Australia and Indonesia are developing legal frameworks to provide Digital Identification (“Digital ID”), a form of digital personal identification document. Many countries have implemented national identification cards or numbers, such as Indonesia, whereas others have developed systems to verify an individual's identity using multiple forms of documentation, as in Australia. Digital ID aims to extend and simplify these systems by digitising them.

This article will discuss the standing legal frameworks in Indonesia and Australia addressing the development and regulation of this technology, its risks and benefits, and the potential impact on businesses and individuals.

What is Digital Identity?

Unlike existing methods of digital identification such as e-KYC, which require the user to enter the details upon their hardcopy documents, or share photocopies, Digital ID entails a self-contained, legally recognised form of identification held digitally. Countries such as Singapore, the technology is used to identify oneself by providing a set of details, similar to a username and password. As the work of verification has already been done by the government, identification can be accepted almost instantly.

Digital ID offers clear benefits: (i) fraud reduction, (ii) reduced verification times, and (iii) lowered costs all while minimising the need to provide sensitive documents. Nevertheless, optimism around Digital ID should be balanced with the reality that such systems may still be vulnerable to fraud and particularly data breaches. Centralising information in one system creates a single point of failure, meaning backup measures and continuous regulatory oversight will be essential.

Indonesia’s Digital Identity Legal Framework

Development of NIK and the e-KTP

The groundwork for Digital ID was laid in 2006 with the introduction of the Nomor Induk Kependudukan (“NIK”) under Law No. 23 of 2006. The NIK was designed to serve as a unique identifier for each Indonesian citizen. Before the NIK, it had been possible for individuals to hold multiple identity documents, such as the national identity card, which facilitated tax evasion and changing one’s identity. Building upon the NIK, the electronic Kartu Tanda Penduduk (“e-KTP”) was rolled out in 2011. Containing an embedded microchip, the new e-KTP project sought to further reduce fraud by storing biometric data on the card itself, and by connecting the card to the NIK number and a secure database containing copies of government documents such as birth certificates.

The Identitas Kependudukan Digital

With the Minister of Home Affairs Regulation No. 72 of 2022 on Standards and Specifications for Identity Card Forms and the Implementation of Digital Population Identity (“MoHA Regulation 72/22”), the Ministry of Home Affairs (Kemendagri) established the standards and specifications for Digital ID in Indonesia. The Identitas Kependudukan Digital (“IKD”) was to be a form of digital e-KTP, also linked to an individual’s NIK. According to Article 19 letter b of MoHA Regulation 72/2022, users must submit their NIK, e-mail address, phone number, and selfie alongside submitting biometric information such as their fingerprint or iris. Once verified by the government, the IKD would allow an individual to access personal documents, government services, and verify their identity using a QR code generated by the government. Teguh Setyabudi, the Director General of Population and Civil Registry, emphasized that the implementation of IKD is not intended to substitute the current e-KTP. Instead, both serve as complementary documents, taking into account the diverse levels of smartphone adoption among Indonesians.

The IKD was implemented to the legislative specifications and is currently accessible but suffers from low uptake. Despite an ambitious 100% adoption target by June 2024, only 3.8% of the Indonesian population had done so. As a possible solution, the government has invested in INA Pass, an application developed by INA Digital (a subsidiary of Peruri, a state-owned enterprise), as an alternative manner of accessing the IKD framework. The app is aimed at further consolidating the digital identification system by connecting with systems that the IKD app does not connect to and streamlining the user experience with a more user-friendly design.

For the implementation of this program, the Ministry of Communications and Digital Affairs (Kementerian Komunikasi dan Digital or “Komdigi”) has a key involvement and responsibilities with respect to building the trust and integration of national digital services, meanwhile the Population and Civil Registry Agency (Dinas Kependudukan dan Catatan Sipil or “Dukcapil”) has their key role in terms of the population administration. Kominfo is mainly responsible for providing regulatory oversight in respect of cybersecurity matters, while Dukcapil is responsible for implementing the technology and maintaining the NIK database.

Benefits for Individuals and Businesses

The nationwide implementation of Digital ID in Indonesia could promise clear benefits for individuals and businesses. For citizens, a central access point for identity verification, accessible via smartphones, could alleviate the burden of managing multiple government documents, an issue that continues despite the introduction of the e-KTP. The World Bank notes that Digital ID can improve accessibility to social and financial services, by reducing paperwork load on both the individual and the government, particularly in a country with over 280 million people. For businesses, Digital ID may reduce verification costs by minimising the need for in-house systems or third-party e-KYC services. More citizens having access to identification also broadens the possible customer base.

