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Indonesia’s digital advertising sector was worth about US$800 million in 2015, but the business was left untaxed because of loopholes in regulations

Minister Rudiantara at a networking event hosted by KADIN, MAVCAP, Gobi Partners, and Convergence Ventures

Indonesia’s Ministry of Communications and Informatics spokesperson Ismail Cawidu told Reuters that in March, the Ministry aims to issue a regulation for streaming and messaging providers, as well as social media websites.

He cited national interests on taxes as well as controlling terrorism and pornography-related content as the main reasons for the proposal.

“If they do not comply, Indonesia will reduce their bandwidth or block them entirely,” said Cawidu.

He also stated that there might be a transition period under the new rules.

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Meanwhile, Minister of Communication and Informatics Rudiantara spoke to MetroTV on Sunday about digital advertising in Indonesia. The Ministry estimated that the country’s digital advertising sector was worth about US$800 million in 2015, but the business was left untaxed because of loopholes in regulations.

Even Internet giants such as Google, which had already formed legal entities in Jakarta, as well as Facebook and Twitter which have representative offices in the country, may face greater scrutiny on their tax reports.

“Google has an office in Indonesia, but digital age transactions do not go through that office. That is what we’re looking to straighten out,” said Rudiantara.

Indonesia has never been shy about blocking or banning Internet companies who had failed to comply to regulations. State-owned telco operator Telkom blocked Netflix from all of its services, while the government was close to banning Tumblr for pornographic content on its platform.

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