In brief

Until recently, there was no clear deadline for the registration obligation imposed on offshore or foreign private electronic system operators (ESOs) (“ESO Registration“) under Minister of Communication and Informatics (MOCI) Regulation No. 5 of 2020 on Private Electronic System Operators, as lastly amended by MOCI Regulation No. 10 of 2021 (“MOCI Regulation 5“). See our previous client alert on the issuance of MOCI Regulation 5 here.

When MOCI Regulation 5 was first enacted, there was a six-month transitional period for private ESOs to conduct ESO Registration after the regulation became effective on 24 November 2020. However, in practice, the Indonesian Online Single Submission (OSS) system was not yet able to accommodate registration applications by offshore private ESOs. As a result, the timeline for ESO Registration was further extended to become six months after the OSS system became effective (but the system was not yet ready and there was no specific date for when the system would be deemed effective).

Recent update

On 22 June 2022, the MOCI held a press conference (“MOCI Press Conference“) to announce that the six-month period was counted from 21 January 2022 (deemed as the date on which the OSS system became effective), and that therefore the deadline for ESO Registration would be 20 July 2022. We understand from the MOCI’s website (i.e., https://pse.kominfo.go.id/home/pse-asing) that the first offshore private ESO secured an ESO Registration certificate in April 2022. The MOCI issued Circular Letter of MOCI No. 3 of 2022 on the Effective Date of private ESO Registration (“Circular Letter“) on 14 June 2022 to officially clarify, among other things, that: (i) ESO Registration is conducted through the OSS system; and (ii) Any private ESOs registered prior to the enactment of MOCI Regulation 5 must still conduct re-registration.

With the OSS system now being ready to accommodate ESO Registration by offshore ESOs, the MOCI is expecting all private ESOs (including offshore and local ESOs) to conduct ESO Registration within 20 July 2022. As a reminder, under MOCI Regulation 5, the ESO Registration applies to offshore private ESOs (i) that provide services in the territory of Indonesia, (ii) that engage in business in Indonesia, and/or (iii) whose electronic systems are used and/or offered in Indonesia.

Key takeaways

Sanctions

In the MOCI Press Conference and the Circular Letter, it was stated that there will be administrative sanctions for any non-compliance with the ESO Registration requirement. These administrative sanctions should refer to the administrative sanctions stipulated under MOCI Regulation 5, which include warning letters, temporary suspension, administrative penalties (there are no details of the amount under the current regulation), revocation of an ESO registration certificate (which can only be imposed on private ESOs registered prior to the enactment of MOCI Regulation 5) and the blocking of access to the private ESOs’ electronic systems (access can be granted again once the private ESO has conducted ESO Registration).

We suspect that the blocking of access is the ultimate sanction for any non-compliance with the ESO Registration requirement. This is in line with the MOCI Press Conference in which we understand that the MOCI will not immediately block access to platforms. The MOCI will first conduct a series of coordination and discussions with relevant parties (including private ESOs and the authority that governs private ESOs) to understand any private ESOs’ reasoning for not yet conducting ESO Registration in the OSS system. If the reasons are not acceptable, the MOCI will proceed with the blocking of access. However, from recent news articles subsequent to the MOCI Press Conference, the MOCI has stated that it is firm on its position and will take the necessary steps for ESOs that have not secured their ESO Registration, including the blocking of access to the private ESOs’ electronic systems.

In addition to the MOCI Press Conference, the MOCI has also held a meeting on Monday, 27 June, inviting a number of very well-known private ESOs that operate their platforms in Indonesia to show their seriousness of this obligation and that the MOCI will not hesitate to block platforms (including those of the big players) that have not been registered post 20 July.

In case of access blocking, based on MOCI Regulation 5, and as mentioned during the MOCI Press Conference, the MOCI may re-open access to blocked platforms once the private ESOs have fulfilled all of the compliance requirements under MOCI Regulation 5.

Key information submitted in ESO registration

The setting of a hard deadline for ESO registration shows the MOCI’s intention to fully supervise and monitor online platforms in Indonesia. This includes enforcement of the requirement on data protection principles and negative content management for private ESOs (either offshore or local ESOs).

When conducting ESO Registration, private ESOs must also provide several key statements/information, including:

The information of a contact person (i.e., to receive any takedown request on negative content or any request from the authorities for access to the system)
The information on the number of users and the number of transactions from Indonesia
The commitment to provide access (for law enforcement purposes) and to protect personal data as required under the prevailing laws

Actions to consider

Considering this, private ESOs (both offshore and onshore) should urgently make an internal assessment of whether their platforms fulfil the criteria to be subject to the ESO Registration requirement, and should manage the MOCI’s expectations of them. If they fulfil the criteria, clients should conduct the ESO Registration (or re-registration) before 20 July 2022.

Although the MOCI has indicated that it will not immediately conduct the blocking of access to the private ESOs’ electronic systems without coordination and discussions with the relevant ESOs, there is uncertainty on how much the MOCI will accept or address concerns that are raised by ESOs, but clearly clients should continue monitor closely of any development on a daily basis or if there is any further information from the MOCI on the impact of not completing the ESO Registration post 20 July 2022.

Based on the MOCI website (https://pse.kominfo.go.id/home), accessed on 29 June 2022 (at 12.45 pm), there are 4,628 local ESOs and 81 offshore ESOs that have completed their registration.

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