Deadline for Private Electronic System Operators Registration: 20 July 2022

Introduction

On 14 June 2022, the Indonesian Ministry of Communications and Informatics (MOCI) issued Circular Letter No. 3 of 2022 regarding Effective Date on Registration of Private Electronic System Operators (ESO) (CL 3/2022). CL 3/2022 is set to be a directive for the implementation of MOCI Regulation No. 5 of 2020 (as amended with MOCI Regulation No. 10 of 2021) regarding Private Electronic System Operators (MOCI Reg. 5/2020).

Key highlights of CL 3/2022

• Local and foreign private ESOs are required to undertake registration to obtain an ESO registration certificate from the Ministry of Investment/Capital Investment Coordinating Board (Kementerian Investasi/Badan Koordinasi Penanaman Modal – BKPM)’s Online Single Submission (OSS) system by 20 July 2022.
• ESOs that have not obtained ESO registration certificate could be subject to administrative sanctions from MOCI in the form of access blocking. For clarity, please refer to the section relating to sanction at the end of this article.
• Existing registered ESOs are also required to re-register themselves through the BKPM’s Online Single Submission.

Our remarks

As background, the requirement for ESO’s to register with the MOCI was based on Law No. 11 of 2008 regarding Electronic Information and Transaction as amended by Law No. 19 of 2016 (EIT Law) and Government Regulation No. 71 of 2019 regarding the Implementation of Electronic System and Transaction (GR71/2019), both of which are underlying legislation for MOCI Reg. 5/2020.

Background

EIT Law is the main legal instrument which regulates matters concerning electronic information, transaction and related business. One particular requirement that is foreshadowed by the EIT Law is the requirement for the registration of electronic systems in Indonesia.

GR 71/2019 sets out the following notable provisions:

1. electronic system is defined as a series of electronic platform and procedure which is used to prepare, collect, process, analyse, store, show, announce, send and/or disseminate electronic information and data;
2. GR 71/2019 introduces a new concept of public and private ESOs. It requires for both ESOs to be registered with the MOCI;
3. Previously registration was only required for ESOs who provide “public service”. However, the concept of “public service” is no longer applicable. The distinction between public and private ESOs is set out in GR 71/2019;
4. A public ESO is the operation of electronic system by state institution or an institution appointed by the state. Public ESO must maintain and store data within data centres established in Indonesia; and
5. A private ESO is the operation of electronic system by a person, business entity, and society. Private ESO may maintain and store data outside Indonesia provided it is consented by the data owners.

Definition of ESO under MOCI Reg. 5/2020

• MOCI Reg. 5/2020 defines private ESO consistently with GR 71/2019. However, MOCI Reg. 5/2020 also extends the definition to cover non-Indonesian (i) individuals, (ii) business entities and/or (iii) society which:

1. provides services in Indonesia;
2. operates its business in Indonesia; and/or
3. have its electronic system is used and/or offered in Indonesia.

• In other words, both local and foreign private ESOs must register with MOCI.

   

• For clarity, MOCI Reg. 5/2020 requires registration for ESO’s of electronic systems as which:

   

1. provide, manage, and/or operate the offer of and/or trading of goods and/or services;
2. provide, manage, and/or operate financial transaction services;
3. the transfer of paid digital material or content through a network data whether by way of portal or website download, transfer via electronic mail, or through other application to user devices;
4. provide, manage, and/or operate communication services through, including but not limited to, short message, voice call, video call, electronic mail, and online conversation in the form of digital platform, network services and social media;
5. search engine services, electronic information services which is provided in the form of text, voice, picture, animation, music, video, movies, and games or a combination these in parts and/or in whole; and/or
6. process personal data for the operational activity of the public with respect to electronic transaction.

Registration deadline and process

• Whilst MOCI Reg. 5/2020 requires foreign private ESOs to register with MOCI, it was only until early 2022 that the OSS system was up and running to accommodate registration for foreign private ESOs. Until such time, only local private ESOs could register through the OSS.
• Prior to the issuance of CL 3/2022, there was no hard deadline for completing the registration. MOCI Reg. 5/2020 did stipulate that private ESOs to complete registration within six months when the OSS system becomes fully operational. However it was not clear at the time when the OSS was determined as fully operational. In a press conference in late June 2022, MOCI clarified that the 20 July 2022 hard deadline was calculated from six months as of 21 January 2022 – which was the date on which the OSS became fully operational.
• Registration for both local and foreign private ESOs shall be made through the OSS system. Local ESOs may file the application to obtain ESO registration certificate through their existing OSS account. Note that, every business entity in Indonesia will be required to have an OSS account to which it will be used to process business licences registration. Local ESOs may find the application feature in the supporting licence for business activity section (Perizinan Berusaha Untuk Menunjang Kegiatan Usaha) of the OSS.
• Please refer to the following link to access the official guidelines to proceed with the registration with MOCI, as it is available in Indonesian and English language (https://k-cloud.kominfo.go.id/index.php/s/RQtzXLQysTHWZkp).

Sanction

• CL 3/2022 stipulates that the MOCI could impose sanctions for non-compliance as set out under MOCI Reg. 5/2020, which include warning letters, temporary suspension, administrative fines (with no details on the quantum), revocation of ESO registration certificate and the blocking of access to the private ESO’s electronic system. It is unclear how firm MOCI will be in addressing any non-compliance with respect to registration. TMOCI has indicated in their press-conferences that they will not immediately block access, but engage in discussions and socialisation – suggesting that they will provide an opportunity to rectify any non-compliance. This will have to be monitored after the 20 July deadline.

Closing

The MOCI provides a list of registered ESOs in the MOCI website (https://pse.kominfo.go.id/home). This can be used as reference to see which companies have registered.

We would suggest businesses consider whether they qualify as private or foreign ESOs, including whether registration would be required. Please let us know if we can be of any assistance.