Understanding the PSE License for Online Business in Indonesia

In Indonesia, the PSE License is a vital certification for online businesses, ensuring compliance with the country’s stringent data protection and security standards. This license is essential for e-commerce platforms, mobile applications, and websites that handle electronic transactions or store customer information. Obtaining a PSE License not only demonstrates a commitment to safeguarding user data but also enhances consumer trust and supports seamless online operations.  [ez-toc] This article provides a comprehensive overview of the PSE License, including its importance, who needs it, the scope of electronic systems covered, and the steps required to obtain it, along with insights into the legal framework and compliance updates.

What is the PSE License?

The PSE License is crucial for any online business in Indonesia. It certifies that a company’s electronic systems meet the security and data protection standards set by Indonesia’s Ministry of Information and Communication. This certification helps online businesses adhere to local regulations and assures users that their data is handled securely.

Why is the PSE License Important?

Having a PSE License is fundamental for the businesses as it demonstrates a commitment to data security and privacy. Failure to obtain the PSE License, the Minister can block the access to your electronic system which means that the electronic system cannot be used and cannot be accessed by the customer. 

Who Needs a PSE License in Indonesia?

The PSE License is required for any online business that offers services, processes payments online, or stores information. This includes:

• E-commerce or marketplace platforms
• Mobile applications
• Websites that handle electronic transactions or collect personal data
• Platforms that gather information or process payments
• search engine (written, voice, images, music, video, film, games)
• paid digital content
• Media social, network services, communication services (chat, video calls, emails, voice calls or online conversation in the form of a digital platform)

Should You Set Up a Company in Indonesia to Operate Online Business in Indonesia?

The answer is not mandatory. The minister of communication and information allows the electronic system operator which establish based on the law of another country or that permanently domicile in another country but:

1. Provide services in the territory of Indonesia
2. Engages in business in Indonesia; and/or
3. Its electronic system are used and/or offered in the territory of Indonesia

The subject above is obliged to register and obtain the PSE License to be able operate in Indonesia.

Steps to Obtain a PSE License

1. Document Preparation

• Company established based on Indonesian law: Begin by preparing the necessary legal documentation. This includes articles of association, approval from the Ministry of Law and Human Rights, obtaining a business license (NIB) and a Taxpayer Identification Number (NPWP). 
• Company established based on the law of another country: identity of the electronic system provider, identity of the director, certificate of incorporation, total of users in Indonesia and transactions value from Indonesia. All documents must be translated by the sworn translator.
• Compile comprehensive profiles of the Electronic System Provider and its systems, detailing your electronic system and its operations.

2. Registration

• Use the Online Single Submission (OSS) system to apply for the PSE License. This platform is the sole channel for registration. Ensure accurate classification of your business and system details, including the type of system, server location, and how it manages business processes.
• Your electronic system will be soon listed in the government’s website/system which marks the legal registration

Legal Framework and Compliance

The PSE License is governed by the Ministry of Communication and Information Regulation No. 5 of 2020 and No. 10 of 2021 (“Regulation”).  After obtaining the PSE License, the company must comply with the compliance sets in the Regulation, such as:

1. Any changes to the information that has been submitted to the ministry when obtaining the PSE License, must be reported to the ministry (i.e change the director, change the address, etc)
2. Providing user guidelines in Indonesian language
3. Not containing prohibited contents such as pornography, gambling
4. Providing customer service to the users

Setting Up Your E-commerce Business

When setting up an e-commerce business in Indonesia, selecting the right business model and legal entity is crucial. For foreigners, you can either set up a company in Indonesia (called as PT PMA) or use your foreign entity . Incorporating PSE License considerations into your business plan ensures regulatory compliance and prepares your business for success in Indonesia.

Frequently Asked Questions

• Can our online business provide services within Indonesia’s territory? Yes, you can. As long as your electronic system is registered to the Indonesian government through the Ministry of Communication and Information by obtaining a PSE License.

• What is the PSE License in Indonesia? The PSE License, issued by the Ministry of Information (MOI), certifies that a company’s electronic system can operate in Indonesia and already adheres to data protection standards, enhancing public trust in online services.

• Should we open a company if our online business services cover Indonesia’s territory? Not mandatory. Our government allows an entity established based on the law of another country as long as the electronic system is registered to the Indonesian government.

Conclusion

In conclusion, securing a PSE License is crucial for any online business operating in Indonesia. It ensures compliance with local data protection standards, enhances consumer trust, and supports smooth online transactions. Understanding the requirements and steps for obtaining this license is essential for successful e-commerce operations within the country. For expert guidance on navigating the PSE License process and ensuring your online business meets Indonesian regulations, CPT Corporate is here to help. Our team provides comprehensive support for obtaining the PSE License and ensuring your e-commerce business is compliant with local standards. Discover how CPT Corporate can assist you in achieving seamless regulatory compliance by visiting CPT Corporate today.