Dissecting Presidential Regulation №19 of 2024 for Accelerating the Indonesian Game Industry

Bear with me, this is going to be a long post because I want to talk about the Presidential Regulation or Perpres specifically designed to accelerate the growth of the Indonesian game industry in one post. I’ll briefly cover its history, the formulation process, and its potential impact. I also deliberately wrote this to document its historical significance, as this Perpres is a monumental event being the first time a creative economy sub-sector has a presidential directive to accelerate its growth. And please understand, everything in this post is from my personal point of view, so there might be some inaccuracies. So, let’s go!

What Was the Government Doing Before the Perpres?

Let’s go back a bit. First, the game industry in Indonesia is still new and not yet mature. Perhaps in the late ’90s and early 2000s, the initial wave of the game industry began with Matahari Studio making arcade games. The existence of game studios in Indonesia laid the foundation for the profession of game development. This expanded further with the Flash platform, making the game industry more inclusive. Flash marked the beginning of the local game industry boom. During this era, indie developers started to emerge, forming communities in the GameDev ID forum, holding gatherings called GameDev Gatherings (GDG), and so on. In 2013, the Indonesian Game Association (AGI) was also established. Around this time, the government was becoming aware of the game industry.

In the early days of the game industry, Kominfo (the Ministry of Communication and Information) was already sponsoring GDG to facilitate meetups. The Ministry of Tourism and Creative Economy (Kemenparekraf) also supported local game studios by flying them to events like the Tokyo Game Show and even creating a blueprint for the local game industry. This blueprint details the history of the game industry and action plans for government support. If you’re curious, you can read the 2015 blueprint here. So, the momentum for government support for the game industry was already building within Kominfo and Kemenparekraf.

When the government changed in 2015, a new organization called the Creative Economy Agency (Bekraf) emerged. Bekraf was staffed with new people, with professionals leading the team, which I found quite fresh. Although Bekraf’s first year was a bit uncertain, after 2016, they made significant strides in supporting the game industry. They held roadshows in various cities for talent development seminars called Bekraf Developer Day, had government funding programs called Government Incentive Assistance, and programs for marketing and securing deals abroad through Archipelageek, flying local game studios to events like the Game Developer Conference in SF, Gamescom in Cologne, TGS, and more. Bekraf’s efforts had a significant impact despite their limited resources.

Then in 2019, another change occurred. Bekraf was dissolved and merged with the Ministry of Tourism again, which felt like starting from scratch, especially with the COVID-19 pandemic. This period was initially slow, although things started picking up towards the end. During this time, Kominfo also became more active in supporting the Indonesia Game Developer Exchange program. In short, the government, especially Kemenparekraf and Kominfo, has been present for the game industry, trying to help with various good programs. So, why the sudden need for a Perpres?

Why Suddenly Make a Perpres?

In August 2021, I and other AGI officials were invited to a meeting by representatives from the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves). AGI was asked to prepare a presentation on the issues facing the local game industry and the support needed from the government. During this meeting, it was revealed that a deputy from Kemenparekraf who had supported the game industry since 2015 reported to a deputy at Marves about the industry and its potential. Particularly the fact that out of 20 trillion rupiah spent on games in Indonesia, all the money goes abroad. This information reached the Coordinating Minister and was brought to the cabinet meeting with the President. That’s when the President ordered the creation of an acceleration program through a presidential directive.

In September, we had our first meeting with the Coordinating Minister. Ministers and representatives from various ministries and organizations attended this meeting. There were representatives from Kominfo and Kemenparekraf, but also from the Ministry of Industry, Ministry of Trade, Ministry of Finance, Ministry of State-Owned Enterprises, Ministry of Education and Culture, and others. There was one sentence that made me optimistic during the meeting that came from the Coordinating Minister. “You (referring to the ministries and agencies) listen to these young people who understand the industry.” This sentence made me optimistic because the government wanted to listen to the industry to ensure the program created aligns with the industry’s needs. This led to a series of coordination meetings to design what the government could do to help the Indonesian game industry.

