A Digital Policy With Teeth – by Andy Mukherjee (Bloomberg News – July 7, 2017)


Nationalism minus chauvinism. That’s how Indonesia wants to deal with FANG. Facebook, Apple, Netflix and Google — the four horsemen of the digital economy — will get to play freely in the archipelago’s 260-million-strong consumer market, according to Communications and Information Technology Minister Rudiantara.

The minister, who uses only one name, has no airy-fairy notions about national digital champions who’ll help keep Indonesian money at home.The nation’s pragmatic approach to its small but growing digital economy is in stark contrast to “a particularly durable brand of resource nationalism,” which, according to Eve Warburton, a research scholar at the Australian National University, “has become a permanent feature of Indonesia’s political economy.”

A tax on unprocessed copper, meant to prod U.S. companies Freeport-McMoRan Inc. and Newmont Mining Corp. to add more value to their exports from Indonesia, may have caused billions of dollars in revenue losses for the government since 2014. While the levy has now been scaled back, Freeport is still stuck in a messy quibble with Jakarta over its license to operate at Grasberg, the world’s second-largest copper mine.

The FANG, by contrast, have a far more open field. They just have to pay to play for the country’s 113 million Internet users. Some of them already are writing checks. Just last month, Alphabet Inc.’s Google settled a long-running tax dispute with Indonesia.

Rudiantara refused to tell me what the Mountain View, California-based company has agreed to cough up because Finance Minister Sri Mulyani Indrawati has sworn him to secrecy. More important than the money, however, is the change in law that his ministry will push for this year, allowing overseas companies to sell web services.

For the rest of this article: https://www.bloomberg.com/gadfly/articles/2017-07-07/making-fang-pay-to-play-is-indonesia-s-digital-policy-with-teeth