Indonesia relaxes data storage rules to allow placement abroad

JAKARTA (Reuters) - Indonesia has relaxed its data storage rules to allow private companies to keep and process data abroad, according to a copy of the new regulations, sparking criticism from local business that the government is backtracking on its digital sovereignty pledge.

Southeast Asia’s largest economy issued regulations in 2012 requiring domestic storage of a range of data, which some interpret to be applicable to all websites and applications that provide services to other parties, to allow oversight by the government. There was a five-year transition period.

Though the regulation was largely not enforced, with officials for years repeatedly saying a revision was in the works, it was among the key complaints by foreign tech companies looking to invest in Indonesia, which has the biggest internet economy in the region.

The new regulation, released this week, requires that only government data be held and processed onshore. Private sector data, which are considered commercial and non-strategic, are allowed to be stored abroad.

The American Chamber of Commerce in Indonesia said in its newsletter the new rules were “a relief to many in industry”.

However, local business associations were worried the rules hurt data protection as the government may not have access to data centers in other jurisdictions.

Having data stored offshore could mean Indonesian law enforcement officials would not have the authority to force a company to provide data during an investigation, Alex Budiyanto, chairman of Indonesia Cloud Computing Association told Reuters by telephone on Thursday.

“When there is a legal case, we can only wait for officers from the other country’s jurisdiction to solve it,” he said. He added that local businesses were also worried the change would kill their prospects, as domestic players are much smaller in capital size compared with global counterparts.

“We have said numerous times that the (2012) government regulation does not need a revision,” Jamalul Izza, chairman the Indonesian Internet Service Providers Association, said.

“The government has made a fanfare of digital sovereignty but this proves the government isn’t thinking about such a thing,” he said.

A spokesman for Indonesia’s communication ministry, which oversees data storage rules, declined to comment.

The new rules also call for “the right to erasure” meaning a data subject has the right to request removal from data controllers and “the right to delisting” or allowing a data subject to ask search engine not to show information on its page.

Indonesia’s internet economy is the largest and fastest-growing in the region, on track to cross the $130 billion mark by 2025, according to a report by Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company.

Editing by Gayatri Suroyo and Chizu Nomiyama