Examples of Smart Contract Use in Indonesia: From Government Projects to Local Startups

Bittime - A smart contract is a digital program that runs automatically on a blockchain network to execute agreements without intermediaries. This means that once the specified conditions are met, the transaction will proceed autonomously without the need for third-party authorization.

This concept is starting to gain attention in Indonesia because it is able to provide high efficiency and transparency in various sectors, from logistics to public services.

As awareness of blockchain's potential grows, examples of smart contract use in Indonesia are now increasingly diverse — both in the private and government sectors.

What Is a Smart Contract and Why Is It Important?

Smart contracts function like “self-executing” digital contracts. They contain a set of instructions and conditions stored on the blockchain.

If conditions are met, the system automatically executes an action — for example, sending a payment or transferring ownership rights.

This technology is important because it reduces the potential for manipulation and increases trust between parties without intermediaries.

In a business context, smart contracts help speed up administrative processes, reduce legal costs, and ensure compliance through automated systems.

Some popular blockchains used for smart contracts include Ethereum, BNB Chain, and Solana. However, a number of local projects are also starting to develop their own ecosystems to support smart contract-based applications.

Smart Contracts are starting to be implemented in various sectors in Indonesia.

Technology smart contract or Smart contracts are beginning to be tested in various projects in Indonesia. From land certificates and digital identities to central bank digital currency trials, this automated contract concept is seen as improving efficiency and transparency.

According to reportsSSEK Indonesia Blockchain 2025 Regulatory Guide, a number of government agencies and local startups are developing blockchain-based projects with a smart contract system as the main foundation.

Although regulations are still developing, the implementation of smart contracts is considered a crucial part of Indonesia's digital transformation in the public and financial sectors.

Blockchain-Based Land Certificates

One of the initial projects for implementing smart contracts in Indonesia is in the systemdigital land certificate. 

Research entitledBlockchain-Based Land Certificate Management in Indonesiademonstrates how public blockchains can be used to automatically record and verify land ownership.

Through smart contracts, verification processes, data changes, and ownership transfers can be accelerated without extensive manual intervention. This system also has the potential to reduce the risk of document duplication and manipulation.

However, the study noted that integration with conventional land systems and data security remain major challenges.

Mandala Chain Digital Identity and the West Java Government

Smart contracts are also tested in the system digital identity.Reported fromPanewslab, projectMandala Chainin collaboration with the West Java Provincial Government to develop the IDCHAIN ​​platform.

Through this system, smart contracts are used to regulate the process of identity validation and authorization of public data access on the blockchain.

Mandala Chain targets cross-agency integration, such as educational records and medical data, so that information exchange between agencies can be done more securely and transparently.

This step is also one of the local government's efforts to encourage digital transformation with a decentralized approach.

Smart Contracts for Renewable Energy

Another study entitledDeveloping a Smart Implementation Framework for Blockchain-Based P2P Renewable Energy Trading in Indonesiademonstrates the potential use of smart contracts in renewable energy trading.

Through this system, users with solar panels can sell their excess energy directly to other consumers (peer-to-peer) using smart contracts. Transactions, energy calculations, and payments are automated based on digital meter data.

The research assessed that this model could create a more efficient energy market. However, national electricity regulations and infrastructure readiness are crucial factors that need to be adjusted for successful implementation.

Bank Indonesia's Digital Rupiah Trial

Smart contracts are also starting to be tested byBank Indonesia (BI)in project developmentDigital Rupiah.
Report FintechNews.sgstated that BI is testing smart contract functions to automate the processsettlement Delivery versus Payment (DvP)between financial institutions.

In a project calledGaruda Project, BI uses platforms like String And Hyperledger Besuto build a system capable of recording interbank transactions efficiently and transparently. Smart contracts ensure that transactions between parties occur only if both conditions are met, thereby minimizing the risk of default.

This step is an important milestone in the modernization of the national financial infrastructure towards a blockchain-based system.

Legal Validity of Smart Contracts in Indonesia

From a legal perspective, smart contracts are not yet specifically regulated in Indonesia. However, based on research,Can Smart Contracts Have Legal Validity in Indonesia?(IJBLE, 2024), smart contracts can still be considered valid as long as they fulfill the four conditions of the agreement according toArticle 1320 of the Civil Code: agreement of the parties, legal capacity, certain objects, and lawful causes.

This means that even though contracts are created and executed through computer code, as long as these elements are met, smart contracts can have the same legal force as conventional agreements.

Some regulations that have the potential to support this include:Electronic Information and Transactions Law (ITE) as well as Personal Data Protection Act (PDP), which could be the basis for recognizing the legality of digital contracts in the future.

Conclusion

The implementation of smart contracts in Indonesia is showing positive signs. From government projects to national banking trials, this technology offers high efficiency, transparency, and automation.

Nevertheless, strengthening regulations and standardizing systems are crucial steps to ensure widespread and legally valid implementation of smart contracts. 

Collaboration between the government, industry players, and academics is necessary to ensure Indonesia becomes not only a user but also a developer of smart contract technology in Southeast Asia.

FAQ

What is a smart contract?

A smart contract is a digital agreement that is executed automatically using computer code on a blockchain without a third party intermediary.

Are smart contracts legally valid in Indonesia?

There are no specific regulations yet, but smart contracts can be legally recognized as long as they fulfill the valid elements of an agreement in the Civil Code and electronic regulations such as the ITE Law.

Who has used smart contracts in Indonesia?

Several projects, such as Mandala Chain, energy trading research, and Bank Indonesia's digital rupiah trial, have already used smart contract systems.

What are the main challenges of implementing smart contracts in Indonesia?

Key challenges include legal certainty, code security, national blockchain infrastructure, and user digital literacy.

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