E-commerce in Indonesia – Legal and Regulatory Framework

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E-commerce in Indonesia – Legal and Regulatory Framework
25 August 2020

The Indonesian government initially adopted a conservative and relatively traditional approach to regulating internet-based activities. Prior to 2008, there was no legislation or guidelines in Indonesia that regulated the internet and how electronic information was offered and consumed, for both commercial and non-commercial purposes. In the five to seven years before 2008, Indonesia experienced the rapid development of information technology and the number of internet users in the country soared as the internet became the most popular medium to access electronic information.

In response to this growth, the Indonesian government issued an underlying regulation to address potential issues resulting from activities conducted on the internet. On 21 April 2008, through the House of Representatives, the Indonesian government issued Law No. 11 of 2008 on Electronic Information and Transactions (the ITE Law).

The idea behind the ITE Law was to set out basic rules and provide a generic understanding of the internet and related activities. The ITE Law set out various terms and definitions relevant for electronic transactions and introduced a number of administrative requirements to conclude digital transactions. The spirit and stated intent of the ITE Law is to protect the state, the public and the private sector against acts of cybercrimes.

The ITE Law stipulates several provisions on personal defamation, online threats and religious blasphemy. In theory, the purpose of these provisions is to enable the arrest and prosecution of cybercriminals. In reality, however, the ITE Law has been used to prosecute individuals for alleged criminal actions online. Provisions of the ITE Law have frequently been used by regional and central government authorities as the legal basis to prosecute citizens who have used the internet to criticise or protest against government policies.

As the information technology sector continued to evolve, the Indonesian government sought to keep pace by issuing implementing regulations for the ITE Law and, in 2016, amending the ITE Law itself. With the issuance of Law No. 19 of 2016, the Indonesian government amended several articles in the ITE Law and added a number of new provisions. One of the most controversial amendments was a provision that authorised the government, through the Ministry of Communication and Information (MOCI), to block websites. So, despite the objections of some experts, who argued that blocking websites should only be done by way of a court order, to limit the possibility of any abuse of power, the government is now fully authorised to block websites without any preliminary assessment.

This controversy aside, some parties applauded the ITE Law amendment for providing clearer guidelines on the appropriate use of social media. The Indonesian government seems to have decided to take a more liberal approach to regulating internet activities, with the expectation that users are able to self-regulate their internet use.

This first appeared in the Lexology GTDT e-Commerce 2021 global guide

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