INDONESIA
Since February 2017
Pillar Foreign Direct Investment (FDI) in sectors relevant to digital trade |
Sub-pillar Requirement to engage in joint ventures to invest or operate
Ministry of Communication and Information Technology Regulation No. 6/2017
The Ministry of Communication and Information Technology Regulation No. 6/2017 mandates that any consortium offering Internet Protocol Television (IPTV) must consist of at least two Indonesian entities (Art. 4). Additionally, Art. 6 specifies that foreign investors must adhere to the requirements of Art. 4. Every consortium providing IPTV must obtain approval from the Ministry of Communications and Informatics. The approval request must include details on all company shares held by foreign investors (Art. 25.7 h).
Coverage Internet Protocol Television (IPTV)
INDONESIA
Since February 2012
Pillar Foreign Direct Investment (FDI) in sectors relevant to digital trade |
Sub-pillar Nationality/residency requirement for directors or managers
Ministry of Manpower and Transmigration Regulation No. 40/2012
The Ministry of Manpower and Transmigration Regulation No. 40/2012 specified 19 positions that are reserved for Indonesian nationality only, ranging from Chief Executive Officer to various directors, managers, and supervisors positions within a company.
Coverage Horizontal
INDONESIA
Since March 2014, last amended in November 2020
Since August 2007, last amended in December 2022
Since August 2007, last amended in December 2022
Pillar Foreign Direct Investment (FDI) in sectors relevant to digital trade |
Sub-pillar Commercial presence requirement for digital services providers
Law of the Republic of Indonesia No. 7/2014 About Trade (Trade Act)
The Law of the Republic of Indonesia No. 40 of 2007 Concerning Limited Liability Company
The Law of the Republic of Indonesia No. 40 of 2007 Concerning Limited Liability Company
Pursuant to Art. 24 of the Trade Act and Art. 5 of the Limited Liability Company Act, all exporters and importers are subject to a licence issued by the government, which is subject to a commercial presence requirement.
Coverage Horizontal
Sources
- https://sim.oecd.org/Simulator.ashx?lang=En&ds=DGSTRI&d1c=apf&d2c=idn
- https://web.archive.org/web/20240822111156/https://peraturan.bpk.go.id/Download/27842/UU%20Nomor%2007%20Tahun%202014.pdf
- https://web.archive.org/web/20241117121348/http://faolex.fao.org/docs/pdf/ins49202.pdf
- https://web.archive.org/web/20240330201015/https://peraturan.bpk.go.id/Download/29563/UU%20Nomor%2040%20Tahun%202007.pdf
- https://web.archive.org/web/20230102004217/http://www.flevin.com/id/lgso/translations/Laws/Law%20No.%2040%20of%202007%20on%20Limited%20Liability%20Companies%20(BKPM).pdf
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INDONESIA
Since March 2016
Pillar Foreign Direct Investment (FDI) in sectors relevant to digital trade |
Sub-pillar Commercial presence requirement for digital services providers
Ministry of Communication and Informatics Circular Letter No. 3/2016
The Ministry of Communications and Informatics issued Circular Letter No. 3/2016 on 31 March 2016, establishing the regulatory framework for the delivery of application and content services via the Internet, commonly referred to as Over the Top (OTT) Services. The Circular categorises OTT Services into two main types. The first, OTT Application Services, involves the use of internet protocol-based telecommunications networks to provide functions such as text messaging, voice and video calls, online chatting, financial transactions, data storage, gaming, social networking, and related services. The second, OTT Content Services, encompasses the provision of digital information in formats such as text, sound, images, animations, videos, music, films, and games, delivered via streaming or downloads over telecommunications networks.
According to Section 5.3 of the Circular, foreign individuals or business entities may provide OTT Services only if they establish a Permanent Business Entity in Indonesia, in compliance with the country’s prevailing tax regulations. Furthermore, the Circular imposes specific obligations on OTT Service Providers, including the mandatory use of Indonesia’s National Payment Gateway and Indonesian internet protocol numbers (Sections 5.5.5 and 5.5.6).
