trade sector framework. It gives business actors greater flexibility in structuring certain distribution arrangements, aligning with the business’s commercial goals and preferred schemes, while also drawing clearer regulatory boundaries for areas subject to closer scrutiny, including exclusive distribution rights, direct selling activities, pyramid scheme indicators, and import-related compliance.

The practical implication is that documentation and compliance discipline will become increasingly important. Business actors should not only ensure that their agreements, appointment documents, trademark basis, and licensing records are formally in place, but also assess whether they remain enforceable, traceable, and aligned with the amended GR 29/2021. This is particularly relevant given the expanded enforcement tools now available to the authorities, including government coercion measures, administrative fines, and potential freezing or revocation of business licenses.

 

 

Disclaimer: The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their circumstances.