Major Amendments to the Indonesia’s Trade Regulatory Framework under GR No. 3 of 2026

On 15 January 2026, the Government of the Republic of Indonesia (“Government”) issued and enacted Governmental Regulation No. 3 of 2026 on the Amendment to Government Regulation No. 29 of 2021 on the Implementation of the Trading Sector (“GR 3/2026”). GR 3/2026 amends several provisions of Government Regulation No. 29 of 2021 on the same subject (“GR 29/2021”) and simultaneously revokes Government Regulation No. 33 of 2019 on the Imposition of Administrative Sanctions on Warehouse Owners for Failure to Register Warehouses.

The issuance of GR 3/2026 is primarily intended to align the regulatory framework for the trading sector with Government Regulation No. 28 of 2025 on Risk-Based Business Licensing. Beyond technical alignment, GR 3/2026 reflects the Government’s strategic objective to strengthen domestic distribution networks, enhance legal certainty in the trade sector and improve the overall ease of doing business for market participants.

This legal update outlines the key amendments introduced under GR 3/2026 and provides practical guidance for businesses in assessing and managing compliance under the revised regulatory landscape.

• More Detailed Requirements for Exclusive Distribution Agreements

  While GR 29/2021 established the general framework for exclusive distribution rights based primarily on the existence of an exclusivity arrangement, GR 3/2026 introduces more detailed requirements on the specific information and documentation that must be included in such arrangement.

  Notably, the new regulation specifies that:

  1. for agreements whose parties are the direct seller and trademark owners, the agreement only needs to be accompanied with the trademark certificate or proof of trademark registration application in the relevant class; and

  2. for agreements that are not entered into directly with the trademark owner, the parties must provide a complete chain of exclusive distribution agreements from the current distributor up to the trademark owner, along with the relevant trademark documentation.

  Furthermore, GR 3/2026 provides that the exclusive distribution rights will automatically terminate upon the occurrence of any of the following: (i) expiry of the distribution agreement, (ii) lapse of the underlying trademark protection; and/or (iii) rejection of the trademark registration application.

• Expansion of Prohibitions Applicable to Direct Selling Companies

  GR 3/2026 introduces a more restrictive regulatory environment for direct sellers by expanding the list of prohibited activities. Specifically, direct sellers are now prohibited from:

  1. selling goods through online marketplaces;

  2. selling services, not limited to certain niche sectors as previously governed under GR 29/2021; and

  3. using virtual offices or shared working spaces (co-working spaces) as their official business address unless that location has a permanent physical workspace.

• Broader Scope of Goods Prohibited from Direct Selling

  GR 3/2026 expands the categories of goods that are ineligible for distribution through direct selling systems. The prohibited categories now include:

  1. goods subject to specific distribution regulations (e.g., pharmaceuticals or psychotropics);

  2. investment-related products such as shares or bonds; and

  3. goods that cannot be legally transferred in ownership.

• Removal of Mandatory Minimum Term for Sole Distributor Appointments

  GR 3/2026 removes the restrictive requirements previously established under GR 29/2021 that required sole distributor appointments to have a minimum validity period of five years, coupled with a mandatory one-time extension.

  Principals and sole distributors from now on will have full autonomy to negotiate and determine the duration of their appointment terms and can be tailored to specific commercial objectives, project timelines, or performance-based milestones. There is also no longer a statutory requirement to provide a mandatory extension, allowing for "fixed-term" appointments that expire naturally without legal obligation to renew.

• Amendment to Retail Distribution Channels Requirement

  GR 3/2026 introduces a critical amendment to the operational requirements for retailers by relaxing the mandatory sales channel rules previously set forth in GR 29/2021. Under the previous regime, retailers were generally required to distribute goods through both physical store facilities and other sales channels such as electronic systems (e-commerce). GR 3/2026 amends this requirement by allowing retailers to operate through either physical stores and/or other sales channels.

• Removal of Statutory Limitation on Ownership of Modern Retail Stores

  GR 3/2026 removes the statutory limits on the number of modern retail outlets a single business entity may own and operate under GR 29/2021. However, despite the removal of the underlying provision in GR 29/2021, there is still regulatory uncertainty on whether such limitations continue to apply in practice. This is because the current implementing regulation, i.e. Minister of Trade Regulation No. 23 of 2021 on the Guidelines for the Development, Structuring and Supervision of Shopping Centers and Modern Retail Stores, still prescribe a specific 150-store ownership threshold, and such regulation has not yet been revoked or amended to align with the GR 3/2026. Accordingly, further clarification from the Ministry of Trade is required.

• Clarification and Expansion of Pyramid Scheme Criteria

  While GR 29/2021 established a general prohibition against pyramid scheme activities, it did not provide specific legal parameters to distinguish legitimate Multi-Level Marketing (MLM) from illegitimate activities. GR 3/2026 addresses this gap by introducing a definitive "four-factor test" for identifying pyramid schemes. A marketing network is now legally categorized as a pyramid scheme if it satisfies any of the following criteria:

  1. the company derives benefits from unreasonable membership or recruitment fees;

  2. the company allows or encourages the registration of the same individual as a direct seller more than once using identical identity data;

  3. the company pays participants commissions or bonuses based on the recruitment of new members or the collection of their membership fees, rather than the movement of products; and/or

  4. the company pays to participants commissions or bonuses through marketing programs that are not based on actual sales of goods.

• More Detailed and Integrated Administrative Sanction

  In addition to existing sanctions under GR 29/2021, GR 3/2026 introduces a more robust category of government coercive measures, including:

  1. seizure or confiscation of goods;

  2. closure of business premises; and/or

  3. blocking of electronic systems and/or other internet media used for online trading.

  GR 3/2026 also expands the scope of licenses subject to sanctions not only to the main business licenses but to also include supporting business licenses (perizinan berusaha untuk menunjang kegiatan usaha) and introduces the possibility of license suspension in addition to license revocation.