Game Publishers Will Be Required to Become Indonesian Legal Entities

All game publishers operating in the Indonesian market must be Indonesian legal entities.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Penerbit Gim Bakal Diwajibkan Berbadan Hukum Indonesia

KOMPAS/MEDIANA

Director-General of Applications and Informatics at the Ministry of Communication and Informatics (Kemkominfo), Semuel Abrijani Pangerapan, during a coffee session with Kemkominfo on Friday, January 26th, 2024, in Jakarta.

JAKARTA, KOMPAS  —  The government through the Ministry of Communication and Information will require all game publishers operating in the Indonesian market to have Indonesian legal entities. The ministry has given game publishers a 1-2 year gap to fulfill their obligations.

"Regulations that require game publishers to be Indonesian legal entities are contained in the Minister of Communication and Information regulations (Permenkominfo). The discussions have been completed and now his position is at the Ministry of Law and Human Rights. "It won't be long before it will be determined and promulgated," said the Director General of Applications and Information at the Ministry of Communication and Information (Kemkominfo) Semuel Abrijani Pangerapan during the Coffee with the Ministry of Communication and Information session, Friday (26/1/2024) , in Jakarta.

Previously, in mid-2023, the Ministry of Communication and Information Technology (Kemkominfo) opened a public consultation on the Draft Ministerial Regulation regarding game classification. This Draft Ministerial Regulation replaces Ministerial Regulation No. 11 of 2016 concerning Electronic Game Classification, which still refers to Government Regulation (PP) No. 82 of 2012 concerning the Implementation of Electronic Systems and Transactions.

The Ministry of Communication and Information has drafted a regulation regarding the classification of games consisting of seven sections. Among them, Section II regulates game classification which includes obligations for game publishers and procedures for game classification, particularly the categorization of content criteria and user age groups. Meanwhile, Section V regulates administrative sanctions. Section VI, on the other hand, contains transitional provisions for game publishers to apply for game classification.

KOMPAS/WILIBRORDUS MEGANDIKA WICAKSONO

Children play and learn about coding through various games at Coding First Purwokerto, Banyumas, Central Java, Saturday (17/6/2023).

Semuel confirms that the provision requiring Indonesian legal entity game publishers is indeed in the Draft Regulation of the Ministry of Communication and Information Technology. He also stresses that the regulation aims to organize the gaming ecosystem in Indonesia.

"Foreign game publishers must have a legal entity in Indonesia, either by standing alone or partnering with a local company. We will provide time, perhaps 1-2 years, for them to fulfill their obligation to have a legal entity," he said. If there is a game distributor who also has a publishing business, they must also take care of their publishing business to have a legal entity in Indonesia."

Also read: Exports of Indonesian Intellectual Property Based Products are Still Small

In line with the obligation of legal publishers in Indonesia, games distributed in Indonesia must clearly specify the age classification of their users. Supervision is carried out by an independent rating agency certified by the Ministry of Communication and Information Technology.

"The granting of game ratings should ideally be carried out by the government, but we cooperate with independent rating agencies," he said.

Semuel added that the sanction for game publishers who do not comply with the obligation to have legal entity in Indonesia is game blocking. Games that do not comply with age segment classification will also be subject to sanctions, but he did not explain the details.

KOMPAS/AGUSTINUS YOGA PRIMANTORO

A number of media crew members are testing out console games available at the Agate International office located in the Summarecon Bandung area of Gedebage district, Bandung city, West Java, on Tuesday (16/1/2024).

It needs to be clarified

Founder and CEO of Anantarupa Studios, Ivan Chen, when contacted separately, stated that the interval of time to fulfill legal obligations should not be too long. In some countries, such as China and Vietnam, game publishers who have not complied with all government requirements will be blocked first.

"The idea of an independent rating institution should be clarified as to who the members are and how quickly the Ministry of Communication and Information will respond to the rating results from the independent rating institution. The government has not yet clarified this. Then, what consequences will be imposed by the Ministry of Communication and Information if they find games that are intended for ages 17 and above, but are promoted for elementary and high school students?" said Ivan.

Furthermore, Ivan is of the opinion that the obligation of game publishers to be legal entities in Indonesia is only for the government's interest in collecting taxes. There is no positive impact on the local gaming industry yet.

Also read: Indonesian Games: Expanding in the Domestic Market, Starting to Play in the Global Arena

Local gaming industry requires a connection between the education sector and the industry's ecosystem, access to financing for the industry, and an integrated marketing access, including domestic component level regulations (TKDN) at the Ministry of Industry. In addition, there is also a need for improved standardized classification for business sectors.

The local gaming industry also requires the commitment of the central and regional governments, state-owned enterprises, and regional-owned enterprises to use local gaming licenses.

"Does the regulation issued by the Ministry of Communication and Information Technology regarding the classification of games and electronic system organizers solve the challenges faced by the national gaming industry? I don't think so," said Ivan.

KOMPAS/SAMUEL OKTORA

The Agate game development team held a meeting in a relaxed atmosphere to finalize the grand launching of the Ciayo Stories game, Friday (10/5/2019), in the Bandung Teknopolis area, Bandung City, West Java. The game is planned to be launched in September 2019.

pros and cons

Meanwhile, Roshan Raj Behera, a Partner at Redseer Strategy Consultants, believes that streamlining registered game publishers in a country has its advantages and disadvantages. Its benefits depend on the regulations issued, economic context, and technology.

Some of its advantages first is quality control. Registration helps maintain quality. Registered publishers tend to follow industry standards, protecting consumers from fraud or harmful content. Second, market regulation because it can encourage healthy competition. Third, the government can more easily levy taxes on registered publishers, thereby increasing revenue.

The government can more easily impose taxes on registered publishers to increase revenue.

"Another advantage is accountability and legal compliance, better data collection on the industry that is useful for analysis or policy-making, and promotion of local cultural content," he said.

Meanwhile, Roshan added, amongst its counterparts includes barriers to entry for small or independent publishers, the risk of increased censorship or government control over content, and the risk of financial burden, particularly for smaller game publishers.

"The other downside is the risk of excessive regulation, which makes it less attractive for investment and innovation. In addition, there is potential for misuse for political or non-industrial purposes," he said.

Also read: Spend up to Millions of Rupiah for Games?