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‘Only fair’ that Netflix plays by local tax and censorship rules in Indonesia, says MNC boss

Tanoesoedibjo:

Tanoesoedibjo: ‘It is not fair for foreign players like Netflix to avoid local regulations’

The boss of one of the region’s most powerful television companies has said that on-demand video streaming companies like Netflix are going to have to negotiate extensive regulatory hurdles if they are to get anywhere in Indonesia.

Rudy Tanoesoedibjo, CEO and president director of Indonesian TV giant MNC Sky Vision said at the Content Asia Summit in Singapore last week that while Netflix may yet prove to be “very popular” in Southeast Asia’s most populous country, it would not be fair for such companies to operate in Indonesia without paying local taxes and complying with local censorship standards.

“Netflix is very, very popular,” Tanoesoedibjo said in response to a question from Content Asia’s editorial director Janine Stein about the threat of newcomers to Indonesia’s content scene. “But in Indonesia there is a problem, because the government sees Netflix and other OTT players as foreign entities doing business in Indonesia, getting revenue from Indonesia, but not paying Indonesian taxes.”

“The government is developing regulations to level the playing field. So foreign players getting revenue from Indonesia will most likely be asked to pay local tax. They will also be subject to local censorship. It is not fair when a foreign player serving directly to Indonesia does not follow local censorship regulations,” said Tanoesoedibjo.

When Netflix launched simultaneously in 130 markets globally at the start of the year, its entrance to Indonesia was blocked by state-owned telco Telkom, with the company complaining that the service carries pornographic content.

The ban came shortly after the government demanded that Netflix comply with regulations that stipulate that the firm pays tax on every transaction, and hires local staff to service its business on the ground.

Tanoesoedibjo’s comments come just over a week after a regional survey by YouGov into attitudes around video on-demand platforms found that 11% of Indonesians asked already subscribe, and 43% say they intend to – the most positive indication of the affinity towards Netflix in a study that included China, Hong Kong, Singapore, Australia, Thailand, the Philippines and Malaysia.

Only 4% said they wouldn’t consider it, as the content “doesn’t seem that interesting,” and only 8% said they would avoid Netflix because of its relatively high cost.

The findings appear to jar with another study, by strategy consultancy MTM and released in May, that predicted that while Asia-born OTT players such as Malaysia’s Iflix, Hong Kong’s Viu and Hooq from Singapore will do well in Indonesia, Netflix will struggle unless it can appeal more to local tastes.

The study found that adoption of OTT services in Indonesia has been relatively limited so far because of poor broadband infrastructure, high levels of piracy and low awareness.

Tanoesoedibjo commented at Content Asia Summit that viewing trends in Indonesia are playing into the OTT players’ hands. “People don’t want to pay for what they don’t want to watch. That’s a consistent complaint we’re getting every day.”

“If the cost of broadband comes down, people will demand that they can watch what they want, when and where they want,” he said.

One of the mistakes content providers were making in Indonesia was trying to push out as many channels as possible with mediocre content.

“Say you have two good channels and five not so good ones, and you’re trying to push them all at the customer… people won’t stand for it. They’re getting smarter.”

“Especially now with [the rise of] OTT, we have too many channels but not enough good ones,” he said.

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