Jakarta’s recent framework agreement with the United States on trade and personal data transfers has ignited a fierce debate over Indonesia’s digital sovereignty. Announced earlier this week on the White House website, the prospective deal includes provisions to facilitate cross-border data flows and eliminate tariffs on intangible products by recognizing the US as having adequate data protection standards. While Indonesian officials tout the agreement as a step toward secure digital cooperation, critics warn it could undermine national control over critical data resources and expose citizens to privacy risks.
A Framework for Data Transfers
The joint statement from the White House, published on Tuesday, outlined Jakarta’s commitment to providing certainty for personal data transfers to the US. This move is part of a broader trade agreement aimed at fostering digital economic ties between the two nations. Indonesian authorities have emphasized the potential benefits, including a legal foundation for protecting citizens’ data when using US-based digital services such as search engines, social media platforms, and e-commerce systems.
Communication and Digital Minister Meutya Hafid addressed the ongoing negotiations in a statement on Thursday, reiterating a position earlier conveyed by President Prabowo Subianto. She assured the public that the government would prioritize secure data governance. “The government will ensure that data transfer to the US will not be carried out carelessly. On the contrary, the whole process will be conducted within a secure and reliable data governance framework” Meutya stated, adding that transfers would occur under tight supervision by Indonesian authorities and in strict adherence to national law. 
Also on Thursday, Coordinating Economy Minister Airlangga Hartarto spoke at a press conference, confirming that Jakarta had agreed to establish a secure protocol for managing cross-border data flows with the US. He noted that such protocols extend beyond the US to other countries as well, citing the Nongsa Digital Park special economic zone in Batam, Riau Islands, as an example of existing frameworks. Airlangga also highlighted compliance by major US tech firms, including Amazon Web Services, Microsoft, and Google Cloud, which have established data centers in Indonesia to align with national regulations.
Concerns Over Digital Sovereignty
Despite these assurances, the agreement has drawn sharp criticism from digital advocacy groups and industry experts who fear it could compromise Indonesia’s control over its digital infrastructure. Hendra Suryakusuma, chairman of the Indonesian Data Center Providers Organization (IDPRO), voiced significant concerns about the potential loss of data sovereignty. Speaking to a local news outlet on Thursday, he warned that transferring personal data generated in Indonesia to the US for analysis could erode national control over strategic, personal, and open data.
Hendra further cautioned that local data centers might be relegated to secondary roles such as Edge Computing or Hybrid Cloud Generators diminishing their importance as primary sites for data processing. This shift, he argued, could deter prospective industry players from entering Indonesia’s market, potentially redirecting billions of dollars in investments to the US. Domestic operators, internet service providers, and even the state-owned power company PLN could lose substantial revenue tied to the growing demand for data storage and processing, which requires significant electricity consumption.
Moreover, Hendra pointed to potential conflicts with Indonesia’s Personal Data Protection (PDP) Law, which mandates stringent onshore data protection measures for critical sectors like education, banking, and healthcare. “The personal data of Indonesian citizens is a strategic [resource]. If we say that data is the new oil, then it must be generated and processed domestically to become our asset” he emphasized, urging the government to conduct a thorough assessment to prevent overdependence on foreign entities and address the country’s already fragile data security landscape, which has been marred by recent breaches. However contemporary cyber security critics now say that sovereignty and data privacy must not be conflated, especially given that many secure providers comply with a host of physical and cyber security standards that even most governments cannot attain.
Advocacy Groups Highlight Privacy Risks
The Institute for Policy Research and Advocacy for Society (Elsam), a prominent advocacy group, echoed these concerns in a press release on Wednesday. Describing the digital trade deal as unfair Elsam argued that it prioritizes the interests of US-based data storage companies over the protection of Indonesian citizens’ personal data. The group raised alarms about the potential for mass surveillance by US authorities and the risks associated with cross-border data flows, particularly in the absence of a dedicated personal data protection body in Indonesia.
Elsam’s statement underscored the fragmented nature of current cross-sectoral regulations, which it claims has led to weak oversight of data transferred overseas. This regulatory gap increases the likelihood of data leaks, misuse, and violations of privacy rights, according to the organization. The slow pace of establishing an independent data protection authority has further compounded these issues, leaving Indonesia vulnerable as it negotiates complex international data agreements.
Balancing Economic Gains and Digital Risks
Amid the criticism, some experts see potential benefits in the agreement if handled with caution. Pratama Persadha, chair of the cybersecurity watchdog Communication and Information System Security Research Center (CISSReC), suggested that the deal could accelerate the creation of an independent data protection institution in Indonesia. However, he stressed the importance of addressing the risks posed by the free flow of personal data, which he described as essential raw materials for developing artificial intelligence, algorithm-based services, and technological innovation.
In a statement on Thursday, Pratama warned that mismanagement of data could turn it into a commodity exploited by foreign entities, who might develop products and services using Indonesian data only to sell them back to the local market. He advocated for a bilateral agreement that prioritizes Indonesia’s digital rights and called for investments in digital infrastructure, research, and local talent development to maintain technological independence.
Broader Implications for Indonesia’s Digital Economy
The debate over the Indonesia-US data trade agreement reflects broader tensions in the global digital economy, where data has become a critical asset akin to natural resources. For Indonesia, a nation with a rapidly growing digital user base, the stakes are particularly high. The country’s digital economy is projected to expand significantly in the coming years, driven by widespread internet adoption and the proliferation of e-commerce and cloud services. However, without robust data governance, critics argue that much of the economic value derived from this growth could be siphoned off by foreign tech giants.
The agreement also raises questions about the balance between international cooperation and national interests. While aligning with the US on data protection standards could facilitate trade and attract investment from American tech firms, it risks creating a dependency that undermines Indonesia’s ability to shape its own digital future. The presence of major US companies like AWS and Microsoft in Indonesia, while a sign of economic engagement, also amplifies concerns about data control and the potential for these firms to prioritize their home country’s interests over local needs.
Furthermore, the absence of a fully operational personal data protection body remains a glaring gap in Indonesia’s regulatory framework. Until such an institution is established, the country’s ability to enforce data protection laws and oversee cross-border transfers will remain limited. This vulnerability is particularly concerning given the history of data breaches in Indonesia, which have exposed sensitive information and eroded public trust in digital systems.
Looking Ahead: A Test for Indonesia’s Digital Strategy
As negotiations with the US continue, the Indonesian government faces the delicate task of balancing economic opportunities with the imperative to safeguard national interests. The concerns raised by industry leaders and advocacy groups highlight the need for a comprehensive strategy that prioritizes data sovereignty, strengthens domestic digital infrastructure, and accelerates the establishment of regulatory oversight mechanisms.
For now, the public and stakeholders alike await further clarity on the terms of the agreement and the measures Jakarta will implement to protect its citizens’ data. The outcome of this deal could set a precedent for how Indonesia navigates future digital trade agreements, not just with the US but with other global partners as well. As the digital landscape evolves, the question remains whether Indonesia can harness the benefits of international collaboration without compromising the very resources that underpin its digital economy.
