Let's review the law for Indonesia's major plan to build its local gaming industry (Perpres No. 19/2024)! & my thoughts
For those of you who aren't in the news, the Indonesian government has issued a presidential regulation (peraturan presiden, or perpres for short) earlier this year where they will invest and nurture its local gaming industry. The law, called Presidential Regulation No. 19 2024 on Accelerating the Development of the National Gaming Industry - or Perpres No. 19/2024 for short - was issued on February 12th this year and went into effect that same day, is the Indonesian government's first major attempt to nurture and support its local gaming industry. Among which, the government states that it will fund game projects as minimum as US$40 million, hopes to make 100 prototypes annually, with the achieved goal of having Indonesian-made games taking up 70% of the domestic gaming market, and 10% of the global gaming market.
But you might be wondering, what would the law itself specifically states? Well, I have the copy of the actual law on my hand, so we can take a look at it together! Because idk why I'm bored and I got nothing else better to do.
So, the first thing to note here is that in order to achieve their video gaming industry nirvana, the Indonesian government has set up a team to assist the execution of the law itself. It will be headed by Coordinating Ministry for Maritime & Investment Affairs and conducted in conjunction between the Ministry of Tourism and Creative Economy and of course, our behated bastard child, the Ministry of Communication and Informatics, or known popularly as Kominfo. Yup, the guys who banned Steam and PayPal due to MR5 and blocked all of your porn? That's them.
Funding for this program will be carried out from Indonesian state budget (APBN), local government budgets (APBD), and any other legal funding necessary to help the project. Whether or not game developers will receive the full amount of funding from the Indonesian government as it makes its way from the top to bottom is yet to be seen.
And that is it so far, where the formalities end. The attachment part that comes up next is the most interesting part, as that is where they put a long 14-page essay justifying the need for this regulation, and the steps they're undertaking to achieve the Indonesian government's ideal goal and vision for its local game industry. And it boils down to the largest big talking point mentioned below here:
This passage outlines the goals, in which that the Indonesian-games will get at least 70 whole percents of the local gaming market and 10 percent of the international gaming market. This is a number that is too optimistic in general, especially for the Indonesian government. There's also the aspect of "seeding the values of the Pancasila and national cultural values," which I'll address later on. But without knowing what kind of games the general market domestically and internationally wants, getting that number from scratch is outright unrealistic. Besides, how many games are they going to make to meet that 70%-10% goal?
Which leads us to the next point: they will do this by making 100 video game prototypes annually, promote 100 of them nationally, and promote 30 of them globally.
I feel like this is more of a quantity over quality kind of scenario. Expecting all 100 video games to be prototyped, and then rolled out to public release nationally and internationally under what I assume is a tight bureaucratic government scheme annually, in a country known where red taping is as common as everyday life is going to be very difficult. I wouldn't be surprised if the end goal turns out to be something like 20 games nationally, where 5 of them are promoted internationally. After all, it took A Space for the Unbound seven years from first concept in 2015 to public release, and then another to be nominated at last year's The Game Awards. If the Indonesian government expects to have ASFTU-level kind of game multiplied by 100 to be done within a year, then it needs to heavily readjust its expectations.
But at least there is one thing for sure, the Indonesian Education Ministry (Kemdikbud) will be working together with the Indonesian Games Association (AGI) to develop a national curriculum intended in bringing game dev course studies for vocational school and university students. It's at least nice to see that a standardized video game designing and development will reach a wider academic outreach domestically. Wouldn't be surprised if Indonesian game dev schools start playing Sakurai Masahiro's YouTube videos during class.
Now here comes to the financing and platforming stuff of the law: it states that the Indonesian government will construct an investment scheme through the Indonesia Game Fund through matching funds and venture capitals, in which they are expecting to raise around Rp600 billion or US$40 million annually to fund their game program.
As mentioned earlier, not only these games will be funded through annual state budgets and local government budgets, but third-party ways of funding are also allowed as long as it fits within their legal project. I would assume Indonesian state-owned enterprises would start doing some outreach to big capital investment banks and triple A game companies to fund the project. The extent of how realistic they will reach that 40-million-dollar goal is yet to be seen.