According to Section 5.3 of the Circular, foreign individuals or business entities may provide OTT Services only if they establish a Permanent Business Entity in Indonesia, in compliance with the country’s prevailing tax regulations. Furthermore, the Circular imposes specific obligations on OTT Service Providers, including the mandatory use of Indonesia’s National Payment Gateway and Indonesian internet protocol numbers (Sections 5.5.5 and 5.5.6).
Coverage OTT services
Sources
- https://web.archive.org/web/20210226131032/https://www.kominfo.go.id/content/detail/7194/siaran-pers-no28pihkominfo32016-tentang-surat-edaran-nomor-3-tahun-2016-terkait-penyediaan-layanan-aplikasi-dan...
- https://web.archive.org/web/20241202174706/https://www.lexology.com/library/detail.aspx?g=d8ac6047-1dcc-47d0-a1b8-9914dadc9135
- https://web.archive.org/web/20231220171931/https://www.lexology.com/library/detail.aspx?g=44d84bcc-652d-4a5a-a3e3-4778fae2e383
- https://web.archive.org/web/20241202205816/https://www.makarim.com/news/the-government-of-indonesia-has-finally-regulated-over-the-top-services
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INDONESIA
Since June 1997, entry into force in September 1997
Pillar Intellectual Property Rights (IPRs) |
Sub-pillar Participation in the Patent Cooperation Treaty (PCT)
Patent Cooperation Treaty
Indonesia is a party to the Patent Cooperation Treaty (PCT). However, the country does not consider itself bound by Art. 59 related to disputes.
Coverage Horizontal
INDONESIA
Since October 2014
Pillar Intellectual Property Rights (IPRs) |
Sub-pillar Copyright law with clear exceptions
Law of the Republic of Indonesia No. 28 of 2014 on Copyright (Undang-undang (UU) No. 28 Tahun 2014)
Indonesia has a copyright regime under the Law of the Republic of Indonesia No. 28 of 2014 on Copyright. However, the exceptions do not follow the fair use or fair dealing model, therefore limiting the lawful use of copyrighted work by others. Art. 43 lists the exceptions, which include publication, distribution, communication, and/or reproduction of State emblems and national anthems in accordance with their original nature; the production and distribution of the Copyrighted content through information technology and communication media that are not commercial and/or lucrative for the Author or related parties, or the Author expresses no objection to the manufacture and dissemination in question; among others.
Coverage Horizontal
INDONESIA
Since June 2012
Since October 2014
Since October 2014
Pillar Public procurement of ICT goods and online services |
Sub-pillar Other limitations on foreign participation in public procurement
Defence Law 2012
Presidential Regulation 76/2014
Presidential Regulation 76/2014
Indonesia's 2012 Defence Law and Presidential Regulation 76/2014 prioritise the use of local materials and components by defence agencies, emphasising the procurement of locally produced goods and services whenever possible. Additionally, in cases where Indonesian government entities procure from foreign defence suppliers due to local supply limitations, regulations mandate "trade balancing" offsets. These offsets can include incorporating local content, production offsets, technology transfer, or a combination of these measures.
Coverage Public sector
Sources
- https://web.archive.org/web/20241126024754/https://jdih.kemendag.go.id/peraturan/stream/738/3
- https://web.archive.org/web/20241126142644/https://www.global-regulation.com/translation/indonesia/7209579/act-no.-16-of-2012.html
- https://web.archive.org/web/20230331215014/https://ustr.gov/sites/default/files/2023-03/2023%20NTE%20Report.pdf
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INDONESIA
Since October 2019
Pillar Public procurement of ICT goods and online services |
Sub-pillar Other limitations on foreign participation in public procurement
Government Regulation No. 71/2019 on the Provision of Electronic System and Transaction (Peraturan Pemerintah (PP) Nomor 71 Tahun 2019 Penyelenggaraan Sistem dan Transaksi Elektronik)
Government Regulation No. 71/2019 requires operators of electronic systems for public purposes to store electronic transaction data within Indonesia, unless the necessary technology is unavailable locally. Public Electronic System Operators (ESOs) include: (a) public bodies, such as central and regional executive, legislative, and judicial bodies, as well as any other entities established under statutory mandates; and (b) entities appointed by public bodies to operate electronic systems on their behalf.
