Indonesian Perspective Overview

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Indonesia for the Digital Economy

Indonesia for the Asia’s 3rd & TPP

Source: trpc.biz/goingdigital-indonesia2015/ (Sept, 2015) Source: setkab.go.id / Cabinet Secretary

Internet Economy: Digital Business

Internet Ecosystem: Multistakeholder

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Internet Governance: Open, Inclusive

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But, TPP is a closed-door negotiation!

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TPP Final Texts

Final Texts: - https://ustr.gov/trade-agreements/free-trade-

agreements/trans-pacific-partnership/tpp-full-text - https://wikileaks.org/tpp-final

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1. Cross-border Data Transfer (TPP e-Commerce, Article 14.11.2) – TPP: restriction of cross-border digital data transfer is not allowed – Standard for data and personal information? – Jurisdiction? Bilateral /multilateral agreement?

2. Data Center Territory (TPP e-Commerce, Article 14.13.2) – TPP: computing facility / data center localization is not allowed – Indonesian Government Regulation No. 82/2012? – Localization = trade barrier? Market (traffic) domination?

3. Copyrighted Digital Content (TPP Intellectual Property, Article 18.82.3) – TPP: immediate remove/disable digital content of the copyright infringement – Liability of service providers? User-generated content? – Regulation? Procedure? How about fair-use?

4. Trade Secret in Computer System (TPP Intellectual Property, Article 18.78.2) – TPP: unauthorized access of trade secret in a computer system is a criminal – Revelation of a corporate wrongdoing is criminal? – New threat for whistleblower, journalist or netizen who tell the truth?

5. Internet Access for Consumer (TPP e-Commerce, Article 14.10) – TPP: Consumer’s Internet subject to “reasonable network management” – Justification for “reasonable”? Unjustifiable discriminatory? – Limitation of “network management” practice? Net neutrality?

6. e-Transmission Custom Duties (TPP e-Commerce, Article 14.3) – TPP: custom duties on electronic transmission is not allowed – Global operators’ revenues are stagnating, operating and capital expenditures are increasing. Meanwhile,

the “over-the-top” (OTT) players that piggyback free on telecom systems are gaining in number and popularity, making the traditional operators’ task that much more difficult* ?

– Taxing of over-the-top (OTT) services? Digital products?

*) http://www.strategyand.pwc.com/perspectives/2015-telecommunications-trends

Full Presentation: http://bit.ly/tpp4id or http://s.id/tpp4id

Summary of the 6 TPP’s Impacts on Digital Rights from Indonesian Perspective (Brief Overview)

TPP e-Commerce, Article 14.11.2:

“Each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person.”

#1 | Case : Cross Border Data Transfer

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#1 | Note: Data Needs Safe Environment

Global trends #3 to create opportunities to transform Southeast Asia by 2030 (McKinsey, Nov 2014)

“Establish a policy framework for data collection and sharing as well as online privacy. Capturing the value of big data, the Internet of Things, and the cloud depends on creating a safe and predictable environment for data collection, storage, and usage across business entities and even across country borders. (McKinsey, Nov 2014)

Protecting personal data online is key for the data driven economy, since it will increase trust in the internet, and greater trust will foster more use. Data flows nowadays are global, and privacy regimes need to be interoperable with one another to really enable the internet to be an engine of innovation and economic growth. (World Development Report, Jan 2016)

#1 | Note: Protecting Data is a Key

TPP signatories would still be free to restrict cross-border data flows* as long as the restriction reasonably relates to:

1. Legitimate public policy objective.

Fact: Indonesia does not have Personal Data Protection and/or Privacy Law/Bill yet.

2. Not applied in an arbitrary or unjustifiable discriminatory or a disguised restriction on trade.

Fact: Should comply with the General Agreement on Trade in Services (GATS) / WTO.

#1 | Note: Restriction OK, but…

*) TPP e-Commerce, Article 14.11.3

#1 | Note: Benefit for (US) Data Services

“Our member companies, the leading developers of software, hardware, and data services, will benefit particularly from the right of free transfer of data, and the freedom to locate computing facilities based on business decisions, not protectionist policies.“ (BSA, May 2016)

Logo of several BSA member:

#1 | Impact: Standard & Jurisdiction?