But here's another big, major smoking gun. The Indonesian government is also expecting to formulate a regulation that forces platforms to accept any third-party payments a game would prefer to use. This is a big deal, and it came at a time where Jakarta followed the EU's footsteps and sued Google for monopolistic practices on their payment system in 2022, with preliminary hearings beginning June this year. It was Indonesia's first major attempt to crack down on big tech.
Not only this will have ramifications for the Indonesian video gaming industry, but also the local tech industry at large. Such regulations may potentially cause even Apple to have the Indonesian government knocking on their doors for the same monopolistic behavior over their payment system. Although, I would imagine they would also have to play realpolitik on a case-by-case basis, considering Indonesia has also been wooing Apple for more investments, as well as trying to get them to build a manufacturing plant to make iPhones in the country.
Not to mention, the Indonesian government has been super lenient on local manufacturing schemes for Apple by letting iPhones for sale in the Indonesian market despite the phones themselves aren't manufactured locally, while companies like Samsung, BBK and Xiaomi manufactures are forced to manufacture their phones locally to meet such high standards. And starting an antitrust lawsuit with Apple is a good way to kill off any ambitions Jakarta has to make iPhones within its territory.
Another aspect that got me questioning hard however, is their intellectual property scheme. According to this law, around 25% of the IP rights to the games will be owned by the Indonesian government through a ministry or its state-owned enterprises, or a private company for marketing campaigns. Sure, IP rights and creative transfers like work-for-hire is a very common sight in the game industry, but I can't help but wonder why the Indonesian government would own 25% of your fancy fantasy JRPG game idea specifically, even if it's for marketing? It seems kinda suspicious.
Considering the AGI was involved in formulating the curriculum for game dev studies, and thus, being involved in formulating this regulation as a whole, part of me makes me wonder that 25% is the lowest amount the AGI and the Indonesian government agreed on. Even then, for marketing campaigns alone, giving off a quarter of the IP as a whole to the government seems a bit too much.
The Indonesian government is also planning to formulate a law (undang-undang) to require all foreign video game companies to open a local subsidiary within their borders. Otherwise, the Kominfo will be banning every access to their game services, and even prohibiting sales in Indonesia. I have covered about this issue before in my Nintendo in Southeast Asia history post, and the Indonesian gaming industry, including the AGI themselves have objected strongly against this notion. I assume the AGI couldn't get the Indonesian government to think twice about the ramifications of doing such move, as many local game developers are concerned about possible conflict of interest where big foreign gaming companies would absorb all Indonesian game dev human resources that could've been funneled into local game studios instead.
This also ties in with the future of the Indonesian Game Rating System (IGRS), with a directive to revise the Kominfo Ministerial Regulation No. 11/2016. Which they already did in the form of Kominfo Ministerial Regulation No.2/2024 and is the main reason why the IGRS website is currently down for the time being as they're reformulating how game rating is conducted.
I took a little glimpse over Kominfo's MR2/2024, and most of the articles and clauses remain pretty similar to the previous MR11/2016 regulation, except adding parts regarding game developers and publishers as "electronic system providers" and adding clauses that makes it sound it is mandatory for foreign game companies to open local subsidiaries in Indonesia and have their games properly rated by the IGRS or face repercussions.
And here comes the last interesting part of the law, tighter local domestic content manufacturing (TKDN) schemes on video games. This includes preloading local-made games bundled with gaming system hardwares that are also manufactured locally, under the supervision of the Ministry of Industry, or Kemenperin.
TKDN or local content manufacturing requirements has always been a controversial move conducted by Kemenperin. Despite its intentions to strengthen local tech production, Kemenperin is also known for giving free passes for companies like Apple to sell iPhones, despite not having a manufacturing facility within the country, pretty much undermining their protectionist scheme.