Previously, Government Regulation No. 82, which was revoked by Regulation No. 71/2019, mandated that electronic system operators for public services connect their data to a data centre and a disaster recovery centre located within Indonesian territory for purposes of law enforcement and data protection (Art. 17). Although the term “public services” was not explicitly defined under GR 82, it was broadly interpreted by the Ministry of Communications and Informatics (MOCI) to include all services offered to the public via the Internet. This interpretation effectively extended local storage obligations to numerous private sector companies.
Previously, Government Regulation No. 82, which was revoked by Regulation No. 71/2019, mandated that electronic system operators for public services connect their data to a data centre and a disaster recovery centre located within Indonesian territory for purposes of law enforcement and data protection (Art. 17). Although the term “public services” was not explicitly defined under GR 82, it was broadly interpreted by the Ministry of Communications and Informatics (MOCI) to include all services offered to the public via the Internet. This interpretation effectively extended local storage obligations to numerous private sector companies.
Coverage Electronic systems operators for public scope
Sources
- https://web.archive.org/web/20230322005029/https://peraturan.bpk.go.id/Home/Details/122030/pp-no-71-tahun-2019
- https://web.archive.org/web/20230103224650/https://www.lexology.com/library/detail.aspx?g=cd6e5251-6dd7-4b46-b6be-759c78c9bf7b
- https://web.archive.org/web/20221012134007/https://jdih.kominfo.go.id/produk_hukum/view/id/6/t/peraturan+pemerintah+republik+indonesia+nomor+82+tahun+2012
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INDONESIA
Since April 2020
Pillar Public procurement of ICT goods and online services |
Sub-pillar Other limitations on foreign participation in public procurement
Ministry of Finance Regulation No. 115/PMK.06/2020
The Ministry of Finance Regulation No.115/PMK.06/2020, which replaces the Ministry of Finance Regulation No. 65/PMK.06/2016 mandates foreign entities to establish an Indonesian limited liability company before utilising the state-owned property for undertaking the public procurement of the infrastructure projects (including telecommunication infrastructure) under the public-private partnership scheme. This requirement has already been in place since 2016. Nevertheless, this represents a liberalisation for foreign companies in Indonesian public procurements since it previously required the prioritisation of domestic service suppliers.
Coverage Telecommunication infrastructure
INDONESIA
ITA signatory?
I
II
Pillar Tariffs and trade defence measures applied on Information and Communication Technology (ICT) goods |
Sub-pillar Effective tariff rate on ICT goods (applied weighted average)
Effective tariff rate to ICT goods (applied weighted average)
0.97%
Coverage rate of zero-tariffs on ICT goods (%)
41.36%
Coverage: Digital goods
Sources
- http://wits.worldbank.org/WITS/
- https://www.wto.org/english/news_e/brief_ita_e.htm#:~:text=ITA%20participants%3A%20Australia%3B%20Bahrain%3B,%3B%20Jordan%3B%20Korea%2C%20Rep.
- https://www.wto.org/english/res_e/booksp_e/ita20years_2017_full_e.pdf
- https://web.archive.org/web/20220120054410/https://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154430.pdf
- https://www.wto.org/english/tratop_e/inftec_e/itscheds_e.htm
INDONESIA
N/A
Pillar Tariffs and trade defence measures applied on Information and Communication Technology (ICT) goods |
Sub-pillar Participation in the World Trade Organization (WTO) Information Technology Agreement (ITA) and 2015 expansion (ITA II)
Lack of participation in Information Technology Agreement Expansion Agreement (ITA II)
Indonesia is a signatory of the World Trade Organization (WTO) Information Technology Agreement (ITA) of 1996, but is not a signatory of its 2015 expansion (ITA II).
Coverage ICT goods
Sources
- https://www.wto.org/english/news_e/brief_ita_e.htm#:~:text=ITA%20participants%3A%20Australia%3B%20Bahrain%3B,%3B%20Jordan%3B%20Korea%2C%20Rep.
