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Comprehensive Guide to Government Regulation No. 71/2019 (GR 71) on Electronic Systems and Transactions

What is Government Regulation No. 71/2019 (GR 71)?

Government Regulation No. 71/2019 (GR 71) is a legal framework issued by the Indonesian government to regulate the implementation and management of electronic systems and transactions. It was officially enacted on October 30, 2019, and aims to ensure the reliability, security, and integrity of electronic transactions and systems in Indonesia. GR 71 is part of Indonesia’s broader efforts to improve its digital economy, facilitate e-commerce, and provide a clearer regulatory environment for businesses operating in the digital space.

This regulation complements existing laws such as Law No. 11/2008 on Electronic Information and Transactions (ITE Law) and is aligned with international standards to foster trust and stability in Indonesia’s rapidly growing digital market.

Key Provisions of Government Regulation No. 71/2019 (GR 71)

1. Scope of Electronic Systems and Transactions

GR 71 regulates various aspects of electronic systems, including:

  • Electronic transactions such as online purchases, e-banking, and digital payments.
  • Electronic data management which covers data storage, transmission, and protection.
  • Certification and licensing of electronic system operators (ESOs) to ensure compliance with legal and technical standards.

2. Electronic System Operators (ESOs)

Under GR 71, businesses that provide electronic services, such as e-commerce platforms, digital payment services, and online service providers, are classified as Electronic System Operators (ESOs). Key requirements for ESOs include:

  • Obtaining certification from the Minister of Communication and Informatics (Kominfo) to ensure their systems meet national standards for security, privacy, and reliability.
  • Implementing data protection measures to safeguard personal data and prevent unauthorized access.
  • Complying with data retention requirements and ensuring data integrity for both operational and regulatory purposes.

3. Data Protection and Privacy

GR 71 outlines specific obligations for ESOs regarding personal data protection. The key aspects include:

  • Data minimization: ESOs must only collect and process data that is necessary for their services and must inform users about the data being collected.
  • Data retention: Personal data should only be stored for as long as necessary for business operations or legal purposes.
  • Data confidentiality: ESOs are responsible for ensuring that personal data is kept secure from unauthorized access, alteration, or leakage.

4. Electronic Certification and Digital Signatures

The regulation provides clear guidelines on the use of electronic signatures and digital certificates in electronic transactions. It recognizes that electronic signatures, when verified by a certified Electronic Certification Authority (ECA), hold the same legal standing as traditional handwritten signatures. This provision aims to facilitate the digitalization of contracts and transactions across various sectors, including banking, insurance, and government services.

5. Cybersecurity and Risk Management

GR 71 requires all ESOs to implement robust cybersecurity measures to protect their systems and users. The regulation emphasizes:

  • Proactive cybersecurity: ESOs must have mechanisms in place to identify, manage, and mitigate cyber risks.
  • Incident response plans: ESOs are required to have established protocols for responding to security incidents, including data breaches, hacking attempts, or system failures.
  • Security audits and assessments: ESOs must regularly conduct security audits to assess the integrity and resilience of their electronic systems.

6. Consumer Protection

In terms of consumer protection, GR 71 mandates that ESOs ensure:

  • Transparency: Users should be informed about their rights, terms and conditions, and how their data will be used.
  • Complaint handling: ESOs must have mechanisms for consumers to report issues, such as fraud or defective services, and resolve disputes in a timely manner.

7. Penalties and Enforcement

GR 71 sets forth penalties for non-compliance, which can include fines, suspension of operations, or revocation of certification. Enforcement mechanisms are managed by Kominfo, which is authorized to monitor and investigate electronic systems and transactions.

Impact of Government Regulation No. 71/2019 (GR 71)

1. For Businesses

  • Legal Certainty: GR 71 provides a clear framework for businesses involved in electronic systems and transactions, making it easier to understand and comply with regulatory requirements.
  • Cybersecurity Standards: Businesses are encouraged to adopt advanced cybersecurity measures to protect their systems and customer data, thereby reducing the risk of cybercrime and improving trust.
  • Consumer Trust: With strong provisions on data protection and consumer rights, businesses that comply with GR 71 can enhance their reputation and attract more users to their platforms.

2. For Consumers

  • Increased Protection: Consumers benefit from improved data privacy, secure transactions, and protection against cyber threats. The regulation ensures that consumers’ personal data is only collected for legitimate purposes and is adequately safeguarded.
  • Confidence in Digital Services: By establishing clear rules for digital transactions and online contracts, GR 71 helps build consumer confidence in using digital platforms for various services, including e-commerce and financial transactions.

3. For Indonesia’s Digital Economy

  • Growth of E-commerce: GR 71 facilitates the growth of e-commerce and digital businesses by providing a stable legal environment that protects both businesses and consumers.
  • Financial Inclusion: The regulation encourages the development of digital finance solutions, contributing to greater financial inclusion and access to services for underserved populations.

Challenges and Future Outlook

  1. Compliance Burden for Small Businesses: While large businesses may have the resources to comply with GR 71, smaller entities may face challenges in meeting the regulation’s complex requirements, especially in terms of cybersecurity and data protection.
  2. Adapting to Rapid Technological Changes: As technology evolves, GR 71 will need continuous updates to address emerging issues such as new cybersecurity threats, digital currencies, and advancements in artificial intelligence.
  3. Globalization and Cross-Border Data Transfers: The regulation needs to align with international standards for cross-border data transfers, as businesses often operate globally. Clear guidelines on international cooperation and data exchange will be crucial to avoid conflicts with foreign regulations.

Conclusion

Government Regulation No. 71/2019 (GR 71) is a crucial step in ensuring the stability, security, and growth of Indonesia’s digital economy. It provides a clear regulatory framework for businesses operating in the digital space, while also offering enhanced protection for consumers. As digital transformation continues to accelerate, GR 71 will play an important role in fostering a secure and trustworthy environment for electronic systems and transactions in Indonesia.