Indonesia Wants Internet-Based Firms to Establish Local Entity or Be Blocked
The world's Internet giants that provide services in Indonesia (such as social media platforms) are encouraged to establish a permanent presence in Indonesia in the form of a representative office or foreign investment company (PT PMA) hence becoming taxable entities. If not, their services can be blocked by Indonesian authorities. Finance Minister Bambang Brodjonegoro informed reporters about this plan on Monday (29/02). Although he declined to mention any names, it is assumed Brodjonegoro refers to social media platforms and those that sell products/services to the massive online audience of Indonesia.
Meanwhile, Ismail Cawidu, spokesman for Indonesia's Communications Ministry, stated that his ministry plans to issue a new regulation that contains rules for those Internet-based firms that provide streaming and messaging to the Indonesian public as well as social media websites. Failure to comply with new rules could mean that their bandwidth will be reduced or they can be blocked altogether. The new regulation could be issued in March 2016.
It seems that there are two issues behind these new plans of the Indonesian government. Firstly, Indonesia is eager to find new tax revenue streams as it needs to collect funds for massive spending on infrastructure and social development programs. The online advertisement industry (particularly when it involves foreign websites) is one of the industries that has loopholes in existing regulations. Indonesia's Communication Ministry estimates that digital advertising from Indonesia was worth approximately USD $800 million in 2015. However, this industry remains largely untaxed.
Secondly, Indonesian authorities want to increase control over the content on popular websites in Indonesia (this is related to pornographic content as well as activities related to terrorism).
On 12 February 2016 it was announced that the Indonesian government ordered all instant messaging providers - including Line, Twitter and WhatsApp - to remove gay emoticons as these items are not in line with local cultural norms and ethics. This move triggered controversy and was reason for New York-based Human Rights Watch to write a letter to Indonesian President Joko Widodo complaining about the weak position of lesbian, gay, bisexual, and transgender people (abbreviated LGBT) in Indonesian society. One week later, the Indonesian government blocked micro-blogging site Tumblr for distributing pornographic content.
Indonesia - with its large and young population - is estimated to have around 82 million social network users in 2016, up 13.5 percent from last year's figure (eMarketer estimate) with Facebook being the most popular one. As such, Indonesia is among the world's biggest communities of Google, Facebook, Twitter and many more Internet-based businesses and platforms. Google, Facebook and Twitter already have legal entities in Indonesia.
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