INDONESIAN GOVERNMENT REQUIRES FOREIGN PRIVATE ELECTRONIC SYSTEMS OPERATORS TO REGISTER THEIR DIGITAL PLATFORMS

Private electronic systems operators (“Private ESOs”) – essentially mean companies who operate digital platforms or apps that conduct or provide any of the services listed down below are required by the Indonesian the Ministry of Communications and Information Technology (“MOCI”) to, either making registrations under the MOCI Regulation No.5/2020[1] or running the risk of getting their platforms blocked or being sanctioned by the MOCI.

This mandatory registration requirement applies NOT ONLY to local Private ESOs, but also to foreign Private ESOs - established and subject to foreign law, or permanently domiciled outside Indonesia, that:

1. provide services within Indonesia;
2. do business in Indonesia; and/or
3. have electronic systems used or offered within Indonesia.

There is no further elaboration on and specific thresholds set for foreign Private ESOs that would be subject to the registration requirement. This means that any foreign Private ESOs that fall into the above criteria must be registered in Indonesia, regardless of scale, potential risk, or type of activity.

Background

The requirement is intended to ensure that consumer data is safeguarded by service providers utilizing digital platforms, website or apps to provide stronger internet user protection including consumer protection, user personal data protection, as well as protection of a safe digital space and privacy.

Who are private ESOs?

MOCI Regulation No.5/2020 broadly defines Private ESOs as persons, business entities or communities that operate an electronic system. Further the regulation elaborates that Private ESOs include:

1. ESOs that are supervised by ministers or institutions in accordance with laws and regulations.
2. ESOs that have an online portal, site or application through internet to:
   1. provide, manage, and/or operate offer and/or trade of goods and/or services;
   2. provide, manage and/or operate financial transaction services;
   3. deliver paid digital material or content through a data network, either by way of downloading from a portal/site or by email delivery, or through another application to the user’s device;
   4. provide, manage, and/or operate communication services in the form of short messages, voice calls, video calls, electronic mail, and online chat in the form of digital platform, networking and social media services;
   5. manage a search engine, provide electronic information in the form of text, sound, picture, animation, music, video, movie and games or a combination of any and/or all of them; and/or
   6. process personal data for operational activity serving society in relation to electronic transactions

Deadline

Failure to comply with the mandatory registration requirement could leave a Private ESO liable to administrative sanction, including blockage of access.

In a circular letter issued and published in June 2022[2], MOCI announced that that private ESOs must register themselves to the Ministry by 20 July 2022. Before the circular letter was issued there had been uncertainty regarding the deadline for the registration.

As of today, there are many foreign Private ESOs that have not registered their platforms. News on August 1, 2022 reported that PayPal (one of the most famous online payment providers) was temporarily blocked by MOCI before it then finally completed its registration[3] . We believe that MOCI will continuously impose a sanction to other Private ESOs who have not complied with the registration requirement, presumably starting with the ones with huge popularity.

Therefore, we suggest that all companies that fall within the above Private ESOs classification to review their activities and comply with this mandatory registration requirement to avoid the risk of their websites, apps, or platforms being blocked in Indonesia.

Based on the MOCI website (https://pse.kominfo.go.id/home), accessed on 29 September 2022 (at 6 pm), there are 10,437 local Private ESOs and 423 foreign Private ESOs that have completed their registration. MOCI also provide lists of foreign Private ESOs that are temporarily blocked, currently 18.

Please let us know if you have further questions or require our assistance on this matter.

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Click here for the Japanese translation article.

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[1] Government Regulation No. 71 of 2019 on the Provision of Electronic Systems and Transactions, and MOCI Regulation No. 5 of 2020 on Private ESOs, as amended by MOCI Regulation No. 10 of 2021 (“MOCI Regulation No.5/2020”).

[2] MOCI Circular Letter No. 3 of 2022 on Effective Date for Private ESO Registration.

[3] https://money.kompas.com/read/2022/08/03/202945126/sempat-diblokir-kominfo-paypal-kini-resmi-terdaftar-pse-di-indonesia.

The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.