Indonesian Ministry Still Insists on Local Data Centers for Online Companies

Antara news agency reports that the Minsitry for Communications and Informatics (Kemkominfo) is insisting that electronic service providers must locate their data centers in Indonesia. This is in regards to government regulation (PP) 82/2012, Electronic Systems and Transactions Organizer.

During the open discussion held by the Indonesian E-commerce Association (IdEA) on Tuesday in jakarta, Kominfo director general applications and informatics Ashwin Sasongko said, "If the data centers are located overseas and there are issues, (Indonesian) law enforcement will face problems in getting to the data. Law enforcers cannot gain physical access because it's in another country".

According to Sasongko, the government policy requiring data center placement with Indonesian borders apply to anyone who runs an electronic system and with transaction activities in Indonesia, whether they are new or existing. He said that new companies which require the use of a data center must immediately make use of an Indonesian facility. Existing companies must also use data centers located in Indonesia. If they previously use foreign data centers, they must switch to Indonesian facilities soon.

Head of IdEA, Daniel Tumiwa, argues that there will be considerations from business practitioners who will weigh the costs and benefits of running a data center in Indonesia. "The cost can double easily in Indonesia and the data infrastructure must pass through other countries, which will incur charges".

At the discussion, IdEA made a suggestion to the government who should have made considerations by offering incentives for companies who comply with the data center placement requirement as per PP82/2012. However, Kemkominfo has yet to publish regulations which will serve as the basis for the technical aspects of running electronic systems including the possibility of an incentive as expected by members of the association.

BlackBerry and Google both were pressed by the Indonesian government to operate a local data center not too long ago. In this case, both companies, which are among the largest technology companies in the world that have made investments in Indonesia, refused to build a local data center having considered the cost which could reach into the hundred million US dollar range. Another consideration hinges on the unstable business climate in Indonesia which is affected by a complicated bureaucracy system, rampant corruption, natural disasters, terrorism issues, and so on. These are just some of the issues that need to be taken care of before moving forward with the policy plan.

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