Philip Jacobson has been detained since Tuesday, not long after he attended a community meeting between the provincial government and the Indigenous People's Alliance of the Archipelago – a community group with a long history of dispute over land ownership.
He is the editor of Mongabay, a non-profit online news website with a focus on the environment and environmental degradation, including in Indonesia.
Mr Jacobson, 30, entered Indonesia on a multiple-entry business visa to attend a series of meetings, according to Mongabay.
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Freedom House says a law regulating online publications impedes the work of journalists.
He was first approached by immigration officials at his temporary residence on 17 December, 2019, in Palangkaraya, the capital city of the Indonesian province of Kalimantan, the day he was scheduled to leave the city.
Immigration officials attended his temporary residence, confiscated his passport, and asked him to come in the following day for questioning, Mongabay reported.
He received a formal letter stating he was being investigated for allegedly committing a visa violation on January 9, but was not taken into custody until January 21, 35 days after he was first approached.
"It later became clear that someone had photographed Jacobson at the parliament building and reported him to immigration," Mongabay reported.
"He was informed that he faces charges of violating the 2011 immigration law and a prison sentence of up to five years. He is now being held at a prison in Palangkaraya."
Critics say arrest of an Indonesian academic for allegedly "insulting" the country's military is indicative of shrinking freedom of speech in Indonesia.
Abdul Manan, chair of the Indonesian Independent Journalism Alliance (AJI), said foreign journalists who face visa problems are commonly directly deported, not detained.
"We are waiting to see how long he will be detained for, as Mongabay has covered issues which have not pleased the Government," Mr Manan told the ABC.
"If this administrative reason is being used to detain foreign journalists, the same argument could be used for Indonesian journalists".
The latest report from AJI found there were 53 incidents of violations against journalists in last year.
In early 2018, three BBC Indonesia journalists were forced to leave the province of Papua after a tweet about aid for a measles and malnutrition outbreak in the regency of Asmat.
Amnesty International Indonesia said the arrest of Mr Jacobson is an example of an "unacceptable attack on freedom of the press in [Indonesia]".
"Philip Jacobson's arrest is just the latest scandal amid Indonesia's growing repression and persecution of environmental activists and journalists," Amnesty Indonesia director Usman Hamid said.
"His arrest will have a chilling effect on anyone seeking to expose similar abuses, and the country will be worse off for it."
While working with Mongabay, Mr Jacobson has written articles about illegal shadow companies responsible for deforestation in Borneo, as well as an analysis on Indonesian President Joko Widodo's environmental policies.