A country that has such laws will find it challenging to enforce data standards on a company resident in a country that does not. In addition, some companies may rely on the lack of a physical presence in a particular jurisdiction in order to argue that they need not comply with the privacy and other consumer protection laws of that country. (Public Citizen, Nov 2015)

TPP e-Commerce, Article 14.13.2:

“No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory.”

#2 | Case: Data Center Territory

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TPP signatories would still be free* to request data center localization as long as the request reasonably relates to: Legitimate public policy objective.

Fact: Indonesia has Regulation of the Government of the Republic of Indonesia number 82/2012, concerning Electronic System and Transaction Operation

Not applied in an arbitrary or unjustifiable discriminatory or a disguised restriction on trade.

Fact: Should comply with the General Agreement on Trade in Services (GATS) / WTO.

#2 | Note: Localization OK, but…

*) TPP e-Commerce, Article 14.13.3

#2 | Note: Indonesian Regulation(s)

• Regulation of the Government of the Republic of Indonesia number 82/2012, concerning Electronic System and Transaction Operation, article 43.1.b: “The Electronic Transactions in the territory of the Republic of Indonesia shall: perform transactions data storage in domestically”

• Draft of MCIT Ministerial Decree concerning Personal Data Protection in the Electronic System: “Data center and disaster recovery center of electronic system operator for public service used to process the Personal Data Protection shall be placed in the territory of the Republic of Indonesia”

United States Trade Representative, “2016 National Trade Estimate Report on Foreign Trade Barriers” (page 231):

• The Indonesian government has signaled plans to enact a personal data protection regulation under Regulation 82/2012, and may pursue national legislation on personal data protection in 2016, both of which could further define requirements for data localization.

• A local data center requirement could prevent service suppliers from fully leveraging the economies of scale from existing data centers and discourage future investment in Indonesia.

• Furthermore, such a requirement could inhibit the cross-border data flows that are essential to electronic commerce.

• The U.S. Government continues to engage the Indonesian government on this issue.

#2 | Note: Localization = Barrier?

‘‘Bipartisan Congressional Trade Priorities and Accountability Act of 2015’’. - SEC. 102. Trade Negotiating Objectives

- (b) Principal Trade Negotiating Objectives - (9) LOCALIZATION BARRIERS TO TRADE

“The principal negotiating objective of the United States with respect to localization barriers is to eliminate and prevent measures that require United States producers and service providers to locate facilities, intellectual property, or other assets in a country as a market access or investment condition, including indigenous innovation measures.”

#2 | Note: What Congress Said

In the United States, Congress should be asked for approval after the TPP Agreement is signed by the President, pursuant to the requirements set forth under the Trade Promotion Authority (TPA).

#2 | Impact: Domination & Market?

“The country distribution of major data centers clearly reflects two things the US dominance of cloud and internet technologies; and the scale and unique characteristics of the Chinese market. The ranking also reflects the relative importance of smaller countries that are often used as regional hubs – Hong Kong, Singapore…” (Sinergy Research Group, Oct 2015)

TPP Intellectual Property, Article 18.82.3:

“Requirement for Internet Service Providers to expeditiously remove or disable access to material residing on their networks or systems upon obtaining actual knowledge of the copyright infringement…..”

#3 | Case: Copyrighted Digital Content

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#3 | Impact: UGC & Liability?

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*) UGC = User-Generated Content

TPP Intellectual Property, Article 18.78.2:

“Each Party shall provide for criminal procedures and penalties for one or more of the following:

– the unauthorized and willful access to a trade secret held in a computer system;

– the unauthorized and willful misappropriation (unlawful acquisition) of a trade secret, including by means of a computer system; or

– the fraudulent disclosure, or alternatively, the unauthorized and willful disclosure, of a trade secret, including by means of a computer system.”

#4 | Case: Trade Secret in Computer System

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#4 | Impact: Threats for the Truth?

