AmCham Update Vol. 5 #78

Kominfo Crackdown on Anonymous Internet, Moscow Meeting for Prabowo & Putin, Latest BI Digital Payments Blueprint, New Tax System Set for December Soft Launch, PMI Shrinks

Aug 02, 2024

Kominfo Cracks Down on Anonymous Internet Access

As part of a crackdown on on-line anonymity, public access to free Virtual Private Networks (VPN), commonly used to hide a user’s IP address and identity, will be limited, the Ministry of Communication and Information Technology (Kominfo) announced on July 31. The ministry cited the rampant use of VPNs to access illegal online gambling and pornographic content to justify the move.

In many countries, VPNs are also used by dissidents and opposition leaders to avoid the prying eyes of government.

Communication Minister Budie Arie Setiadi said that online gambling hampers the government’s digital transformation efforts by negatively affecting public productivity. He said the government wants to shield the public from online gambling, which is the “dark side” of digitalization.

Search engine DuckDuckGo, which is noted for its security and privacy, was also banned this week for the same reason, said Usman Kansong, Director General of Informatics Applications at Kominfo.

Surung Sinamo, Country Director at cybersecurity giant Palo Alto Networks Indonesia, said that VPN use to access social media was harmless, but that the real danger came when connecting to platforms that store high-value data such as banking, financial technology and digital assets.

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Prabowo & Putin Meet in Moscow

President-elect and Defense Minister Prabowo Subianto met with Russian President Vladimir Putin in Moscow’s Grand Kremlin Palace on July 31. Prabowo underscored his desire to strengthen bilateral ties, particularly in the defense and nuclear energy sectors.

"I aim to continue maintaining and enhancing this relationship. Historically, Russia has consistently supported us in times of need,” said Prabowo on Wednesday.

Prabowo said he wanted to cooperate with several Russian institutions in the nuclear reactor sector. Indonesia also intends to address a nationwide shortage of doctors by sending more students to study medicine in Russia, Prabowo said.

Prabowo also invited Russia to send a delegation to a defense conference and exhibition that will be held by Indonesia in November 2024.

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Quick and Digital the Goal for BI Blueprint

Bank Indonesia (BI) officially launched its Payment System Blueprint (BSPI) 2025-2030 on August 1 during the Digital Finance and Creative Works Festival in Jakarta. The program aims to accelerate digital payments, according to BI Governor Perry Warjiyo.

The new blueprint is a continuation of the 2019-2025 BSPI and will focus on the modernization of retail and wholesale payment infrastructure, consolidation of the national payment industry, digital innovation and acceptance, expansion of international cooperation, and the development of the digital rupiah.

The digital rupiah is currently in its proof-of-concept stage, Perry added, and the central bank is still studying how to distribute it to retailers and whether to use a centralized or decentralized model. BI underscored the need to accelerate development of the digital payments system and hinted at enacting regulatory reforms.

There are a record 50 million users on the Quick Response Indonesia Standard (QRIS), most of whom are micro, small, and medium-sized enterprises (UMKM).

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Core Tax Administration System Heads for December Soft Launch

Minister of Finance Sri Mulyani announced plans to soft launch the new Core Tax Administration System (CTAS) in December 2024. She said the implementation of the CTAS is driven by the increasing number of taxpayers and a growing volume of documents, which is expected to increase the tax-to-GDP ratio by 1.5 percent.

CTAS aims to enhance the automation and digitalization of tax administration, allowing taxpayers to independently access services, automatically complete tax return forms and submit annual notification letters via the tax website.

The Directorate General of Tax noted that the new system will enable the government to monitor compliance with tax laws more accurately and credibly.

Sri Mulyani added that the system has undergone extensive trials involving 21 business process modules. Throughout its development, the Directorate General of Tax has been under continuous supervision by law enforcement officers, including the Corruption Eradication Commission (KPK) and the National Development Planning Agency (Bappenas).

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Indonesia's PMI Retreats in July

Indonesia’s Purchasing Manager Index (PMI) declined to 49.3 in July, according to data released by S&P Global. The index, which measures the national level of purchasing in the manufacturing sector, lost 4.9 points in the last four months from 54.2 in March 2024.

The plunge is driven by declining market demand for sales of goods, Paul Smith, Economic Director at S&P Global Market Intelligence, said. Additionally, constraints on the supply side and weakening export performance also hinder companies from boosting production.

Coordinating Minister for Economic Affairs Airlangga Hartarto said both the market and the government need to be more optimistic and that the trajectory for investment remains strong. Hartarto said the government will examine the circumstances that led to the decline in the index figure.

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Member Announcement | Dow

In May 2024, Dow and SCG Chemicals (SCGC) announced the signing of a first-of-its-kind memorandum of understanding (MOU) in the Asia Pacific region to transform 200KTA of plastic waste into circular products by 2030.

The partners intend to accelerate technology development to enable both mechanical recycling (MR) and advanced recycling (AR) and convert a broader range of plastic waste into high-value products.

The parties anticipate that subsequent phases of the partnership will include sourcing of plastic waste feedstocks in Southeast Asia including potential expansion into other parts of the region.

"Asia has one of the largest sources of convertible plastic waste. We want to disrupt how the region currently handles waste and structure a new model that values, sources, and transforms plastic waste. Our partnership with SCGC will enable both companies to be key players in enabling greater circularity in the region,” said Bambang Candra, APAC commercial vice president, Packaging & Specialty Plastics at Dow.

The partnership supports Dow's "Transform the Waste" target, which aims to transform plastic waste and other forms of alternative feedstock into 3 million metric tons of circular and renewable solutions annually by 2030. The partnership also addresses SCGC's sustainability goals under its "Low Waste, Low Carbon" initiative to lower greenhouse gas emissions by 20 percent and expand its green polymer portfolio with a sales target of 1 million tons per year by 2030.

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Get to Know Our Members | Illumina

Illumina is a leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function. These systems are enabling studies that were not even imaginable just a few years ago, and moving us closer to the realization of personalized medicine. Illumina’s customers include a broad range of academic, government, pharmaceutical, biotechnology and other leading institutions around the globe.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Lydia Ruddy and written by the AmCham Staff.

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