Government Issues Regulation to Accelerate the Development of National Game Industry
Following up on our previous Newsflash on Minister of Communications and Informatics No. 2 of 2024 dated January 24, 2024, on Classification of Games (AKSET Newsflash – New Regulation on Classification of Games), Presidential Regulation No. 19 of 2024 on Acceleration of National Game Industry Development was issued on February 12, 2024 (“PR 19”).
The enactment of PR 19 relates to the economic potential of the game industry that needs to be strengthened by involving various stakeholders in an effort to amplify the creative and digital economy. PR 19 also provides direction, foundation, and legal certainty for all parties involved in the development of the national game industry.
We set out below the key provisions under PR 19:
A. Definition of National Games
PR 19 defines national games as game products that are owned by Indonesian citizens or Indonesian legal entities which are evidenced by a registration certificate of creation of intellectual property certificate.
B. Implementation of Acceleration of National Game Industry Development
The acceleration of the national game industry development shall serve as a guideline for (i) the Central Government and the Regional Governments to implement sectoral policies and follow up on the National Game Industry Development Acceleration Program (the “Program”) and (ii) other stakeholders in carrying out the Program.
In implementing the acceleration of the national game industry development, the Central Government and/or the Regional Governments may cooperate with educational institutions, business sectors, industrial sectors, community networks, and/or media.
PR 19 also introduces the forming of the acceleration of a national game industry development team (the “Team”) which consists the relevant ministries/institutions as its members. The Team consists of a director (in Indonesian, pengarah) and a daily implementor (in Indonesian, pelaksana harian).
The director of the Team is chaired by the Coordinating Minister of Maritime and Investment Affairs, while the chairman of the daily executor of the Team is the Minister of Tourism and Creative Economy/Head of Tourism and Creative Economy Agency.
PR 19 stipulates different duties for the director and the daily executor of the Team. However, as a whole, the Team has the following duties: (i) carry out coordination and synchronization, (ii) direct steps and policies to resolve problems and obstacles, (iii) develop comprehensive strategies and implementation of public communication, (iv) carry out monitoring and evaluation, and (v) provide recommendations on changes to the Program.
C. National Game Industry Development Acceleration Program
Elaboration on the Program is stipulated under the Appendix of PR 19. The Appendix of PR 19 stipulates the background, principles, vision and mission, purpose, and direction of policy, strategy, program details, and stakeholders in relation to the Program.
Further, the Appendix of PR 19 stipulates 7 (seven) program details for the acceleration of the national game industry development, which also sets out the activities, targets, year of completion, responsible parties, and relevant stakeholders. The 7 (seven) programs are highlighted below:
i. Developing human resources for the national game industry
This program includes, among others, training and assistance for human resources that is adjusted to the competence needed and increasing human resources in the gaming sector, including business, marketing, branding, and positioning, and scholarships.
ii. Opening access for financing and capital for the national game industry
This program includes, among others, preparation of schemes for financing from investors through matching fund and venture capital and drafting regulations that opens inclusive payment on the distribution platform (among others, Apple Store, Google Play Sote, and Steam) to grant access for third party payments.
iii. Increasing promotion and opening of access to the national game market
This program includes among others, provision of captive market for the national game products and promotional synergy with e-commerce in Indonesia.
iv. Provision of adequate and competitive technology infrastructure to support the national game industry development
This program includes, among others, creating a development center for technology and acceleration of games development and development of networks in the game industry.
v. Drafting laws and regulations to strengthen the ecosystem of the national game industry
It is worth noting that under this program, one of the intended forms of activity is the drafting of laws and regulations that encourages foreign game publishers with great economic impact to establish a legal entity in Indonesia.
Further, the target for the foregoing activity is (i) to have a separate business classification code (in Indonesian, Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) for game publishers and (ii) to form a regulation that obligates foreign game publishers to establish a legal entity in Indonesia and/or form a partnership with domestic legal entity/company.
vi. Development of hardware industry for national games
This program consists of expansion of laws and regulations on domestic component level (in Indonesian, Tingkat Komponen Dalam Negeri or TKDN) of hardware to incorporate elements of software (games) in its calculation and encouragement of collaboration between the manufacture industry and the national game industry with the purpose of developing intellectual property-based business.
vii. Activation of National Games in Regional and Global Areas
This program consists of increasing activation and appreciation of national game manufacturers by participating in the implementation of national, regional, and global level activities and creation of professional and sustainable regular activation schemes to support the development of national game.
We view that PR 19 should be beneficial for the acceleration of the national game industry development. However, its implementation remains to be seen. Particularly with respect to the regulation that will require foreign game publishers to establish a legal entity Indonesia or at least form a partnership with local Indonesian companies, which is targeted to be published in 2024. We will issue further updates as relevant.
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or M. Fatih Satria Kasmaliputra (mkasmaliputra@aksetlaw.com) for further information.
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