American multinational information technology company IBM has advised the Indonesian government to formulate better electronic regulations to benefit from digital trade. (Antara Photo/Basri Marzuki)

IBM Wants Indonesia to Pay Attention to Digital Trade


OCTOBER 28, 2019

Jakarta. The local arm of American multinational information technology company IBM amped its agenda on accelerating digital trade in Indonesia.

To achieve this, the company advises the government to adopt a more open approach in its policy on data, support cross-border data flow, and avoid taxation on electronic transmissions.

"Digital commerce is one thing that is very important in economic growth and creating jobs; for that we must take advantage of existing opportunities to protect and be more responsible for the flow of data throughout the world, so as not to impact economic growth in the world," Stephen Braim, vice president of government and regulatory affairs at IBM Asia Pacific, told the Jakarta Globe.

The Indonesian government adopted a new regulation earlier this month aimed at localizing data, which obligates global technology companies to establish data centers and data recovery centers in the archipelago. The regulation is intended to make local data providers more competitive against foreign rivals.

"I think part of the Indonesian government understands that it's better to be integrated into the global digital economy than be isolated. I think for Indonesia, there is much greater economic benefit by being part of a much freer arrangement around digital trade," Braim said.

He said governments must understand that data belong to online service providers – social media companies for example – and that companies such as IBM have no control over it.

"If all data supporting a modern global economy are suddenly limited through digitally comparable trade restrictions and high protection, it can have a drastic impact on job creation and economic growth," Braim said.

He cited four principles for digital trading: free permission for cross-border data flow; avoiding data localization regulations; protecting algorithms and source code; and prohibiting tariffs on digital trade.

"There is a lot of education IBM is doing around the world to make sure governments correct the right problem. We would hate to see companies, such as social media, snuffed out by government regulations that try to solve a problem over there that has nothing to do with the company over here," Braim said.

IBM processes 87 percent of credit card transactions worldwide, is responsible for half of the information technology infrastructure for telecommunications, and supports nine of the world's top 10 retailers.