Indonesia’s Growing Commitment to IP Protection: Insights from the 2026 Special 301 Report
The Office of the United States Trade Representative (USTR) recently published its 2026 Special 301 Report, an annual review that evaluates the state of Intellectual Property (IP) protection and enforcement among U.S. trading partners worldwide. Published in April 2026, the report primarily assesses developments that took place throughout 2025 and early 2026. It is widely regarded as one of the most influential international references for businesses, investors, innovators, and IP owners seeking to understand the IP landscape of major markets around the world. While Indonesia remains on the Priority Watch List in this year’s report, the USTR also acknowledges several positive developments and important reform commitments that demonstrate Indonesia’s growing focus on strengthening IP protection and enforcement. For businesses looking to expand into Southeast Asia’s largest economy, the report provides valuable insights into both the challenges and opportunities that exist within Indonesia’s evolving IP ecosystem. Understanding Indonesia’s Position in the 2026 Report The Special 301 Report places countries into different categories based on the USTR’s assessment of their IP protection and enforcement environment. Indonesia remains on the Priority Watch List in 2026, alongside countries such as China, India, Russia, Chile, and Venezuela. According to the report, U.S. right holders continue to face concerns relating to piracy, counterfeiting, enforcement effectiveness, and certain regulatory issues. However, it is important to understand that remaining on the Priority Watch List does not necessarily indicate a deteriorating IP environment. In fact, the report specifically recognizes a number of improvements made by Indonesia during the review period and highlights several commitments that could lead to significant enhancements in the future. Key Challenges Identified by the USTR The report notes that piracy and counterfeiting remain among the primary concerns in Indonesia. According to the USTR, stakeholders continue to report: Widespread online piracy and counterfeiting; Limited enforcement actions against sellers of pirated and counterfeit goods; Continued use of piracy devices and piracy applications; Concerns regarding certain provisions of Indonesia’s Copyright Law; Unauthorized camcording activities; Unlicensed software use; and Judicial delays and limited IP expertise among some judges. The report also notes that as manufacturing activities continue to expand in Indonesia, local production of counterfeit goods has reportedly increased in certain sectors. At the same time, counterfeit sales have increasingly shifted from physical markets to online platforms, creating additional enforcement challenges. Interestingly, the report links this trend to the broader shift of manufacturing activities from China to countries such as Indonesia. While this development creates new enforcement challenges, it also reflects Indonesia’s growing role in global supply chains and manufacturing investment. As more businesses establish production and commercial operations in Indonesia, securing Intellectual Property rights at an early stage becomes increasingly critical. Another area highlighted by the USTR concerns border enforcement. While Indonesia’s Directorate General of Customs and Excise possesses ex officio authority to take action against infringing goods, practical obstacles have reportedly limited broader use of the customs recordation system by foreign right holders. The report also identifies concerns relating to Geographical Indications (GIs), pharmaceutical regulatory data protection, Patent implementation requirements, and certain market access measures affecting foreign films. The report also encourages Indonesia to maintain transparency and due process in the protection of geographical indications, particularly as negotiations under the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA) continue. Positive Progress Recognized by the USTR Despite these concerns, the 2026 report acknowledges that Indonesia made progress in IP enforcement during 2025. According to the USTR, stakeholders observed improvements in Indonesia’s efforts to address online piracy, including increased cooperation between the Directorate General of Intellectual Property (DGIP) and the Ministry of Communications and Digital Affairs. The report also highlights the continued activities of Indonesia’s IP Enforcement Task Force, which has been working to increase awareness of IP-related issues across government agencies and encourage more investigations into IP infringement cases. Furthermore, the Indonesian government is reportedly considering establishing a larger national task force dedicated to trade monitoring and IP enforcement. Despite these efforts, the report notes that criminal enforcement remains relatively limited compared to the size of the Indonesian market. According to stakeholders cited by the USTR, there has reportedly been only one criminal conviction in a copyright piracy case during the past five years, highlighting why enforcement remains a key area for future improvement. A Major Development: The U.S.-Indonesia Agreement on Reciprocal Trade One of the most significant developments mentioned in the report is the signing of the U.S.-Indonesia Agreement on Reciprocal Trade on February 19, 2026. According to the USTR, Indonesia has committed to taking steps to address many long-standing IP concerns through this agreement. The commitments include: Significantly increasing IP enforcement actions; Eliminating local domicile requirements within the customs recordation system; Criminalizing the trafficking of devices that circumvent technological protection measures; Criminalizing unauthorized camcording; Extending Copyright protection terms for certain categories of works to seventy years from first publication; and Providing protection against unfair commercial use and unauthorized disclosure of pharmaceutical and agricultural test data. One particularly noteworthy commitment is the planned removal of local domicile requirements within Indonesia’s customs recordation system. The USTR previously identified this requirement as one of the factors limiting foreign right holders’ ability to utilize border enforcement mechanisms. If implemented, the change could make customs enforcement more accessible and practical for international brand owners and rights holders. The agreement also contains commitments relating to the protection of regulatory test data submitted to obtain marketing approval for pharmaceutical and agricultural chemical products. This issue has long been monitored by research-intensive industries, and stronger safeguards could contribute to greater confidence among companies investing in innovation-driven sectors. Looking Ahead Although Indonesia remains on the Priority Watch List, the 2026 Special 301 Report also points to growing efforts to strengthen IP protection and enforcement. Recent enforcement initiatives and reform commitments suggest that Indonesia is moving toward a more robust IP environment. For businesses, innovators, and brand…