The Process of Formulating the Game Perpres Content

After this meeting, I remember there was a WhatsApp group called the “All-Nighters Group” because AGI had to prepare materials for daily meetings in a short time. Yes, daily. Every day, sometimes even on weekends, there were cross-ministerial meetings with a maximum duration of one hour, covering various topics. And every day before these meetings, we were given a topic to present. For example, if we were meeting with the Ministry of Education and Culture tomorrow, AGI had to prepare a presentation on the talent situation, the support programs needed, benchmarks from other countries, the conditions in Indonesia, etc. Then the next day, if we were meeting with the banking sector, we had to prepare material on funding. And then for a meeting with the Directorate General of Taxes, we had to prepare material on taxation. So because we had to prepare materials daily, the group consisted of Cipto as the president of AGI, Arief from Agate, Kris from Toge, Ko Andi from Lyto, Mbak Eva from Megaxus, Ajie from Everidea, and Pak Hari, who used to be a deputy at Bekraf, working every night to prepare materials for the next day’s meeting with various ministries and agencies on different topics.

The daily roadshows to various ministries and agencies with different topics ended on October 13, 2021. This was a very memorable moment for me. At the office, we usually create OKRs for our game studio. Now we were asked to create OKRs for various ministries and agencies. We had the opportunity to create a Google Sheets file with a matrix outlining what initiatives we needed to take, the output, the target date, the responsible agency, and the agencies involved. The plan was for the Perpres to be enacted in 2022 so the government would have two years in 2023 and 2024 to implement the items in the Perpres. And indeed, in the process of creating the Perpres, when we did the roadshow to various ministries and agencies, there were key issues in the game industry that needed solutions and the respective ministries or agencies could provide them. However, there were also times when ministries or agencies did not have the capacity to solve certain issues we raised, but they could support other areas with perhaps less impact. So when reading this Perpres, there will be high-impact points that make you think, “Wow, we really need this, great,” but there may also be low-impact points. Nonetheless, the fact that the government is willing to help the game industry is something to be grateful for.

The Delays in Harmonization

The Perpres we targeted for enactment in 2022, to be implemented in 2023 and 2024, had to be delayed and was only enacted in 2024. This was due to the lengthy harmonization process that required many adjustments. This was also a valuable learning experience for us in designing a program because one program we wanted might already be covered by another program, might conflict with other regulations, or might lack the necessary legal “umbrella” for its basis, and so on. During the harmonization process, the relevant ministries received a copy of the draft matrix, which was then distributed to the relevant directorates, leading to the identification of issues that needed further investigation.

This investigation process took a long time because the points in the matrix involved many parties. When we talk about government programs, we are talking about coordinating with a very large organization, where even different directorates within the same ministry can have different tasks and functions. They may not be aware of each other’s programs. Or there might be regulations impacting other programs that need to be synchronized. The harmonization process took almost a year. And even when the document was finalized, it took time to reach the president’s desk.

You might ask, what’s the point of creating a Perpres if its target was for 2 years (2023–2024) but it was only enacted in 2024? I believe the harmonization process is unavoidable, and making regulations cannot be rushed. Unlike in the industry where we can make company policies quickly, in government, there are many interests impacted by the regulations created. But with this matrix in 2022, in 2023 and 2024, some programs were already being “prepped” by the responsible parties. So it’s not like they were waiting for the Perpres to be signed before acting, but the Perpres clarifies the division of tasks for each ministry. However, some programs couldn’t proceed because their budget allocations could only be made after the Perpres. This is understandable. But for me, the crucial impact of this Perpres is that even if there is a change in president and cabinet, it can help ensure the continuity of the program. No need to start from scratch again. Previously, in 2015 there was a blueprint, but with the change in ministry nomenclature, we had to start from scratch again. The same happened in 2019. But with this detailed Perpres mapping out the roles and responsibilities of each agency, hopefully, the new cabinet can adopt this Perpres.

What Does the Local Game Industry Acceleration Perpres Contain?

If you want to read the full content of Perpres №19 of 2024, you can check it here. But I’ll try to cover the main points and highlight some crucial aspects. I might not be able to cover everything in this post, but if there’s another opportunity to delve into the Perpres, I’d be happy to do so.

Okay, basically there are seven focus areas in this Perpres.

1. Human Resource Development: Training 3,000 talents with competencies needed by the game industry.
2. Financing and Capital: Creating financing schemes to support the development of local games.
3. Promotion and Market Access: Introducing quality local games to the domestic and regional markets.
4. Research and Development: Creating hardware and software technology for game production.
5. Market Protection Regulation: Strengthening the playing field so local games can compete with foreign games.
6. Hardware Industry Development: Ensuring that locally made hardware (phones, laptops, and devices) contains local content (TKDN).
7. Activating Local Games in Southeast Asia: Involving local games in regional events to raise awareness.

