Legal Protection for MSMEs in the Digital Economy: E-commerce Regulatory Innovation Toward Business Sustainability

Abstract

MSMEs are very important to the national economy, they face many structural and legal challenges during the digital transformation. Relevant regulations include Law No. 20 of 2008 on MSMEs, the ITE Law, and Government Regulation No. 80 of 2019. This normative legal research uses a juridical-normative approach based on secondary legal materials and literature studies. It explores three main questions: the current legal protections for MSMEs in Indonesia's digital economy, the legal challenges MSMEs face in using e-commerce platforms, and how regulatory innovations can support sustainable business continuity. The findings reveal that existing laws are ineffective due to a lack of digital legal literacy among MSMEs, insufficient personal data protection, and overlapping regulations. Additionally, unequal bargaining positions between MSMEs and large digital platforms exacerbate legal problems. The study highlights the need for adaptive, inclusive, and risk-based regulations to ensure fairness. The government should play a dual role: not only as a regulator but also as a facilitator of digital transformation through legal education, regulatory simplification, and improved access to legal protection and aid. To enhance competitiveness and protection in the digital era, the research recommends improving MSMEs' understanding of digital law, strengthening legal business status, and establishing accessible online dispute resolution mechanisms.