One of the many building blocks to unlock the full potential of Indonesia's internet economy (including its digital financial services) is a reliable digital personal identification system. According to the World Bank, a digital ID is a pool of data (e.g., phone numbers, biometrics) and/or other credentials (e.g., digital signature) which is captured electronically to uniquely identify a person.
Despite the requirement for a robust digital personal identification system, the Annual Member Survey 2018 by the Indonesian FinTech Association finds that digital signature is adopted at a lower rate than other key technologies.
This hopefully is about to change dramatically starting from 2020 because of the issuance of Government Regulation No. 71/2019 in October last year.
The Legal Significance of an E-Signature
The regulation defines an e-Signature as a signature that consists of meaningful electronic data to be used as a verification and authentication tool. An eSignature has the legal significance for parties in entering into an e-Contract or for doing an e-Transaction. Under Indonesian contract law, one of the four elements of a valid contract is a meeting of minds, an agreement, about the terms and the subject of a contract. In an e-Contract, the e-Signature signifies the meeting of minds of the parties entering into the e-Contract. The regulation specifies that when parties put their e-Signature on an e-Contract, the law assumes that the parties have reviewed and understood the contents of the eContract!
An e-Signature must uniquely point to a specific person (for a business entity, the term is e-Seal). For evidentiary purposes in the courts of law, it is imperative that an e-Signature be able to fully authenticate and verify the identity of the person that put its e-Signature on an e-Contract or provides its e-Signature in doing an e-Transaction.
The regulation allows certified and un-certified e-Signatures but differentiates the level of evidentiary value. This means an un-certified e-Signature will require more supporting documents to authenticate and verify the signatory. Given the cost involved for certification, from a business point of view, one may need to decide whether certain processes can be done with an un-certified e-Signatures given the manageable or low risk that any dispute will be brought to court (for example, internal processes)
There is Nothing New under the Sun
An interesting question comes up about what data is to be used in an eSignature. One of the many benefits of a growing internet economy will be more e-commerce and financial inclusion involving the underbanked and unbanked population of the 150 million or so internet users in Indonesia. Certain population segments have never learn to do manual signatures; instead they use their thumb, which in digital jargon is part of a biometric identity. In our view, given how e-Signature is being defined in the regulation, a thumb print (or finger print) could be the basis of an e-Signature (anecdotally, this is further evidence of the wise saying that there is nothing new under the sun).
More Light at the End of the Tunnel
With the nationwide mandatory requirement for the use of a single Quick Response Code Indonesian Standard (QRIS) on 1 January 2020, and now with more focus on the establishment of a reliable digital signature system, the front end/consumer facing part of the ecosystem of the internet economy will be more developed, bringing Indonesia a step closer to realizing its huge internet economy potential.