Facebook set up local entity in Indonesia

Photo by Facebook

JAKARTA (TheInsiderStories) – United State’s social networking giant Facebook Inc., plan to set up local entity in Indonesia to comply the country’s regulation. Chairman of Coordinating Investment Board Thomas Lembong said, Facebook has received principal permit to set up a domestic unit in Indonesia from his office.

“As far as I know Facebook already pocketed principle permit from our office and now being eligible in local government to get such as location permissions and others. This, I see as the good faith and positive spirit of Facebook to become a responsible player in our country,” He told press on Wednesday.

He continued, the government will inevitably lead the digital industry toward maximizing job creation, business opportunities for local businesses. As far, many of Small Medium Enterprises (SMEs) selling their products on Facebook and Instagram. Thus social media platform, Thomas said, become an important means for SMEs and even young children and housewives to market their products and services.

Indonesia has been pushing foreign technology firms to be locally incorporated since 2015. Last year, Indonesian government has released Over The Top (OTT) rules for mobile service providers to acquire licenses in the country.

The law said, foreign service providers will have to register as a local entity with sole ownership or establish a joint-venture with local partners. The providers will be given “reasonable” periods of time to comply with the new rules.

Minister of Communication and Information Rudiantara had said, large OTT mobile service providers have expressed willingness to comply with the new rules by either establishing their own local entities, partnering with local operators, or establishing joint ventures with local firms.

Among them were Blackberry joined PT Elang Mahkota Teknologi Tbk (IDX: EMTK), Twitter Inc., Google Inc., and Swedish’s digital music provider Spotify–who has recently teamed up with local telecommunications company PT Indosat Ooredo Tbk (IDX: ISAT).

He stressed it, that the government intended to resolve the international OTT players first before the locally owned OTTs citing a commitment to equality. The minister had also reaffirmed his commitment, as the regulator, to improving customer service and consumer protection.

Director of Counseling, Services and Public Relations at Directorate General of Taxes Hestu Yoga Saksama added, if Facebook become a limited company the imposition of corporate income tax will be the same as other corporate taxpayers, which is 25 percent.

He said, that during this time, Facebook’s income has been deducted on income derived from Indonesia received or obtained by foreign taxpayers other than local entity in Indonesia. The rate is 20 percent.

Indonesia is currently dominated by international OTT applications like Facebook–now has 96 million users in the country–  and Twitter as many as 40 million accounts of Indonesians. Facebook currently operates in Indonesia through an office in central Jakarta.

(Written by Linda Silaen, Email: linda.silaen@theinsiderstories)