A new Hermès handbag for $100? A Rolex for under $50? Sounds too good to be true and unfortunately, it is. Counterfeit branded goods remain widespread in Indonesia, undermining legitimate businesses and raising serious concerns about the enforcement of intellectual property rights. The United States government has made clear that weak IP protection could jeopardize Indonesia’s access to preferential trade treatment, but observers are not expecting overnight changes. 

The United States Trade Representative (USTR), part of the Executive Office of the President, has flagged Indonesia for over a decade due to weak enforcement against counterfeit goods. Indonesia has appeared on the USTR’s Priority Watch List for 16 consecutive years, and key markets such as Jakarta’s Mangga Dua retail district and ecommerce platforms such as Shopee, Bukalapak and Tokopedia have been cited in various editions of the USTR’s Notorious Markets for Counterfeiting and Piracy reports.  

In the the 2024 edition of the Notorious Markets reports, it is mentioned that: “Mangga Dua remains a popular market for a variety of counterfeit goods, including handbags, wallets, toys, leather goods, and apparel. There has been little or no enforcement actions against counterfeit sellers. Stakeholders continue to report that warning letters issued to sellers have been largely ineffective and they raise concerns about the lack of criminal prosecutions.” 

Local politicians and authorities have urged vendors to shift to legitimate goods, while others have simply called on consumers to stop buying counterfeit products. But until the government and law enforcers take direct action, the sources of counterfeit bags, watches and computer software, the problem will likely persist. 

Status quo: How Indonesia regulates counterfeit goods 

In response to the latest report, Indonesian officials have pledged improvements, but enforcement is complicated by structural and legal weaknesses. Trademark infringement is a complaint-based offense under Indonesia’s trademarks law, meaning authorities cannot act without a formal report from the rights holder. 

Despite the Ministry of Trade’s (MOT) commitment to addressing the issue by enhancing cross-sectoral coordination, increasing public involvement in intellectual property protection, the USTR is urging more “robust and expanded enforcement actions, including through actions by the IP Enforcement Task Force”. In support of intellectual property protection and efforts to combat the spread of counterfeit goods, Indonesia has implemented the following actions: 

Recordation of intellectual property rights for import/export control 

Understanding that counterfeit goods are frequently traded across borders, the Indonesian government issued Government Regulation No. 20 of 2017 on the Control of Import or Export of Goods Suspected to Be or Originating from Intellectual Property Rights Violations, along with its implementing regulation, Minister of Finance Regulation No. 40/PMK.04/2018. These regulations establish the procedures for businesses operating in Indonesia to record their intellectual property rights with the Directorate General of Customs and Excise, based on the registrations and recordations recorded by the Directorate General of Intellectual Property (DGIP). Therefore, it is important to note that IP recordation cannot be carried out for unregistered or unrecorded intellectual property, nor by a foreign entity that does not have a presence in Indonesia. However, if the foreign entity has a licensee in Indonesia, the licensee may conduct the IP recordation on its behalf, provided that the relevant intellectual property has already been registered or recorded in Indonesia. 

This IP recordation enables customs officials to intercept imported or exported goods suspected of infringing intellectual property rights, specifically trademarks or copyrights. When such goods are discovered, customs must notify the rights owner or holder, providing sufficient evidence obtained through customs inspections or intelligence analysis. The rights owner or holder then has up to two days to confirm and submit a request for a suspension order from the court. 

Active supervision from MOT officials 

The MOT has issued Regulation No. 69 of 2018 on the Supervision of Circulated Goods and/or Services to enhance consumer protection through systematic oversight. This regulation empowers Goods and Services Supervisory Officers and Consumer Protection Civil Servant Investigators to carry out supervision activities. Supervision is carried out through three main approaches: periodic, special, and integrated supervision.  

