Prone To Being Controlled By Foreigners, The Government Must Maintain National Digital Sovereignty

Illustration. (Photo: Unsplash)

JAKARTA - The ownership structure of the largest courier company in Indonesia which is fully controlled by foreigners is in the spotlight. This kind of business practice makes Indonesia's digital world vulnerable to foreign control, therefore the government is encouraged to strengthen law enforcement to protect the great potential of the digital economy and restore Indonesia's digital sovereignty.

The practitioner and observer of information technology governance, Sigit Widodo, said that the Indonesian government must have the courage to enforce the rules for limiting foreign ownership in the digital industry. If law enforcement is not carried out, Indonesia will lose the great potential of the digital economy that the community should be optimally able to feel. Indonesia can also lose sovereignty over the big digital economy.

"Currently, there is a lot of discussion about digital logistics services company J&T Express violating foreign ownership limits in Indonesia. In this case, the government must strengthen law enforcement. Moreover, J&T in its prospectus admits that it owns 100 percent of the shares in J&T Indonesia through nominees. This violates the rules because the maximum foreign ownership is 49 percent," said Sigit, in his statement, Wednesday, November 1.

He further added that the great potential of Indonesia's digital economy towards 324 billion US dollars or around Rp. 5,094 trillion by 2030 must provide maximum benefits to the Indonesian people. This is the basis for the government to include the digital logistics service industry into the negative list of investments by limiting foreign ownership to only 49 percent.

"The condition where a digital company is fully controlled by foreigners makes the company less stable in dealing with economic turmoil. Although the company usually receives large amounts of funding, it is more prone to economic turmoil caused by external factors. Economic conditions in its home country will affect funding and business decisions in Indonesia," said Sigit.

As in previous information, J&T Global Express Ltd, a courier company from China that started a business in Indonesia with the flag PT Global Jet Express implementing an initial public offering (IPO) on the Hong-Kong Exchange, October 27.

In the prospectus, J&T admits that it collided with the rules in Indonesia. The rules in question are the Pos Indonesia Law and Law Number 25 of 2007 concerning Investment which sets a 49% foreign investment limit for courier service companies. However, seeing the huge business potential in Indonesia, J&T is looking for ways to enter the logistics market in the country.

Through this prospectus, J&T conducts businesses with affiliated entities, Indonesian companies and subsidiaries in the country. In this way, J&T Global has effective control over Indonesia's affiliated consolidation entities. Including obtaining economic benefits and having the option of buying all shares in Indonesian companies if allowed by local law.

"If it is proven that there are rules that are violated, the government must immediately take firm steps to enforce healthy competition in the digital industry so that its potential can be utilized as much as possible for the national interest," said Sigit.