Indonesia – The Revamped Electronic Information And Transaction Law .

On 5 December 2023, Indonesia’s House of Representatives (Dewan Perwakilan Rakyat) finally approved the Second Amendment of Law No.11 of 2008 on Information and Electronic Transactions (“ITE Law”), which has long been the foundation of digital transactions law in Indonesia. The second amendment is officially enacted as Law No. 1 of 2024 on the Second Amendment of Law No. 11 of 2008 on Information and Electronic Transaction (“Law No.1/2024”).

This article aims to highlight the key amendments as set out under Law No. 1/2024. 

1. Electronic Certification Operators

Prior to the amendment, the ITE Law allowed the utilization of electronic certification services provided by both foreign and domestic electronic certification operators. The difference between this would only be related to the evidentiary power (burden of proof) in the event of disputes. However, Law No. 1/2024 regulates this differently as it states that electronic certification operators that operate in Indonesia must be in the form of an Indonesian legal entity and domiciled in Indonesia. There is an exception to this requirement though, if the electronic certification service is not yet available in Indonesia. From this regulation, it can be assumed that Law No. 1/2024 prioritizes the utilization of domestic electronic certification operators in Indonesia. 

Law No. 1/2024 also adds one more regulation concerning cross-border mutual recognition of electronic certifications, which must be stipulated under a cooperation agreement.

Details of the activities of electronic certification operators are now clarified in Law No. 1/2024. The services that can be provided by the electronic certification operators are: 

1. Electronic signature;
2. Electronic stamps;
3. Electronic timestamps;
4. Recorded electronic shipment services;
5. Website authentication;
6. Preservation of electronic signature and/or electronic stamps;
7. Digital identity; and/or
8. Other services utilizing electronic certification. 

2. Protection of Children by Electronic System Operators

Law No.1/2024 introduces an additional clause to ensure the protection of children when accessing and/or utilizing an electronic system.  Under Article 16A of the new ITE Law, Electronic System Operators (penyelenggara sistem elektronik / “Electronic System Operators”) are obliged to protect children who use their electronic systems.

To implement such protection measures, Article 16A of ITE Law obliges Electronic System Operators to: 

1. provide information regarding the minimum age limit for children who can use the product;
2. implement children user verification mechanism;
3. implement a mechanism for reporting abuse of products, services and features that violate or have the potential to violate children’s rights.

Furthermore, Electronic System Operators must implement technologies and operational technical measures to provide such protection from the development stage until the operation stage of the electronic system.   

Violation of the above provision may be subject to administrative sanctions in the form of: 

1. written reprimand;
2. administrative fine;
3. temporary suspension; and/or
4. access termination.

3. Electronic Signatures 

Law No. 1/2024 requires high-risk electronic transactions to be executed by electronic signatures which are secured by electronic certificates. An example of high-risk transactions provided under the elucidation of Law No. 1/2024 are financial transactions that are not carried out face-to-face by the parties.  

4. Standard Clause for International Electronic Contracts 

Law No. 1/2024 adds a new requirement for international contracts with standard clauses. Law No. 1/2024 now obliges international electronic contracts to be governed under Indonesian Law if they meet the following circumstances: 

1. the users are from Indonesia and will provide their consent from or within Indonesian jurisdiction;
2. the place of execution of the contract is in Indonesian jurisdiction; and/or
3. the Electronic System Operators have a place of business or conduct business activities in Indonesian territory.

5. Amendment in Criminal Prohibitions Provisions 

Law No.1/2024 introduces several amendments to the criminal prohibition provisions under the ITE Law among others by increasing the maximum fine. One of the examples, violation to Article 27 (2) of ITE Law was used to be subject of a maximum fine of IDR 1 billion (approx. USD 64.1 k) to IDR 10 billion (approx. USD 641 k). 

Relating to the criminal provisions under the ITE Law it is worth noting that the criminal provisions under the ITE Law is only valid until the effectiveness of Law No.1 of 2023 on the Criminal Code, which is set to be effective on 2 January 2025.

6. Government Authority to Order Electronic System Operators 

One of the additional authorities provided to the government under Law No.1/2024 is to order Electronic System Operators to make adjustments to their electronic system and/or to perform certain measures. 

Pursuant to Article 40A of Law No. 1/2024, the government is responsible for encouraging the creation of a fair, accountable, secure, and innovative digital ecosystem. To implement this, the government may order electronic systems operators to make adjustments to their electronic systems and/or to perform certain measures. 

Electronic System Operators who fail to implement such orders from the government may be subject to administrative sanctions in the form of:

1. Written reprimand;
2. Administrative fine;
3. Temporary suspension; and/or 
4. Access termination. 

7. Defamation and Threats

Defamation in the case of electronic information has been long regulated under the ITE Law. Law No. 1/2024 now adds a more specific clause concerning defamation and a new clause concerning threats. 

Article 27A of Law No. 1/2024 provides one example of a defamation case through electronic information, i.e., defaming someone by accusing of something for public consumption in the form of electronic information or electronic documents through an electronic system. 

In addition to defamation, Law No. 1/2024 now adds one more criterion, i.e., threats. Article 27B of the law regulates (a) threats by violence and (b) threats of defamation/threats to disclose a secret through the distribution/transmission of electronic information or electronic documents that are conducted for the purpose of (i) obtaining something from the victims, or (ii) receiving loan or acknowledgement of indebtedness or debt settlement from the victims.

Conclusion: 

The implementation of Law No. 1/2024 and the amendments thereof expresses the government’s intention to perfect the ITE Law which has been enacted since 2008. After 16 years, it is undoubtedly that electronic transactions have become the new norm for legal transactions, both domestic and cross-border transactions.

While most of the public focuses on the amendments to the criminal prohibitions set out under Law No.1/2024, the update also introduces several new changes applicable to the business sector. Among others, implementing protection measures for children utilizing their electronic system and ensuring that international contracts with standard terms are governed by Indonesian Law. 

Furthermore, Law No.1/2024 also acknowledges the need to accommodate cross-border digital transactions by further strengthening the provisions on electronic certification, which will no doubt promote foreign and domestic digital transactions conducted by Indonesian business actors.

For Further Information, Please Contact:

MetaLAW, Legal Consultant, Jakarta, Indonesia

general@metalaw.id