On February 14, Indonesia held its general election, the biggest single-day election of any democracies in the world, with the electorate voting for both presidential and legislative candidates. Both official and unofficial counts show the Chairman of Gerindra Party, Prabowo Subianto significantly leading the other candidates in the presidential race, he is expected to be Indonesia’s next president. Just two days prior to the election, the country also issued Presidential Regulation No. 19 of 2024 on the Acceleration of National Games Industry Development, which clarifies ministerial oversight of gaming regulations in Indonesia, while also introducing policies to grow the games industry and encourage local development. This turn of events may affect how Indonesia’s games industry and market are managed and grow in the next five years.


All three of the presidential candidates held esports tournaments to attract younger voters  (Source: Merdekanews.id, iNews.id, Sindonews.com)

Indonesia is the largest country by population in Southeast Asia, with more than 278 million people. According to Niko Partners’ estimation, the country has the third largest gamer population in Asia, behind China and India, with 137.9 million gamers – this may explain why more games are being localized into Indonesian. Niko Partners’ market model also shows Indonesia makes up approximately a quarter of all games revenue and half of all gamers in Southeast Asia.

Prabowo’s victory in the presidential election will likely mean the continuation of policies that Indonesia has adopted over the past decade. His running mate, Gibran Rakabuming Raka, is the eldest son of Indonesia’s current president Joko “Jokowi” Widodo. Prabowo himself was a member of President Jokowi’s cabinet in the past 5 year as the minister of defense. Jokowi’s policies of infrastructure development, easing access for foreign investment in the country, and mega projects, such as the building of the country’s new capital, will likely continue under the new leaderships. Digital economy, digital connectivity, and digital innovation are among the main programs promised by Prabowo-Gibran’s campaign document.

Because Prabowo is expected to continue President Jokowi’s policies, it is likely this will apply to the games industry sector in Indonesia. The recently issued Presidential Regulation No. 19 of 2024 on the Acceleration of National Games Industry Development, or PERPRES 19/2024, will likely be upheld by Prabowo. PERPRES 19/2024 will create an inter-ministerial team headed by the Coordinating Minister of Maritime and Investment Affairs to centralize policies related to the games industry and market. Currently this position is held by Luhut Binsar Pandjaitan, outgoing President Jokowi’s right-hand man. According to the regulation, the Minister of Tourism and Creative Economy, who is also the Head of the Tourism and Creative Economy Agency, and the Minister of Communication and Informatics will lead the daily executive functions of the governmental team. Both ministries have already been involved in the country’s games industry and market over the past decades, although seemingly with lower levels of coordination, and this regulation will increase this coordination.

PERPRES 19/2024 states a number of new policies that will be adopted to accelerate Indonesia’s games industry growth with the goal of reaching total market value of $2.5 billion or IDR 36 trillion by 2025. While most of the policies include actions that support the industry, such as skill training, intellectual property assistance, inclusive third-party payment regulation, tax regulation revisions for game companies, marketing support, and the inclusion of games in educational curricula, there are several points that need to be understood carefully.

  • First, section 5.1 introduces a new regulation dictating that foreign game publishers must have a legal entity in Indonesia and/or partner with a local legal entity/company.
  • Second, section 5.2 details a game classification body that will ensure all games operating in Indonesia do not clash with Indonesian national values.
  • Third, section 6.1 mentions a policy where Indonesian games shall be preloaded to game hardware sold in Indonesia.

Collectively, these policies are likely to have a substantial effect on foreign game companies operating or launching games in Indonesia. As the details of these policies are not yet available to the public, game companies that are active in the Indonesian market or are trying to enter the market should keep a watchful eye on how these policies are implemented.

Niko Partners is carefully watching the development of Indonesia’s games market and industry. We expect the country to grow as a games market and in its game development capacity following the election results and new regulations. Clear communication between the government and game industry actors will be needed to ensure these regulations are applied in a way that supports the market’s development.

 

Indonesia is the fastest growing among SEA-6 games market and the leader in gamer growth. Deep dive into the market through our SEA-6 Games Market Reports and get regular pulse check on the industry through Niko’s Value-Added News Analysis (VANA).

 

Photo by Darang Candra