Investment in Indonesia’s digital economy is being held back by the country’s uncertain legal framework, according to one of the region’s leading experts in internet law. But Facebook is making a difference.

There are 30 million internet users in Indonesia, but according to Dr Sinta Dewi, from the Faculty of Law at Padjadjaran University, e-commerce hasn’t taken off. The internet is used primarily as an information source, for instant messaging and social networking, but not for shopping.

In part, that’s because Indonesian culture still values “going shopping” as a social and recreational activity.

However, key laws are missing. There are no laws covering internet banking, for example. A cyber crime bill is still being drafted, although the country will soon ratify the European Union’s Convention on Cyber crime. Draft laws on media convergence are being resisted by the free-to-air broadcasters.

Sign up for a FREE 21-day trial and get Crikey straight to your inbox

By submitting this form you are agreeing to Crikey's Terms and Conditions.

Data protection and privacy laws are missing too — a fact highlighted by the banking industry’s practice of selling customer data to telemarketers.

Indonesia’s sole internet law is the Information and Electronic Transaction Act (Law Number 8, 2008). It attempts to cover issues of jurisdiction, electronic contracts, privacy, intellectual property rights and criminal liability, but it has many loopholes and weaknesses.

“Business people are not very happy with this regulation,” Dewi told the UNSW Cyberspace Law and Policy Centre yesterday. “Certain regulations like consumer protection [and] electronic contracts have not been covered,” she said.

Businesses also felt there was insufficient consultation — even though it took eight years for the law to work its way through parliament and accommodate the conflicting demands of the Department of Trade and Industry and the Department of Telecommunications.

The case of Prita Mulysari has highlighted the law’s inconsistencies.

Mulysari’s private email complaining about her treatment at the Omni International Hospital became public, leading to a defamation suit by the hospital and criminal libel charges. Offline, she would have faced a maximum penalty of 4500 rupiah (IDR), about  50 Australian cents, and a year in jail. Online, it became a breach of the IET Act, with a maximum penalty of IDR 1 billion (approx $A112,000) and six years jail.

Indonesia is unusual in that a criminal libel charge does not require malicious intent to be proved.

Mulysari was initially ordered to pay IDR 204 million in damages (approx $A23,000). However a supporters mailing list and the Facebook group “KOIN UNTUK PRITA” was formed, with a massive response. Dewi says Mulysari gained a million supporters on Facebook alone. More than a billion rupiah was raised.

The Supreme Court has since overturned civil defamation cases, and it is expected that the criminal conviction will also be dumped. Meanwhile, Mulysari is counter-suing the hospital for a trillion rupiah ($A112 million), and there are calls for the IET Act to be reviewed.

“The case has highlighted the over-reaction of Indonesian prosecutors when presented with cases being pursued by influential individuals and companies,” as Wikipedia diplomatically puts it.

In Indonesia’s relatively young democracy, the working relationships between congress and executive government are still worked out. “It is up and down,” Dewi says. Congress wants to enact freedom of information laws, for instance. The government isn’t so keen.