There are many interesting points, but I’ll focus on three areas that were the main requests from AGI. Since the first meeting in 2021, AGI has identified the most urgent issues needing solutions: Funding, Talent, and Market Access.

Funding

In the funding section, AGI provided various benchmarks for government funding worldwide. AGI even accompanied the government on study visits to France and Germany to learn about their funding schemes. In Germany, the funding scheme extends to both regional and central governments. Thus, in the Perpres, there is a mandate in matrix 2.1 for “Piloting the financing of the National Game Industry through the Public Service Agency (BLU) with a revolving fund concept and mitigated risks” with the goal of “Assigning BLU to pilot the financing of the National Game Industry along with regulatory adjustments.” BLU will be the agency managing the financing of game production. Additionally, there is a funding scheme in point 2.2 for “Creating a funding scheme from investors through matching funds and venture capital” with the goal of “Creating an Indonesia Game Fund scheme that can finance the development of National Games with at least 40 million USD/600 billion IDR per year.” This matching fund scheme is common in many countries and has proven to increase the potential for deals and investment in Indonesia (which will also affect tax growth domestically). So this is one of the Perpres mandates that needs close monitoring.

Talent

The second point is about talent. We need our game dev talent to be stronger and more numerous. Stronger talent will also attract more investment domestically. Therefore, talent development programs are key and needed at various levels. For example, point 1.1 “Training and mentoring human resources with the required competencies” with the goal of “3,000 people trained in game development and creating 100 new national game prototypes each year” to produce new talents. There’s also a focus on upskilling in point 1.3 “Improving human resources in the game field, including business, marketing, branding, and positioning, including scholarships” with the goal of “Creating 100 talents in the game field,” and pushing for knowledge transfer like in point 1.5 “Creating policies to facilitate high-skilled foreign talents in game development activities to work in Indonesia” with the target “Creating policies to make it easier for high-skilled foreign talents to work in Indonesia.”

Market

From the market side, there are two approaches. One is to enhance the competitiveness of local games in Indonesia, and the other is to strengthen the competitiveness of local games globally. This program translates into various forms. For example, point 3.1 “Providing captive markets for national game products” with the goal of “Providing market access by ministries, agencies, and state-owned enterprises to support the utilization of national game products (through coordination and other activities)” so local games can be used by state agencies. Then there’s point 3.4 “Promoting national games and opening market access domestically and abroad” with the goal of “a. Promoting 30 national games abroad each year b. Promoting 100 national games domestically each year.” There’s also a hardware-related point 3.6 “Creating a local content scheme to include national games in devices distributed in Indonesia” with the target “Having national games preloaded on devices distributed in Indonesia.” I also find one matrix quite controversial, which is in article 5.1 “Creating regulations to encourage foreign game publishers with a significant economic impact to establish legal entities in Indonesia” with the target “a. Creating a separate Indonesian Standard Industrial Classification for game publishers b. Creating regulations requiring foreign game publishers to have a legal entity in Indonesia and/or partner with a local company.” This regulation is still being shaped, and the government is open to technical input for its implementation. So don’t worry, there’s still room for discussion.

How is the Implementation Progress of the Game Perpres?

If you’ve read the Perpres, you can see there are more than 32 programs to be executed. Some programs are simple because they already have legal foundations and are just waiting for execution, or have been ongoing before the Perpres. Those are easy. But some programs cannot be instant and need a long process. For example, funding programs are complex. I know this is what everyone in the industry is looking for. When we pitch our game to a publisher, if we bring a vertical slice, and other studios have highly polished vertical slices funded by their governments, competing with them with our limited resources is tough. I’ve seen games with successful crowdfunding campaigns because their demos were highly polished, thanks to government funding.

But don’t worry, now there’s at least one coordination meeting every week to monitor the Perpres implementation. Even Cipto monitors this program and attends weekly coordination meetings offline. AGI continues to help ensure these 32 programs are well-executed, involving many stakeholders.

My only hope is that under the leadership of President Prabowo and Mas Gibran, the unfinished business from President Jokowi’s era can be continued. Hopefully, in 2025 we won’t have to start from scratch and can hit the ground running with the remaining tasks in the Perpres.