PSE is one of the core regulations in Indonesia’s digital ecosystem that must be understood by every electronic service provider, including foreign companies. In recent years, Indonesia’s digital economy has grown rapidly. Internet usage has soared, online transactions have surged, and digital services have become an integral part of daily life. This growth makes Indonesia a strategic market in Southeast Asia, attracting many global companies eager to expand their business.

However, these opportunities also come with challenges. The Indonesian government places strong emphasis on data security, consumer protection, and legal compliance. For this reason, the regulation of Electronic System Operators (Penyelenggara Sistem Elektronik, or PSE) is key to ensuring that every foreign digital service operates legally, safely, and transparently. Without compliance, digital services risk restrictions or even being blocked.

Through Minister of Communication and Informatics (Kominfo) Regulation No. 5 of 2020 on Private Scope Electronic System Operators, all electronic system providers, both local and foreign, are required to register. The regulation sends a clear message: Indonesia welcomes global digital services, but only for companies willing to comply with national regulations.

Legal Basis: Private Scope PSE

The rules on Private Scope PSE are laid out in Kominfo Regulation No. 5/2020. This regulation serves as a guideline for any company operating an electronic system in Indonesia, or from abroad, as long as its services are used by Indonesian users.

Key points from the regulation include:

1. Mandatory Registration – All private PSEs must register through the Online Single Submission – Risk-Based Approach (OSS-RBA) platform.
2. Coverage for Foreign Services – A foreign company is required to register if its services:
   • Are widely used by Indonesian users.
   • Offer services in the Indonesian language.
   • Conduct transactions in Indonesian Rupiah.
   • Run marketing or promotional campaigns targeting Indonesian consumers.
3. Transparency and Data Access – Companies must provide government access under certain conditions, such as law enforcement or national security.

This regulation is not limited to local providers but specifically emphasizes the obligations of foreign digital services. It ensures that foreign companies not only enjoy the Indonesian market but also share responsibility for data security, user protection, and compliance with local law.

Read More: PB-UMKU Indonesia: Definition, Purpose & How to Apply

PSE Private Asing (Foreign Private PSE)

PSE Private Asing refers to foreign legal entities that operate electronic systems while their services are accessed by users in Indonesia. This means that even if a company is based overseas, once its services reach Indonesian users, it falls under Indonesia’s PSE regulatory scope.

For foreign companies, this regulation is crucial because it:

1. Determines operational legality:
   Without registration, the company is not legally recognized.
2. Serves as a market entry requirement:
   Registration is the gateway for foreign services to be lawfully accessible in Indonesia.
3. Builds user trust:
   Users have greater confidence in services that comply with regulations.
4. Avoids penalties:
   From written warnings to permanent blocking.

In other words, this regulation is not just a formality—it is a decisive factor for the continuity of foreign digital services in Indonesia.

Main Obligations for PSE Private Asing

Foreign digital services classified as PSE must comply with several key obligations:

1. Registration via OSS-RBA
   Every electronic system used by Indonesian users must be officially registered with Kominfo.
   
2. Personal Data Protection
   Providers must have a privacy policy aligned with Indonesia’s Personal Data Protection Law (UU PDP) and implement proper cybersecurity standards.
   
3. Data Access When Requested
   Under specific circumstances such as law enforcement or national security, companies must provide access to their systems to the government in line with legal requirements.
   
4. Content and Service Compliance
   Foreign services must not violate Indonesian rules relating to consumer protection, taxation, or prohibited content.

These obligations are designed to protect national interests while ensuring that users receive safe and reliable digital services.

Read More: Marketplace vs E-Commerce: which one is your digital business?

Consequences of Non-Compliance

If a foreign company fails to meet registration requirements, the Indonesian government may impose administrative sanctions, including:

1. Written warnings from Kominfo.
2. Administrative fines.
3. Temporary suspension of services.
4. Permanent blocking of access to the service in Indonesia.

The consequences extend beyond operations, they also affect reputation. A blocked service can lose public trust, and users may switch to competitors. For global companies, such damage can have serious implications for their international brand image.

Conclusion

In Indonesia’s rapidly growing digital landscape, PSE is a key regulation for foreign digital services that want to operate legally. This rule is not just administrative paperwork; it is a strategic instrument to ensure fair competition, consumer protection, and national data security.

For foreign companies, compliance with PSE regulations is essential to safeguard their reputation, strengthen market position, and secure long-term business continuity in Indonesia. On the other hand, non-compliance could result in severe penalties, from fines to permanent blocking of services.

While compliance may present challenges, the benefits far outweigh the difficulties. By following the rules, foreign digital services can build user trust, gain legal certainty, and tap into Indonesia’s vast digital market potential.

At ET Consultant, we support foreign companies in understanding, preparing, and fulfilling all PSE requirements under Indonesian law. With deep expertise and a strategic approach, we help international clients achieve compliance while maintaining sustainable business growth in Indonesia.

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ET Consultant is a Business Consultant and Legal Consultant Expert that provides support for local and multinational clients to start and manage their business operations in Indonesia. ET Consultant specializes in Business Incorporation, Licensing & Legal, Accounting & Taxes, Immigration, and Advisory Services.

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