- https://www.wto.org/english/res_e/booksp_e/ita20years_2017_full_e.pdf
- https://web.archive.org/web/20220120054410/https://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154430.pdf
- https://www.wto.org/english/tratop_e/inftec_e/itscheds_e.htm
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INDONESIA
Since January 2014
Pillar Public procurement of ICT goods and online services |
Sub-pillar Exclusion from public procurement
Ministry of Industry Regulation No. 02/M-IND/PER/1/2014 (Peraturan Menteri Perindustrian 02/M-IND/PER/1/2014)
Art. 10 of Regulation No. 02/M-IND/PER/1/2014 provides that domestic service suppliers need to be prioritised. To qualify as a domestic service provider, a majority of the shares must be owned by an Indonesian citizen, and two-thirds of the board members must be local. If no domestic service suppliers are participating in the procurement, national service suppliers (with at least 10% of shares belonging to Indonesians) will be taken into consideration. Only when these are also unavailable will foreign service providers be allowed to participate in the procurement process as well (Art. 16.1).
Coverage Horizontal
INDONESIA
Since March 2018, last amended in February 2021
Pillar Public procurement of ICT goods and online services |
Sub-pillar Exclusion from public procurement
Regulation of the President of the Republic of Indonesia No. 16 of 2018 on Government Procurement
Under Art. 63 of Presidential Regulation No. 16/2018, an International Tender may be conducted if no capable or eligible domestic Economic Operator is available, and:
- The estimated value of goods and other services exceeds Rp 50 billion (approx. USD 4.5 million), or
- The estimated value of consulting services exceeds Rp 25 billion (approx. USD 2.25 million).
Additionally, foreign business entities selected through an International Tender must collaborate with national business entities via a consortium, subcontract, or other forms of cooperation.
- The estimated value of goods and other services exceeds Rp 50 billion (approx. USD 4.5 million), or
- The estimated value of consulting services exceeds Rp 25 billion (approx. USD 2.25 million).
Additionally, foreign business entities selected through an International Tender must collaborate with national business entities via a consortium, subcontract, or other forms of cooperation.
Coverage Horizontal
Sources
- https://web.archive.org/web/20221003215153/https://peraturan.bpk.go.id/Home/Details/41063/perpres-no-54-tahun-2010
- https://web.archive.org/web/20211020042808/https://peraturan.bpk.go.id/Home/Details/73586/perpres-no-16-tahun-2018
- https://web.archive.org/web/20211026020428/https://www.globaltradealert.org/state-act/4690
- https://web.archive.org/web/20220305184557/https://trade.ec.europa.eu/doclib/docs/2014/november/tradoc_152872.pdf
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INDONESIA
Since March 2018, last amended in February 2021
Pillar Public procurement of ICT goods and online services |
Sub-pillar Exclusion from public procurement
Regulation of the President of the Republic of Indonesia No. 16 of 2018 on Government Procurement
Art. 66 of Presidential Regulation No. 16/2018 provides that the ministries, institutions and regional apparatuses are obligated to use domestic products. Procurement of imported goods may be conducted in the event that the goods cannot be produced domestically or that domestic production volume is unable to meet the demand.
Coverage Horizontal
Sources
INDONESIA
Since October 2019
Pillar Public procurement of ICT goods and online services |
Sub-pillar Surrender of patents, source code or trade secrets to win public tenders/Restrictions on technology standards for public tenders
Government Regulation No. 71/2019 on the Provision of Electronic System and Transaction (Peraturan Pemerintah (PP) Nomor 71 Tahun 2019 Penyelenggaraan Sistem dan Transaksi Elektronik)
Art. 9 of the Government Regulation No. 71/2019 requires that providers of bespoke software must provide or escrow the source codes associated with their service. The requirement applies to Electronic System Providers for public scope. This requirement was already contained in Art. 8 of Government Regulation No. 82/2012, which was repealed by Government Regulation No. 71/2019.
Coverage Electronic systems operators for public scope
Sources
- https://web.archive.org/web/20230322005029/https://peraturan.bpk.go.id/Home/Details/122030/pp-no-71-tahun-2019
- https://web.archive.org/web/20221012134007/https://jdih.kominfo.go.id/produk_hukum/view/id/6/t/peraturan+pemerintah+republik+indonesia+nomor+82+tahun+2012
- https://web.archive.org/web/20220121201607/http://cloudscorecard.bsa.org/2016/pdf/country_reports/2016_Country_Report_Indonesia.pdf
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