1. Periodic supervision is conducted regularly, based on planned programs and prioritization of goods and services that pose significant risks to consumers. The criteria for prioritization include potential harm to consumer safety, health, security, and the environment, threats to domestic market stability and frequent instances of deceptive practices such as non-compliance with standards, misleading labeling, or coercive sales methods. 

2. Special supervision is carried out on an ad hoc basis in response to complaints from the public, businesses or consumer protection agencies, as well as reports from media sources or other credible information about suspicious goods or services in the market. 

3. Integrated supervision involves the formation of a dedicated team to coordinate oversight efforts across relevant stakeholders, ensuring a more comprehensive and collaborative enforcement approach. 

Legal protection for intellectual property rights holders 

To obtain legal protection against intellectual property infringement, rights holders must first register or record their intellectual property with the DGIP. Upon receiving official confirmation of registration or recordation, the intellectual property becomes protected under the applicable laws and regulations. In Indonesia, disputes related to intellectual property are adjudicated by the Commercial Court. 

Brigadier General Arie Ardian Rishadi, Director of Intellectual Property Law Enforcement, says efforts to combat counterfeit are being pursued through cross-sectoral coordination and greater public involvement in supporting intellectual property protection. 

He says the government, through various ministries and agencies, regularly carries out monitoring, surprise inspections, and on-site checks. “We will continue to increase oversight of trade centers like Mangga Dua,” he said in late April. 

A non-governmental push: Hello Kitty engagement 

To complement the Indonesian government's ongoing efforts, Sanrio, the Japanese company behind Hello Kitty, recently launched a Southeast Asia campaign titled Sanrio Values Authenticity, with a strong focus on Indonesia. The campaign includes large ads on Jakarta’s MRT and electronic billboards, warning consumers about the risks of counterfeit goods, such as poor quality and safety issues, and highlighting the importance of intellectual property rights. 

To reach younger audiences, Sanrio has partnered with Indonesian influencers Andre Hendarto and Meissie, who share content on Instagram about valuing authenticity. The company says it is also working with local enforcement agencies to improve intellectual property protection and crack down on counterfeits. 

What can brands do to combat piracy? 

1. Register trademarks and copyrights. Engage a reputable law firm to ensure that all trademarks, logos, and creative works are registered with the DGIP in Indonesia. This registration is crucial for legal protection and enforcement actions. 

2. Pursue IP recordation with the Directorate General of Customs and Excise. To monitor potential counterfeiting of your goods or services, consider IP recordation with the Directorate General of Customs and Excise. This mechanism helps prevent counterfeit products from being imported into or exported out of Indonesia. 

3. Record IP license agreement with the DGIP. If a business actor does not have a local entity but wishes to pursue IP recordation with the Directorate General of Customs and Excise in Indonesia, it may consider entering into a license agreement with an Indonesian party, such as its distributor. This license agreement must then be recorded with the DGIP, and the resulting recordation confirmation can be used as the basis for proceeding with IP Recordation. 

4. Monitor and report infringements. Regularly monitor e-commerce platforms and social media for unauthorized use of brand assets. Platforms like Shopee and Tokopedia offer mechanisms to report IP violations. 

5. Engage local expertise. Consult with local IP law firms and experts who can guide effective enforcement strategies and help with administrative processes. 

6. Pursue Legal Action. As an initial step, send formal warning letters to infringers, demanding they stop unauthorized activities. Such letters can be effective, especially when they highlight potential legal consequences. If infringements persist, consider filing civil lawsuits or initiating criminal proceedings. While civil actions can seek compensation, criminal complaints may lead to more immediate cessation of infringing activities. 

7. Collaborate with local authorities. Work closely with Indonesian enforcement agencies, such as the DGIP and the IP Task Force.  

8. Use tech tools. Use digital tools like watermarks and QR codes to authenticate products and deter counterfeiting. These measures can help consumers verify product authenticity. 

9. Educate consumers. Launch awareness campaigns to inform the public about the risks associated with counterfeit products.