On 2 January 2024, the Law No. 11 of 2008 on Electronic Information and Transactions (UU ITE), which initially amended in 2016, entered its second amendment into force through Law No. 1 of 2024 on The Second Amendment to Law Number 11 of 2008 on Electronic Information and Transactions (Second Amendment of UU ITE).
Generally, UU ITE and its initial amendment in 2016 have sparked controversy due to their expansive nature, lack of clarity, and ambiguous provisions. This has raised concerns about its privacy-related issues, potential impact on public freedom of expression and democratic discourse.
Overview of Amendment
The Second Amendment of UU ITE marks a noteworthy change in the legal framework of Indonesia pertaining to electronic information and transactions. It encompasses crucial aspects including child protection, electronic certification, international contract governance, enhanced clarity on prohibition actions, and law enforcement measures, all affecting both businesses and individuals active in digital sphere.
Key Changes
In our first edition of ALTA Regulation Alert, we will explore below key provisions introduced by the Second Amendment of UU ITE:
A. Electronic Certification Organizer: Scope of Services and Institutional Provisions
The Second Amendment of UU ITE introduced scope of services of electronic certification organizers (ECO), including e-signature, e-seal, e-time stamp, registered electronic delivery service, website authentication, preservation of e-signatures and/or e-seals, digital identity, and other services that use electronic certificates.[1]
Additionally, while the previous amendment did not differentiate/allows a foreign entity ECO and Indonesian entity ECO, pursuant to the Second Amendment of UU ITE, an ECO must be an Indonesian legal entity and domiciled in Indonesia. However, it is an exemption if the service using electronic certificates is not yet available in Indonesia.[2]
B. Mandatory: E-signatures for High-risk Transactions
This Second Amendment of UU ITE introduced a ‘high-risk transaction’ and mandates the parties that enters high-risk transactions to use electronic signature secured by an electronic certificate. The high-risk transactions, refers to, amongst others, financial transactions that are not carried out physically face-to-face.[3]
C. Child Protection
The Second Amendment of UU ITE explicitly govern the obligation for electronic service organizer (ESO) to implement the children/minority protection. This Second Amendment of UU ITE mandates that protection of children’s right shall be the priority of the ESO compared to the commercial interests of the ESO. This protection includes personal data, privacy, physical, mental, and emotional/psychological wellbeing against any misuse of electronic information and/or documents that violates their rights.[4]
In order to implement such protection, the ESO must provide:
- Information relating to minimum age at which the minors may use the products and/or services;
- Mechanism to verify the age of children/minor users; and
- Mechanism for reporting with regards to products, services, and features that violates or potentially violates the rights of the children/minor.[5]
Failure to comply with these provisions may subject the ESO to administrative sanctions such as written warning, administrative fine, temporary suspension of the electronic systems, and/or termination of access to electronic system.[6]
D. Indonesian Law as the Governing Law to International Electronic Contracts
This Second Amendment of UU ITE mandates that international electronic contracts which uses standard clauses, drafted by the ESO, must be governed by Indonesian law under the following conditions:
- The users of ESO services originate from Indonesia and provide their consent from or within Indonesia jurisdiction;
- The performance of the contract takes place in Indonesia jurisdiction; and/or
- The ESO has a place of business in Indonesia or engages in business activities in Indonesia.
According to the Elucidation of this article, this provision aims to provide protection for users of ESO services in Indonesia by ensuring access to an effective and efficient legal system in fulfilling their rights and obligations and resolving disputes.[7]
E. Enhancement on Prohibited Actions Provisions
Previously in the initial amendment, the Article 27 paragraph (3) regarding defamation, is somewhat controversial due to the lack of clarity on “defamatory content” and was widely criticized and challenged by the public.
In the Second Amendment of UU ITE, it is refined through Article 27A: “…intentionally attacking the honour or good name of another person by accusing them of something, with the intention of making the matter known to the public in the form of Electronic Information and/or Electronic Documents which are conducted through Electronic Systems” , defamation refers to an act that its Elucidation also clarified that; degrades or damages the good name or dignity of another person to the detriment of that person, including defamation and/or slander.[8]
A lesser criminal sanction from the previous amendment, a defamation will subject to imprisonment up to 2 (two) years and/or fine up to IDR400 million (four hundred million Rupiah). Retroactively, a defamation accuser could potentially be charged with criminal sanctions if they are unable to prove their claim, with up to 4 (four) years imprisonment and/or fine up to IDR750million (seven hundred fifty million Rupiah).[9]
Additionally, it is an exemption for defamation if it’s done for public interest or self-defense.[10].
F. Wider of Government’s Role and Authorization in Digital Ecosystem
The newly introduced Article 40A, outlined that the government is responsible for promoting a fair, accountable, safe and innovative digital ecosystem. In order to implement such responsibility, the government has the right to instruct ESO to make ‘adjustments’ to their electronic system and/or take certain actions. The ESOs shall comply with any instructions by the government since incompliance to such instructions will subject the ESO to administrative sanctions. This provision aims for ESOs to gain equal opportunity of business and innovation (equal level of playing field), provide opportunities for the public to get better and quality choices, and create a sense of security over the of the electronic system organized by the ESOs.[11]
Through the newly added Article 40 paragraph (2c) and (2d), the Second Amendment of UU ITE also provides the government a wider authorization to prevent dissemination and use of electronic information and/or documents containing prohibited contents in the form of, with or without instruction to the ESO, to terminate access and/or content moderation by themselves to any prohibited content, including unlawful content (i.e. pornography, gambling, and/or harmful content to the safety of life or health of individuals or the public).[12]
Additionally, it also provides wider authorization for civil service investigator to order ESOs to block social media account, bank accounts, internet protocol (IP) address, and/or other digital assets associated with criminal offense.[13]
In Summary
In the wake of the Second Amendment of UU ITE, a transformative journey unfolds from the veiled complexities and ambiguous nuance to a realm of heightened clarity. It is acknowledged that the Second Amendment of UU ITE has enhanced the clarity of existing articles and introduced new ones, which also effects individuals and digitalized business players to comply and implement the outlined new obligations.
However, it is crucial to note that most provisions above are still subject to the implementing regulations, and certain aspects still lack comprehensive clarity, raising questions mainly on the challenging implementation and its enforcement. These issues are expected to be further stipulated in the forthcoming implementing regulations (with an anticipation that the Government Regulation No. 71 of 2019 on The Organization of Electronic Systems and Transactions will undergo amendments).
