Key Legal Considerations for Technology Investment in Indonesia

Jan 28, 2026 | Berita

Key Legal Considerations

The rapid expansion of digital technology has transformed investment patterns worldwide, including in Indonesia. Technology investment is no longer viewed merely as a means to increase income but increasingly as a strategic tool to preserve asset value against inflation and to achieve long term financial objectives. Despite its potential, investment in the technology sector carries significant legal and regulatory risks that require careful assessment.

This article provides an analysis of the most critical issues that must be considered before investing in technology based businesses in Indonesia. It focuses on regulatory compliance, data protection and intellectual property, and corporate governance and investment structuring, all of which are central to legal certainty and investment sustainability.

 

Regulatory Compliance and Legal Certainty

 

The primary legal framework governing investment in Indonesia is Law No. 25/2007 on Investment. This statute applies to both domestic investors and foreign investors and sets out the fundamental rights and obligations of investors operating within Indonesian jurisdiction. In response to economic transformation and technological development, this law was amended by Article 77 of Law No. 6/ 2023 on the Stipulation of Government Regulation in Lieu of Law No. 2/2022 on Job Creation into Law, commonly referred to as the Job Creation Law. The amendment reflects the government’s intent to align investment regulation with contemporary economic realities and digital innovation.

In parallel, the growth of electronic commerce and digital platforms prompted the enactment of Law No. 11/2008 on Electronic Information and Transactions. This law was subsequently amended by Law No. 19/2016 and Law No. 1/2024 to strengthen legal certainty, cybersecurity, and public welfare in the digital environment. Collectively, these statutes regulate electronic systems, online transactions, and digital liability, forming the legal backbone of Indonesia’s digital economy.

For investors, compliance with investment law and electronic systems regulation is not merely a formal requirement. These laws impose concrete obligations relating to business licensing, electronic system security, consumer protection, and accountability for technology use. Investment in technology sectors that are not aligned with existing regulations exposes investors to heightened legal risk, including administrative sanctions and potential civil or criminal liability.

 

Personal Data Protection and Intellectual Property as Digital Assets

 

In technology driven enterprises, data and intellectual property function as core economic assets. Their protection is therefore a decisive factor in determining a company’s valuation and long term competitiveness.

Indonesia regulates personal data protection through Law No. 27/2022 on Personal Data Protection. This law introduces a comprehensive framework governing the lawful processing of personal data and aligns Indonesia with international data protection standards. It classifies personal data into specific personal data and general personal data. Specific personal data includes health information, biometric data, genetic data, criminal records, children’s data, personal financial data, and other data as determined by law. General personal data includes full name, gender, nationality, religion, marital status, and combined data capable of identifying an individual.

The Personal Data Protection Law obliges data controllers and data processors to apply core principles such as security, confidentiality, and accountability. Investors must therefore assess whether a technology company has implemented adequate technical and organizational measures to comply with these obligations. Failure to do so may result in substantial financial loss, regulatory sanctions, and reputational damage.

The urgency of this issue is underscored by data from the Indonesian Cyber Security Forum 2024, which reported that approximately 2.3 billion personal data records of Indonesian citizens were allegedly exposed on dark web forums over the past three years. Such incidents undermine public trust in electronic system operators and highlight systemic vulnerabilities in data governance.

In addition to personal data, intellectual property represents a strategic digital asset. Indonesian legal scholar OK Saidin defines intellectual property as a proprietary right derived from human intellectual effort. Intellectual property rights in Indonesia include patents, trademarks, industrial designs, copyrights, geographical indications, trade secrets, and layout designs of integrated circuits.

Before committing capital, investors must ensure that the target company holds valid ownership and legal protection over its intellectual property, including proper registration where required. Unclear or disputed intellectual property status creates a substantial risk of future litigation and may jeopardize the viability of the investment. Effective intellectual property management is therefore both a legal necessity and a business strategy essential to long term investment security

Also read: The Urgency of Biometric Data Protection in the AI Era

 

Corporate Governance and Investment Structuring

 

Corporate governance is a key indicator of a company’s integrity, transparency, and accountability. These principles allow investors to evaluate the operational health and sustainability of a technology company.

The Indonesia Stock Exchange defines good corporate governance as a system designed to direct and control a company in a professional, independent, and fair manner while promoting ethical and sustainable conduct. Although many technology companies are not publicly listed, the application of good corporate governance principles remains highly relevant for private companies and startups.

Investors should assess whether the company has a clear organizational structure, responsible decision making mechanisms, and effective internal oversight. Weak governance structures often correlate with higher legal and operational risk, particularly in rapidly scaling technology enterprises.

Investment structuring also carries significant legal implications. Indonesian law recognizes various investment instruments, including equity participation and debt instruments, all of which must comply with the Investment Law. The rights and obligations of shareholders, ownership structures, and investor protection mechanisms are governed by Law No. 40/ 2007 on Limited Liability Companies, as amended by Article 109 of the Job Creation Law.

At the core of any investment relationship lies the investment agreement. This agreement functions as the primary legal instrument governing the rights and obligations of the parties, the funding scheme, risk allocation, and dispute resolution mechanisms. Careful drafting is essential to minimize legal uncertainty and prevent future disputes.

Investment in the technology sector offers significant opportunities but also presents complex legal challenges. Regulatory compliance, personal data protection, intellectual property ownership, corporate governance, and sound investment structuring are critical factors that must be evaluated comprehensively before any investment decision is made.

When these elements are aligned with the Indonesian legal system, technology investments benefit from a strong legal foundation. Investors who understand and manage these legal dimensions effectively are better positioned to mitigate legal risk and enhance long term investment success. Ultimately, sustainable technology investment in Indonesia depends on a balanced collaboration between legal certainty and adaptive business innovation.***

Also read: Comparative Analysis of Personal Data Protection Regulations in Indonesia and the European Union

 

Regulations:

  • Undang-Undang Nomor 1 Tahun 2024 tentang Perubahan Kedua atas Undang-Undang Nomor 11 Tahun 2008 tentang Informasi dan Transaksi Elektronik (“UU ITE 2024”)
  • Undang-Undang Nomor 6 Tahun 2023 tentang Penetapan Peraturan Pemerintah Pengganti Undang-Undang Nomor 2 Tahun 2022 tentang Cipta Kerja menjadi Undang-Undang (“UU Cipta Kerja”)
  • Undang-Undang Nomor 27 Tahun 2022 tentang Perlindungan Data Pribadi (“UU PDP”)
  • Undang-Undang Nomor 19 Tahun 2016 tentang Perubahan atas Undang-Undang Nomor 11 Tahun 2008 tentang Informasi dan Transaksi Elektronik (“UU ITE 2016”)
  • Undang-Undang Nomor 11 Tahun 2008 tentang Informasi dan Transaksi Elektronik (“UU ITE”)
  • Undang-Undang Nomor 25 Tahun 2007 tentang Penanaman Modal (“UU PM”)

References: