Digital Economy Faces Regulatory Headwinds

Digital Economy Faces Regulatory Headwinds

Indonesia confronts a dilemma common in many developing countries. How best to regulate and channel the internet to national advantage without distorting economic benefits? The issue here is particularly relevant, given the scope of the digital economy and the deregulation narrative embraced by the Jokowi government. One issue, for instance, is fair treatment. Large firms, such as Facebook and Twitter, fear that tax initiatives will penalize them for their existing local-market commitment. These companies—and others—already make important contributions through indirect taxes and employment opportunities. The government will likely have to be more inclusive of its regulatory design than early indications suggest.

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