An Overview of Indonesia’s new Data Protection Law

Data mining is gathering the personal information of as many users as possible where users are the subject, the product, and the prize. The more users’ personal data an organization has, the better they can predict a user’s future behavior.

Data protection is tasked with ensuring organizations do not collect information they are not entitled to, that any data they do have is kept safely, updated, and deleted when requested and not shared with third parties without appropriate controls.

This is where data protection laws come; to defend users’ personal information and exercise their rights to know what happens to the data gathered by companies. Governments and data regulators worldwide are actively working on mechanisms to safeguard user data, the national interests, and secure cross-border data transfer.

Introduction
The need for data protection stems from the concern of personal data being collected, stored, or shared without the knowledge and consent of the individual(s).

Prior to October 2022, there was no comprehensive data protection law in Indonesia. However, as a general rule of thumb, Indonesia up till then protected the data of its citizens in the Constitution of the Republic of Indonesia 1945 ('the Constitution'). Article 28G of the Constitution states: 'Each person shall have the right to the protection of their personal selves, families, respect, dignity, and possessions under their control.'

Furthermore, there were several regulations that regulate the personal data processed in the electronic systems by the electronic service providers. These PDP Regulations are:

• Regulation No. 20 of 2016 concerning Protection of Personal Data in Electronic Systems (MoCI Reg);
• Amended Law No. 11 of 2008 on Electronic Information and Transaction (EIT Law);
• Government Regulation No. 71 of 2019 on the Implementation of the Electronic System and Transaction (GR 71).

There are also sectoral regulations that regulate the personal data in a specific sector e.g, banking sector, health sector, etc.

Indonesia’s New Personal Data Protection (PDP) Law
Following delays due to COVID-19, Indonesia has now passed its first Personal Data Protection Act (PDP Law). On October 17, 2022, the bill was finally passed into law by the Indonesian House of Representatives after two years and ten months of on-off deliberations. The PDP law addresses the much-needed reforms to the country’s data privacy protection rules. The law is built on the European Union’s General Data Protection Regulation (GDPR).

In essence, Indonesia is following the same data subject rights and personal data processing regulations set by the European Union in their GDPR.

The PDP Law has 72 articles across 15 chapters. These articles and chapters extensively cover data ownership rights, prohibitions on data use, along with the collection, storage, processing, and transfer of personal data of Indonesian users.

With Indonesia being an active part of the global economy and attracting millions of tourists annually, businesses should quickly align their business operations to comply with the upcoming PDP law.

Who Needs to Comply with the PDP Law?
The PDP law will impact local businesses in Indonesia and will also have an impact on companies across the globe that deal with Indonesian consumers. The PDP law applies to any registered company dealing with Indonesian residents, irrespective of where they are registered.

Whether an entity is public or private, local or international, the PDP Law will automatically apply to them if they deal with the personal data of Indonesian residents. The new PDP Law is expected to apply to all sectors, bringing forward comprehensive provisions on personal data protection, both electronically and non-electronically.

Material Scope of the PDP Law
Law No. 27 of 2022 on Personal Data Protection, the formal label for the new PDP Law, regulates sensitive personal data as well as other personal data that may endanger or harm the privacy of the data subject.

Territorial Scope of the Law
Law No. 27 of 2022 applies to companies both within and outside of the territory of Indonesia where their actions:

• involve legal consequences within the territory of Indonesia;
• affect Indonesian citizens within and outside of the territory of Indonesia.

Definitions of Personal Data and Sensitive Personal Data Under the PDP Law
1. Personal Data: Under Law No. 27 of 2022 on Personal Data Protection, personal data is defined as any data regarding an identified person or a person that can be identified either individually or in combination with other information, directly or indirectly, by using electronic and/or non-electronic systems.
2. Sensitive Personal Data: Article 3 of the PDP Bill defines sensitive personal data as personal data that requires special protection, and includes data concerning religion or belief, health, physical and mental conditions, sexual life, personal financial data, and other personal data that may be dangerous or detrimental to the privacy of the data subject.

Recognizing Key Roles of a Data controller and a Data Processor
The PDP Law states that a data controller and a data processor will be separated.

Definition of a Data Controller
A data controller determines the purpose of and controls the processing of personal data.

Definition of a Data Processor
A data processor processes personal data on behalf of the personal data controller.

Data controllers and data processors can be individuals, corporations, public entities, business actors, organizations, or institutions. Under the PDP Bill, the primary liability of personal data processing is borne by the data controller.

Data Subjects Rights
The PDP Law states that data subjects will be granted the following rights, similar to those recognized under the GDPR. These include:

• Right to access.
• Right to the consent withdrawal.
• Right to object to automated decision making.
• Right to restrict Processing.
• Right to Deletion.
• Right to be informed and to sue.
• Right to compensation in case of any violations.

Data controllers and data processors will be required to observe and respect these rights.

Lawful Basis of Processing
Under the PDP Law, consent is only one of several requirements for the lawful processing of personal data. The PDP Bill has introduced the following exceptions for personal data processing without relying on consent:

• For the performance of a contract to which the data subject is a party, or in order to fulfill a request of the data subject prior to entering into the contract;
• To comply with an obligation that is imposed on a data controller by law;
• To fulfill the vital interests of the data subject;
• For the exercise of authority vested in the data controller by law;
• For the fulfillment of a public service obligation to which the data controller is subject in the public interest; and/or
• For the pursuit of a legitimate interest of the data controller or the data subject.
Cross-border Data Transfer Requirement
The PDP Law introduces new requirements on cross-border data transfer, which will be subject to the following conditions:
• The recipient country has a personal data protection level that is equal to or higher than the provisions in the PDP Bill;
• An international agreement exists between the countries;
• A contract between data controllers that covers personal data protection matters; and/or
• Consent from the data subject.

Data Breach Notification Requirement
The PDP Law will require that data controllers must inform the Ministry of Communication and Information Technology (MCIT) and data subjects within 72 hours of a data breach. These notifications must include:

• The compromised data;
• When and how the data was compromised;
• Management and recovery efforts.

PDP ensures that the relevant data subjects must be informed as soon as possible to limit the damage.
Empowering Data Protection Officers (DPOs)

The PDP Bill requires that data controllers and data processors must appoint a DPO if:

• They process personal data to provide public services;
• Their main activities require regular and systematic monitoring of personal data on a large scale;
• Their main activity consists of processing specific data, including criminal data, on a large scale.

Data protection officers will be designated based on their professional qualifications, legal knowledge, and experience in data privacy. However, there are currently no specific mandatory qualifications, skills, or educational requirements. This may be clarified in the future.

Penalties
The PDP Law will enforce strict action against companies that fail to comply with the PDP Law and regulations set by the state, including fines of up to US$14.4 million.

On that account, companies operating in Indonesia or dealing with Indonesian residents’ personal data should adopt a proactive approach to identifying and resolving any potential challenges to comply with the PDP Law.

Conclusion
Over the years prior to the enactment of the new PDP Law, public trust in institutions and companies was gradually eroded by several high profile cases, including the 2019 Denny Siregar lawsuit against Telkomsel for breach of data privacy and unauthorized distribution of personal data. To comply with the PDP Law and further gain customer trust, businesses in Indonesia should begin strategizing comprehensive and consistent activities that safeguard the personal data of Indonesian citizens.


Disclaimer:
The information contained in this brochure is general and should not be considered as legal advice or any other professional advice. Please consult with professional advisors for advice concerning these specific matters before making any decisions.