These potential benefits must be read against significant potential risks. If a bad actor were to gain access to a person’s phone or IKD details, it is possible that they could easily impersonate that person or otherwise use that access to their own benefit. Concentrating sensitive information in a central database also leads to a high risk of sensitive data leaking or being compromised. It is therefore imperative that the government continues to develop its regulatory framework to keep its systems secure.

Looking to the future, Indonesia’s digitalization efforts are supported by a US$250 million grant from the World Bank received in 2023, aimed at further developing this technology. Additionally, interoperability remains a key goal, as evidenced by Indonesia’s participation in the ASEAN Digital Economy Framework Agreement (“DEFA”) which provides a blueprint for regional digital cooperation. Such measures could streamline international business processes and travel, further benefiting both citizens and enterprises across the region.

Australia’s Digital Identity Legal Framework

Australia has never had a unified identity mechanism akin to a national identity card. Often when an Australian must prove their identity, they have to provide multiple pieces of documentation to prove that they exist and that they are who they claim to be. In recent years, the government has encouraged the development of Digital ID platforms, most prominently MyID (formerly MyGovID), the official government-provided platform, and AusPost’s Digital iD.

Legal Framework

The Digital ID Act 2024 was created to provide a framework for digital identity providers. Under the act, the government can accredit providers once they have verified that they meet security, privacy and interoperability standards. The Australian Government Digital ID System (“AGDIS”) is: (i) operated and regulated by the Australian Competition and Consumer Commission (“ACCC”), which focus on compliance and accreditation, and (ii) supervised by the Office of the Australian Information Commissioner (“OAIC”), who focus on maintaining the privacy safeguards and investigating security issues. Additionally, the Digital ID Data Standards Chair is a body formed for the purpose of maintaining authentication and technical standards for accredited bodies.

The Australian approach, unlike Indonesia’s centralised system, reflects Australia’s federated model. The AGDIS was established to enable third-party identification systems to interact with government and thereby grant citizens some freedom of choice as to which provider they give their data. An example of an existing third-party service is AusPost’s Digital iD system, which is used by services such as DocuSign. However, as of yet the Digital iD and MyID systems are not usable in the same contexts. In the future, it is possible that Digital iD is granted the same rights in the same operational contexts as MyID under the AGDIS.

Benefits for Individuals and Businesses

From an individual and a business perspective, Digital ID offers many of the same benefits in Australia as it does in Indonesia. Notably, unlike Indonesia, Australia does not have a uniform national form of identification, nor a Personal Identification Number like the NIK. Therefore, by increasing reliance upon a central form of identification it is possible that we trade convenience for the risk of identity theft or identity-directed attacks.

Comparative Analysis: Indonesia vs. Australia

Both Indonesia and Australia have established formal regulatory frameworks to provide a basis for Digital ID. In implementation, they have both taken a government-led approach, while involving enterprise participation, as seen in the involvement of INA Digital and AusPost. In this regard, Australia has made a stronger commitment towards encouraging non-governmental providers through the AGDIS.

Indonesia is working towards a level of interoperability with other ASEAN Member States under the DEFA. Australia’s states may soon adopt ISO 18013-5:2021, an international standard for digital driver’s licence, a possible move towards international interoperability that exemplifies the functioning of Australia’s federal model.

Lessons from International Models and Future Outlook

For both Indonesia and Australia, successful Digital ID systems overseas can provide valuable insight for the development of such systems at home. Indonesia has been meeting with Estonian officials to discuss, which could provide valuable insights. Estonia’s highly successful Smart-ID, for example, has been rated as highly secure, has been widely adopted, and may be used to vote in the 2025 local elections. More locally, Singapore and India have high levels of adoption and may provide good models as example.

World Bank Principles on identification may provide additional guidance in navigation challenges as both nations continue to refine their legal frameworks. The principles stress the need for universal access, open standards, robust privacy protections, and a focus on user experience and interoperability. By adhering to these guidelines, both Indonesia and Australia could further strengthen trust in their new Digital ID systems.

Conclusion

Indonesia and Australia both have legal frameworks to regulate and support the implementation of digital ID. Indonesia’s system relies on centralised identification based upon the NIK and derived from the e-KTP, while Australia’s system creates an entirely new form of verified identification based upon e-KYC practices. Both countries stand to receive many of the same benefits from implementing Digital ID, including trust and accessibility, but will have to maintain strict regulatory oversight based on up-to-date cybersecurity principles to protect sensitive information.

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