The Indonesian Government has again updated the regulatory framework for the trade sector through Government Regulation No. 3 of 2026, which amends Government Regulation No. 29 of 2021 on the Implementation of Trade (the “Regulation”). The amendment is intended to support the smooth circulation of goods in the domestic market while providing greater legal certainty for businesses engaged in distribution activities.
At a general level, the Regulation reaffirms that the distribution of goods in domestic trade may be carried out either directly to consumers or indirectly through distribution businesses. It also provides greater clarity on how legal relationships within the distribution chain must be documented, an issue that is particularly relevant for businesses relying on multiple layers of distribution or franchise arrangements.
Indirect distribution may take place through the general distribution chain, including distributors, agents, wholesalers, retailers, and their respective networks, and may also be conducted through a franchise system. While this structure largely reflects existing market practice, the Regulation introduces a more defined approach to the contractual basis of those relationships.
One of the key changes lies in the form of documentation now required for distribution arrangements. Under the previous framework, a distribution relationship could be evidenced by an agreement, an appointment, and/or written proof of transaction. Under the new Regulation, however, the relationship between distribution businesses and distributors, agents, and franchisees must be based on an agreement. By contrast, relationships involving wholesalers and retailers may still be evidenced by an agreement, an appointment, and/or written proof of transaction. This distinction is likely to be significant in practice, particularly for businesses reviewing the legal basis of their existing distribution structures.
The Regulation also retains the ability of domestic producers to appoint sole distributors or sole agents for specific marketing areas. At the same time, it introduces greater commercial flexibility by removing the previous requirement for a minimum five-year appointment period for sole distributors or sole agents. This allows businesses to structure the duration of their distribution arrangements more freely, in line with commercial strategy and market conditions.
Further rules on agreements governing distribution by distributors or agents are expected to be issued under a ministerial regulation. As of now, however, that implementing regulation has not yet been released.
Taken together, these amendments suggest a more structured yet commercially flexible approach to domestic distribution. By placing greater emphasis on formal agreements for key distribution relationships while relaxing fixed appointment periods, the Regulation appears aimed at strengthening legal certainty without losing sight of business practicality in Indonesia’s evolving trade landscape.