Opening a Foxconn manufacturing plant somewhere in Cikarang to manufacture Nintendo and Sony consoles is unlikely, so it's hard to see how this part of the plan will be executed. Tech companies in general sees Vietnam to be a more promising spot for manufacturing than Indonesia. The Vietnamese government ever since its Doi Moi economic revival program has been giving huge tax breaks, fast-tracked land permits to build factories, and many more to companies who are willing to invest in manufacturing within the country, something Indonesia is lacking heavily. Plus, Vietnam's advantage on sharing its proximity by land to China means the logistics and supply chains for the components needed for manufacturing and assembly would be considerably cheaper and cost-effective compared to shipping it across the South China Sea into Java, not to mention the huge tariffs Indonesian customs will charge on manufacturers.
This is the main reason why Apple chose Vietnam as it seeks to drop its reliance on Chinese manufacturing, while saying "we'll consider it" (which is another way of saying no) on manufacturing in Indonesia during Tim Cook's visit back in April. And since iPhones are made in Foxconn's factory, no Apple factories in Indonesia means no Foxconn factory that is also designed to make Nintendo Switches and PS5s made in Indonesia.
I don't think any companies, including hardware gaming companies, would want to manufacture their consoles in a country where the cost of doing business is way higher and takes longer and more expensive to import stuff for manufacturing.
I do hope that any local content manufacturing mandate they are planning doesn't end up being a huge burden to the customers and end up making video game consoles more expensive, or even outright not being sold due to said local content reasons.
And that's pretty much it. It is nice to see that the Indonesian government is putting their attention in its local video game industry. Investment and funding into local game studios and letting small indie game developers thrive is always a good thing. But I can't feel but help that the plans and policies taken really feels like Jakarta wants the gaming industry on a more protectionist, us vs. them approach.
The local content manufacturing requirements, the overtly optimistic 70 percent market share goals, the 25% IP transfers for the Indonesian government, the Pancasila and culutral values upholding requirements, everything about it seems like they want game developers to make games what the Indonesian government wants rather than what the consumers and game studios want to make.
The Pancasila and cultural value-upholding requirements in particular seems like a very open-ended excuse to heavily vet Indonesian-made games that doesn't meet the government's narrative, and I am quite concerned that they could have a huge editorial control over what games and concepts developers should make to please the big fat government overlords, such as banning progressive and sensitive topics and ideas in games, LGBTQ+ representation, and anything they deem to be "extremely violent" and "violating the common cultural norms." Which would be very something coming from bureaucrats where the only gaming thing they'd know is playing Zuma on work hours paid by its taxpayers. I hope they can understand and thoroughly examine on what Indonesian gamers, and to an extent, what the global audience want.
But not all of its policies are outright daydreaming or questionable. I welcome their attempts to crack down on big tech by making it mandatory for platforms to accept third-party payment systems, meaning Indonesian gamers could use local payment systems accepting rupiah via QR payment methods, which has been all the rage in the country. It is also nice to see that game dev courses are being planned for vocational school and university students, giving them curriculum-level of attention, it's a humble way to get people interested into game development 101.
Overall, the main points I would like to offer here are:
I wish the Indonesian government lets people make games what they want and what the audience wants, free from total editorial interference and suppression.
Fund game projects realistically and reduce any possible red taping as the funding moves from top to bottom. (Very doubtful, but it would suck to find out that a good game studio got unrightfully dragged into embezzlement/corruption scandals because of what happened on the top during the funding process.)
Make access to dev kits needed to make games easier, with customs and tax fees reduced or dropped entirely.
Setting targets more realistically and put quality over quantity.
Clarify more in-depth about the 25% intellectual property right transfer clause to government institutions.
Protectionist policies like local content manufacturing (TKDN) should not hamper gamers' choices on what gaming platforms and systems, as well as what kind of games they want due to it being inaccessible with higher tariffs imposed on a product. (It would suck if a game console became 50% more expensive due to more Kemenperin/Bea Cukai "economic safeguarding" shenanigans.)
The efforts that Jakarta is giving for its local game developers is very much welcomed. But just like any other political efforts Jakarta is bringing to the table; I think we all should be very cautious on following its development.
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