Digital trade is critical for Indonesia’s economic recovery and prosperity, particularly during the Covid-19 pandemic. The country’s digital economy will be worth USD 124 billion by 2030, e-commerce being the most significant contributor, according to the E-Conomy SEA 2020 research prepared by Google, Temasek, and Bain & Company. Moreover, virtual classrooms, or ed-tech, as well as health tech, have also gained momentum for growth.
Considering the massive potential of the Indonesian digital sector, investors and entrepreneurs should be cognizant of the rules in place before entering the market. PSE certificates (“Penyelenggara Sistem Elektronik” or “Electronic System Provider”) given by the Ministry of Information and Communication (“Menkominfo” or “MOI”) are one of the most essential regulatory criteria for doing online business in Indonesia.
Doing Online Business in Indonesia: What is a PSE Certificate, and Should You Have One?
In order to start a online business in Indonesia, you’ll need a PSE certificate.
The PSE certificate is issued by the MOI to confirm that a company’s electronic system is safe and meets Indonesian data protection requirements. The government wants to increase public trust in the internet by demanding certification from companies that operate online.
Companies that gather information online from Indonesian consumers in the regular course of business must have the PSE certificate. Although a company may not call itself a “digital” or “online” business in Indonesia, the MOI considers any company that gathers any user information online to be an online business, necessitating the usage of a PSE certificate.
Eligibility Criteria to Obtain PSE
Minister Regulation 5/2020 requires private electronic systems organizers (Penyelenggara Sistem Elektronik – “Private PSE”) to register with the Minister via the Online Single Submission (OSS) system if they satisfy the following criteria:
- Private PSEs that are controlled or overseen by the Ministry or an organization based on legal and regulatory rules; and/or
- Private PSEs that feature internet-based portals, sites, or network applications can be used to:
- provide, manage, and/or make offers and/or trade goods and/or services;
- provide, manage, and/or operate financial transaction services;
- transmit materials or purchased digital content to the Electronic Systems User’s equipment via data networks, either by downloading through portals or sites, dispatching over electronic mail, or using other applications;
- supply, manage, and/or run communications systems that include, but are not limited to, brief messages, voice calls, video calls, electronic mail, and network discussions via digital platforms, network services, and social media;
- electronic information services provider in the form of writings, sounds, images, animation, music, video, film, and games, or combinations thereof in part and/or full; search engine services; and/or
Processing of personal data for public service operational operations including electronic transactions.
This registration requirement applies not just to domestic Private PSEs, but also to any Private PSEs with a foreign domicile and that meet the following criteria:
- Offering services inside the Indonesian area;
- In Indonesia, doing business; and/or
- The electronic system is used and/or offered in Indonesian territory.
Type of PSE Certificate
Following the approval of the firm’s proposal by the MOI verification team, the company will get one of two types of licenses:
- A five-year PSE Certificate: If the company already has a valid information security certificate, this is issued.
- A one-year temporary PSE Certificate: If the company does not yet have an information security certificate, this is granted; in this case, the company must get an information security certificate by the first anniversary of the temporary PSE to earn the full 5-year license. The PSE certificate will be terminated if the information security certificate is not obtained, and the application procedure will have to be redone.
How to Obtain PSE Certificate to do Online Business in Indonesia
Requirements
The registration for Private Scope PSE is done using the OSS platform. To apply, one needs to fill out the registration form and fulfill the following requirements:
- Attach a document with a broad explanation of the Electronic System’s operation;
- responsibility to guarantee data security in line with applicable laws and regulations;
- the legal responsibility to protect personal information in line with the law;
- the requirement to do a feasibility study on an electronic system.
Sanctioning Regime’
A PSE certificate is frequently a requirement for companies operating online in specific industries to get other needed permissions.
The MOI has chosen to take control of enforcement operations and has begun legally enforcing PSE certificate requirements from 2020 by reprimanding, fining, restricting access to, and/or terminating companies that operate in Indonesia but do not have a PSE certificate.
How Can Cekindo Help?
While making an investment in Indonesia’s digital economy, Cekindo will provide you with a seamless company registration experience. Our consultants can further assist you with the acquisition of business licenses with the least delay.
Moreover, if you want to stay on top of legal compliances before investing, Cekindo’s legal consultant team can assist you to review your possible investments. Furthermore, Cekindo provides tax and accounting services and can act as your HR entity to carry out HR and recruitment services to help cut overhead costs of setting up a department.