(TPP) Creates New Threats for Journalists and Whistleblowers. Dangerously vague text on the misuse of trade secrets, which could be used to enact harsh criminal punishments against anyone who reveals or even accesses information through a "computer system" that is allegedly confidential.

TPP Could Criminalize Journalism and Whistleblowing. TPP’s trade secrets provisions could make it a crime for people to reveal corporate wrongdoing “through a computer system.” The language is dangerously vague, and enables signatory countries to enact rules that would ban reporting on timely, critical issues affecting the public. (May 2015, 250+ Tech Companies and Digital Rights

Groups signed a letter to Congress).

#5 | Case: Internet Access for Consumer

TPP e-Commerce, Article 14.10:

“Subject to applicable policies, laws and regulations, the Parties recognize the benefits of consumers in their territories having the ability to: (a) access and use services and applications of a consumer’s choice available on the Internet, subject to reasonable network management.”

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#5 | Note: Open Discrimination

“The provision doesn’t advance anything for countries that

don’t have net neutrality regulation. It also fails to effectively address existing net neutrality challenges, because it may only apply to situations where access to applications or services are blocked. It may not include situations where traffic is unjustifiably degraded or discriminated against in an economic sense, or where a service provider prioritizes certain services, giving them significant advantages over competitors. Due to these shortcomings, the TPP’s open access framework leaves open an entire universe of discriminatory and innovation harming activity that traffic carriers can leverage and which regulators have found objectionable.” (Nov, 2015)

“A network management is a practice that has a primarily technical network management justification, but does not include other business practices. A network management practice is reasonable if it is primarily used for and tailored to achieving a legitimate network management purpose. Reasonable network management is an exception to the no-blocking rule, no-throttling rule, and no-unreasonable interference/disadvantage standard, but not to the rule against paid prioritization, because it does not a network management practice and not primarily a technical purpose”. (FCC, Mar 2016)

#5 | Note: “Reasonable” according to FCC

“Protecting and Promoting the Open Internet”

#5 | Note: Indonesia Case

#5 | Impact: Net Neutrality Debate?

#6 | Case: e-Transmission Customs Duties

TPP e-Commerce, Article 14.3:

1. No Party shall impose customs duties on electronic transmissions, including content transmitted electronically, between a person of one Party and a person of another Party.

2. For greater certainty, paragraph 1 shall not preclude a Party from imposing internal taxes, fees or other charges on content transmitted electronically, provided that such taxes, fees or charges are imposed in a manner consistent with this Agreement.

#6 | Note: Ensuring Common Sense

#6 | Note b: Taxing (Digital) Services

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#6 | Impact: ....................? (you decide it!)

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1. Cross-border Data Transfer (TPP e-Commerce, Article 14.11.2) – TPP: restriction of cross-border digital data transfer is not allowed – Standard for data and personal information? – Jurisdiction? Bilateral /multilateral agreement?

2. Data Center Territory (TPP e-Commerce, Article 14.13.2) – TPP: computing facility / data center localization is not allowed – Indonesian Government Regulation No. 82/2012? – Localization = trade barrier? Market (traffic) domination?

3. Copyrighted Digital Content (TPP Intellectual Property, Article 18.82.3) – TPP: immediate remove/disable digital content of the copyright infringement – Liability of service providers? User-generated content? – Regulation? Procedure? How about fair-use?

4. Trade Secret in Computer System (TPP Intellectual Property, Article 18.78.2) – TPP: unauthorized access of trade secret in a computer system is a criminal – Revelation of a corporate wrongdoing is criminal? – New threat for whistleblower, journalist or netizen who tell the truth?

5. Internet Access for Consumer (TPP e-Commerce, Article 14.10) – TPP: Consumer’s Internet subject to “reasonable network management” – Justification for “reasonable”? Unjustifiable discriminatory? – Limitation of “network management” practice? Net neutrality?

6. e-Transmission Custom Duties (TPP e-Commerce, Article 14.3) – TPP: custom duties on electronic transmission is not allowed – Global operators’ revenues are stagnating, operating and capital expenditures are increasing. Meanwhile,

the “over-the-top” (OTT) players that piggyback free on telecom systems are gaining in number and popularity, making the traditional operators’ task that much more difficult* ?

