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Jakarta Post
Jakarta Post
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Tech giants under scrutiny

  • Dylan Amirio

    The Jakarta Post

Jakarta | Sat, February 27 2016 | 08:41 am

A week after President Joko '€œJokowi'€ Widodo visited Silicon Valley, the Indonesian Communication and Information Ministry announced plans to force all foreign over-the-top (OTT) content providers to establish permanent businesses here or face the risk of being blocked in the country.

Communication and Information Minister Rudiantara asked tech giants, such as Facebook, WhatsApp and Twitter, to comply with the regulation by either establishing their own local entities, partnering with local telecommunications operators or establishing joint ventures with local firms.

'€œIt comes back to concerns regarding consumer protection and leveling the playing field. We need to know what happens with the data they send outside of Indonesia and we also wish to allow Indonesia to be more competitive in the global market,'€ Rudiantara said Friday.

Referring to both Twitter and Facebook, which already have offices in Jakarta, Rudiantara has said that such firms must have a legal entity and permanent business status so that they are accountable to answer customer complaints.

By initiating a local presence policy, Indonesia also expects to be able to recover millions of dollars in lost taxes, as companies that do not have their own local entities are not bound by an obligation to pay taxes.

To date, Japanese messaging app LINE is the only firm to have reportedly agreed to adjust to the policy.

Pending discussion with related stakeholders, the ministry will likely issue an official decree on the matter by the end of March, with assistance from the Finance Ministry.

Rudiantara claimed to have discussed the matter during his visit to Silicon Valley in the US with Jokowi, but declined to detail any company response.

During Jokowi'€™s US visit, from Feb. 17 to 19, the President played zero-gravity ping pong with Facebook'€™s co-founder Mark Zuckerberg and met with Twitter CEO Jack Dorsey, spreading the word that Indonesia was serious about expanding into the digital economy.

In a meeting with Zuckerberg, Jokowi welcomed Facebook'€™s contribution to the development of the Indonesian digital economy.

Meanwhile, commenting on the ministry regulation, IT observer Heru Sutadi said that the government was doing the right thing by requesting that foreign OTTs establish local entities, saying that it strengthened the notion of sharing wealth generated by the digital economy.

'€œThe country risks losing a large amount of tax money each year because those who pay to advertise on such social media outlets are technically free from any tax obligation,'€ he said.

If the government does follow through with its plan to block the sites, they must be able to properly and carefully explain the decision to the public, he added.

Last week, the ministry stunned the nation'€™s bloggers with a plan to block social media and microblogging site Tumblr due to the staggering amount of pornographic material available on the site.

However, the ministry backtracked on the decision a few days later due to the intense furor voiced by Indonesian Tumblr users. Internet observers and bloggers questioned both the government'€™s decision to block the site and its ability to govern the internet.

Other countries to have recently made the news over a similar restriction of social media sites include Bangladesh, which blocked Facebook and WhatsApp at the end of 2015 for a period of 22 days due to '€œsecurity issues'€.

Facebook also notably ran aground in India recently when the country decided to block its more '€œaffordable'€ Free Basics program over net neutrality issues, claiming that the service merely emphasized the gap between India'€™s rich and poor.

During the Mobile World Congress in Barcelona on Wednesday, Zuckerberg expressed disappointment over India'€™s decision to block the service.

'€œIt is a major setback for India,'€ he was quoted by Bloomberg as saying. Zuckerberg said that his company and the internet.org coalition of tech companies founded by Facebook would continue to try to find other ways to bring the estimated 1 billion people in India, who lack consistent internet connectivity, online.

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