– Taxing of over-the-top (OTT) services? Digital products?

*) http://www.strategyand.pwc.com/perspectives/2015-telecommunications-trends

Full Presentation: http://bit.ly/tpp4id or http://s.id/tpp4id

Summary of the 6 TPP’s Impacts on Digital Rights from Indonesian Perspective (Brief Overview)

• http://www.worldbank.org/en/publication/wdr2016

• https://www.eff.org/issues/trade-agreements

• https://www.citizen.org/documents/tpp-ecommerce-chapter-analysis.pdf

• http://www.bsa.org/~/media/Files/Policy/IssueBriefs/05032016TPP.pdf

• https://www.wto.org/english/tratop_e/ecom_e/ecom_briefnote_e.htm

• http://www.oecd.org/internet/ieconomy/

• http://trpc.biz/goingdigital-indonesia2015/

• https://www.globalpolicywatch.com/2015/11/the-tpps-electronic-commerce-chapter/

• http://www.globalresearch.ca/tpp-could-criminalize-journalism-and-whistleblowing/5451009

• http://www.slideshare.net/SutedjoTjahjadi/transforming-to-indonesias-digital-economy-menuju-digital-ekonomi-indonesia

• http://www.mckinsey.com/global-themes/asia-pacific/three-paths-to-sustained-economic-growth-in-southeast-asia

• https://www.srgresearch.com/articles/us-and-china-account-54-all-major-cloud-and-internet-data-centers

• https://www.srgresearch.com/articles/us-accounts-almost-half-all-major-cloud-and-internet-data-centers

• http://submarine-cable-map-2016.telegeography.com/

• https://web.kominfo.go.id/sites/default/files/users/1536/RPM%20Perlindungan%20Data%20Pribadi%20dalam%20SE%20-%2028%20Maret%202015_nando_bersih.pdf

• https://jdih.kominfo.go.id/produk_hukum/view/id/6/t/peraturan+pemerintah+republik+indonesia+nomor+82+tahun+2012

• http://www.thejakartapost.com/news/2016/03/03/telkom-vs-netflix-and-network-neutrality-debate.html

• http://www.thejakartapost.com/news/2016/01/27/indonesia-s-telkom-effectively-blocks-netflix.html

• http://www.thejakartapost.com/news/2016/03/28/telkom-bring-netflix-rival-indonesia.html

• http://www.thejakartapost.com/news/2016/06/09/activists-urge-govt-to-ensure-net-neutrality-in-indonesia.html

• http://www.thejakartapost.com/academia/2016/05/10/taxing-the-internet-giants-catch-me-if-you-can.html

• http://www.wsj.com/articles/indonesia-to-pursue-u-s-tech-firms-on-taxes-minister-says-1459951546

• http://rabble.ca/news/2016/02/false-positive-tpp-net-neutrality-rules-lack-enforceability-and-impact

• https://apps.fcc.gov/edocs_public/attachmatch/DA-16-271A1_Rcd.pdf

• https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.pdf

• https://ustr.gov/sites/default/files/TPP-Promoting-Digital-Trade-Fact-Sheet.pdf

• https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2016/2016-national-trade-estimate

• https://www.congress.gov/114/plaws/publ26/PLAW-114publ26.pdf

• https://www.congress.gov/bill/114th-congress/senate-bill/995

• https://fas.org/sgp/crs/misc/R43491.pdf

• https://www.govtrack.us/congress/bills/114/s995

Reading Sources

www.ictwatch.id

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e-mail: donnybu[at]ictwatch.id blog: donnybu.com twitter: @donnybu

mobile: +62-818-930932

• Daily Activities : ICT Watch, Executive Director ICT Lecturer (NIDN: 0306117401) Fellow Researcher of Citizen Lab - Toronto University and

Global Partners Digital - London Former of : Journalist, Editor and VP at Detikcom Online Media

• Formal Educations : University of Indonesia, Communication Management Gunadarma University, Computer Science

• Brief CV : http://bit.ly/dbu-cv

Brief Biodata